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Systematix Research Report
KEI Industries Ltd.'s strong and in line Q4 FY23 (revenue/Ebitda/profit after tax up 9%/19%/19% YoY) was driven by robust 13% volume and 15% retail sales (42% mix) growth.
Ebitda margin at 10.4% expanded 83 bps YoY, aided by gross margin (26.2%, up 200 bps YoY). FY23 volume/ revenue/ Ebitda/ profit after tax grew 20%/ 21%/ 20%/ 27% YoY, with Ebitda margin of 10.2%.
KEI turned net cash in FY23 (Rs 1.83 billion including acceptances). Management reiterated its guidance of 16% plus revenue growth and 10.5-11% Ebitda margin (~12% in four-five years) for the forthcoming years.
Higher retail sales mix (FY23 mix of ~44% expected to touch 50% in one-two years) will continue to drive KEI's margins and cash flows ahead (to be used for future capex).
Its LT cables (~Rs 500 million brownfield capex at Silvassa; ~Rs 5 billion revenue potential) and a greenfield capex plant (~Rs 8 billion at Baroda, to be operational in FY26) should fuel growth.
We retain our estimates and expect revenue/profit after tax compound annual growth rate of 15%/20% over FY23-25E (FY18-23: 15%/27%), respectively, with 26% return on capital employed and strong operating cash flows.
Strong industry-leading growth and cashflows have driven huge re-rating in the scrip over last four-five years.
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