Buy KEI Industries; target of Rs 505: Dolat Capital
Dolat Capital’s research report on KEI Industries
The KEI Industries (KEI) results were more than our estimates, driven by strong sales in the retail segment and growth in EPC and institutional orders. KEI is focusing on expanding its dealer network, as this sales channel offers higher brand stickiness as well as better margins and lower working capital requirement. The institutional sale growth was a positive and management expect this division to grow in double digits. The EHV sales was another growth engine and is expected to rise further, considering the government push for underground electrification and metro transport. Brand development and distribution expansion will propel growth in the retail segment. We also believe the increase in proportion of the retail segment will control the need for working capital.
The improvement in the balance sheet is a result of the strong macro demand and the optimal product mix. We reiterate a Buy rating, with a target price of ` 505. (14x FY21E).
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