KEI Industries hosted a conference call on July 27, 2022. In the conference call the company was represented by Anil Gupta, CMD and Rajeev Gupta, ED (Finance) & CFO.

Key takeaways of the call

In Q1FY23, Cables institution grew by 52% to Rs 765 crore [exports jumped up 222% to Rs 193 crore, domestic institution sales up 29% to Rs 572 crore] and that of cables retail was up 68% to Rs 652 crore. EPC (other than cables) was down 2% to Rs 84 crore.  

Order book  as end of Jun 30, 2022 was Rs 2741 crore  [EPC order book was Rs 878 crore,  EHV Cables was Rs 353 crore,  Domestic cable Rs 1428 crore, Export cables order Rs 82 crore].  Additionally the company is   L1 for EHV orders worth Rs 229 crore.   

Net Debt (including Channel Finance and acceptance) as on Jun 30, 2022 was Rs 32 crore as against Rs 270 crore as end of March 31, 2022.  Acceptance and channel finance as end of Jun 30, 2022 was Rs 103 crore and Rs 88 crore respectively against Rs 299 crore and Rs 106 crore as end of March 31, 2022.

EBITDA margin in Q1Fy23 was 10.42% down from 11.45% in corresponding previous quarter. But for volatility in material cost either upward or downward, the company is cable of doing margin higher than 10.5-11%.

Of EPC sales of RS 84 crore in Q1FY23 the EHV sales is Rs 36 crore.

Continue to strengthen dealer network. Active working dealers as end of Jun 30, 2022 are 1800.

Sales through dealer network was 42% in Q1FY23 vs 38% in Q1FY22.

Expect EPC retention money of Rs 100 crore to be released during current fiscal. 

Expect a capex of about Rs 200-250 crore for next 3 years to achieve a STO CAGR growth of 17-18% going forward. Land acquisition is under process and will spend entire amount on land during this fiscal.  Land cost will not be more than 50-60 crore.

Destocking has already taken place in the channel. Typically dealers have 15 days stock and if they feel copper prices will go down they will wait for 10 days and place orders.

Volume growth of C&W in Q1FY23 was about 27%.

Revenue growth of 16-17% growth is expected for FY23. Considering strong order book the company is confident of achieving this revenue growth for current fiscal. The company is also targeting 32-35% of distribution growth to support current year target growth.    

Capacity utilisation for cables division was 78%, House wire 65% and SS Wire 80%.  Capacity utilisation is 80-90% for EHV cables and doing debottlenecking which will support growth. The company have enough capacity to support growth and by peak of it the new capacity will come on stream.

Steady demand comes from infra i.e. power generation, solar/wind/other, t&d, industrial such as steel, refinery, aluminium.     Energy railway, metro, roads highway, building, port and airports including modernisation are also drives institutional demand.

Exports for FY23 to be about Rs 700-750 crore.