Sharekhan has given Buy recommendation for KEI Industries with a target price of Rs. 540 in its research report issued on Jan 29, 2021

Sharekhan’s research report on KEI Industries

Q3FY2021 was a descent quarter. Revenue and PAT came on expected lines, while margins were slightly lower than estimates on higher input cost. Management expects FY2021 revenue to be at 87% of pre-COVID levels and expects 11% margin for FY2021. However, there should not be any constraint for FY2022 growth and management expects growth of 18%-20% for FY2022 and a similar range in consecutive years with sustainable margins of 11%. Working capital cycle is expected to normalise by year-end as payments are getting back on track; the company is likely to get retention money worth Rs. 150 crore-200 crore by March end, which would further strengthen the balance sheet.

Outlook

We retain Buy rating KEI Industries Limited (KEI) with an unchanged PT of Rs. 540, given positive outlook going ahead and reasonable valuation.

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