Fortune Scrip     

Published: April 30, 2025
Updated: April 30, 2025

KEI Industries

PAT skyrockets 24 times in 12 years: Sales to hit 25k cr. Mark by 2030

This fortnight we have picked KEI Industries, a leading player in the cables and wires sector, as the Fortune Scrip. Founded way back in 1968 as Krishna Electrical Industries, a partnership corporation with a focus on the production of rubber cables for house wiring, it has during the last 57 years emerged as a global empire that provides comprehensive wire and cable solu tions. Today, the company supplies a broad range of cables and wires products and plays an integral role in the development of core sectors of the country, such as real estate, infrastruc ture, power, steel, fertiliser, refinery, transportation, energy and building materials.

Its segments include power cables and electrical wires, stainless steel wires, flexible instrumentation cables, house wires and winding wires, substations on a turnkey basis up to 400 KV, and conversion of overhead lines to underground lines for complete towns, including substation (High Tension) and LT (Low Tension) distribution systems. By manufacturing high-quality products, coupled with its proven credibility in successfully executing engineering, production and construction (EPC) turnkey projects, KEI has fortified its position as a one-stop solution provider in the cable and wires industry.

The company is well-organised. It has around 40 branch offices and 25 warehouses spread across the country. Besides, it has a wide network of over 30,000 channel partners through whom its products are distributed to clients in over 55 countries.

KEI provides a wide array of cabling solutions. It manufactures and markets extra high voltage (EHV), medium voltage (MV) and low voltage (LV) power cables. As a one-stop shop for products and services which caters to both the retail and institutional markets, KEI has established a strong foothold in the engineering, production and construction (EPC) services industry.

FOREIGN LISTING

The company’s shares are listed on BSE and NSE and its GDR and FCGB are listed overseas in the Luxembourg stock exchange.

The company is doing very well on the financial front. During the last 12 and a half years, its sales turnover has expanded more than five and a half times from Rs 1,658 crore in fiscal 2013 to Rs 9,127 crore during the half-year ended September 2024, with operating profit also spurting more than five and a half times from Rs 171 crore to Rs 921 crore, and the profit at net level shooting up more than 24 times from Rs 26 crore to Rs 639 crore. But we have not picked KEI as the Fortune Scrip on account of its past laurels. We are confident that its future prospects are all the more promising. Consider:

• Prospects for the Indian cable and wire industry – which grew from Rs 60,000 crore in fiscal 2019 to Rs 800,000 crore in 2024 — are buoyant going ahead. This growth was driven by the expansion of high voltage (HV) and extra high voltage (EHV) cables, elasto meric cables and PVC control cables, supported by rural electrification, transmission and development. KEI is well-positioned to outpace industry growth as it has expanded its C&W capacities significantly across multiple facilities in the first half of fiscal 2025. Its cable capacity has gone up 36 per cent and wires capacity 27 per cent in H1FY25 as compared to 2024. It is also undertaking a greenfield expansion in Sanand near Ahmedabad in Gujarat with a planned capex of Rs 1850 crore, to be spent over fiscal years 2025 and 2026. This will increase its cable capacity by 2,63,523 km, a growth of 37 per cent over the existing capacity. As a result, capacity utilisation is projected to go up 70 per cent in FY25-26. It is further expected to touch 90 per cent by 2029, driven by robust demand. What is more, KEI plans to continue investing Rs 600-700 crore annually in growth capex, targeting a CAGR of 17 per cent as against the expected industry growth of 6 per cent. Additionally, the company has acquired land in Baroda (Gujarat) for further expansion

BIGGER FOOTPRINT

• The company has taken strategic initiatives to focus on driving retail business and exports. Over the past three years, KEI has expanded its geographical footprint and strengthened its retail division through promotional campaigns, outdoor marketing and sponsorships that focus on brand visibility. The share of B2C sales in overall revenues grew from 29 per cent in FY2020 to 47 per cent in 2024 and further to 54 per cent in 2025, improving cash flows and reducing receivable periods. The company aims to stabilise the retail trade at 50 per cent of the sales mix by 2026, implying greater stability and growth.
• KEI is also expanding its international presence by entering high-potential regions and building strong partnerships. It has secured UL approval in the US, BASEC approval in Europe, and various construction protocol certifications. The company exports to over 60 countries and has set up marketing offices in the UAE, South Africa, Nepal and Gambia. Its export share of revenues increased to 13 per cent in fiscal 2024, and it plans to raise it to 18 per cent in the next 3 years. The company plans to enhance its offerings from the current portfolio of cable, stainless steel wire and EPC projects, and to explore new segments with significant growth potential.
• The management remains optimistic about the demand outlook in the domestic and ex port markets. It estimates a revenue growth of 19-20 per cent yoy in FY2026 and an EBITDA margin of 11 per cent. The company aims to clock a revenue CAGR of 20+ per cent over FY2026-30 to reach Rs 25,000 crore by 2030.
• Thanks to increased management efficiency, capacity utilisation has improved to 85 per cent for cables, 70 per cent for housing wires and 91 per cent for stainless steel wires during the first nine months of fiscal 2025. At the same time, KEI has reduced raw materials purchases through LCs due to surplus funds, which will help save interest expenses, pushing up the bottomline in the process

BUMPER ORDERS

• Demand for the company’s products is on the rise at home as well as abroad, and the order book is getting thicker by the day. As on September 30, 2024, the order book stood at Rs 3,870 crore. The order book for exports grew 20 per cent, and the EHV order book was Rs 600 crore.
• KEI has ambitious capex plans. During the first 3 quarters of fiscal 2025, the company incurred capex of Rs 426 crore, including Rs 252 crore for the Sanand project, Rs 57 crore for the Chinchpada project, Rs 27 crore for the Bhiwadi project and Rs 49 crore for the Pathredi plant. The capex in the last quarter of 2025 was around Rs 400 crore, and for fiscal 2026 it will be around Rs 650 crore.

E.H.V. NICHE

• KEI is one of the few Indian players with the ability to manufacture EHV cables above 220 KV, and is also amongst select players globally to manufacture EHV 400 KV cables. This was possible as the company entered into a technical collaboration with Swit zerland-based Brugg Kabels AG, which has over 100 years of experience in manufacturing EHV cables up to 550 KV. This strategic tie-up enables KEI to provide high-end designs and process backup services, benchmarked to the highest global standards. There are stringent requirements for meeting compliances and securing product approvals. These pose formi dable entry barriers in the EHV cable space, generally taking new entrants eight years to enter the market. This gives KEI a compelling advantage to seize the growing opportunities in the EHV cables market. Though, during the current bearish phase in the stock market, foreign institutional in vestors (FIIs) reduced their stake in KEI from 29.8 per cent in Q3FY2025 to 25.3 per cent in Q4FY2025, mutual funds raised their stake from 13.33 per cent in December 2024 to 21.9 per cent by March 2025. What is more, Goldman Sachs upgraded the stock from neutral to 'BUY'. The share price of KEI, which was bid up to Rs 5,041, came down to Rs 2,443 during the current bearish phase in the market. But lower levels attracted some knowledgeable buying and the share price is now quoted around Rs 2,928. Of course, the share price may remain subdued and even decline modestly during this bearish phase in the short term, but the long-term prospects for the stock are buoyant and discerning investors will do well to accumulate these stocks with a long- term perspective. They are sure to reap rich rewards once the current bearish phase is over.