Prabhudas Lilladher's research report on KEI Industries
KEI Industries (KEII) maintained its guidance of 16-17% revenue growth in FY25, driven by capacity expansion and healthy demand in domestic & export markets, even after lower growth in H1FY25. Domestic demand mainly comes from private sector cement, steel, industrial & solar, and government projects. Export business is gaining traction in the US & Europe apart from Australia, the Middle East & Africa. The company aims to reach 11.0% EBITDA margin in FY25. KEI reported strong rev. in HT cables (+65.8% YoY), LT cables (+20.8% YoY) & housing wire (+21.5% YoY) in Q2FY25. However, its EPC rev. declined, and is expected to decline further in FY25. We maintain our earnings estimates for FY25/FY26/FY27E and estimate revenue/EBITDA/PAT CAGR of 17.7%/22.8%/22%.
Outlook
Consistent growth in volume with margins improvement, robust returns (27.5%/20.3% RoCE/RoE in FY24), and optimistic guidance, compel us to assign a premium valuation to the company compared to its peers. Maintain ‘BUY’ at TP of Rs5,265 (same as earlier), valuing at 45x FY27 earnings.
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