My Investment Idea No. 2: - KEI Industries

Long Term Investment Idea No. 2

KEI Industries

1.     Face Value = Rs 2

2.     Equity = 16.90 Cr

3.     Price: Rs 475

4.  KEI Industries was established in 1968 as a partnership under the name KRISHNA ELECTRICAL INDUSTRIES with prime business activities of manufacturing house wiring rubber cables. Today it is grown in an Empire offering holistic wires and cables solutions with a global presence. The company offers an extensive range of cabling solutions. KEI Manufactures and markets Extra High Voltage (EHV), Medium Voltage (MV) and Low Voltage (LV) power cables. Serving both retail and institutional segments, KEI has emerged as one stop shop for products and services with its growing presence in the Engineering, Procurement and Construction (EPC) services domain. They are exporting their products to over 45 countries.

5.    The stock has risen from Rs 10 in 2009 to Rs 614 in Nov 2019 and is now trading at around Rs 475.

Company Results Overview

Yearly:
     
                          Net Sales (NP)/ Net Profit (NP)/ Earning Per Share (EPS)

6.    2015: Rs 2033.02 Cr/  Rs 34.25 Cr  /  Rs  4.05
7.    2016: Rs 2351.02 Cr/  Rs 62.55 Cr  /  Rs  7.40
       Yearly YoY Growth in NP =  82.62%
8.    2017: Rs 2628.46 Cr/  Rs 93.65 Cr  /  Rs 11.08
       Yearly YoY Growth in NP =  49.72%
9.    2018: Rs 3465.50 Cr/  Rs 144.76 Cr/  Rs 17.13
       Yearly YoY Growth in NP =  54.57%
10.  2019: Rs 4230.98 Cr/  Rs 180.86 Cr/  Rs 21.40
       Yearly YoY Growth in NP =  24.93%

Quarterly:

11.  Jun 18 (FY 2019): Rs  886.15 Cr /  Rs 32.22 Cr / Rs 3.81
12.  Jun 19 (FY 2020): Rs 1081.36 Cr/  Rs 45.73 Cr/  Rs 4.66
       Quarterly YoY Growth in NP =  41.93%
13.  Sep 18 (FY 2019): Rs 998.31 Cr  /  Rs 41.45 Cr/  Rs 4.90
14.  Sep 19 (FY 2020): Rs 1233.70 Cr/  Rs 76.08 Cr/  Rs 9.00
       Quarterly YoY Growth in NP =  83.54%

Half Yearly (HY):

15.  HY FY 2019: Rs 1884.46 Cr/  Rs    73.67 Cr/ Rs 8.71
16.  HY FY 2020: Rs 2315.06 Cr/  Rs  121.81 Cr/ Rs 13.66
       HY YoY Growth in NP =  65.35%

17.  It is worth noting that KEI Industries made a profit of Rs 180.86 in full FY 2019 where as it has made a profit of Rs 121.81 Cr in first 6 months of FY 2020 which is 65.35% up as compared to net profit of Rs 73.67 in first 6 months of FY 2020. This I consider as a bright spot in its earnings.

Company's Debt:

18.  FY 2017: Rs 813 Cr
19.  FY 2018: Rs 842 Cr
20.  FY 2019: Rs 600 Cr

Company's Manufacturing Plants:

21.  Company has four Manufacturing Plants located in New Delhi, Rajasthan and Silvassa.

Rationale For Investment as Per Google Research:

22.  Country has total of 65000 km Railway Line out which only 30000 km has been electrified since Independence. Government has plans for 100% electrification in next 4-5 years.

23.  In addition, Indian railways is making dedicated Freight Corridor which would also be electrified.

24.  It is learnt that we may have dedicated high tension cables for Industrial use. So in future, you may see two parallel lines running through the Indian Farms.

25.  Most of the Indian cities would have underground electric cables in Future.

26.  Exports of the Company is likely to grow 30-35%

27.  Housing Sector revival would further enhance consumption of housing cables.

Conclusion:

28.  Though it is a small cap share but it must be kept in mind that it has been registering tremendous growth in its Sales and NP Profit since 2009. With Government's thrust on Power Infrastructure, companies with integrity are bound to perform.

29.   Most of the information provided above has been taken from the internet and which may or may not be correct. Therefore, do your own research before investing in KEI Industries.

 Disclaimer:

The Post written above is not to be taken as a " Buy recommendation" by the author for KEI Industries and no one should take a decision to buy this stock based on the information given in this blog. This blog is written only to publish the views of the author, which could be right or wrong. You must consult your Financial Advisor before buying KEI Industries.