Snowball Effect 📈

R R Kabel Q2FY27 Concall Takeaways - 1⃣ Volume Growth: Revision Q2 volume growth was in high single digits, while H1 volume growth stood in the low teens. Product-wise performance: • Wires: Double-digit volume growth • Cables: Single-digit volume growth Management clarified that quarterly fluctuations are normal and remains confident about the growth potential of its expanded cable capacities. H2 is historically a stronger period for the company in terms of volumes. It continues to see growth opportunities in both domestic and export markets. However, FY27 volume growth guidance has been revised from 16–18% to 14–15%. 👉The key monitorable is whether the company can sustain volume growth without compromising pricing discipline and margins. 2⃣ Export Business: An Increasing Growth Driver Export contribution has moved towards 30–35% of revenue and contributed around 32% in Q2 topline. Europe and the Middle East are the biggest export-contributing regions. Historically, exports were heavily skewed towards wires because the company had limited cable manufacturing capacity which has gradually changed. This is due to new cable capacities are allowing the company to increase cable exports. Cable exports are growing faster and gaining share in the export mix. Management highlighted that the company typically adds 3–4 new international approvals every year. It is continuously working on entering new geographies, securing additional international approvals and expanding product categories. Management expects domestic and export businesses to grow at similar speeds over time. 👉Export growth combined with increasing cable penetration could improve the company's addressable market and diversify its revenue base. 3⃣ Margin Expansion Management reiterated its wires & cables margin expansion roadmap. => FY27 EBIT margin target: 9.5% => FY28 EBIT margin target: 10.5% The company had targeted approximately 300 bps of improvement over FY26–FY28. Key drivers: => Better gross profitability => Disciplined commodity management => Operating leverage => Improved manufacturing efficiencies => Better fixed-cost absorption One concern raised during the call: Gross margin contracted by approximately 100 bps. Management attributed this to product mix and the impact of higher raw-material prices. 4⃣ FMEG: Moving Towards Breakeven FMEG remains the second growth engine, although profitability is still a work in progress. Management explained that Q2 is seasonally weaker, particularly because the company is fan-heavy in its FMEG portfolio. During Q2 fans experienced a seasonal slowdown, lighting and appliances contributed more to revenue. The company expects stronger fan demand in H2. Management remains confident of achieving annual breakeven despite cumulative segment losses of Rs. 17 CR at the time of the call. 5⃣ Capacity expansion and capex – Significant investments ahead R R Kabel is undertaking significant investments to support its future growth. => FY27 planned capex: Rs. 550–600 CR. => H1 capex: Approximately Rs. 281 CR => FY28 indicative capex: Rs. 300 CR. Additionally, the board approved Rs. 200 CR for land acquisition in Rajasthan. The Rajasthan investment is separate from the existing capex programme. Management also discussed shifting the Roorkee plant without disrupting existing production. The facility is being taken on lease, and it is expected to support increased FMEG capacity. 6⃣UM Cables acquisition – Entry into optical fibre cables R R Kabel entered into a business transfer agreement with UM Cables Limited, a wholly owned subsidiary of Usha Martin Limited. • Acquisition consideration: Rs. 77 CR. • Business: Optical fibre and related cables The acquisition provides entry into the optical fibre cable segment. Management highlighted that the acquired facility currently has low-capacity utilisation. A detailed business plan is expected in the following quarter. It also clarified that investors should not build in a significant revenue contribution from UM Cables for FY27. 7⃣ Working capital and balance sheet Despite strong growth and elevated commodity prices, the working capital cycle improved. • Net working capital cycle: 46 days in September vs 49–50 days earlier. • Receivable days: Improved from 34 to 32 days. • LC-backed trade utilisation: Approximately Rs. 1,290 CR. The company is increasingly using LC-backed trade facilities for metal purchases. - Higher trade payables are partly attributable to the increased use of these facilities. Management acknowledged that debt could increase further because of higher raw material prices, increased working capital requirements, ongoing manufacturing capex and capacity expansion investments. 👉The combination of higher capex, dividends and working-capital requirements could put pressure on free cash flow in the near term 8⃣ Risk to Monitor => Volume growth delivery in FY27 => Export Mix sustainable => FMEG breakeven in FY27 => Improvement in Working capital and debt => Further details on UM Cables Bottom Line The bigger story: R R Kabel is investing today to strengthen its manufacturing scale, product portfolio and global presence for the next phase of growth. 👉Execution, capital efficiency and sustainable profitability will determine how successfully it converts these investments into long-term earnings growth. 🟥Disclaimer: This post is for educational and study purposes only. Please do not consider it as a Buy/Sell recommendations.

