KEI Industries, one of the leading players in the cable and wire manufacturing industry, saw its share price surge to a new record high of ₹2,095 apiece during Tuesday's intraday trade. This remarkable surge was fueled by the company's impressive Q4 earnings numbers, which came in line with market estimates.
The company's shares have been on an upward trend since its Q4FY23 result announcement on May 02, advancing nearly 10%. Furthermore, the stock has rallied over 41% this year, delivering positive returns in four out of five months, including May so far.
In the last decade, the stock has yielded a significant return, rising from ₹10.90 apiece to the current market position of ₹2,069.95, which translates to a gain of 18890%.
For the March quarter, the company reported a 19% YoY rise in its consolidated net profit at ₹138 crore on a 9.1% YoY increase in net sales of ₹1,955 crore.
The cable and wire segment, which accounts for more than 90% of the company's revenue, posted a growth of 8.26% YoY to ₹1,755 crore. While the sales of stainless-steel wire were up 16.46% YoY to ₹64.87 crore, the sales of EPC increased to ₹223 crore in Q4 FY23.
The decline in raw material costs and other operating expenses resulted in an 80 basis point YoY increase in EBITDA margin to 10.4% in March quarter.
In FY23, the net sales of the company stood at ₹6,912 crore, as compared to the previous year's net sales of ₹5,726 crore. The company's EBITDA for the same period was ₹733 crore, a significant increase from the previous year's EBITDA of ₹603.38 crore.
Additionally, the company's profit after tax for FY23 stood at ₹477 crore, an increase from the previous year's PAT of ₹376 crore.
"KEI has performed well in Q4 FY23 and FY2023 with strong volume growth. We believe the company is on a healthy and sustainable growth trajectory, as it is catering to diversified user industries, increasing its focus on retail, strengthening its high-margin EHV, and carrying out capex to meet the rising demand," said domestic brokerage firm Sharekhan.
KEI Industries is targeting a revenue CAGR of 17–18% in the coming years and aims to increase its market share in house wires to 8% from the current level of around 6%. The company also plans to increase its share in the cable market, where it currently holds a 12% market share, said the brokerage firm.
The company expects the retail segment to contribute over 50% of total revenue in the next two to three years. Increasing the contribution of the retail segment to total revenue would reduce the pricing gap with its competitors, it added.
The government has envisaged Rs. 111 lakh crore in capital expenditure in infrastructure sectors in India from FY2020 to FY2025. Sectors such as energy, roads, urban, and railways account for 71% of the projected infrastructure investments. The government's continued thrust on infrastructure investment is expected to improve demand for the W&C industry, according to the brokerage.
Sharekhan retained its 'buy' recommendation on the stock with a target price of ₹2,215 apiece, which hints towards an upside of 7% from the stock's last trading price.
15 analysts polled by MintGenie on an average 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.