KEI Industries' Outlook For FY25
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TVTranscript
00:00Let's shift our focus to KEI Industries. My colleague Anushi spoke to Chairman and
00:12Managing Director Anil Gupta, who spoke at length about the company's growth prospects
00:17ahead. Listening to a chunk of that conversation.
00:21The capex at Chinpada is now complete and we have already, it was a brownfield expansion.
00:30That means the expansion within the ongoing factory and we have already started production
00:37from the additional capacities created over there from July onwards. Regarding Sanand,
00:46the construction work is in full swing and we expect the first phase of the project to
00:53be completed by either end of the March or in the first quarter of FY26. So far as capex
01:05is concerned, this year we expect to do an overall capex of around 700 to 750 crore rupees
01:14in all our plants where the major will be the Sanand.
01:18Okay, Mr. Gupta and considering the additional capacity coming in, what is the revenue projection
01:24that we are making? Is it going to be in the similar range of 16 to 17% and also on the
01:29volume front as well, if you can give us a guidance that we can look forward beyond FY26.
01:34So if you can take the next five years in consideration.
01:39This year we expect to grow by 16 to 17% because this incremental growth will come
01:50from the brownfield expansions which we have done in last year and this year at Silvassa
01:56and Bewadi and Pathredi. So far as Sanand is concerned, that contribution will come
02:02only in the next financial year. So we expect that with this expansion in Sanand and existing
02:12expansions, we should continue to grow by 16 to 17% over the next four years and in
02:21between maybe next year or so we will plan something else for the future years.
02:30Okay, so 16 to 17% of revenue growth that we should be expecting for the next four years.
02:35All right, that's fair. Now if I'm looking at your mix in the main cable and wire which
02:39is your heavyweight segments, the focus has shifted towards the dealer side. The mix is
02:44now inched upwards from 47% last year to almost at 53% compared to the institutional side
02:52which has gone down. Want to understanding your perspective on this, what is the positioning
02:58that you are looking towards? Should we expect a similar level for the new quarters to come
03:04as by and what is the margin profile? Do the margins profile differ across these two segments?
03:11We expect to maintain around 50% from B2C and 50% from B2B in the coming quarters and
03:25so far as margins are concerned, I think the margin profiles almost remain similar.
03:31Okay, so margin profiles remain similar and that is in the 10 to 11% that we should be aiming
03:37for FY25 onwards. But beyond that, you have guided that we can expect some sort of improvement.
03:43So can you talk more on that sense as well? Yeah, we expect to maintain a bit of around 11%
03:52in this financial year and maybe we are definitely trying to improve upon EBITDA by
03:590.5% to 1% I mean by improving the customer profile and also by achieving better economies
04:09of scale and better efficiencies in all our brands. So this will be the aim and
04:16we will try to achieve better than 11%. Okay, that's fair. Mr. Gupta, now coming to the other
04:23leg of the businesses on the export side. Now in Q1, we did see about a 24% of a dip that was on
04:29the account of logistic issues. Want to understand what happened in the quarter gone by and in the
04:35next quarter, what can we expect because there was a shortfall revenue which you are expecting
04:41to make towards Q2 and Q3. So wanted to understand more on the export side of the business.
04:48In this financial year overall, for the full year, we expect to grow by around 35% to 40%
04:54in exports. We had already explained the reasons of dip in the first quarter but that will be
05:01made up in this quarter. But overall, full year looks promising because we have a very strong
05:08order book position and we are also improving our customer penetration in many countries.
05:19Okay, so 35% to 40% is the growth level for this year that we should be looking out for.
05:24Correct. Okay, and now coming to your order book, now if we compare the order book, now that has
05:30stood at about 3,600 crores. Want to get your perspective on what were the new order inflows
05:36which are taking place, where are we seeing more opportunities and what is the kind of pipeline
05:41that you are looking towards for this financial year? We have a very strong order booking of
05:48recurring nature of cables, supplies, which we normally execute within three to four months,
05:56that is B2B. And so far as B2C orders are concerned, they are mostly executed within
06:01maximum two to three weeks, partly from the inventories or stocks we are holding or by
06:11quickly manufacturing it. So we are not including B2C orders in our order book position
06:19and the order book position mainly consists of the B2B orders and also some EPC and EHV cable orders.
06:30Okay, so a higher mix of B2B orders that we are looking forward as of now.
06:34Now, there was a very interesting progress report which suggested that your branded housing wires
06:40and cable business is set for more room for market share expansion. I wanted to take in your
06:47perspective, do you agree with the statement? Because if we look at your cable and overall
06:51cable and wire market share, that stands at about 12%. And if you come to the branded part, about
06:56seven to eight percent. So what is your outlook on this? Where can we see these numbers going
07:02upwards towards in the next two, three years as we move forward with the business?
07:07See, this market size is growing and we are improving our market penetration by
07:14tapping in untapped areas where our dealers are not present or where our market is not there. So
07:22we are improving our penetration and we hope that with the increase in the market size and
07:28our penetration in the untapped markets, we should be able to grow by around 25% per year
07:35in the branded house wire segments and thereby taking it to substantially
07:42improved levels in the next three years. Okay, so 25% is the growth that we maintain for the
07:48branded housing wire and cable business. Now, this is one offhand question. Now, a lot of wiring
07:54companies are now involved in E-beam cables. Now, since you're involved in exporting cables for the
08:00solar projects and wind projects, I wanted to understand, are you also involved in these works
08:06or you're planning to launch in a similar level? What is your perspective on the same?
08:11We are manufacturing equivalent variety of solar wires, but by continuous vulcanization
08:20rubber process. However, we are also coming up and launching electron beam cables in our
08:28new Sanand project for which the construction work is under progress and we have already ordered
08:35the planted machinery for electron beam wires in that facility.
08:43All right, so plenty happening. In fact, both the stocks we've spoken about today are very,
08:50very interesting. But with that, completely out of time on this edition of this mid-show from
08:55myself, Mahima and everyone who puts the show together. Thanks so much for watching.
08:58More on the other side. Stay tuned to NDTV Profit.