Polycab, KEI Industries, RR Kabel Gets A Buy As Motilal Oswal Initiates Coverage

Motilal Oswal Report

We initiate coverage on Polycab india Ltd., KEI Industries Ltd. and RR Kabel Ltd. with a Buy rating as we believe these companies will benefit from favorable industry trends and report healthy earnings growth over FY24-26E.

We expect Polycab’s Ebitda and earnings per share to post a compound annual growth rate of 14% and 15%, respectively, over FY24-26. We expect KEI’s Ebitda and EPS to clock a CAGR of 25% (each), over FY24-26.

We expect RR Kabel’s Ebitda and EPS to clock a CAGR of 39% and 43%, respectively, over FY24-26.

We estimate Polycab’s return on equity/return on capital employed to be 20%/21% in FY26 vs. ~19% in FY23. Its RoIC would be 27% in FY26E versus 26% in FY23.

We estimate KEI’s RoE/RoCE to be ~19%/20% in FY26 versus ~18% in FY23. Investments in the new Greenfield unit will restrict a significant improvement in RoE for KEI.

We estimate RR Kabel’s RoE/RoCE to be ~25%/24% in FY26 versus ~14%/12% in FY23.

We expect these companies to retain their premium valuations.

We Polycab at 50 times FY26E EPS to arrive at our target price of Rs 7,500.

We : KEI at 50 times FY26E EPS to arrive at our target price of Rs 5,000, and RR Kabel at 40 times FY26E EPS to arrive at our target price of Rs 2,200.

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