Emkay Global Financial has given Buy recommendation for KEI Industries with a target price of Rs. 1350 in its research report issued on Jul 27, 2022
Emkay Global Financial Market’s research report on KEI Industries
KEI’s Q1FY23 revenue beat our estimates by 7%, with LT Cable/House Wires surpassing projections by 8%/11%. All product segments saw a 3-yr revenue CAGR in the range of 10-25%. The company’s C&W growth was the highest vs. peers on a 3-yr CAGR basis. C&W exports grew by 2.2x yoy on a favorable base and were up 62% qoq as well. B2C sales contributed 41.7% of total sales, up from 40% in Q4FY22. GM was slightly ahead of estimates at 23.5% (-411bps yoy), aided by lower sub-contracting expenses. Despite the sharp correction in commodity prices, management maintained FY23 revenue growth guidance of 16-17%. The distribution network is expected to grow by 30-35% in FY23. Net debt, after a significant reduction in Q1, should remain stable going forward.
Reflecting the commodity price correction and management guidance, we have lowered FY23-25E revenue by 3%. But the cut in FY23 EPS estimate is restricted to 2%. Maintain Buy with a Jun’23E TP of Rs1,350. Our target PE is derived using a two-stage DCF model.