KEI margin drops 2.46 points sequentially as costs outpace sales
Revenue grew 38.52% year on year, but the sequential margin decline reversed the improvement seen through Q1FY27.
Filed 21 Oct 2026, 20:48 IST · after market close · KEI Industries Ltd (KEI)
Key takeaways
- Consolidated revenue grew +38.52% YoY to Rs 3,776.42 cr, while operating margin improved only 0.09 percentage points.
- Sequentially, expenses grew +21.88% against revenue growth of +18.56%, cutting operating margin by 2.46 percentage points and net profit by -4.26%.
- Operating margin at 9.97% was 1.06 percentage points below the 11.03% Industrials median across 19 reporting peers.
Price around the results
Year-on-year growth remained strong, but momentum weakened sequentially
KEI reported consolidated revenue growth of +38.52% YoY to Rs 3,776.42 cr, while net profit rose +28.96% to Rs 262.45 cr. Sequentially, revenue increased +18.56%, but net profit fell -4.26%, indicating that the larger sales base did not translate into higher quarterly earnings. The results were filed after market close on 21 October 2026.
Cost growth drove the sharp sequential margin reset
Expenses grew +21.88% QoQ, faster than revenue at +18.56%, narrowing operating margin by 2.46 percentage points to 9.97%. Year on year, expenses grew +38.38% against revenue growth of +38.52%, leaving margin broadly stable with a 0.09 percentage-point improvement. Other income contributed 6.94% of pre-tax profit, while the YoY tax-rate decline of 0.9 percentage points provided some support to net-profit growth.
Margin fell after four quarters of improvement
Operating margin rose from 9.88% in Q2FY26 to 10.83% in Q3FY26, 10.98% in Q4FY26 and 12.43% in Q1FY27 before falling to 9.97% in Q2FY27. The quarter's margin was 1.06 percentage points below the 11.03% median for 19 Industrials peers that had reported, placing KEI eighth from the bottom on this measure.
Domestic cables led growth while EPC was a drag
Management said domestic Wires & Cables grew +45.76% YoY, supported by sustained demand and operational improvements. The company told analysts that EHV cable sales rose to Rs 217 cr from Rs 172 cr, a +26.20% YoY increase, while SS Wire sales grew +15.96%; EPC sales excluding cable declined -3.78% YoY. Management also said the export Wires & Cables business is expected to grow substantially, citing its order book and demand in overseas markets.
No market reaction yet; past result-day moves skewed negative
The stock had not yet recorded a post-results reaction because the filing came after market close. Across the last eight results, the stock rose three times and fell five times, with a median absolute move of 3.17%, so the historical pattern has been more often negative than positive.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,776 cr | ₹3,185 cr | +18.56% | +38.52% |
| Other income | ₹25 cr | ₹20 cr | +25.29% | -42.02% |
| Expenses | ₹3,400 cr | ₹2,790 cr | +21.88% | +38.38% |
| Operating profit | ₹377 cr | ₹396 cr | -4.88% | +39.80% |
| Operating margin (%) | 9.97% | 12.43% | — | — |
| Interest | ₹17 cr | ₹18 cr | -2.49% | +21.75% |
| Depreciation | ₹31 cr | ₹29 cr | +7.04% | +51.39% |
| Profit before tax | ₹353 cr | ₹369 cr | -4.32% | +27.39% |
| Tax | ₹91 cr | ₹95 cr | -4.46% | +23.06% |
| Net profit | ₹262 cr | ₹274 cr | -4.26% | +28.96% |
| EPS (₹) | ₹27.45 | ₹28.68 | -4.29% | +28.87% |
Operating margin of 9.97% compares with a Industrials sector median of 11.03% across 19 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -8.45% | -7.91% |
Volume on the results session was 23.08× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Domestic Wires & Cables grew 45.76% year on year in Q2 FY27, led by sustained demand and operational improvements.
- EHV cable sales increased to ₹217 crore in Q2 FY27 from ₹172 crore in Q2 FY26, growing 26.20% year on year.
- SS Wire sales increased 15.96% year on year in Q2 FY27.
Guidance & outlook
- The export Wires & Cables business is expected to grow substantially, supported by a strong order book and strengthening demand in key overseas markets.
Problems & risks
- EPC sales excluding cable decreased 3.78% year on year in Q2 FY27.
What to watch
- Whether operating margin recovers from 9.97% after the 2.46 percentage-point sequential decline.
- Whether revenue growth stays ahead of expense growth after +18.56% versus +21.88% sequentially.
- Whether export Wires & Cables growth develops as management expects, following domestic growth of +45.76% YoY.