Emkay Global Financial has given Buy recommendation for KEI Industries with a target price of Rs. 710 in its research report issued on Jun 01, 2021

Emkay Global Financial’s report on KEI Industries

KEI posted healthy performance in Q4 with 17% yoy EBITDA growth, beating our estimate by 7%. EBIT margins across segments were impacted by the reclassification of un-allocable expenses and a related expense of Rs260mn pertaining to previous quarters. EBITDA margins in both the retail and institutional segments saw an improvement, and this is expected to sustain. Cable demand is holding up in Q1FY22, and management is confident about recovering the lost wire sales after current restrictions are eased. Working capital intensity rose to 120 days from 79 days in FY20. It should normalize after receiving Rs1.5bn of retention money in the EPC business. Going forward, the company will continue to purchase raw material supplies in cash to restrict rise in acceptances.


In FY22, the management is targeting 25% growth in domestic institutional sale and 35%+ retail growth. We have raised FY22-23 EPS by 9-11% as we bake in 28-37bps higher EBITDA margins. Maintain Buy with a revised TP of Rs710 (14x Sep’23E EPS) vs. Rs554.