KEI Industries under pressure amid IT searches across multiple locations

Shares of KEI Industries

Ltd. declined nearly 3% on Thursday, May 7, after sources told CNBC-TV18 that the Income Tax Department is conducting search operations at the company.

According to sources, the searches are currently underway across nearly six locations, including Delhi.



The development comes days after KEI Industries reported its March quarter earnings, following which Morgan Stanley downgraded the stock to ‘equal weight’ from ‘overweight’, while raising its price target to ₹5,213.

The brokerage said the downgrade follows the stock’s sharp 35% outperformance versus the Sensex over the last six months.

Despite elevated commodity prices and a weaker rupee, the company’s management has guided for 20% YoY revenue growth.

However, Morgan Stanley said that Q4 reflected softer volume growth, while margins could face pressure from rising competition in the wires segment, even as operating leverage remains supportive.

For Q4FY26, KEI Industries reported a 19% YoY increase in revenue to ₹3,476 crore, marginally ahead of estimates.

Growth was led by an 18% rise in the wires and cables segment and 22% growth in stainless steel wires, while the EPC business remained largely flat.

The company said topline growth was primarily value-led due to pass-through of higher raw material prices.

EBITDA rose 27% YoY to ₹381 crore, beating expectations, while EBITDA margin expanded 70 basis points to 11%. Gross margin improved 150 basis points to 25.2%, while net profit increased 26% YoY to ₹284 crore, also ahead of estimates.

According to Equirus Securities, underlying volume growth may have declined on a YoY basis despite the strong revenue growth.

The brokerage added that overall EBITDA margins were the highest since Q4FY24, while margins in the wires and cables business reached their best level since Q2FY21.

Segment-wise, 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 witness margin pressure.

For FY26, KEI Industries reported 21% revenue growth, exceeding its earlier guidance range of 19–20%. The order book stood at ₹3,585 crore, down 9% sequentially and 6% YoY.