RRKABEL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.0

📊 Financials: RR Kabel has delivered strong quarterly profit growth (PAT ₹116 Cr vs ₹88.8 Cr), with EPS at ₹35.4. ROE at 15.2% and ROCE at 19.7% reflect efficient capital usage. Debt-to-equity ratio of 0.17 indicates a very low leverage profile, supporting financial stability.

💹 Valuation: Current P/E of 42.0 is significantly higher than industry PE of 20.0, suggesting overvaluation. Book value ₹206 vs CMP ₹1,492 implies a steep P/B multiple. PEG ratio of 3.10 indicates earnings growth is not keeping pace with valuation. Intrinsic value appears lower than CMP, highlighting stretched valuations.

🏭 Business Model: RR Kabel operates in the electrical cables and wires industry, with diversified product offerings across residential, commercial, and industrial segments. Competitive advantage lies in brand strength, wide distribution, and product quality. Growth is supported by infrastructure expansion and rising demand for electrical products.

📈 Entry Zone: Technically, support lies near ₹1,300–₹1,350 (DMA 200 and DMA 50 zones). CMP at ₹1,492 is close to its 52-week high (₹1,524), limiting upside. Entry is advisable on dips closer to ₹1,300 for margin of safety.

📌 Long-term Holding: Strong fundamentals, low debt, and healthy return ratios make RR Kabel attractive for long-term holding. However, valuations are stretched, so accumulation should be gradual and preferably on corrections.

Positive

• 📈 Quarterly PAT growth of 133% shows strong earnings momentum.
• 📊 Healthy ROE (15.2%) and ROCE (19.7%) reflect efficient capital usage.
• 💡 Low debt-to-equity ratio (0.17) ensures financial stability.
• 🏭 Strong brand presence and diversified product portfolio in cables and wires.

Limitation

• ⚠️ High P/E ratio (42.0) compared to industry average (20.0).
• 📉 PEG ratio of 3.10 indicates valuation is ahead of earnings growth.
• 💸 Low dividend yield (0.42%) offers limited income to shareholders.

Company Negative News

• 📉 Decline in FII holdings (-0.39%) signals reduced foreign investor confidence.

Company Positive News

• 📈 Increase in DII holdings (+0.25%) shows domestic institutional support.

Industry

• 🏭 Electrical cables and wires industry trades at PE of 20.0, highlighting RR Kabel’s premium valuation.
• 📊 Industry growth supported by infrastructure expansion and rising electrification demand.

Conclusion

⚖️ RR Kabel is financially strong with low debt and healthy returns, but valuations are stretched. Entry is advisable near ₹1,300–₹1,350 support zones. Long-term holding is justified given strong fundamentals, but accumulation should be cautious and valuation-aware.

Would you like me to extend this with a peer benchmarking overlay against other cable and wire manufacturers like Polycab and Havells to see relative valuation and efficiency?