Buy KEI Industries; target of Rs 4780: Motilal Oswal

Motilal Oswal's research report on KEI Industries

KEI Industries (KEII)’s 3QFY25 revenue grew 20% YoY (in line, as strong revenue growth in the C&W/SSW segment offset lower-than-estimated EPC revenue). Its EBITDA grew ~12% YoY to INR2.4b (3% miss). OPM contracted 70bp YoY to 9.8% (-70bp vs. our estimate) due to a lower margin in the C&W segment. KEII’s PAT grew ~9% YoY to INR1.6b (-6% vs. our estimates). Management remains optimistic about the demand outlook both in the domestic and export markets. KEI estimates a revenue growth of 19-20% YoY in FY26 and an EBITDA margin of ~11%. The company aims to clock a revenue CAGR of 20%+ over FY26-30E to reach INR250b by FY30. EBITDA margin is likely to improve to 12.5% by FY28E (vs. ~10% in FY25E).

Outlook

The stock is trading at 50x/41x FY26E/FY27E EPS. We value KEII at 50x Dec’26E EPS to arrive at our revised TP of INR4,780 (vs. earlier TP of INR5,150). Reiterate BUY.