KEI Industries - Expansions Unlocking Potential For Growth: Motilal Oswal

Motilal Oswal Report

Ebitda/Adjusted profit after tax of KEI Industries Ltd. clocked a CAGR of ~18%/38% over FY15-FY24 despite margin pressures (led by raw material cost volatility) in the cables and wires segment during FY22/23.

Going ahead, we expect Ebitda and EPS to clock a CAGR of 24%/22% over FY24-FY27.

The higher free cash flow generation over the past few years has helped KEI to reduce debt and strengthen its balance sheet. The company has accelerated its capex plan to meet the growing demand and maintain its competitiveness.

Capex is pegged at around Rs 10 billion/Rs 5 billion in FY25E/FY26E. We estimate free cash outflow in FY25 and improvements in cash flow from FY26 onwards.

KEI has consistently delivered strong performance, led by a robust demand environment and a diversified customer base with a significant presence across domestic and international markets.

Its growing focus on the retail segment and capacity expansion would continue to drive growth for the company The stock is currently trading at 45 times its FY26E EPS. We value KEI at 50 times Sep’26E EPS to arrive at our target price of Rs 5,450. Reiterate Buy.

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