Thread by @LnprCapital

KEI INDUSTRIES Analysis !!
#KEIIndustries

A detailed thread below 🪡🧵
#StockMarket #Investing

▪️ About -

KEI was incorporated in 1968 as a partnership firm, Krishna Electrical Industries, with prime business activity of manufacturing of cables & wires. In 1992, the firm became a public limited company under the name of KEI Industries Limited (KEI). Co is among India’s

leading manufacturers and marketers of cables & wires, with a comprehensive product portfolio ranging from housing wires to Extra High Voltage (EHV) cables.

▪️ Financial Summary -
Q4 FY22 (YoY)

Revenue were at ₹ 1799 Cr ⬆️44%
PAT at ₹ 116 Cr ⬆️35%

▪️ Diversified product Portfolio -

Wide product basket comprising:

~ Extra-High Voltage Cables up to 400 KV
~ High & Medium Voltage Cables
~ Control & Instrumentation Cables
~ Specialty Cables
~ Submersible Cables
~ Rubber Cables
~ PVC/Poly Wrapped Winding Wires

~ Flexible & House Wires
~ Stainless Steel Wires
~ EPC Projects

Helping the company service a wide spectrum of sectors such as power, oil refineries, railways, automobiles, cement, steel, fertilizers, textile and real
estate, amongst others.

KEI’s cable division has a wide range of products (portfolio of over 400 products), including power cables (comprises of low tension (LT), high tension (HT) and extra high voltage (EHV) power cables) up to and including 400 kV grade, control &

instrumentation cables, rubber cables, winding, flexible & house wires, specialty cables, submersible cables, OVC/poly wrapped winding wires & stainless-steel wires. In the cables segment, KEI continues to have a technical collaboration with BruggKabel AG,

Switzerland for the manufacturing of EHV cables. BruggKabel is involved in manufacturing of high voltage/extra-high voltage cables up to 550 kV voltage grade. The co also has a presence in EPC & turnkey solutions segment for infrastructure projects.

▪️ Emphasis on EHV cable business to continue -

The co aims to become one of the few select players globally to manufacture and supply 400kV EHV cables. Stringent requirements for meeting compliances & securing product approvals further make it difficult for new players to

enter the market. It has won a landmark order from Tamil Nadu Transmission Corporation Limited for EHV cables.

▪️ Strong backward integration -

The co has backward integrated its services by setting up in-house manufacturing of PVC. Backward integration enables it to exercise

greater control over the manufacturing process & quality, thereby resulting in improved efficiencies & higher margins. It enables to meet customers’ needs in a timely manner & enhance ability to offer cost-competitive solutions.

▪️ Robust growth in infrastructure sector -

As a continuation of National Infrastructure Pipeline initiatives, the Government will push investments in infrastructure sectors such as power, real estate & housing, railways, roads, petrochemicals & renewable energy.

The Transmission & Distribution sector continues to remain in focus in the medium and long-term owing to the Government electrification & housing schemes driving demand for wires and cables.

▪️ Strong presence in retail segment with a well entrenched distribution network -

- Strong distribution network covering major metros & Tier 1 & 2 cities
- 22 depots across India
- 34 marketing offices across the country

- Company is focussing on marketing through various brand
promotion activities via multiple communication channels

▪️ Industry Prospects :

- To create potential for domestic manufacturers & developers, Government will auction 40GW of renewable energy projects including 30GW solar & 10GW wind every year till 2028.

- India’s power sector is forecasted to attract investments worth Rs 9-9.5 trillion (US$ 128.24-135.37 billion) by FY23

- Global cable market is projected to expand at a CAGR of 4.1% during forecast period to reach USD 235.9 billion by 2026

-The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025. The implementation of
the Goods and Services Tax (GST) will make India a common market with a GDP of US$ 2.5 trillion along
with a population of 1.32 billion people.

▪️ Key Risk -

• Inability to pass on any increase in raw material prices to the customers could adversely impact margins and profitability

• Inability to scale up capacity could decelerate growth in cables segment

• Any slowdown in government infrastructure spending could impact the cablevolumes (EPC and EHV) especially when private investments doesn't revive

• Inability to win new EPC contracts or execute existing contracts could be a major risk factor

▪️ Conclusion -

The company expects recovery to continue through Tier 2, Tier 3 cities. Distribution expansion will drive growth in the retail segment, Cable & wire business will continue to grow due to increase in growth in power, real estate etc that bodes well for the Co.

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