KEI Industries rises 5% as Morgan Stanley initiates with overweight rating

KEI Industries share price: Electrical wires & cables manufacturer KEI industries shares were in demand on the last day of the week, as the scrip rallied as much as 5.33 per cent to hit an intraday high of Rs 3,930.95 per share.

 

The northward move in KEI Industries share price came after foreign brokerage firm Morgan Stanley initiated coverage with ‘Overweight’ rating, with a target price of Rs 4,391, according to reports. The target price reflects an upside of 17.66 per cent from its previous close of Rs 3,731.90 on February 20. 

 

The brokerage reportedly highlighted multiple domestic growth drivers for KEI Industries, with the future of energy being a key factor. 

 

The company boasts a strong Cables & Wires (C&W) franchise, and its business model continues to evolve positively.

 

Additionally, the company's export potential is expected to support earnings growth, driven by current multipolar manufacturing dynamics. KEI Industries has also increased its capital expenditure (capex) to meet both domestic and export demands.

 

Thus, Morgan Stanley projects a 23 per cent compound annual growth rate (CAGR) in earnings for the period FY25-28.

 

Financially, KEI Industries’ consolidated net profit attributable to the equity shareholders of the holding company soared 9.3 per cent year-on-year (Y-o-Y) to Rs 164.8 crore in the December quarter of FY25, from Rs 150.8 crore in the December quarter of FY24. 

 

KEI Industries’ revenue climbed 19.8 per cent Y-o-Y to Rs 2,467.2 crore in Q3FY25, from Rs 2,059.3 crore in Q3FY24. 

 

At the operating level, Ebitda jumped 12.3 per cent Y-o-Y to Rs 240.7 crore in Q3FY25, from Rs 214.4 crore in Q3FY24. Ebitda margin, however, squeezed 60 basis points (bps) to 9.8 per cent in Q3FY25, from 10.4 per cent in Q3FY24.

 

Geojit, a domestic brokerage firm, highlighted in a note on February 20 that KEI Industries witnessed major revenue growth in the recent quarter, fuelled by robust domestic demand and expanding global opportunities.

 

The company anticipates a sales growth of 19-20 per cent in the coming year, driven by increased capacity, growing domestic demand, and strong export market prospects. KEI’s strategic focus on meeting rising demand is reflected in its ongoing capacity expansion efforts, positioning the company to capitalise on future opportunities and enhance operational efficiencies.

 

Considering these factors, Geojit analysts have upgraded their rating on the stock to ‘Buy’, assigning a target price of Rs 4,103 based on a 36x FY27E P/E.

 

At 12:01 PM, KEI Industries share was trading 4.91 per cent higher at Rs 3,915. In comparison, BSE Sensex was trading 0.54 per cent lower at 75,330.66 levels.