The company’s net sales during the quarter under review grew 33% at Rs 9.97 billion, against Rs 7.49 billion in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, tax, depreciation and amortization) margin was stable at 10.2%.
The good revenue, EBITDA and net profit growth stemmed from cables (up 36% y/y, 23% y/y volume growth). Also, strong cable revenues helped to a healthy 10.1% EBITDA margin, and to shortening the working capital cycle (down 36 days to 73) and borrowings (down Rs 3.2 billion).
“The Rs 39.4 billion order book (including L1) provides strong revenue assurance over FY18-20. While FY19 EPC revenue would be flat, growth would return in FY20. Within cables, we expect the mix to favour EHV cables and exports, which would aid the margin expansion,” analysts at Anand Rathi Share and Stock Brokers said in company update.
The brokerage firm expects revenue/EBITDA/PAT to clock 20%/24%/31% CAGRs over FY18-20 owing to strong growth in cables supported by its order book, the rising revenue share of EHV cables and retail sales. A further stock re-rating would depend on free-cash-flow generation, it added with retain ‘buy’ rating on the stock and revised target price (TP) of Rs 440 per share.
Analysts at Elara Capital raises EPS by 4% in FY19E and 1% in FY20E on strong performance and capacity expansion in HT cables and house wires. The brokerage firm hike TP by 2% to Rs 480 on 18x (unchanged) FY20E P/E as we roll forward by a quarter to September 2020E.
KEI Industries has outperformed the market by surging 52% in past nine trading days, as compared to a 3% rise in the S&P BSE Sensex. The stock hit a 52-week low of Rs 248 on October 23, and a record high of Rs 495 on May 30, 2018, on the BSE in intra-day trade.