Sharekhan has given Buy recommendation for KEI Industries with a target price of Rs. 1895 in its research report issued on Oct 25, 2022
Sharekhan’s research report on KEI Industries
KEI’s Q2FY2023 performance was below our expectations but met street expectations with ~20%/~19% volume/value growth in wires and cables (W&C) segment. OPM declined by 82 bps y-o-y to 10% due to poor EHV sales and input cost volatility. Management has maintained 17-18% revenue CAGR target for the next two-three years. Management expects OPM to be at ~10.5% in FY2023 and, thereafter, move up to ~11%. KEI’s formidable position in W&C industry would help it capture robust demand in institutional and retail segments. Healthy balance sheet with net cash position and improving working capital cycle give us further comfort.
Outlook
We retain a Buy rating on KEI Industries (KEI) with a revised PT of Rs. 1,895 factoring in a promising growth outlook and capability to gain market share in wires, strengthen leadership in EHV, LT and HT cables through capacity expansion, and focus on expanding its retail business.