Buy KEI Industries; target of Rs 322: Edelweiss

Edelweiss' research report on KEI Industries

50% of retail sales are through channel financing. This entails minimal working capital with LT cables constituting 55-60% of retail sales; b) KEI has 26 stocking points across India; c) India positioning in retail – No.2 in North, No.4 in West after Polycab and Finolex ,No.1 in East and No.5 in South; and d) dealers’ spread across India - 35% in North, 25% in West and South each and 15% in East.

Outlook

High profitable growth in cables & wires, ramp up in distribution and major debt repayment provides financial leverage and renders KEI our preferred pick in the India consumer electrical space (refer Consumer Durables - Home Run). We maintain ‘BUY/SO’ with target price of INR322.