Domestic demand to recover post lockdown- KEI Industries
Update on Indian Equity Market:
On Tuesday, Nifty closing down 8 points at 15,575. Adani Ports (3.7%), ONGC (3.5%), and Bajaj Finance (2.8%) were the top gainers on the index while JSW Steel (-2.3%), TATA STEEL(-2.2%), ICICI BANK (-1.9%) were the top losers for the day. Among the sectoral indices, Private Bank (-0.9%) and Metal (-0.8%), and Realty (-0.52%) lead the losers, while Media (0.32%) and IT (0.11%) lead the gainers.
Excerpts of an interview with Anil Gupta, CMD of KEI Industries aired on CNBC TV 18 on 31st May 2021:
- Pent-up demand is strong and the management is confident that the sales will pick up post lockdown restrictions end.
- The Company posted a 17% YoY growth in EBITDA margin and 47% YoY growth in the bottom line. The results are indicative of the long-term growth prospects of the company.
- The company is currently working at full capacity and is expected to stock up inventory in order to be ready when the demand picks up.
- Retail sales are currently under pressure due to lockdown but the company is showing good order book growth.
- KEI Industries currently has an order book of Rs 26000 mn with steady growth however labor shortage and site closures have impacted the execution rate.
Asset Multiplier Comments:
- Like many consumer durable companies, KEI industries has suffered the adverse effects of lockdown but there are better days ahead.
- The company has is well poised to reap the benefits of cost rationalisation and volume expansion growing ahead.
Consensus Estimates (Source: market screener website):
- The closing price of KEI Industries was ₹622/- as of 31-May-2021. It traded at 17x/ 14x the consensus EPS estimate of ₹ 36/ ₹ 43 for FY22E/23E respectively.
- The consensus price target is ₹ 664/- which trades at 15x the EPS estimate for FY23E of ₹ 43/-
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”