“Ultratech’s launch has raised investor considerations on KEI’s future profitability. We consider present market worth components in approx. 300 bps loss in market share for KEI over FY26-30E in its retail phase and no offset from energy or exports,” the brokerage mentioned in a notice.
Jefferies has factored in a 50 bps compression in KEI Industries’ margins over FY26-30E, whereas noting that the corporate’s retail phase stays the important thing space of danger from UltraTech Cement’s entry into wires and low-tension cables. Retail contributes 54% of KEI’s income and is primarily pushed by housing.
KEI has steadily elevated its retail share via branding and vendor growth since 2017-18, with its retail market share rising from 7% in FY17 to 21% in FY26. Over the identical interval, the trade’s unorganised share declined from 35-40% to round 25%.
Jefferies expects KEI’s growth into Europe and the US over the previous 2-3 years to start out yielding outcomes. It additionally expects home energy transmission capex to rise 2.6x in FY26E-30E versus FY21-25.
The brokerage’s worth goal assumes KEI’s retail market share stays at 22% over FY27E-30E, whereas EBITDA margin rises by 50 bps to 11.5%. Nonetheless, even when KEI loses some market share, Jefferies believes the corporate is properly positioned to offset the affect via home energy transmission cable gross sales and exports.
KEI Industries is buying and selling at 36x P/E on September 2027E earnings, in keeping with its five-year common. Jefferies’ goal worth reduce values the corporate at 40x P/E on September 2028E earnings, in contrast with 45x earlier, because it components in some a number of compression following a extra aggressive-than-expected launch by UltraTech.The revised valuation stays at a premium to the five-year common P/E of 36x, supported by enhancing visibility on exports and energy transmission. Jefferies expects KEI’s EPS to develop at a 20% CAGR over FY26-29E. The important thing draw back danger, in response to the brokerage, is sharp pricing competitors in cables.
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Nonetheless, KEI Industries’ administration mentioned the corporate can defend its retail market share, supported by its established model and dependable vendor community, whereas its costs stay aggressive at 3-4% decrease than different gamers. Administration maintained its FY27E steerage of 25% income progress and 11-12% EBITDA margin, which suggests 3-13% upside potential to the brokerage’s FY27E EPS estimates.
Inside Energy T&D, Additional Excessive Voltage (EHV) cables stay extremely worthwhile, with solely two home gamers, KEI and Common Cables, presently current within the phase.
(Disclaimer: Suggestions, recommendations, views and opinions given by the consultants are their very own. These don’t symbolize the views of The Financial Instances)
