KEI Industries' Explosive Q2: Can 116% Export Growth Power Its Next Big Leap?
Executive Summary: KEI Industries Fires on All Cylinders in Q2 FY26 🚀
KEI Industries Limited has once again delivered a powerful performance in the second quarter of FY26, showcasing robust growth that outpaces its own guidance. The company’s results reflect strong execution in its core Cables & Wires business, impressive margin expansion, and a solid balance sheet. While the overall numbers are bright, a closer look reveals a story of strategic focus: phenomenal growth in exports and the domestic dealer network is masking weakness in the legacy EPC and stainless steel wire segments.
With a massive new manufacturing facility at Sanand on the cusp of commissioning, is KEI Industries setting the stage for an even faster growth trajectory? Let’s dive into the numbers to find out.
The Growth Engine: Sales Performance Analysis
KEI’s headline revenue for Q2 FY26 stood at ₹2,727 Crore, marking a healthy 19.38% YoY growth. For the first half of the year (H1 FY26), revenue is up by a strong 22.25%. This performance is particularly impressive as it comfortably exceeds the management’s full-year growth guidance of 18% provided during the Q1 earnings call. This demonstrates strong execution in a market where domestic-focused capital goods companies are in a sweet spot.
| Revenue (₹ in Crore) | Q2 FY25 | Q1 FY26 | Q2 FY26 | YoY Growth | QoQ Growth |
|---|---|---|---|---|---|
| Total Revenue | 2,284 | 2,590 | 2,727 | 19.38% | 5.25% |
But the real story lies beneath the surface. The growth is not uniform across its business segments.
Cables & Wires: The Undisputed Champion
The Cables & Wires segment is the powerhouse, contributing over 95% of the sales and driving nearly all the growth.
- Dealer/Distribution (B2C) Network: This segment continues its steady march, growing 17.31% YoY to ₹1,475 Crore. This indicates robust demand from the real estate and retail sectors, aligning perfectly with the strong domestic economic theme. With over 2,300 active dealers, KEI’s brand recall and reach are clearly paying off.
- Institutional Business: The institutional segment grew by a stellar 28.14% YoY, but the story here is one of geographic divergence.
- Exports: The standout performer was exports, which skyrocketed by an incredible 116.19% YoY to ₹425 Crore. This validates the company’s strategy to expand its global footprint.
- Domestic Institutional: This sub-segment showed some softness, with sales declining from ₹615 Crore to ₹581 Crore YoY (as per the note in the presentation). While EHV cable sales were strong, the broader domestic institutional segment appears muted.
EPC & Stainless Steel Wire: The Laggards
In line with the trend from the previous quarter, the non-core segments continue to drag down the overall performance.
- EPC Projects: Revenue plummeted by 41.12% YoY to just ₹47 Crore. This appears to be a conscious strategy to focus on the higher-margin core business.
- Stainless Steel (SS) Wire: This segment also saw a 10.58% YoY decline.
Takeaway: KEI’s growth is laser-focused on its core strength. The twin engines of a strong domestic B2C network and a rapidly expanding export market are firing impressively.
Order Book: A Slight Pause?
The company’s pending order book stood at ₹3,824 Crore as of September 30, 2025. This is slightly lower than the ₹3,921 Crore reported at the end of Q1 FY26. While not a major cause for concern, this dip suggests that order inflow during the quarter was slightly slower than the pace of execution. Given the lumpy nature of institutional orders, this will be a key metric to track in the coming quarters.
Margin Expansion and Profitability: Hitting the Mark ✅
Growth is good, but profitable growth is better. KEI delivered on this front as well, with earnings growing significantly faster than revenue, indicating strong operational efficiency.
| Earnings (₹ in Crore) | Q2 FY25 | Q1 FY26 | Q2 FY26 | YoY Growth |
|---|---|---|---|---|
| EBITDA | 238 | 298 | 312 | 31.20% |
| EBITDA Margin % | 10.40% | 11.49% | 11.43% | +103 bps |
| PAT | 155 | 196 | 204 | 31.47% |
| PAT Margin % | 6.78% | 7.56% | 7.46% | +68 bps |
The EBITDA margin of 11.43% is a significant improvement from the previous year and is right in line with the management’s guidance of “close to 11%”. Interestingly, during the Q1 call, the management had indicated that an 18% contribution from exports could push margins towards 11.5%. In Q2, exports contributed ~17.1% of revenue, and the margin was indeed strong at 11.43%. This consistency between guidance and performance enhances management’s credibility.
Based on its strong top-line and even stronger bottom-line growth, KEI Industries can be confidently classified as a Fast Grower.
Balance Sheet: Fortified for Growth
KEI’s financial health is robust, providing a solid foundation for its ambitious expansion plans.
- Net Cash Position: The company remains comfortably in a net cash position, with a net cash (including acceptances) of ₹732 Crore. This is after funding significant capex, which is a testament to its strong cash flow generation.
- Working Capital Efficiency: The working capital management is commendable.
- Trade Receivables have decreased compared to March 2025, even as H1 sales grew by over 22%. This is a sign of excellent collection efficiency.
- Inventory levels have risen in line with sales growth, suggesting prudent preparation for future demand without overstocking.
- A significant increase in Trade Payables indicates improved credit terms with suppliers, further aiding cash flows.
The Next Frontier: Sanand Capex and Future Outlook
The most exciting part of the KEI story is what lies ahead. The company is in the final stages of a massive ₹2,000 Crore capex for a new manufacturing facility in Sanand, Gujarat.
- Game-Changing Capacity: This plant is expected to add a top-line potential of ₹6,000 Crore once fully operational, effectively creating a path to double the company’s scale over the next few years.
- Key Milestone Ahead: Management has guided that Phase 1 of the Sanand plant will commence commercial production in Q3 FY26—the current quarter! This is the most significant near-term trigger for the company.
- Long-Term Vision: Post the full commissioning of the Sanand project, management is aiming for a 20%+ CAGR in revenue.
Key Risks and Watchpoints ⚠️
- US Tariffs: The economic context highlights the imposition of 50% tariffs on US exports from August 2026. In the Q1 call, management noted that the US was a new focus area for exports. This new tariff regime poses a significant headwind to their American ambitions. The company’s ability to pivot its phenomenal export growth to other geographies like the Middle East, Europe, and Australia will be critical.
- Order Inflow: The slight dip in the order book needs to be monitored to ensure it doesn’t become a trend.
- Capex Execution: The timely commissioning and ramp-up of the Sanand plant are crucial to delivering on the future growth promises. Any delays could disappoint market expectations.
Final Verdict
KEI Industries has delivered an excellent quarter, firing on its chosen cylinders of B2C and exports while strategically de-emphasizing non-core businesses. The company is not just meeting but exceeding its guidance, backed by a fortress-like balance sheet.
The future narrative is firmly tied to the Sanand facility, which is set to come on stream imminently. While global headwinds, particularly US tariffs, present a new challenge for its export strategy, KEI’s strong domestic positioning and diversified export basket should provide resilience. For now, KEI Industries remains a compelling growth story in the Indian manufacturing and infrastructure space.
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