Buy KEI Industries; target of Rs 2665: Sharekhan

Sharekhan's research report on KEI Industries

A 20% volume growth in Q1FY24 lagged its peers due to capacity constraints. Further, despite in-line revenue and net profit, OPM contracted y-o-y basis due to higher ad spends. Management expects brownfield and greenfield capacity expansions would ensure a 17-18% revenue CAGR for the long-term. Management expects OPM to inch up by 100-150 bps by FY25-FY26E. KEI’s leading position in the W&C industry and strengthening retail business would help it leverage on ample growth opportunities if the company is able to scale up its capacities in timely manner.

Outlook

We retain a Buy rating on KEI Industries Limited (KEI) with an unchanged PT of Rs. 2,665, as we believe capacity expansion across its product categories and strong demand momentum would drive growth.