Captains Speak     

Published: May 31, 2024
Updated: May 31, 2024

KEI Industries

Targeting double-digit EBITDA this year

Delhi-based KEI Industries, a leading manufacturer of electrical wires and power cables, aims at 15-16 per cent growth in revenue during the current fiscal year ending March 2025. The company targets an EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 11 per cent for fiscal 2025.

Gupta expects exports also to grow substantially. In the last financial year, the company grew exports by 58%, and this year (FY25), it can grow by 50% given that they have a healthy order book as well as enquiry flow. The company currently has an order book of about Rs 3,500 crore.

ALL INDICES UP

Analysing the performance of the company during Q4 and the year ended March 2024, Mr. Gupta said that net sales in the March 2024 quarter were Rs 2,319.27 crore, up 18.76%. EBITDA stood at Rs 259.72 crore, up 24%. The EBITDA net sales margin was 11.2% against 10.7% yoy. PAT stood at Rs 168.79 crore, up 22.2%, the PAT margin rising to 7.28% from 7.07% last year. Of the Q4FY24 overall sales, the contribution of B2C sales (sales through dealer/ distribution) was approximately 45.53% (46.52% in Q4FY23) and that of institutional cables sales was 44.62% (46.85% in Q4FY23).

Domestic institutional wire and cable sales in Q4FY24 were Rs 676 crore (as against Rs 692 crore in the PY). Domestic Institutional EHV cable sale in Q4FY24 stood at Rs 220 crore (against Rs 99 crore in Q4FY23).

The pending order book as of March 31, 2024 was approximately Rs 3,531 crore (EPC orders Rs 771 crore, EHV cables Rs 374 crore, cables domestic Rs 1,865 crore, exports Rs 521 crore). The company expects a revenue growth of 17% for FY25. The EBITDA margin for current fiscal will be maintained at about 11% and the NP margin is about 7.28%.

Capex incurred in FY24 was about Rs 397 crore (including Rs 84 crore in Chinchpada in Silvasa, Rs 51 crore in Pathredi in Rajasthan and Rs 197 crore in the greenfield plant at Sanand, Rs 9 crore towards land in Khera, Gujarat, and Rs 56 crore on other existing plants).

CAPEX PLANS

The company will continue to incur capex on brownfield capacity expansion in FY25. It will be spending a capex of about Rs 65 crore in the next 1-2 months in Chinchpada for brownfield expansion of wires & cables. Similarly, the LT/HW capacity at Pathredi will be enhanced at an outlay of Rs 125 crore and the company expects to incur the balance Rs 74 crore of capex in the next 3-4 months. The Pathredi brownfield expanded capacity will be commissioned by the end of June 2024.

For the Gujarat greenfield manufacturing plant for LT, HT and EHV cables, construction has already started and commercial production will commence by Q1FY25-26. Of the total capex outlay of about Rs 900-1,000 crore for the greenfield plant over the next 3-4 years, about Rs 500- 600 crore will be during the next fiscal. Capacity utilization for cables was 92%, house wires 71% and industry wires 90%.

Completion of the ongoing brownfield capacity expansion will facilitate a 17% growth for FY25 and FY26. With the completion of the current round of capex and commissioning of new capacities, the company expects to add another 100-150 basis points to the EBITDA margin, and that will happen in FY28.

Specific approvals are being obtained for several countries. The company will sell only cables, not wires, in the US. It added EV charging cables to the product portfolio during FY24, and the commercial production has already started.

E.P.C. ORDERS

The company will maintain EPC orders (other than supply of cables to EPC projects) to 5-6% of total sales, and that will be maintained going forward as well. But the company will capitalize on the power sector EPC boom with the supply of cables rather taking up direct EPC orders. Volume growth in FY24 stood at about 24%. Total borrowings as of March 31, 2024 was Rs 134 crore, including channel finance of Rs 97 crore.