Anand Rathi 's research report on KEI Industries
In the present trying circumstances KEI’s flattish Q4 growth was quite encouraging. We believe growth in the cable industry will continue, given the vast opportunities, while wires will see demand from smaller towns. We are upbeat on KEI for its strong order-book (`33bn; including `7.3bn EHV and `16.4bn exports), diversified customers and a healthy balance sheet. The `1.5bn order for 400kVA cables (EHV) sets KEI among the world’s top manufacturers. After strong 20%/20%/42% CAGRs in revenue/EBITDA/PAT over FY16-20, we expect a bounce back from FY22.
Outlook
We continue to believe in sustainable growth prospects for KEI and retain our Buy recommendation, with an unchanged target of `411 (14x FY22e P/E). FCF generation continuing would help in a re-rating of the stock. Also, KEI’s likely entry into FMEG, like its peers, in the next 2-3 years could drive valuations.
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