KEI Industries Ltd. share price target

We met with KEII’s management to gain insights into near-term industry trends and the company’s growth outlook. Management indicated that demand remains strong for cables, led by an increase in government capex activities.

KEI Industries (KEII)’s 3QFY25 revenue grew 20% YoY (in line, as strong revenue growth in the C&W/SSW segment offset lower-than-estimated EPC revenue). Its EBITDA grew ~12% YoY to INR2.4b (3% miss). OPM contracted 70bp YoY to 9.8% (-70bp vs. our estimate) due to a lower margin in the C&W segment.

KEI Industries (KEII) is among the leading players in the Cable and Wire (C&W) industry in India. We believe KEII benefits from multiple growth drivers and business strategies, such as: 1) strong growth potential in the C&W industry over the long term; 2) focus on capacity expansion and gaining market share;

KEII reported a 17% YoY rise in Q2 revenue, but margins declined due to raw material price volatility and lower share of EHV sales and exports

KEI reported a 10% y-o-y growth in net earnings for Q2FY2025 led by a 17% y-o-y growth in
revenues.

KEI Industries (KEII)’s 2QFY25 earnings were below our estimate due to a lower-than-estimated margin in the Cables and Wires (C&W) segment led by RM cost volatility and lower EPC revenue.

The FY24 annual report key highlights of KEI Industries (KEII) are the company has increased investments in capacity expansion, which is estimated to result in a revenue CAGR of ~15-16%.

KEII's Q1 revenue jumped 16% YoY with 40bps EBITDA margin expansion, and driven by robust infrastructure and real estate demand

Monthly Economic Buffet: Economic Round-up April 2024. ACC: Healthy performance largely priced in; maintain HOLD. KEII: Addressing capacity limitations; maintain HOLD. AJP: Strong margins; growth momentum to continue. BLSTR: UCP growth strong, margin outlook healthy. DABUR: Steady performance during the quarter. Metals & Mining: Steel margin pick-up beyond Q2CY24: ArcelorMittal

KEI Industries (KEII)’s 4QFY24 performance was in line with our estimates.
Revenue grew 19% YoY to INR23.2b (vs. est. INR22.6b), fueled by 18%/53%
YoY growth in the cables & wires/EPC segments, while stainless steel wires’
revenue declined 11% YoY. EBITDA grew 21% YoY to INR2.4b (vs. est.
INR2.5b).

POWERIND: In-line quarter but valuations overdone; cut to SELL. FY25 Budget Preview: Focus to remain on consolidation. KMB: NIM intact QoQ; higher provisions dull profits. AXSB: Profits subdued despite strong business growth. HAVL: Slow quarter but summer could bring cheer; maintain BUY. KEII: Decent quarter; maintain HOLD. JKCE: Healthy performance but priced in. GLS: Strong margins make up for subdued revenue growth

Middling Q2 performance with easing capacity constraints; cables revenue healthy but margin lagged peers

Core cables and wires business hampered by lack of capacity; likely to be addressed in coming quarters