In the aftermath of RR Kabel’s recent debut on the stock market, the company has garnered positive attention from a prominent domestic brokerage firm. RR Kabel shares, which were listed on September 20 at a substantial 14% premium to their issue price, have been making notable gains in the market. Commencing trading at ₹1,179 on the BSE and ₹1,180 on the NSE, compared to the issue price of ₹1,035 per share, RR Kabel’s stock has since risen by over 15%.
Prabhudas Lilladher, a respected brokerage firm, has initiated coverage on RR Kabel shares with a ‘Buy’ recommendation and an ambitious target price of ₹1,407 per share, reflecting a valuation at 35 times FY25 earnings. This target price suggests an impressive upside potential of nearly 20% from the closing price on Thursday.
According to Praveen Sahay, Research Analyst at Prabhudas Lilladher Pvt Ltd, RR Kabel represents a promising opportunity in the Wires & Cables (W&C) sector. The company boasts a strong brand presence, a diverse product portfolio, well-structured capacity expansion plans, an expanding network of dealers and distributors, and a distribution-focused approach to export business.
While RR Kabel has expanded its Fast-Moving Electrical Goods (FMEG) portfolio through strategic acquisitions, it anticipates reducing losses in the coming years by shifting its focus toward premium markets. The company has also bolstered its brand recognition, positioning, and manufacturing capabilities within the FMEG sector.
In the W&C segment, RR Kabel stands out as one of the fastest-growing players, reporting a revenue Compound Annual Growth Rate (CAGR) of approximately 40% in W&C, surpassing its peers’ 30% over FY21-23.
This robust growth can be attributed to the company’s strong brand reputation, diversified product range, state-of-the-art manufacturing facilities, and extensive distribution network. Notably, 74% of RR Kabel’s revenue is derived from Business-to-Consumer (B2C) operations, reflecting its substantial presence in the wire-heavy sector. The company has committed to a ₹500 crore capital expenditure over the next two years to boost production capacity in both wire and cable segments.
The analyst predicts a W&C segment revenue CAGR of 22.3% over FY23-26E, with the company’s revenue, EBITDA, and PAT expected to exhibit impressive CAGRs of 20.7%, 38.8%, and 44.3%, respectively, over FY23-26E. This growth is underpinned by an evolving business mix, operational efficiency, cost optimization initiatives, brand-building investments, and an expanding distribution network.
As of 12:00 pm, RR Kabel shares were trading 0.32% higher at ₹1,182.90 each on the BSE, reinforcing the positive sentiment surrounding the stock.
