KEI Industries Gets 'Overweight' From Morgan Stanley With 17% Potential Upside — Key Reasons

KEI Industries Ltd.'s share price has received a bullish outlook from Morgan Stanley, after the brokerage initiated coverage with an 'overweight' rating, citing solid growth prospects. The target price of Rs 4,391 implies an upside of 17.6% over the previous close.

KEI's strong cable and wire business is growing, driven by domestic energy sector expansion and increasing exports due to global manufacturing shifts, the brokerage noted.

The company has a well-diversified channel mix in C&W revenue compared to its peers, with a balanced presence in retail, institutional, and exports, along with competitive advantage in extra-high-voltage, analysts Girish Achhipalia and Pranjal Jain said in a note dated Feb. 20.

C&W products are required across industries, such as in real estate, renewables, power transmission and distribution, and infrastructure like data centres, metro, rail, etc.

KEI has set an ambitious target of Rs 25,000 crore in annual revenue by fiscal 2030, implying a compounded annual growth rate of 20%, and aims to expand margins by 220 basis points between FY25 and FY28.

This growth trajectory is expected to be driven by several factors, including increased operating leverage, a rising share of high-margin exports from 11% to 15-17%, a greater contribution from high-margin house wires, expansion of high-margin EHV cable sales with new capacity, and deepening of dealer wallet share.

Morgan Stanley forecasts a 23% earnings CAGR for KEI Industries between the current year and FY28.

Revenue during the December quarter soared 20% to Rs 2,467 crore. Net profit rose 9.4% to Rs 165 crore, falling short of estimates.

The KEI Industries share price has risen 16% in the last 12 months. It closed 4.6% higher at Rs 3,732.45 apiece on Thursday, compared to 0.09% decline in the Nifty 50.

Out of the 18 analysts tracking KEI Industries, 15 have a 'buy' rating on the stock while three recommend a 'hold', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 30%.