KEI Industries Bullish On Long-Term Cable Demand In India, Says Chairman

KEI Industries Ltd. is positive about the long-term cable demand in India, according to Chairman Anil Gupta.

The demand for cables in India is increasing due to the power sector, especially solar developers, transmission and distribution sectors, and the government's infrastructure spend on non-power sectors such as metros, railways, and highways, Gupta, who is also the managing director, told BQ Prime's Hiral Dadia in an interview.

The company is positive about cable demand due to substantial exports opportunities that are also coming up from developed countries, he said.

The company's annualised growth in the past five to six years has been 17–18%, with the exception of the Covid year of 2021, Gupta said. "We are estimating a growth of 17–18% CAGR for the next seven to eight years."

The chairman also mentioned that the company is focused on increasing product demand from India and other geographies by building new capacities in its existing plants and new greenfield plants.

KEI Industries' export business is expected to grow significantly as a percentage of its total revenue, with a potential jump of 15-20%, he said.

The export margins of the company are approximately 11%, and the company aims to maintain an overall margin of 11% moving forward, he said.

KEI Industries is investing approximately Rs 100 crore in capex for its existing plants in the current fiscal year, Gupta said. The company has also launched a greenfield project in Gujarat, which will entail an investment of around Rs 1,000 crore over the next two to three years, he said.

"We will be able to build up a capacity that is almost 60–70% higher than the current level over the next three to four years," he said.

According to Gupta, the company expects to complete its brownfield capex of Rs 45 crore in Silvassa by December 2023 and its brownfield capex of Rs 100–110 crore in Bhiwadi by March–April 2024. This capex is expected to generate Rs 1,000 crore in revenue, he said.

The new facilities of KEI Industries are expected to have an asset turnover ratio of around four times, which will gradually increase to five to six times over a period of two years after commencement of production, Gupta said.

"Demand for houses is growing in India," Gupta said.

The low penetration of real estate in a growing economy like India is expected to drive demand for houses for the next 25 years, which will lead to sustained demand for cables, he said.