Neutral KEI Industries; target of Rs 4200: Motilal Oswal

Motilal Oswal's research report on KEI Industries

KEI Industries (KEII)’s 1QFY26 revenue increased ~26% YoY to INR25.9b (~9% beat, fueled by higher-than-estimated revenue in C&W). EBITDA grew ~20% YoY to INR2.6b (~12% beat). However, OPM contracted 45bp YoY to 10.0% (+20bp vs. our estimate). PAT grew ~30% YoY to INR2.0b (~12% beat).
Management indicated the demand outlook remains strong, led by power T&D, renewable energy, data center, and manufacturing sectors. KEII retains its FY26 growth guidance of ~18-19% and ~20% in next two to three years. This will be led by the completion of the Sanand expansion and KEII’s continued expansion strategy (bought land in Gujarat and Rajasthan for future expansions). KEII aims to achieve an OPM of ~11%, considering the strong order book of domestic institutional cables as well as export orders of cables/EH cables. Further, the completion of Sanand Phase I is likely to improve its margins.

Outlook

We value KEII at 38x Jun’27E EPS (5% discount to POLYCAB’s, given the lower margins of KEII vs. POLYCAB) to arrive at our TP of INR4,200. Reiterate Neutral.