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Indisbulls Ventures
KEI Industries (Buy)
CMP: ₹478.35
Target: ₹525
KEI Industries (KEI) was established in 1968 as a partnership firm Krishna Electrical Industries with prime business of manufacturing house wiring rubber cables. It was converted into a public limited company with the corporate name KEI Industries in December 1992.
Investments rationale: 1. KEI reported good set of numbers in Q4FY19 whereby its top-line grew by 22 per cent y-o-y to ₹1,258 crore in 4QFY19 as against ₹1,030 crore in 4QFY18 on a bottom-line growth of 20 per cent y-o-y to ₹60 crore in 4QFY19 as against ₹50 crore in 4QFY18. The balance sheet has also improved significantly whereby the D/E for FY19 stands at 0.59xas against 1.24x in FY18.
2. KEI’s expertise in EPC projects and excellent track record has rendered it the preferred candidate for cable and wire industry development. With the government sharpening focus on power generation, transmission and distribution, demand for cables as part of T&D equipment is expected to expand significantly.
Outlook & valuations: KEI has constantly outperformed its peers in challenging times. KEI has a track record of maintaining healthy balance sheet and sound returns ratio. We believe the company will be to maintain its guidance of growing at 20 per cent on the top-line over a period of next two years, therefore would like to recommend a ‘buy’ on the stock.
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