KSH International: Why Rising Copper Demand Could Be Both a Blessing and a Headache

India’s copper demand is entering a structurally stronger phase as transmission, renewable energy, industrial electrification and transformer capacity expand. For KSH International, this creates a direct opportunity because specialised winding wires and continuously transposed conductors sit close to the electrical equipment investment cycle.

With a market capitalization of Rs.6,978.84 crore, the shares of KSH International Ltd was trading on Friday at Rs.1,030, down 0.49% from its previous close of Rs.1,035.05. It trades at a P/E of 53.6x earnings.

India’s copper cycle is becoming an electrical infrastructure story

India’s copper demand reached 1.878 million tonnes in FY25, rising 9.3% from 1.718 million tonnes in FY24. Industry estimates indicate that demand could reach around 3.3 million tonnes by 2030, implying a substantially larger market for copper-intensive electrical products over the next four years.

The demand drivers are increasingly structural rather than limited to construction or consumer durables. Infrastructure, renewable energy, transmission, industrial electrification, electric mobility and data centres are all increasing the amount of electrical equipment required across the economy.

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The transmission investment cycle provides an important link between copper demand and KSH’s addressable market. India’s transmission network is planned to expand from 5.09 lakh circuit kilometres in June 2026 to 6.48 lakh circuit kilometres by 2032. Transformation capacity is expected to rise from 1,478 GVA to 2,345 GVA, while inter-regional transmission capacity is planned to increase from 120 GW to 168 GW.

This matters for KSH because transformers and other high-voltage electrical equipment require significant quantities of specialised copper conductors.

KSH manufactures insulated rectangular and round winding wires, continuously transposed conductors and other specialised products used in transformers and electrical equipment. The company generated roughly 75% of its revenue from specialised winding wires in FY26, while the power sector accounted for around 75% of operating revenue.

The opportunity is therefore not simply that copper prices may rise. The more important opportunity is that India may consume significantly more copper through higher volumes of electrical equipment.

India copper and grid indicators

The structural demand environment therefore provides KSH with a sizable addressable market. But the way copper prices affect the company’s financial statements makes the thesis more complicated. Higher copper prices can make KSH look bigger without making it proportionately more profitable

KSH’s business model contains an important distinction between copper price and copper consumption. Copper is the company’s primary raw material, and changes in copper prices are generally passed through to customers. This protects KSH from taking the full commodity-price risk under normal operating conditions.

However, the accounting effect is significant. When copper prices rise, the value of the material sold rises, which can increase reported revenue even when the underlying volume of copper processed grows much more slowly. This distinction was visible in FY26. Revenue from operations increased 61% to Rs.3,107 Cr, while EBITDA increased 55% to approximately Rs.192 Cr. Sales volume increased 21% to 28,168 tonnes.

The difference between revenue growth and volume growth was therefore partly explained by higher realisations, including copper prices. The same phenomenon became even more visible in Q1 FY27.

Revenue from operations increased 108% year on year to Rs.1,164 Cr, while sales volume increased 30% to 7,969 tonnes. Specialised wires revenue increased 113% to Rs.809 Cr.

The company explicitly attributed revenue growth to volume, product mix and higher copper prices. This creates the first major analytical point for KSH.

Rising copper prices are not necessarily the same thing as rising earnings power. If copper prices rise sharply, KSH can report substantially higher revenue because the higher input cost is passed through. But the company’s more meaningful earnings indicators are volume, product mix and EBITDA per tonne.

That makes EBITDA per tonne more important than headline revenue growth when assessing whether KSH is actually improving its economics.

The real blessing is higher value-added copper consumption

KSH’s FY26 numbers suggest that the company is moving beyond simply selling more copper-intensive products. EBITDA per tonne increased from Rs.52,536 in FY25 to Rs.67,625 in FY26, an increase of 29%. The company attributed the improvement to higher value-added products, exports, better utilisation and fixed-cost absorption.

Q1 FY27 strengthened that trend. EBITDA per tonne reached Rs.93,325, compared with Rs.65,885 in Q1 FY26. Management said growth in higher-value-added specialised wires, particularly continuously transposed conductors, outpaced standard wires and supported volumes, exports and unit economics.

This is important because copper itself is largely a pass-through commodity for KSH. The company’s ability to earn more per tonne of copper processed is what can create operating leverage. Specialised products accounted for roughly 75% of revenue in FY26. These products are used in transformer and high-voltage applications where technical specifications, customer approvals and reliability requirements create a different competitive environment from standard copper wire products.

KSH’s annual report also highlighted its position in high-voltage transformer applications, including HVDC transformers. The combination of higher copper consumption and higher value addition is therefore much more significant than copper-price appreciation alone.

What drives KSH’s economics?

The investment thesis consequently depends on the mix of these factors. If KSH merely benefits from higher copper prices, revenue growth can overstate the improvement in its underlying economics. If it grows physical volumes while retaining a high specialised-product mix, the earnings impact can be much stronger.

Capacity expansion could turn the copper cycle into an earnings cycle

KSH entered FY26 with installed capacity of 29,045 MT. By March 2026, installed capacity had increased to 43,445 MT, representing an increase of almost 50%. The company is targeting 59,045 MT by the end of FY27. Q1 FY27 utilisation was approximately 73%.

The significance of this expansion is that KSH is increasing its ability to capture the volume component of India’s electrification cycle.  A larger installed base is particularly relevant because the company has already demonstrated that higher utilisation can improve EBITDA per tonne.

