KEI Industries Q3 Results Review - Inline; Promising Outlook Intact: Systematix

Systematix Research Report

KEI Industries Ltd.’s strong results in Q3 FY23 (revenue/Ebitda/profit after tax 14%/16%/27% YoY) was driven by robust 20% plus volume growth, domestic low tension/high tension cables and rebound in extra high voltage cables/exports.

Gross (24.7%) and Ebitda margins (10.2%) were broadly stable QoQ, despite lower retail sales mix (44.6% versus 47.3% in Q2; nine months: 44.5%).

KEI Industries maintained its net cash status at Rs 850 million (including acceptances) and healthy order book at Rs 34.4 billion (up by Rs 4.3 billion QoQ).

Management reiterated its guidance of 17% plus revenue growth and 10.5-11% Ebitda margin. Rise in retail sales mix (50% mix in two years at 25% plus sales compound annual growth rate) will likely continue to drive KEI Industries’ margins and cash flows (to be used for future capex to maintain 15% plus CAGR over the next five years).

The low tension cables (~Rs 500 million at Silvassa; ~Rs 4 billion revenue potential) and a greenfield capex plant (~Rs 8 billion at Baroda) are expected to be operational in the next three-four years.

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