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KEI Industries hosted a
conference call on Jan 24, 2022. In the conference call the company was
represented by Anil Gupta, CMD and Rajeev Gupta, ED (Finance) & CFO.
Key takeaways of the call
Pending order book as end of Dec
31, 2022 was approx. Rs 3443 Crore.
Sales through Dealer/
Distribution contributed approx. 44.62% of overall sale in Q3FY23 and 44.53% of
overall sale in 9M of FY23.
Expects a revenue growth of 18-20%
for FY23.
EBITDA margin in Q3FY23 improved
to 10.98% as against 10.14% YoY. The company expects to maintain margins going
ahead. The company expects to maintain EBITDA margin guidance of 11% for
FY24.
EPC (Other than cable) was Rs 95
crore (up 2% YoY) for Q3FY23 and Rs 270 crore (up 0%) for 9mFY23. During the 9M of FY23 EPC contribution
reduced from 6.89% to 5.45%, which will reduce working capital requirement of
the company.
Domestic Institutional EHV cable
sale stood at 101 crore in 3rd quarter as against PY 184 Crore. The company
expects to close FY23 with EHV revenue of Rs 350-400 crore (against earlier
target of Rs 510 crore in FY22) due to project delays stemming from right-of way
issues. However based on current order
book the company is confident of scaling past Rs 500 crore of EHV
sales revenue for FY24.
Apart from KEI Industries, EHV
market currently has two other major players i.e. Universal Cables and LS Cables, with a minor
contribution from KEC International and Sterlite Tech. The company commands reasonable market share
and aims to maintain it by bidding for projects that carry a better margin
profile even though there are new entrants.
The government’s emphasis on
infrastructure coupled with rural and rail electrification is boosting demand
prospects for the company. Power distribution-led capex and real estate
construction are other areas of opportunity. The company foresees a prolonged
capex cycle and thus no hindrance to demand growth.
Brownfield expansion at the
Silvassa plant at an outlay of Rs 40-45 crore is estimated to yield additional
revenue of Rs 500 crore on completion. For FY24, capex plans total Rs 250 crore.
The recent commodity price rebound is unlikely
to change inventory levels due to a three-month-lag in the cycle.
The company has an order-driven
export business with no exposure to distribution led business. The company is
targeting Rs 700 crore of exports this year and expects to surpass this figure.
It is currently serving clients across Australia, the Middle East and a few
African countries, with plans to target the US market in FY24.
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