(Reuters) – India’s RR Kabel reported a 33% drop in second-quarter profit on Thursday, hurt by a sharp uptick in copper prices and weakness in demand for electrical goods.
The company’s consolidated profit fell to 495.3 million rupees($5.9 million) for the three months ended Sept. 30 from 741 million rupees a year earlier.
Revenue jumped 12.5% to 18.10 billion rupees, while expenses grew to 17.57 billion rupees from 15.20 billion rupees, as raw material cost rose around 7%.
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KEY CONTEXT
Cable and wire companies are experiencing strong demand, particularly from real estate and infrastructure projects. This growth is being further aided by government’s push to boost economy and affordable housing.
However, higher prices of key raw materials such as copper have hurt the earnings of consumer goods makers. Copper prices, which hit a record high earlier this year, have risen more than 10% in 2024.
RR Kabel had also reported a drop in first-quarter profit as expenses jumped.
Analysts also said that demand for fast-moving electrical goods like fans and coolers were subdued due to inflationary pressures, and as demand runs dry post-summer.
Earlier this month, peers Polycab and Havells India reported second-quarter profit below expectations, hurt by high expenses.
PEER COMPARISON
Valuation (next 12 months) Estimates (next 12 months) Analysts’ sentiment
RIC PE EV/EBITDA Price/Sales Revenue profit growth Mean # of Stock to Div
growth rating analysts price target yield
(%)
R R Kabel Ltd 40.05 26.85 NULL 18.58 33.04 BUY 9 0.79 0.37
Polycab India Ltd 45.61 31.62 4.31 19.70 17.97 BUY 26 0.89 0.45
Havells India Ltd 61.52 41.83 4.85 15.90 23.77 HOLD 23 0.90 0.51
Crompton Greaves 38.54 25.42 2.67 12.78 29.24 BUY 32 0.81 0.76
Consumer
Electricals Ltd
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
* Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT JULY-SEPT STOCK PERFORMANCE
— All data from LSEG
–$1 = 84.0460 Indian rupees
(Reporting by Nishit Navin; Editing by Varun H K)
