KEI - KEI Industries Ltd. Share Price

KEI Industries Limited management provided a positive outlook for the upcoming financial year 2025-26, anticipating a revenue growth of 17% to 18%, supported by a strong order book and the commencement of commercial production at their Sanand facility. Key points highlighted include:

1. Financial Performance Q4 FY25: The company achieved net sales of Rs. 2,914.8 crore, reflecting a growth of 25.1%. EBITDA grew by 30.3%, reaching Rs. 338 crore, while profit after tax increased by 34.2% to Rs. 226 crore.

2. Annual Results FY25: Total net sales were Rs. 9,736 crore, up 19.9%. EBITDA was Rs. 1,062 crore with a margin of 10.92%. Profit after tax for the year reached Rs. 696 crore, an increase of 19.85%.

3. Export Growth: KEI's export sales for FY25 totaled Rs. 1,267 crore, a 15% year-on-year growth, with cable export growing by 40%. The management emphasized their focus on consistent customer relationships leading to stable export contracts.

4. Future Capacity and Investments: The company incurred a capital expenditure of Rs. 618 crore in FY25, with plans to invest unutilized QIP funds of Rs. 1,300 crore in the Sanand project, expected to be completed by FY26.

5. Growing Market Demand: Management noted drivers for growth as increasing demand in renewables, power generation, data centers, and infrastructure projects, including electric vehicle infrastructure.

6. Order Book: As of April 30, 2025, the total order book was about Rs. 3,839 crore, with a focus on both domestic and extra high voltage cable sales.

7. Margin Stability: While they expect stable operating margins in FY26 due to initial operational costs in the new facility, further improvements are projected in subsequent years as economies of scale are realized.

Overall, KEI Industries positions itself for robust growth driven by increased capacity, a focus on exports, and a favorable market environment.

Q&A Section Summary from KEI Industries Earnings Call

Question 1: Pravin Sahay: How is the domestic market performing in terms of volume?

Answer: Our volume growth is based on production. We have capacity constraints which mean we sell either to exports or the dealer market based on demand. It doesn't matter what market we sell to; what's crucial is sustaining our growth rate according to our production capacity.

Question 2: Pravin Sahay: Can you provide more details on export growth and whether it's one-off?

Answer: Our export growth isn't a one-off; it's due to consistent orders from regular customers. The Q4 export growth stemmed from various orders from established clients and not a singular large order.

Question 3: Pravin Sahay: Looking at the EHV business, what is the revenue guidance moving forward?

Answer: EHV capacity will be ready by FY'26-27, and our focus will be on both domestic and export markets. However, technical constraints limit export growth from our current location. Sanand, once operational, will significantly increase our capacity.

Question 4: Pravin Sahay: Profit margins seem to have declined. What factors contributed to this?

Answer: Margin decline isn't solely influenced by LME prices; while they can elevate sales, margins are quickly adjusted based on raw material costs. Export margins are slightly higher, but overall, we adjust for various factors affecting profitability.

Question 5: Bharat Shah: Is the 17-18% growth guidance specific to FY'25-26 or longer-term targets?

Answer: The 17-18% guidance is for FY'25-26. Beyond that, I expect growth rates will be upwards of 20% as new capacity comes online and we ramp production.

Question 6: Dhruv Bhatia: What caused the decline in cash flow from operations this year?

Answer: The decrease is primarily due to our strategy of paying down payables faster, which significantly reduced our payables while sales increased. This reflects our cash management rather than a decline in operational performance.

Question 7: Akshay Gattani: How is the US market responding post-tariff announcements?

Answer: We delivered all existing orders as planned. Long-term, we are expanding our markets to ensure diverse growth and are not reliant solely on the US.

Question 8: Vidit Trivedi: What is the recovery outlook for EHV sales after the downturn?

Answer: Recovery of the EHV segment has largely happened, with an order book around Rs.603 crore. We anticipate better utilization of capacity moving forward.

Question 9: Shrinidhi Karlekar: How much of the domestic institutional business comes from the power sector?

Answer: The power sector typically constitutes about 30-35% of our domestic institutional sales, both directly and through our distributors.

Question 10: Rahul Agarwal: Are you experiencing any employee attrition?

Answer: We are not facing any attrition issues currently. Our employee retention remains stable despite the growth opportunities in the industry.