Shares of a leading cable manufacturer surged 4 percent after Goldman Sachs gave a bullish outlook, citing strong fundamentals and growth prospects. The brokerage has raised its price target, highlighting the stock’s potential upside in the near term.
Price Movement
During Thursday’s trading session, shares of KEI Industries Ltd jumped to an intraday peak of Rs.2,869.00 each, reflecting a 4.14 percent increase from the prior closing price of Rs.2,754.90 per share. However, the stock has retreated since then and is currently trading at Rs.2,857.80 apiece. Over the past five years, the stock has delivered over 900 percent returns.
Brokerage Outlook
Goldman Sachs has issued a buy recommendation on KEI Industries, citing an attractive risk-reward profile as the key factor behind its upgrade. The brokerage has set a target price of Rs.2980 for the stock, highlighting strong near-term growth prospects.
While Goldman Sachs anticipates that planned capital expenditure for new factories could face some deferrals, leading to potentially lower order inflows, it believes this impact could be partially offset by declining commodity prices and reduced financing costs.
The brokerage further noted that cable and wire companies are likely to benefit from ongoing investments in power and infrastructure sectors in the near term. However, it expects this momentum to moderate by the financial year 2027. Additionally, export opportunities remain significant, with India currently contributing just 2 percent to 3 percent of the global cable and wire export market, indicating ample room for growth.
International Footprints
KEI Industries has a strong global presence, exporting its products to around 60 countries. The company is supported by a vast network of over 5,000 channel partners worldwide, which helps drive its international reach and market penetration.
Exports are expected to rise significantly, from 11-12 percent to 18-20 percent by FY26-27, providing a strong boost to the company’s margins. This increase in export activity will not only diversify the revenue streams but also enhance profitability as international markets contribute a larger share to overall sales, strengthening the company’s competitive position.
Financial Performance
KEI Industries Ltd’s financial performance for Q3 FY25 showed significant growth, with revenue reaching Rs.2,467 crore, marking a 20 percent increase from Rs.2,059 crore in the corresponding quarter of the previous year. Additionally, the company’s Profit After Tax (PAT) surged by 10 percent, rising to Rs.165 crore from Rs.151 crore in the same period last year.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 23.41 percent and a Return on Equity (ROE) of 18.05 percent. Its Price-to-Earnings (P/E) ratio stands at 55.95, higher than the industry average of 45.4. Furthermore, the company maintains a solid current ratio of 1.54, a debt-to-equity ratio of 3.45, and an Earnings Per Share (EPS) of Rs.66.83.
Business Overview
KEI Industries offers a diverse range of cables, including Extra-High Voltage (EHV), High Tension (HT), Low Tension (LT), control and instrumentation, and specialty cables. In addition, the company provides EPC services for various projects, such as gas-insulated and air-insulated substations, power transmission and distribution systems, and railway electrification.
Written by – Siddesh S Raskar
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