Prabhudas Lilladher's research report on KEI Industries
KEI Industries (KEII) maintained its healthy revenue growth guidance at 16- 17% and expects 10.5-11%+ margins in the near term, given strong demand outlook in sectors like Infra/Railway/Data Centres etc. We are positive on the company for long term given 1) focus on diversification of product portfolio and de-risking business (retail accounts for ~44% with target to reach 48-50% in FY24) 2) scale-up in distribution network (1,910 dealers, will grow by 7-8% p.a), 3) healthy balance sheet with net cash of Rs 4bn (including acceptances) by Mar-23 and 4) strong order book of Rs35.7bn across domestic & export EPC & cables businesses. Management expects Rs100bn revenue by FY26 with EBITDA margin target of 11+%.
Outlook
We maintain our FY24/FY25E earnings estimate with Revenue/EBITDA/PAT CAGR of 14.8%/21.1%/28.1% over FY23- 25E and value the stock at 23x FY25 EPS to arrive at target price of Rs1,811. Maintain ‘HOLD’.
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