 "KEI Industries at record high, up 6%, stock has surged 25% in one month")
Shares of KEI Industries rallied 6 per cent to hit a record high of Rs 1,172.60 on the BSE in Wednesday’s intra-day trade, had have surged as much as 25 per cent in past one month on the back of strong outlook. The stock surpassed its previous high of Rs 1,159 hit on November 26, 2021.
In the past three months, the stock of KEI Industries has surged nearly 50 per cent, as compared to a 0.32 per cent rise in the Sensex. Moreover, in the past six months, it has rallied 85 per cent as against a 11 per cent rise in the benchmark index. Further, over the past one year, the market price of KEI Industries has zoomed 174 per cent, as compared to a 29 per cent surge in the Sensex.
For July-September quarter (Q2FY22), KEI reported a healthy revenue growth of 30.52 per cent year on year (YoY) at Rs 1,353 crore, with all segments recording growth (except for EPC). Earnings before interest, taxes, depreciation, and amortization (ebitda) margin declined to 11.0 per cent as against 11.74 per cent YoY. Commodity price volatility led to gross margin contraction, similar to peers.
House wires and stainless steel wires saw strong demand, which should continue in October-March period (H2FY22) as well. Management remains confident about doubling house wire sales and maintaining strong growth in retail sales. It has already hired ~150 employees in the sales force for rapid distribution network expansion and higher counter share. Its efforts to increase revenue contribution from the dealer channel have started to pay off, analysts at Emkay Global Financial Services said in result update.
With green-shoots of revival visible in the institutional business and increased dealer sales, we are confident of strong topline growth for KEI in the upcoming quarters. Though capacity expansion is on track, longer-than expected time for regulatory approvals for land acquisition has led to some delays. The focus on balance-sheet deleveraging, consistency in working capital delivery, and robust revenue growth with margin improvement augur well for a valuation re-rating, the brokerage firm said. It maintains ‘buy’ rating on the stock with target price of Rs 1,240 per share.
In the past three months, the stock of KEI Industries has surged nearly 50 per cent, as compared to a 0.32 per cent rise in the Sensex. Moreover, in the past six months, it has rallied 85 per cent as against a 11 per cent rise in the benchmark index. Further, over the past one year, the market price of KEI Industries has zoomed 174 per cent, as compared to a 29 per cent surge in the Sensex.
For July-September quarter (Q2FY22), KEI reported a healthy revenue growth of 30.52 per cent year on year (YoY) at Rs 1,353 crore, with all segments recording growth (except for EPC). Earnings before interest, taxes, depreciation, and amortization (ebitda) margin declined to 11.0 per cent as against 11.74 per cent YoY. Commodity price volatility led to gross margin contraction, similar to peers.
House wires and stainless steel wires saw strong demand, which should continue in October-March period (H2FY22) as well. Management remains confident about doubling house wire sales and maintaining strong growth in retail sales. It has already hired ~150 employees in the sales force for rapid distribution network expansion and higher counter share. Its efforts to increase revenue contribution from the dealer channel have started to pay off, analysts at Emkay Global Financial Services said in result update.
With green-shoots of revival visible in the institutional business and increased dealer sales, we are confident of strong topline growth for KEI in the upcoming quarters. Though capacity expansion is on track, longer-than expected time for regulatory approvals for land acquisition has led to some delays. The focus on balance-sheet deleveraging, consistency in working capital delivery, and robust revenue growth with margin improvement augur well for a valuation re-rating, the brokerage firm said. It maintains ‘buy’ rating on the stock with target price of Rs 1,240 per share.
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