KEI has guided for 20% revenue growth till FY28 supported by commercial production of LT and HT cables in Q1FY26 and completion of Sanand plant by end of FY26 driven by strong demand in domestic & export markets. Major driver for domestic demand are power generation sector (Solar and Wind) and power distribution and transmission companies, as per the management. The company aims to improve its EBITDA margin once Sanand plant becomes operational. KEI reported strong rev growth in HT cables (+65.6% YoY), LT cables (+38.5% YoY) & housing wires (+37.9% YoY) in Q4FY25. Exports saw a significant increase this quarter +91.6% in Q4FY25 while institutional cable exports grew by 219% . We upward revised our earnings estimates for FY26 by 3.8% to factor in increased capacity utilization from existing plant, strong domestic and international demand, and tweaked FY27E earnings. We estimate revenue/EBITDA/PAT CAGR of 18.2%/21.3%/20.6%. Maintain ‘BUY’ at TP of Rs4,278, valuing at 40x FY27 earnings.
Revenue grew by 25.1%, PAT up by 34.3%: Revenue grew by 25.1% YoY to Rs29.1bn (PLe: Rs27.8bn). C&W segment grew by 34.5% YoY to Rs27.9bn, Stainless steel wires revenue declined by 20.0% YoY to Rs462mn, while EPC revenue declined by 34.4% YoY to Rs2.2bn. EBITDA grew by 18.1% YoY to Rs3.0bn (PLe: Rs2.9bn). EBITDA margin contracted by 60bps YoY to 10.3% (PLe: 10.6%). Cables EBIT margin expanded by 10bps YoY to 11%, EPC EBIT margin contracted by 480bps YoY to 7.6%, while EBIT margin of stainless steel wires expanded by 310bps YoY. PAT stood at Rs2.3bn (+34.3%YoY, PLe: Rs2.0bn). Domestic institutional W&C sales declined by 2.3% YoY, whereas export inst sales grew by 219.1% YoY. Dealer/distributor driven sales grew by 41.8%. Dealer count stood at ~2,082 vs 2,060 in Q3FY25. Pending order book stood at Rs38.4bn. Net cash stood at Rs173.7bn.
Con call highlights: 1) The company has guided revenue growth of 18% for FY26. 2) Volume growth in W&C segment was 21%/20% YoY in Q4FY25/FY25. 3). In FY25, the company incurred a total capex of ~Rs6.18bn, with Rs680mn at Chinchpada (Silvassa), Rs580mn at Pathredi in Rajasthan, Rs3.84bn in Sanand, Rs320mn in Bhiwadi, and Rs760mn at other locations. 4) The company expects its market share from FY27 once new capacity becomes operational. 5) Commercial production of LT and HT cables will commence by end of Q1FY26 and Sanand project will be completed by end of FY26. 6) Pending order book including EPC stands at Rs3.8bn. EPC Domestic Rs 4.23bn, EPC EHV Rs 6.03bn, Domestic Cable Rs 21.12bn and Export Cable Rs 7.01bn. 7) Capacity utilization for FY25 stood at 85%/71%/89%/38% in Cable /Housing Wire/Stainless Steel/Communication cable division respectively. 8) In the wires business, East/West/North/South accounts for 15.55%/28.53%/37.73%/18.19% of revenue in FY25. 9) The company derived 51.38%/52.26% of revenue from dealers/distributors in Q4FY25/FY25. 10) 70% of dealer/distributor are covered by channel financing in FY25.