During FY26, the company generated 28,168 tonnes of sales volume against 43,445 MT of installed capacity at year-end. In Q1 FY27, volume reached 7,969 tonnes despite capacity remaining unchanged at 43,445 MT. At the company’s FY26 EBITDA per tonne of Rs.67,625, full utilisation of the planned 59,045 MT capacity would mathematically correspond to annual EBITDA of roughly Rs.399 Cr.

At Rs.74,000 per tonne, the equivalent would be roughly Rs.437 Cr. These are not forecasts because achieving full utilisation and maintaining a particular EBITDA per tonne are both uncertain. They simply demonstrate the operating leverage embedded in the capacity expansion.

The key question is therefore not whether KSH can add capacity. It is whether demand can absorb the additional capacity while the company maintains its specialised-product mix and unit economics.

Q1 FY27 provides some evidence that demand is currently keeping pace. Volume increased 30% year on year, specialised-wire revenue increased 113%, and management said Phase 2 capacity expansion remained on track. The company also commissioned an upcast backward-integration facility and signed a five-year framework agreement with a large global transformer OEM. This shifts the thesis from a simple copper-demand story toward a capacity-utilisation story.

The headache is working capital, not just copper prices

The biggest financial risk from rising copper prices is the amount of capital required to finance the same physical business. KSH’s annual report shows that finance costs increased to Rs.44.0 Cr in FY26 from Rs.28.0 Cr in FY25.

The company attributed the increase partly to higher working-capital utilisation, higher LME copper prices, currency movements and increased operating activity. At the same time, working-capital days improved to around 65 days from 68 days. This creates a paradox.

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Higher copper prices can increase reported revenue because KSH passes the price through to customers. But before that revenue is collected, the company still needs to finance the larger rupee value of inventory and receivables. That means a sharp copper-price increase can be neutral or even positive for reported operating profitability while simultaneously creating pressure on cash flows.

The issue becomes more important as KSH expands capacity. More tonnes require more copper. Higher copper prices increase the rupee value of that copper. Larger production volumes increase inventory requirements. If customer credit periods remain extended, the financing requirement can rise faster than the underlying physical volume.

KSH has been trying to address this by moving toward credit-based copper procurement and improving payable days. The company reduced its debt-equity ratio to 0.39 at FY26-end from 1.21 a year earlier, although working-capital borrowing remained a meaningful part of its financing structure.

By Q1 FY27, the company was also operating at a much larger scale, with quarterly finance costs of Rs.17.3 Cr compared with Rs.7.3 Cr in Q1 FY26. This makes working-capital efficiency one of the most important variables to monitor alongside EBITDA per tonne. 

The valuation question becomes more complicated when earnings are copper-price sensitive. KSH’s rapid earnings growth naturally brings valuation into the discussion, but the quality of earnings growth needs to be separated from the headline numbers. These are strong operating numbers, but Q1 also benefited from higher copper prices and a favourable specialised-product mix. The key question for valuation is whether the Q1 EBITDA per tonne represents a new sustainable level or an unusually strong quarter.

The company’s management considered EBITDA per tonne of roughly Rs.67,000 to Rs.74,000 sustainable, with the specialised-wire mix supporting profitability while the expansion of standard wires could create some moderation. Q1 FY27’s Rs.93,325 therefore sits materially above that indicated range.

This makes it risky to capitalise the latest quarter’s EBITDA per tonne as though it will automatically persist. A more useful framework is to track the range of outcomes.

What could make this work?

The strongest version of the KSH thesis is not that copper prices will continue rising. It is that India’s copper consumption is moving structurally higher because the country’s electrical infrastructure is expanding, while KSH is simultaneously increasing its capacity to supply higher-value copper products.

The company’s exposure is particularly relevant because the transmission and transformer investment cycle is capital intensive and copper intensive. India’s planned transmission expansion alone involves more than 1.39 lakh additional circuit kilometres between June 2026 and 2032, alongside an 867 GVA increase in transformation capacity.

KSH’s capacity expansion is occurring against this backdrop. The company has already moved from 29,045 MT to 43,445 MT and is targeting 59,045 MT. Its specialised products account for the majority of revenue, while exports are also growing rapidly. Q1 FY27 export revenue increased 75.5% year on year to Rs.283.5 Cr.

The five-year framework agreement with a global transformer OEM is another relevant development because it connects the capacity expansion to a longer-term customer relationship rather than relying entirely on spot demand. If these factors continue together, the company could experience a more favourable form of operating leverage.

Higher volumes would spread fixed costs across more tonnes, specialised products could protect EBITDA per tonne, and the new capacity could allow KSH to participate more deeply in India’s transmission and transformer investment cycle.

What could go wrong

Copper prices and cash flow

The biggest risk is that copper prices and revenue grow faster than cash generation. Higher copper prices increase the rupee value of inventory and receivables, potentially increasing financing requirements even when the underlying physical volume is growing at a slower pace.

Capacity absorption

KSH is targeting 59,045 MT of installed capacity by FY27-end, meaning the company needs continued volume growth to absorb the additional capacity efficiently. If utilisation weakens, the benefits of fixed-cost absorption could reverse.

Product mix

Specialised wires currently support higher unit economics, but the company is also expanding standard-wire capacity. If incremental volumes increasingly come from lower-value products, total revenue and volume could rise while EBITDA per tonne moderates.

Financing

Higher copper prices increase the amount of working capital required to support a given level of physical activity. The company has already seen finance costs increase alongside its expansion. The ability to keep working-capital days under control will therefore become increasingly important.

Power-sector concentration

KSH remains heavily exposed to the power sector. Around 75% of operating revenue came from the power sector in FY26. That gives the company strong exposure to the transmission and transformer cycle, but it also means a slowdown in electrical capex could have a meaningful impact on demand.