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/-

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