KEI Industries Ltd


KEI Industries Ltd


Swing Trading Portfolio

Rs. 513.25
Rs. 615.00
April 23, 2021

Stock Info

Face Value (Rs)
Equity Capital (Rs cr)
Mkt Cap (Rs cr)
52w H/L (Rs)
562.85 - 249.00
Avg Daily Vol (BSE+NSE)

Shareholding Pattern

(as on 31-Mar)
Public & Others
Source: Ace equity, StockAxis Research

Price performance

Return (%)
Source: Ace equity, StockAxis Research

Indexed Stock Performance

KEI Industries Ltd Sensex
KEI Industries Ltd
Source: Ace equity, StockAxis Research

Strong growth in wires & cables due to increase in spend in infrastructure activity.

KEI was incorporated in 1968 as a partnership firm, Krishna Electrical Industries, with prime business activity of manufacturing of cables and wires. In 1992, the firm became a public limited company under the name of KEI Industries Limited (KEI). The company is among India’s leading manufacturers and marketers of cables and wires, with a comprehensive product portfolio ranging from housing wires to Extra High Voltage (EHV) cables. By leveraging its in-house cable production, KEI has strategically forward integrated into the Engineering, Procurement and Construction (EPC) services for power and transmission projects. KEI’s order book as on 31.12.20 is Rs ~2,611 Crore and L1 order of EHV Cable Rs ~130 Crore.

Investment Rationale

Diversified product Portfolio
KEI’s cable division has a wide range of products (portfolio of over 400 products), including power cables (comprises of low tension (LT), high tension (HT) and extra high voltage (EHV) power cables) up to and including 400 kV grade, control and instrumentation cables, rubber cables, winding, flexible and house wires, specialty cables, submersible cables, OVC/poly wrapped winding wires and stainless-steel wires. In the cables segment, KEI continues to have a technical collaboration with BruggKabel AG, Switzerland for the manufacturing of EHV cables. BruggKabel is involved in manufacturing of high voltage/extra-high voltage cables up to 550 kV voltage grade. The company also has a presence in EPC and turnkey solutions segment for infrastructure projects. KEI’s presence across diverse products and geographies enables it to cater to a wide range of customer requirements across sectors.

Emphasis on EHV cable business to continue
The company aims to become one of the few select players globally to manufacture and supply 400kV EHV cables. Stringent requirements for meeting compliances and securing product approvals further make it difficult for new players to enter the market. It has won a landmark order from Tamil Nadu Transmission Corporation Limited for EHV cables of 400kV in FY20 of Rs1.5bn, the largest single order it has received till date for 400kV cables. This along with the strong prequalification credentials of KEI will drive its growth in this space.

Strong backward integration
The company has backward integrated its services by setting up in-house manufacturing of PVC. Backward integration enables it to exercise greater control over the manufacturing process and quality, thereby resulting in improved efficiencies and higher margins. It enables to meet customers’ needs in a timely manner and enhance ability to offer cost-competitive solutions.

Robust growth in infrastructure sector
As a continuation of National Infrastructure Pipeline and Budget 2021 initiatives, the Government will push investments in infrastructure sectors such as power, real estate and housing, railways, roads, petrochemicals and renewable energy. The Transmission and Distribution sector continues to remain in focus in the medium and long-term owing to the Government electrification and housing schemes driving demand for wires and cables.

Outlook & Valuation

The company expects recovery to continue through Tier 2, Tier 3 cities. Distribution expansion will drive growth in the retail segment. Working capital cycle is expected to be normalize in FY22E. Cable & wire business will continue to grow due to increase in growth in infrastructure sectors such as power, real estate, renewable energy etc. At the price of Rs 513, the stock is trading at the PE of 18.7x on TTM basis.


KEI Industries Ltd

Price: KEI IND is in an uptrend making higher highs and higher lows on daily as well weekly charts. The stock is currently placed above all its 21SMA & 50SMA moving averages on weekly time frames which indicates positive setup. The stock has bounce from the recent swing low of Rs.474.70 with increased in delivery volume, which show bullishness for this stock. If we consider pervious swing high of Rs.614.65 level, made on 28 October 2019 stock corrected from that level till low of Rs.208.30 made on 23 March 2020. Drawing Fibonacci Retracement between this level the stock is trading near its 61.8% retracement which is Golden Ratio, which has a value of Rs.459.42. The stock is trading in higher top and higher bottom on weekly chart, with higher bottom formation on oscillator front which is giving bullish stance.

Indicator: The stock is trading above keen moving average (21SMA & 50SMA) on weekly chart, which indicates bullishness for this stock. The RSI on daily chart is pegged at 51.42, indicating the stock has not been overbought. The signal line also suggests the upward move and more momentum is due in the counter from a near term perspective. The ADX trading at 38.73 on weekly chart, well above 25 mark, which shows overall strength is likely to bring in sustained buying from the current levels.

Volume: Price and volume analysis plays an important part in determining overall strength or weakness in the stock. Price and volume pattern are moving in the same direction which reflects the true movements in the stock. KEI IND stock has seen the profit booking with thin volume, which still shows the movement of this stock, is still on bull side.

Conclusion: As an investor one can accumulate around current level and Rs.509 with keeping the stop loss Rs.455 for target Rs.615 in 3 – 6 month of time frame.