Sharekhan's research report on KEI Industries
KEI Industries reported strong numbers for Q4FY2022 led by ~20%/52% volume/value growth in cables and wires segment. However, higher input cost weighed on gross/operating margin which reduced by ~600/140 bps and came in at ~24%/9.6%. The management expects a 17-18% revenue CAGR in the next two-three years. It also eyes an operating margin of 10.5-11% and PAT margin of 6.5% on a sustainable basis. KEI’s focus continues to be on expanding retail businesses and exiting EPC business. De-bottlenecking in existing capacities and greenfield expansion in cables and wires at ~ Rs. 800 crore investment (first phase by 2024E) would help sustain its high-growth trajectory.
Outlook
We retain Buy rating on KEI with an unchanged PT of Rs. 1300, factoring in promising growth outlook and compelling valuation.
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