KEI Industries Ltd
(BSE Code: 517569) (CMP: Rs.356.80) (FV: Rs.2) By Pratit Nayan Patel
Company Background: Incorporated in 1968, New Delhi based KEI Industries Ltd (KEI) manufactures and supplies power and other industrial cables. It is ranked amongst the top three cable manufacturing companies in India. It operates through the following segments: Cables; Stainless Steel Wire; and Turnkey Projects. It offers extra high voltage (EHV) cables; high and medium voltage (HMV) cables; high tension (HT) and low tension (LT) cables; control and instrumentation cables; speciality cables; flexible and house wires; submersible cables; marine and offshore cables; solar cables; thermocouple extension/compensating cables; PVC/poly wrapped winding wires; stainless steel wires; and winding wires. It also provides rubber cables, battery cables, panel wiring, fire wires, motor coil leads and low temperature installations. In addition, it offers integrated design, engineering, material procurement, field servicing, construction and project management services for project management and control, transmission systems, power generation projects, substations, cable solutions, overhead transmission lines, infrastructure and civil works. Its products find application in various industries like power, oil refineries, railways, automobiles, cement, steel, fertilizers, textiles and real estate.
Financials: With an equity capital of Rs.15.78 crore and reserves of Rs.654.87 crore, KEI’s share book value works out to Rs.76.7. The promoters hold 45.93% of the equity capital, Mutual Funds hold 11.39%, FPIs hold 10.84% and well-known investor Ashish Kacholia holds 2.75%, which leaves 29.09% stake with the investing public.
Performance Review: For FY18, KEI reported
55% higher PAT of Rs.144.76 crore on 24% higher sales of Rs.3503.12 crore and an EPS of Rs.18.5. For Q2FY19, it reported 45% higher PAT of Rs.41.37 crore on 32% higher sales of Rs.996.8 crore and an
EPS of Rs.5.3. For H1FY19, it reported 31% higher
PAT of Rs.73.55 crore on 19% higher sales of Rs.1880.69 crore and an EPS of Rs.9. Its bottomline has grown at 62% CAGR over the last 3 years.
It paid 50% dividend for FY18.
Industry Overview: According to IBEF, India is the world’s third largest producer and fourth largest consumer of electricity in the world. India recorded electric production of 1201.5 billion units (BU) in FY18, up 56% YoY. The power transmission sector in India is crucial for electricity supply. The recently launched ‘Saubhagya’ scheme, which aims at electrifying all rural households, coupled with the rising share of renewable capacity demands addition in India’s transmission infrastructure. The demand for energy is bound to rise in the years to come on the back of sustained economic growth, rising urbanisation and rising per capita energy consumption.