KEI Industries Q3FY18: Double digit growth continues; BUY | KEI Industries Q3FY18 Results |

KEI INDUSTRIES LTD continued with its double digit growth story in December quarter FY18 backed by higher revenues & other income, lower finance costs and high volumes in cable segment. PAT was reported at Rs. 390 Mn against Rs. 259 Mn corresponding period previous year growing 51% YOY. QOQ, PAT jumped 37% in Q3 FY18. Revenue was seen at Rs 8887 Mn rising 16% YOY against Rs. 7648 Mn same period previous year. Revenue jumped at even higher rate of 18% sequentially. EBDITA was also seen on a firm footing YOY, rising 19% YOY and was reported at Rs. 916 Mn in Q3 FY18 against Rs. 772 Mn corresponding quarter previous year. On quarterly basis also, EBDITA grew at the same rate, 19% in the current quarter. Operating expenditure stood at Rs. 8044 Mn compared to Rs.6880 Mn corresponding quarter previous year, rising 17% YOY whereas on sequential basis, rise was 19%. As As Revenue & EBDITA moved almost parallely, EDDITA Margin witnessed rise of 21 basis points YOY whereas quarterly rise was just 6 basis points. EBDITA Margin stood at 10.31% in Q3 FY18 vis-à-vis 10.10% corresponding quarter previous year. Net Profit Margin stood at 4.39% in the current quarter rising 100 bp YOY and 61 bp sequentially. One basis point is 1/100th of a percentage. KEI Industries has three main businesses, Cables, Stainless Steel wire & Trunkey projects. Cables contributed 72% of total revenue and grew 20% YOY. Stainless steel wire business de-grew 3% YOY and turnkey projects reported yearly growth of 11%. Net Export sales stood at Rs. 1090 Mn in the current quarter against Rs. 1160 Mn corresponding quarter previous year.

The company has controlled its interest expense which has been declining over the previous 4 quarters. But still constitute 3% of revenues at Rs. 251 Mn in December quarter. Other Income was reported at Rs. 73 Mn in the current quarter compared to Rs. 4 Mn in Q3 FY17. KEI Industries Ltd with market cap of Rs. 28484 Mn is a ranked amongst the top three cable manufacturing companies in India, catering to requirements of a wide spectrum of sectors, such as- Power, Oil Refineries, Railways, Automobiles, Cement, Steel, Fertilizers, Textile And, Real Estate etc. The company has been reporting consistent performance numbers and is expected to improve its margins further in the coming quarters. We recommend BUY for the stock for medium & long term investment with target price of Rs. 495 and PE multiple of 20.46 x FY18E & 15.17 x FY19E

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