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Sunday 26 November 2017

KEI INDUSTRIES Ltd - Q2 FY18



KEI INDUSTRIES LTD continued with its double digit growth story in the current September quarter. PAT was reported at Rs. 285 Mn against Rs. 214 Mn corresponding period previous year growing 33% YOY. QOQ, PAT jumped 4% in the current September quarter. Revenue was seen at Rs 7538 Mn rising 12% YOY against Rs. 6756 Mn same period previous year. Revenue or Income from operations declined 8% sequentially. EBDITA was also seen on a firm footing YOY, rising 13% YOY and was reported at Rs. 773 Mn in Q2 FY18 against Rs. 685 Mn corresponding quarter previous year. On quarterly basis, EBDITA declined mildly by 1% in the current quarter. Operating expenditure stood at Rs. 6775 Mn compared to Rs.6090 Mn corresponding quarter previous year, rising 11% YOY whereas on sequential basis, there was a decline of 9%. EBDITA Margin jumped 11 basis points YOY whereas quarterly expansion was 74 basis points. EBDITA Margin stood at 10.25% in Q2 FY18 vis-à-vis 10.14% corresponding quarter previous year. Net Profit Margin stood at 3.78% in the current quarter rising 61 bp YOY and 45 bp on sequentiallyOne basis point is 1/100th of a percentage. 

KEI Industries has three main businesses, Cables, Stainless Steel wire & Trunkey projects. Cables contributed 75% of total revenue and grew 7% YOY. Stainless steel wire business grew 11% YOY and turnkey projects reported yearly growth of 9%. Net Export sales stood at Rs. 1370 Mn in the current quarter against Rs. 1030 Mn corresponding quarter previous year, rising 33% YOY. Major concern area for the company remains interest expense which constitutes 4% of revenues at Rs. 274 Mn in the current September quarter.  Interest expense has declined 9% & 16% YOY and quarterly respectively. Other Income was reported at Rs. 10 Mn in the current quarter compared to Rs. 19 Mn in Q2 FY17.KEI Industries Ltd with market cap of Rs. 26525 Mn is a ranked amongst the top three cable manufacturing companies in India, catering to requirements of a wide spectrum of sectors, such as- Power, Oil Refineries, Railways, Automobiles, Cement, Steel, Fertilizers, Textile And, Real Estate etc. The company has been reporting consistent performance numbers and is expected to improve its margins further in the coming quarters. We recommend BUY for the stock for medium term investment with target price of Rs. 446.


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