KEI Industries Ltd. has been covered by UBS Global Research since it was first listed, with a ‘buy’ rating. The company’s earnings have steadily increased due to its dominant position in the wire and cable market.
The firm has also established a target price of Rs 6,150 per share, which indicates a 40.8% increase from the closing price on Monday.
By 2027, branded wires are expected to generate Rs 4,000 crore in revenue, according to UBS Global Research. Expanding its product line into complementary markets such as switches, switchgear, and small electrical items will make it simpler for KEI Industries through a robust balance sheet and enhanced brand strength.
With almost 40% of the domestic electrification market, KEI Industries dominates its contemporaries in the cables and wires industry. The brokerage stated that its high-voltage cable offering reinforced its leading position.
Over the last ten years, the domestic wire and cable market has grown at a compound annual growth rate (CAGR) of 9%. Meanwhile, KEI Industries has outperformed the market with an 8% annual topline growth, which the brokerage attributes to the expansion in residential wire sales, exports, and business-to-business project supplies of both high and low tension.
With its branded wire division, KEI Industries has grown its sales from 16% in 2018 to 29% in 2024. By investing in creating a brand in this market, the company will benefit and see an increase in return on capital employed, which will rise from 24% in the fiscal year 2024 to 28% in 2028. Higher cash generation and returns will follow from this shortly.
It’s anticipated that this pattern will alter, but for the most part, the wire industry has remained unorganised. In 2028, unorganized markets are expected to decline by 15%, according to UBS Research.
In comparison to the 9% growth it achieved between fiscal 2014 and fiscal 2024, KEI Industries has seen an increase in revenue of 18%. According to UBS Research, the corporation diversified from business to business and currently receives 50% of its revenue from the dealer channel.
Over the last three years, the company’s topline growth has resulted in a rating that is comparable to rivals like Polycab. Most of the cyclical opportunities in the domestic markets are predicted by consensus estimations. Because of the increased capacity and distribution, UBS Global Research believes there will be substantial prospects for market share increases in the cables over the next two to three years.
Meanwhile, the brokerage noted that negative risks to KEI Industries’ growth prospects include a recession in the world economy, slower growth in local infrastructure, and delays in capital investment.
