During Wednesday’s trading session, the shares of a company engaged in manufacturing and supplying wires and cables slumped nearly 11.5 percent to Rs. 4,148.55 on BSE, after the company reported Q2 FY25 financial results with a decline in the EBITDA margins.
With a market cap of Rs. 38,781.7 crores, at 12:31 p.m., the shares of KEI Industries Limited were trading in the red at Rs. 4,297.55, down by nearly 8.3 percent, compared to its previous closing price of Rs. 4,686.9.
What’s the news:
The fluctuations in the share prices were also observed after KEI Industries Limited announced the financial results for Q2 FY25, through the recent filings with the stock exchanges on Tuesday post-market hours.
The consolidated revenue from operations stood at Rs. 2,280 crores in Q2 FY25, indicating a marginal growth of 10.7 percent QoQ from Rs. 2,060 crores in Q1 FY25, as well as by around 17.2 percent YoY from Rs. 1,945 crores in Q2 FY24.
Similarly, KEI Industries experienced a slight increase in the net profit to Rs. 155 crores in Q2 FY25, up 3.3 percent QoQ from Rs. 150 crores in Q1 FY25, and a significant year-on-year growth of nearly 10.7 percent from Rs. 140 crores in Q2 FY24.
However, on a year-on-year basis, the EBITDA margin in Q2 FY25 fell to 10.42 percent, compared to 10.88 percent in Q2 FY24, and also decreased on a quarterly basis from 11.28 percent in Q1 FY25. This decline in margins was primarily due to higher raw material costs, increased finance expenses and employee expense benefits.
Additionally, the net profit margin decreased to 6.79 percent in Q2 FY25, down from 7.29 percent in Q1 FY25 and 7.21 percent in Q2 FY24.
KEI Industries also reported a nearly 29.31 percent year-on-year drop in EPC sales (excluding cable) for Q2 FY25.
By the end of the September quarter, the company reported a pending order book of nearly Rs. 3,847 crores.
Additional News:
Along with the financial results for Q2 FY25, KEI Industries also announced its plans to raise up to Rs. 2,000 crores via a Qualified Institutional Placement (QIP), subject to the approval of the shareholders of the company.
As part of this initiative, the company plans to issue equity shares or other eligible securities. However, it has not provided details on how the proceeds from this fundraising will be utilised.
Brokerage Target:
The global brokerage firm UBS Global Research has earlier initiated a ‘buy’ rating on KEI Industries and assigned a target price of Rs. 6,150 per share, representing a potential upside of nearly 43 percent from the current trading price of Rs. 4,297.55.
The brokerage firm believed that the company is the only pure play in the cable and wire (C&W) industry, holding a 40 percent market share in the domestic electrification market, which is the highest among its competitors.
UBS Global Research projects that KEI Industries will generate Rs. 4,000 crores in revenue from branded wires by FY27. With a robust balance sheet and enhanced brand strength, the company will be well-positioned to expand its product offerings to include related segments such as switches, switchgears, and small electrical products.
Stock Performance:
The stock has delivered positive returns of nearly 60.8 percent in one year, and around 11.6 percent in the last six months. So far in 2024, the shares of KEI Industries have given positive returns of about 34.5 percent.
About the company:
KEI Industries Limited is involved in serving three major segments: Cables & wires, EPC projects and Stainless steel wire.
The company is engaged in the manufacturing, sale and marketing of a wide range of power cables up to 400kV – Low Tension (LT), High Tension (HT) and Extra High Voltage (EHV), control and instrumentation cables, specialty cables, elastomeric/rubber cables, submersible cables, flexible & house wires, and winding wires.
KEI is also engaged in the execution of EPC projects for survey, supply of materials, design, erection, testing & commissioning on a turnkey basis.
Written by Shivani Singh
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