RR Kabel shares jump 7% to new highs after outperforming peers in Q1

Shares of RR Kabel Ltd. gained as much as 9% on Tuesday, July 28, after the company reported strong revenue growth and largely in-line margin and profit after tax (PAT) figures in the first quarter in comparison to the same quarter last year.

RR Kabel's revenue growth stood at 54% year-on-year, compared to street estimates of 38%, led by strong growth in the wires and cables segment.

It reported a profit after tax of 205 crore, up 133% from last year's ₹88 crore figure.

Revenue for the quarter increased by 52% from last year to ₹3,168 crore. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), was up 99% to ₹283 crore from ₹142 crore last year.

The company's EBITDA margin expanded to 8.9% from 6.9% in the year-ago period and its gross margins were at 18.5% from 18.2% last year.

The W&C segment made up for 91% of the revenue, while the FMEG segment made up 9%.

Revenue growth for C&W segment stood at 57% compared to estimates of 40%, while the FMEG business reported revenue growth was 28% compared to 20% estimates.

Peer Comparison

RR Kabel outperformed peers during the quarter, with its Cables and Wires business revenue growing by 57% during the quarter, in comparison to peers like Polycab, whose cables and wires business revenue grew by 38%, while for Havells, that figure stood at 27%.

Even on the margin front, while both Polycab and Havells reported a contraction in their Cable and Wires business margins, RR Kabel's Cable & Wires margin expanded to 9.9% from 7.6% last year.

CLSA Initiates Coverage

Brokerage firm CLSA initiated coverage on RR Kabel with an "outperform" rating and a price tagret of ₹2,850 per share. The price target implied an upside potential of 13% from Monday's closing price.

CLSA said that RR Kabel's distinguished moats of entrenched distribution network, influencer engagement, export leadership and integrated manufacturing should help drive growth and profitability, despite risk of new entrants within the space.

With the company's project RRise providing a clear roadmap for the next phase of growth and profitability expansion, CLSA expects the company to deliver revenue and PAT compound annual growth rate (CAGR) of 18% and 24% respectively over financial year 2026-2030.

16 analysts have coverage on RR Kabel, of which, 13 of them have a "buy" rating, two say "hold", and one has a "sell" rating on the stock. The consensus estimates of price targets implies a downside potential of 7.5% from Monday's closing levels.

Shares of RR Kabel are off opening highs, having made a new record of ₹2,775. The stock has now risen 157% from the IPO price of ₹1,033.