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.
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