KEI Industries shares upgraded by JPMorgan on two key factors; Check price target

Wires and cables company, KEI Industries Ltd., has been upgraded by global investment banking firm JPMorgan in its latest note on Tuesday, October 27.

JPMorgan has upgraded KEI Industries to "overweight" from its earlier rating of "neutral", but has slashed its price target on the stock to ₹4,650, from ₹5,650 earlier. The revised price target from JPMorgan implies a upside potential of nearly 20% from current levels.

The firm believes that the recent 35% correction seen in the KEI Industries share price from the recent peak has made its risk-reward more attractive. It also cited a potential improvement in the company's underlying growth and a shift in mix to protect margins as two other reasons why it upgraded the stock.

KEI Industries has underperformed both, its peer Polycab, and the Nifty 50 index, since September 3, when UltraTech announced the launch of its Cables & Wires business. KEI Industries shares, since then, are down 27%, compared to a 12% drop in Polycab, and a 5% fall on the Nifty 50.

JPMorgan attributed the underperformance to the two negative catalysts, one being UltraTech's entry into the space, and a reset in margin expectations from the company.

We believe KEI Industries continues to offer exposure to the structural theme of electrification / energy transition, with applications across power T&D, renewables, infrastructure, data centers, mobility electrification and exports.

JPMORGAN ON KEI INDUSTRIES

The firm has cited a steep correction in copper prices as a key downside risk for the stock from hereon.

KEI Industries has received at least eight upgrades in recent times after its second quarter results, following which, the stock had seen a steep correction.

Upgrades Received By KEI Industries

Firm	Old Rating	New Rating	Old Target (₹)	New Target (₹)
JPMorgan	Neutral	Overweight	4,650	5,650
Elara Capital	Accumulate	Buy	4,660	5,820
Anand Rathi	Hold	Buy	5,706	5,054
CLSA	Hold	Outperform	5,170	4,845
Asian Markets Securities	Hold	Accumulate	5,530	4,470
BOB Capital Markets	Hold	Buy	5,700	4,900
InCred Research	Hold	Add	5,760	5,000

It now has more "buy" recommendations than it had since December 2022, with 23 out of the 27 analysts tracking the stock turning bullish. Three others have a "hold" recommendation, while one has a "sell" rating. The consensus estimate of price targets implies an upside potential of 30% from current levels.

Shares of KEI Industries ended 4.7% higher on Monday at ₹3,899.5. The stock is still down 13% on a year-to-date basis.