RR Kabel shares soared 14% today; PL maintains 'Buy' call expecting strong volume growth

Shares of RR Kabel Ltd ascended by 14.18 per cent, settling at Rs 1,171.05 on Monday. Domestic brokerage Prabhudas Lilladher (PL) said the company reported strong revenue growth of 26.4 per cent year-on-year (YoY) in the March 2025 quarter, driven by strong W&C (wire and cables) volume growth of 13.6 per cent along with capacity additions.

"W&C Volume growth for FY25 stood at 7.1 per cent, supported by a balanced contribution from both volume and value growth. The company expects volume to grow 18 per cent in FY26. Gross margin expansion was driven by higher realisations and product mix, and further expansion in EBITDA margin was supported by enhanced operational efficiency," the broking firm stated.

"The company expects W&C EBIT margin to improve around 300 basis points (bps) by FY28 and FMEG EBIT to break even by H1FY26. RR Kabel targets 18 per cent CAGR in W&C revenue led by cables, 25 per cent CAGR in FMEG revenue, and 2.5x growth in EBITDA over the next 3 years through its Project RRrise," it also said.

Further, PL expects revenue/EBITDA/PAT CAGR of 16.2 per cent/29.8 per cent/31.8 per cent over FY25-27E, respectively.

"We tweaked FY26/FY27E earnings estimates. We maintain our TP (target price) of Rs 1,292, based on 27x FY27E earnings. Maintain 'BUY'," the brokerage underscored.

On the technical play, RR Kabel shares traded higher than the 5-day, 10-, 20-, 30-, 50-day and 100-day simple moving averages (SMAs) but lower than the 150-day and 200-day SMAs. Its 14-day relative strength index (RSI) came at 78.37. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The stock has a price-to-earnings (P/E) ratio of 50.87 against a price-to-book (P/B) value of 6.60. Earnings per share (EPS) stood at 23.02 with a return on equity (RoE) of 12.97. According to Trendlyne data, RR Kabel has a one-year beta of 0.8, indicating low volatility.

As of March 2025, promoters held a 61.80 per cent stake in the company.