Sharekhan's research report on KEI Industries
KEI Industries reported strong numbers for Q1Y2023 helped by low base and registered ~27%/~61% volume/value growth in cables and wires segment. Higher input cost continued to weigh on gross/operating margin which reduced by ~612/~100 bps and came in at ~24.9%/10.2%. The management expects a 17-18% revenue CAGR in the next two-three years with 30-35% y-o-y growth in the retail business. It also eyes an operating margin of 10.5-11% and PAT margin of 6.5% in FY23. 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 a revised PT of Rs. 1,410, factoring in a promising growth outlook and reasonable valuation.
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