KEI Industries Ltd

Dear investor,

Please find below mentioned short term fundamental stock for delivery purpose.

 

Company	CMP	Target	BSE Code	NSE Code
KEI Industries Ltd.	388	440	517569	KEI

 

Fundamental :-

• Market Cap:  3,474 Cr.
• Current Price:  388.15
• 52 weeks High / Low  614.70 / 208.30
• Book Value:  168.34
• Stock P/E: 13.62
• Dividend Yield: 0.39 %
• ROCE: 29.42 %
• ROE: 26.30 %
• Sales Growth (3Yrs): 22.04 %
• Listed on BSE and NSE
• Company Website
• Face Value:  2.00

KEI Industries Limited (KEI) is an established player in the power cable segment and among the largest cable manufacturing companies in India. KEI offers an extensive range of cabling solutions in Extra-High Voltage, Medium Voltage and Low Voltage power cables. Serving both retail and institutional segments, KEI has emerged as a one-stop shop for products and services, with its growing presence in the Engineering, Procurement and Construction (EPC) services domain further strengthening its leadership position. Franklin India fund is the largest non-promoter shareholder with 5.3% holding. Market cap of KEI is Rs 3,139 cr.
 

Investment rationale
 

Order book growth decelerates yet strong: KEI has a strong order book of Rs 3,260 cr as of Q4FY20 (~15% de-growth QoQ). EPC segment contributes maximum with Rs 1233 cr while cable segment contributes Rs1,116 cr in Q4FY20.The company has recently bagged first big order of 400 KV of Rs 148 Crore from Tamilnadu Transmission Corporation Limited. With the receipt of 400 KV EHV Cable order, Company has reached another milestone and has placed KEI amongst the few international players in the industry to manufacture and supply cables of 400 KV.
 

Strong yearly performance: Although KEI reported flattish numbers for Q4FY20 (flat revenue & 6% PAT growth) on account of fragile economic scenario; the yearly numbers are robust (revenue/EBITDA/PAT growth of 15.5%/12.2%/41.9%) due to strong performance under EPC & cable segment.

 

Sharp drop in debt levels: KEI has reduced its long term borrowings from Rs119 crore to Rs52.7 crore from FY19 to FY20. The net D/E ratio now stands at comfortable level of 0.1x against 0.4x. This has vastly improved the balance sheet health.

 

Valuations & Outlook: KEI has been a consistent performer over the years. It has seen its revenues pace a CAGR of 15.8% even as profits have grown multi-fold at CAGR of 32.6% over the past four years. Although the current situation is not conducive for the industry under which KEI operates the medium term outlook seems to be positive for company. At current price, the stock trades at 1-yr forward P/E multiple of 17.5x which looks reasonable.​
 

Duration of recommendation: Short to Medium term.