Shares of leading wires and cables manufacturer KEI Industries have given exceptional returns to its investors in the long term, skyrocketing over 16000 percent in 10 years.
From around ₹10 in April 2013, the stock has rallied as much as 16046 percent to currently trade around ₹1,752. An investment of ₹10,000 in April 2013 in the stock would have turned into over ₹16 lakh currently.
Meanwhile, it has also generated multi-bagger returns in the past 3 and 5 years. In the last 3 years, the stock has surged over 740 percent from its COVID low of ₹208, hit in March 2020. Whereas, in the past 5 years, the scrip has advanced 355 percent from around ₹385 in April 2018.
In the last 1 year, it is up 37 percent, outperforming major benchmarks, even when the entire market sentiment was negative on the back of massive volatility due to rising inflation, high interest rates, global macro concerns and the most recent US and European banking crisis.
For the current calendar year as well, the stock has advanced over 18 percent, giving positive returns in all 4 months till date. It has added over 3 percent in April so far after a 4.5 percent jump in March. The stock was flat in February, up 0.5 percent but jumped over 10 percent in January.
KEI was established in 1968 as a partnership firm under the name Krishna Electrical Industries, with the prime business activity of manufacturing house-wiring rubber cables. The firm offers holistic wire and cable solutions globally in over 45 countries, through a network of over 5000 channel partners.
Its product portfolio includes extra high voltage cables, high voltage cables, low voltage cables, instrumentation cables, control cables, solar cables, house wires, single core/multicore flexible cables, thermocouple extension/compensating cables, rubber cables, fire survival/resistant cables, marine and offshore cables, winding wires and stainless-steel wires. Headquartered in New Delhi, the firm has over 38 branch offices and 21 warehouses across the country.
In the December quarter, the company reported net profit at ₹128.60 crore, up 27 percent from ₹101.23 crore in the year-ago period. Net sales at ₹1,784.32 crore in Q3FY23 rose 14 percent from ₹1,563.85 crore in the corresponding period last year. KEI Industries recorded an EPS of ₹14.26 per share in Q3FY23 compared to ₹11.24 per share recorded in Q3FY22. In this quarter, the firm also announced a 150 percent dividend for the fiscal year.
Going ahead, brokerage house Prabhudas Lilladher believes that KEI will continue to benefit from industrial volume growth and increase in price by 3-4 percent.
However, stretched valuation keeps limited upside potential for the stock. It has a ‘hold’ call on the stock with a target price of ₹2,794, indicating a potential upside of almost 6 percent.
In the fourth quarter, PL expects KEI's sales to grow 13.7 percent mainly with cable revenue growth of 17.1 percent YoY on account of a 3-4 percent price hike coupled with an increase in copper prices and strong traction in dealer penetrations. Also, B2B business traction continues in this quarter as well, it added. PL expects the firm's EBITDA margin to be maintained at 10.5 percent on account of improvement in dealers' business and price hikes and PAT to grow by 30.8 percent YoY with higher margins and a reduction in interest cost.
