Accumulate KEI Industries; target of Rs 442: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital's research report on KEI Industries

KEI Industries (KEI) results were above our estimates, owing to higher exports, higher than expected sales from Cables division and good demand from Tier 2 and Tier 3 cities. Cables division is expected to bounce back to normal levels in H2FY21 considering the government push for rural electrification and metro transport. However, wires segment may see slow recovery due to slowdown in real estate sector. KEI’s focus has been on various brand building exercises and expanding its dealer network, as this sales channel offers higher brand stickiness as well as better margins and lower working capital requirement. However, in H1FY21 they will not spend much on brand building exercises. They expect dealer segment to grow by 8-10%. Retail sales reduced to 25% in Q1FY21 which will normalize to 32-34% of total sales. Recovery will be seen coming sooner from Tier 2, Tier 3 cities. Distribution expansion will propel growth in the retail segment.

Outlook

The improvement in the balance sheet is a result of the strong macro demand and the optimal product mix. Working Capital cycle will normalize by Oct’20. We recommend Accumulate, with a target price of Rs 442. (14x FY22E).For all recommendations report, click here

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