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What is the story about?
Shares of KEI Industries Ltd. opened as much as 7% lower on Tuesday, May 5, in response its its March quarter earnings, that came in ahead of expectations. However, the stock received a downgrade from brokerage firm Morgan Stanley.
Morgan Stanley has downgraded KEI Industries to 'Equal Weight' and raised its price target to ₹5,213.
Despite higher commodity prices and a weaker rupee, management aims to grow revenue at 20% year-on-year.
Q4 reflects soft volume growth. Margins are expected to benefit from operating leverage but may face headwinds due to increased competition in the wires segment.
The brokerage said it moved to 'Equal Weight' after a 35% outperformance versus the Sensex over the past six months.
KEI Industries Q4 update
Revenue rose 19% year-on-year to ₹3,476 crore, slightly above expectations, led by 18% growth in the wires and cables segment and 22% growth in stainless steel wires, while the EPC segment remained largely flat.
The topline growth was primarily value-led, aided by price pass-through of higher raw material costs.
EBITDA increased 27% to ₹381 crore, beating estimates, while margins expanded 70 basis points to 11%. Gross margins improved 150 basis points to 25.2%, and profit after tax rose 26% to ₹284 crore, also ahead of expectations.
According to Equirus, underlying volume growth may have declined on a year-on-year basis despite the strong revenue print.
The brokerage also said that overall EBITDA margins were the highest since Q4FY24, while margins in the wires and cables segment hit their highest level since Q2FY21.
Segmentally, wires and cables margins improved 140 basis points to 12.4%, while stainless steel wires margins expanded sharply by 400 basis points to 9%. However, the EPC segment continued to see margin pressure.
For FY26, the company reported revenue growth of 21%, exceeding its earlier guidance of 19-20%. The order book stood at ₹3,585 crore, down 9% sequentially and 6% year-on-year.
Morgan Stanley has downgraded KEI Industries to 'Equal Weight' and raised its price target to ₹5,213.
Despite higher commodity prices and a weaker rupee, management aims to grow revenue at 20% year-on-year.
Q4 reflects soft volume growth. Margins are expected to benefit from operating leverage but may face headwinds due to increased competition in the wires segment.
The brokerage said it moved to 'Equal Weight' after a 35% outperformance versus the Sensex over the past six months.
KEI Industries Q4 update
Revenue rose 19% year-on-year to ₹3,476 crore, slightly above expectations, led by 18% growth in the wires and cables segment and 22% growth in stainless steel wires, while the EPC segment remained largely flat.
The topline growth was primarily value-led, aided by price pass-through of higher raw material costs.
EBITDA increased 27% to ₹381 crore, beating estimates, while margins expanded 70 basis points to 11%. Gross margins improved 150 basis points to 25.2%, and profit after tax rose 26% to ₹284 crore, also ahead of expectations.
According to Equirus, underlying volume growth may have declined on a year-on-year basis despite the strong revenue print.
The brokerage also said that overall EBITDA margins were the highest since Q4FY24, while margins in the wires and cables segment hit their highest level since Q2FY21.
Segmentally, wires and cables margins improved 140 basis points to 12.4%, while stainless steel wires margins expanded sharply by 400 basis points to 9%. However, the EPC segment continued to see margin pressure.
For FY26, the company reported revenue growth of 21%, exceeding its earlier guidance of 19-20%. The order book stood at ₹3,585 crore, down 9% sequentially and 6% year-on-year.
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