The financial services firm Sharekhan published the latest research report on KEI Industries Share Price Target, assigning a ‘buy’ rating to the stock. The comprehensive analysis also provides valuable insights into the company’s financial health.
Sharekhan is Bullish on KEI Industries and has recommended a “Buy” rating with a share price target (TP) of INR Rs. 3,600 from its current market price (CMP) of INR 3,120. Let’s take a closer look at their recommendations for the KEI Industries Share Price Target set by Sharekhan.
KEI Industries, a key player in the capital goods sector, is poised to benefit significantly from increased government spending on infrastructure, particularly in the power sector. This surge in investment is expected to aid KEI in achieving its ambitious revenue growth guidance of 15-16% over the next few years.
Expansion and Capacity Addition
A critical factor in KEI’s growth strategy is its focus on capacity expansion. The company plans to add new greenfield capacity, which should be fully operational by FY2026. This expansion is anticipated to generate substantial revenue, reaching around Rs. 4,500 crore at full capacity.
Export Growth Lever
KEI’s export strategy, bolstered by the China +1 policy and a global increase in power distribution infrastructure spending, is set to be another significant growth driver. The company aims to expand its export reach to developed markets, tapping into the opportunities presented by the lack of production capacity in these regions.
Strong Outlook in the Wire and Cable Segment
The wire and cable segment of KEI Industries is expected to see robust growth, driven by government efforts to increase power generation capacity and focus on affordable housing.
The demand is further augmented by private sector investments in expanding core sector capacities. This segment’s growth is expected to outpace the industry average, as many smaller players lack the necessary capital and management bandwidth.
Operational Leverage and Margin Improvement
With the anticipated completion of the greenfield and brownfield expansion by FY2026, KEI expects to see a considerable improvement in its EBITDA margin. This improvement, estimated at 100-150bps, is primarily attributed to the operational leverage benefits.
Risk Factors
Despite the optimistic outlook, KEI Industries faces potential challenges. Volatile input costs could impact margin guidance, and the company’s partial dependence on exports means that fluctuations in forex rates could affect financial performance.
- CMP — Rs. 3,120
- Target — Rs. 3,600
- Type — Buy
- Date — 27 December 2023
- Report — Read Full Report
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