Buy R R Kabel; target of Rs 2960: Motilal Oswal

Moneycontrol • 9 days ago

Original source

Key Investment Pillars

  • RR Kabel is transitioning toward a more cable-led portfolio, with higher-value cables and B2B/institutional demand likely to drive its next phase of growth.
  • The company's recent acquisition of U M Cables' optical fiber and related cable business marks its entry into the communication cables segment, providing an opportunity to diversify beyond its core C&W business.
  • The company is undertaking a capex program of INR12b during FY25-28, including expansion into 220kV EHV cables, which is expected to strengthen its presence in higher-value segments.
  • Management is targeting a blended double-digit C&W EBIT margin of 10.5-11.0% by FY28E.

Thesis Validation Checklist

  • Investors should watch for the successful commissioning of new cable capacities and the integration of the acquired optical fiber business.
  • An improvement in domestic cable profitability, driven by operating leverage and a richer product mix, would be a key indicator of the thesis playing out.
  • The company's ability to maintain its export diversification and expand its presence in high-value segments would also be crucial.
  • Any signs of margin compression or intense competition in the domestic wires segment could pose a risk to the thesis.