scorecardresearchKEI Industries: Sharekhan initiates a 'buy' call with a target price of

KEI Industries: Sharekhan initiates a 'buy' call with a target price of 1,300

Updated: 04 Jul 2022, 08:05 AM IST
TL;DR.

KEI Industries reported a 29.7% rise in net profit to 115.9 crore on a 44.19% increase in net sales to 1,799.5 crore in Q4 FY22 over Q4 FY21. Profit before tax increased by 33.04% in Q4 FY22 to 155.8 crore, up from 117.06 crore in Q4 FY21.

The stock gave a 1-year return of 57.6% as compared to the Nifty Midcap 100 which fell 1.42% in the same period.

The stock gave a 1-year return of 57.6% as compared to the Nifty Midcap 100 which fell 1.42% in the same period.

Shares of KEI Industries closed at 1,197.90 on the NSE in Friday's trade, with the stock gaining over Rs. 735.55 to Rs. 1,152 in the last one year and yielded 57.6% in the same period and 410% in the last 5 years. 

It has a 52-week high of Rs. 1,377.35, while the 52-week low is Rs. 689.50. Taking the stock's current price into account, it has risen 77 per cent from its 52-week low.

The company is engaged in the business of manufacturing, sale and marketing of all range of power cables. It has a 7% market share in India's organised wires and cables industry and a 12-per cent market share in the institutional segment.

The stock has been witnessing remarkable traction in the last one year while the market has been under pressure. The stock gave a 1-year return of 57.6% as compared to the Nifty Midcap 100 which fell 1.42% in the same period.

Despite such strong gains in a volatile market, domestic brokerage firm Sharekhan is still positive on the stock.

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Stock price chart of KEI Industries

In a research report, Sharekhan said "Our interaction with KEI Industries (KEI) reaffirms our positive stance on the company, underpinned by its efforts to gain market share in wires, leadership in EHV cables, and focus on expanding its retail footprints across regions."

"It also eyes an operating margin of 10.5-11% and a PAT margin of 6.5% on a sustainable basis." "De-bottlenecking in existing capacities and greenfield expansion in cables and wires at Rs. 800 crore investment (first phase by Q32024E) would help in market share gain and achieve its growth targets."

As reported by Moneycontrol, Sharekhan has a 'buy' call on the stock with a target price of 1,300, which hints toward an upside of 8.60 per cent from its July 1 closing price of 1,197.90.

KEI Industries reported a 29.7% rise in net profit to 115.9 crore on a 44.19% increase in net sales to 1,799.5 crore in Q4 FY22 over Q4 FY21. Profit before tax increased by 33.04% in Q4 FY22 to 155.8 crore, up from 117.06 crore in Q4 FY21.

On the financial ratio front, KEI Industries has a Return on Equity of 17, which means for every 1 worth of equity, the company is earning 0.17 in profit. It has a price-to-earnings ratio of 27.6x compared to the peer average of 28.9x.

The company is planning to set up a dealer network in the United Kingdom for general-purpose projects and for the oil and gas sector. It also plans to venture into the business of EHV Power Cables by way of having either a JV or Technical Collaboration with a cable company. The company also has an interest in venturing into the EPC business with a nuclear team of professionals with prior experience in EPC projects.

FIIs have been bullish on the company for a long time. This is clear given their increased exposure to the stock over the last four quarters. FIIs held a stake of 18.85% in KEI Industries back in March 2021. The exposure now stands at 25.2%. The majority of the increase happened in the most recent quarter. The promoters hold 38 per cent of the shares in the company. Mutual Funds decreased their holdings from 21.12% to 18.80% in the March 2022 quarter. The regular shareholders own 15.18 per cent.

An average of 14 analysts polled by MintGenie have a 'buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 04 Jul 2022, 08:05 AM IST