Buy KEI Industries; target of Rs 4500: Geojit Financial Services

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Strong demand for domestic wires and cables, with revenue growing 45.8% YoY, driven by infrastructure investments and power transmission spending.
  • Healthy order backlog of approximately Rs. 5,185cr, with export orders standing near Rs. 991cr, indicating a strong pipeline of future growth.
  • Expansion of the Sanand facility, expected to commence commercial production by end-March 2027, will aid future growth and capacity expansion.
  • Management guidance of revenue growth over 25% in FY27 and annual EBITDA margin of ~11%, with potential to move towards 12% as the Sanand facility ramps up.

Thesis Validation Checklist

  • Monitor demand trends in domestic wires and cables, and the company's ability to maintain its market position.
  • Track the progress of the Sanand facility expansion and its impact on revenue and margin growth.
  • Watch for any changes in the company's order backlog and export orders, which could indicate a shift in demand.
  • Keep an eye on the company's EBITDA margin, which is expected to improve as the Sanand facility ramps up, and any potential risks to this guidance.