Karamtara Engineering Q2FY27 Results - 🔶Business Model Karamtara manufactures the structures and components required to build solar power plants, wind installations and electricity transmission networks => Solar energy projects => Electricity transmission networks => Wind energy infrastructure => Industrial application Karamtara's product portfolio comprises: 🔹Solar: Module mounting structures, tracker piles, piers and torque tubes. 🔹Transmission: Lattice towers, structural steel profiles and transmission infrastructure. 🔹Wind: Angular and tubular wind towers. 🔹Fasteners & fittings: Bolts, nuts, foundation bolts and conductor-insulator fitting 🔶Solar – Growth Engine Solar products contributed approximately 71% of Q2FY27 revenue and 75% of H1FY27 revenue. It manufactures both fixed-tilt and tracker-based structures. With increasing solar installations globally, demand for mounting structures and tracker components provides a significant opportunity. Karamtara positions itself as India's largest integrated manufacturer in solar mounting structures and tracker components. 🔶Transmission & Wind Transmission lattice towers contributed 21% of Q2 revenue and 17% of H1 revenue. These towers support high-voltage transmission lines and electricity grid infrastructure. The company also manufactures angular and tubular wind towers. 👉India's expanding power demand, renewable energy integration and grid infrastructure investments create a favourable long-term opportunity for these businesses. 🔶Manufacturing Capabilities & Capacity One of Karamtara's biggest competitive advantages is its integrated manufacturing ecosystem. As of September 30, 2026: • Solar: 527,600 MTPA • Transmission Line Towers: 195,000 MTPA • Tubular Wind Towers: 126,000 MTPA • Fasteners: 30,000 MTPA Additional capacities: • Structural Steel Profiles: 168,000 MTPA • Galvanizing: 420,800 MTPA 🔶Manufacturing Expansion Karamtara operates 13 manufacturing facilities and has a presence across 50+ countries. Its manufacturing footprint includes Tarapur & Nagpur (Maharashtra), Bhachau (Gujarat) and Italy. The company is also setting up a manufacturing facility in Saudi Arabia for solar products, lattice towers and PEB. Additional expansion plans include solar stamping parts and structural steel profiles. 🔶Q2FY27 Financial Performance Revenue increased 62% YoY to Rs. 1,647 CR, EBITDA increased by 46% & PAT by 37%. EBITDA margin declined from 13.2% to 11.9%. PAT margin declined from 6.8% to 5.7%. Finance costs increased approximately 55% YoY to ₹47.9 Cr. 👉The key takeaway: Strong topline growth, but the company needs to demonstrate better operating leverage and profitability as it scales. 🔶Cash Flow & Balance Sheet H1FY27 cash flow: • Operating Cash Flow: Rs. 11.4 CR • Investing Cash Flow: -Rs. 52.4 CR • Financing Cash Flow: Rs. 61.4 CR Operating cash flow declined from Rs. 29.3 CR in H1FY26 despite strong revenue and profit growth. Total debt stood at approximately Rs. 1,004 CR versus Rs. 1,030 CR in FY26. The company is investing in manufacturing expansion, but cash flow conversion needs improvement. 🔶New Opportunities – BESS, PEB & Solar Stamping Beyond its existing portfolio, Karamtara is expanding into additional product categories: • Solar Stamping Parts • Prefabricated Engineered Buildings (PEB) • Battery Energy Storage Systems (BESS) These products can potentially increase its addressable market and customer wallet share. 🔶Defence & Aerospace – A New Optionality The company has proposed a wholly owned subsidiary, Karamtara Defence & Aerospace Limited. The objective is to explore manufacturing, engineering, technology development and R&D opportunities in defence and aerospace. The rationale is to leverage its existing engineering and manufacturing capabilities. However, product selection is under evaluation, capex plans are not finalised and investments will depend on technical feasibility and commercial viability. Karamtara is evolving from a transmission tower manufacturer into a diversified engineering and manufacturing platform for renewable energy and power infrastructure. However, three important parameters deserve attention: => Recovery in EBITDA margins. => Improvement in operating cash flow and working capital. => Returns from ongoing capacity expansion 🟥Disclaimer:This post is for educational and study purposes only. Please do not consider it as a Buy/Sell recommendations. @Dynamicinvstr @vishan_29