Buy KEI Industries; target of Rs 5041: Prabhudas Lilladher

Prabhudas Lilladher is bullish on KEI Industries has recommended buy rating on the stock with a target price of Rs 5041 in its research report dated January 22, 2025.

Broker Research

January 23, 2025 / 12:43 IST

Buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on KEI Industries

KEI Industries (KEII) has given robust volume growth guidance of 19-20% for FY26, driven by capacity expansion and healthy demand in domestic & export markets, along with EBITDA margin of 11%. Domestic demand mainly comes from solar power and power distribution companies, as per the management. The company aims to maintain EBITDA margin in FY25 at previous year’s level. KEI reported strong rev growth in HT cables (+53.8% YoY), LT cables (+30.0% YoY) & housing wires (+25.4% YoY) in Q3FY25. However, its EPC/EHV rev declined, and is expected to decline further in Q4FY25. EHV revenue however is expected to increase to Rs5.5bn by FY26. We downward revised our earnings estimates for FY25 by 4.9% to account for the contraction in margins, while tweaking FY26/FY27E earnings.

Outlook

We estimate revenue/EBITDA/PAT CAGR of 19.1%/23.4%/22.6%. Consistently strong volume/revenue growth with robust returns (27.5% RoCE /20.3% RoE in FY24), led to premium valuation for the company. Maintain ‘BUY’ at TP of Rs5,041 (Rs5,265 earlier, revision in TP due to equity dilution), valuing at 45x FY27 earnings.

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