Prabhudas Lilladher's research report on KEI Industries
KEI Industries (KEII) maintained its revenue growth guidance at 16-17% in cable business with volume growth of >20% in FY24 and expects around 11% margin in the near term, given strong demand outlook in sectors like Infra/Railway/Real estate/Renewable etc. The company has reported strong revenue in housing/winding wire (+33.3% YoY) & guided to continue strong traction in FY24. We are positive on the company for long term given 1) focus on diversification of product portfolio and de-risking business (retail accounts for 44.7% with target to reach 46-47% in FY24) 2) scale-up in distribution network (1,925 dealers, will grow by 7-8% p.a), 3) healthy balance sheet with net cash of Rs 1.75bn (excluding acceptances) by Jun-23 and 4) strong order book of Rs35.7bn across domestic & export EPC & cables businesses.
Outlook
Management expects Rs100bn revenue by FY26 with EBITDA margin target of 12-12.5%. We tweak our earnings estimates for FY24/FY25E and estimate Revenue/EBITDA/PAT CAGR of 18.0%/23.4%/24.5%. Maintain ‘HOLD’ at TP of Rs2,319 (unchanged).
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