KEI Industries Fundamental Analysis


Ye Dil mange more! So welcome back to this special blog where we discuss one more fundamentally strong stock under Rs. 1000. I am sure many of you might have felt at some point in life that investing in good stocks comes at a cost and I wanted to debunk this myth. That is when I started my research on fundamentally strong stocks under Rs. 1000 and this stock is one of those 3 which I shortlisted. I am sure you already know the other 2 from today’s YouTube video. So, without prolonging your excitement let me disclose the third stock - KEI Industries Ltd. Stay tuned till the end of this blog to understand everything about this company. Let’s dive in!
What does the company do?


KEI is one of the leading manufacturers of cables and wires (C&W). But what is the difference between cables and wires? A wire is a single or a group of conductor strands of copper or aluminium whereas a cable is two or more insulated wires wrapped in one jacket. The company supplies a broad range of C&W products and plays an integral role in the development of core sectors of the country, such as Real Estate, Infrastructure, Power, Steel, Fertilizer, Refinery, Transportation, Energy, and Building Materials among many others.

Product Portfolio
Let’s have a look at the product portfolio of the company.

I hope that cables and house wires need no further explanation. Coming to Winding wires, these wires are used for winding submersible pump motors of all sizes. They are used for both Domestic & Industrial applications. Stainless Steel Wires are used in Engineering, Chemical, Construction, and many other industries besides the various type of applications in the manufacturing of kitchenwares, ornaments, utensils. Talking about EPC, the company has forward integrated into Engineering, Procurement and Construction (EPC) services for utility projects having significant cabling requirements. They offer end-to-end turnkey solutions including engineering, consultancy, and project management for Extra high voltage substations, transmission lines, underground cabling, overhead lines, etc. These services are being delivered across core sectors like power, renewables, railways, refineries, petrochemicals, cement, steel among others.

Business Segments
Have a look at the company’s business segmentation and its revenue contributions.


If you observe well under revenue by product segments, revenue for cables and turnkey projects have gone down. Why is that? While reading the conference call transcripts, I found out that the company is reducing its stake in the EPC business due to the elongated working capital cycle, slow recovery of payments, and low margin profile. Due to this, they will limit its contribution to overall sales at 10-15%. This is a strategic decision where they plan to redirect the freed-up resources to the retail segment with an aim to generate 40-50% of overall sales from this segment in the medium term.
Industry Analysis

1. Global W&C Industry
The global wires and cables market size was estimated at USD 183.14 billion in 2020, as per a report published by Grand View Research. It is expected to expand at a CAGR of 4.4% over 2021-28, to reach USD 260.16 billion by the end of 2028. This growth is attributable to the increasing use of cables and wires across the world for transmission and distribution of power, for incremental application in the telecom sector and data centers. Increasing urbanization and commercialization are expected to further bolster investments in the real estate industry, thereby, driving the demand for low voltage insulated wires and cables.


2. Indian W&C Industry
The Indian cables and wires market is projected to grow at a CAGR of 4% between 2021 and 2025, to reach USD 1.65 billion in 2025. Out of a total capital expenditure planned by the government, segments such as energy, roads and highways, urban infrastructure, and railways cumulatively account for ~71% of the total investments, with the energy sector commanding the highest share at 24%. This underscores substantial and sustainable demand for the C&W industry in the coming years.

About the company
KEI Industries Ltd was established in 1968 as a partnership firm under the name Krishna Electrical Industries. Their products are sold in 50+ countries with offices in 5 countries. They enjoy a 7% market share in India’s organized W&C industry and 12% in the institutional segment. They have a network of 1,655 distribution partners across India. The company was able to backwards integrate services by setting up in-house manufacturing of PVC. They continued to be co-sponsors of IPL for the fifth year. KEI was the principal partner to the Rajasthan Royals Team.

1. CAPEX Plans
As stated by the management in the investor’s conference call, the company will continue to invest in increasing the capacity. In the previous years, they had increased housing wires capacity with the setting of a new facility. They are now looking at investing around Rs. 600-700 Crore from internal accruals for growing their capacities for LT, HT, and EHV cables to maintain a CAGR of 17% to 18% against a CAGR of 15% achieved during the last 15 years. The CAPEX will be undertaken over five years. Meanwhile, the company has sufficient capacity to cater to the market demand over the next years by when new production lines will also be available.

Financial Analysis
The 5-year CAGR for Revenue, EBITDA, and PAT are well above average. If we look at quarterly numbers for the same parameters, we can see degrowth on a QoQ basis but YoY growth looks good. The QoQ degrowth happened due to the non-clearance of some orders of EHV cables and the second lockdown in this quarter however, the management is confident that the order will be reflected in Q2.

Apart from this, the company has good ROE and ROCE with low DE. The Current ratio looks good as well. There is no pledging of shares. Currently, the stock appears undervalued when compared to industry P/E.

Technical Analysis
The stock has been in an uptrend. Recently, an ascending triangle was observed, however, the price has been consolidating after it gave a breakout. As per Pivot levels, the next resistance is around 788.64 and 810.20 and support is around 714.80 and 694.70. RSI has been stable at around 60. MACD is bullish but the histogram is showing weakening bullishness due to the recent consolidation.
I hope you enjoyed learning about this company and it added value to your knowledge basket. If you haven’t watched the video on the other 2 interesting yet pocket-friendly stocks which I discussed on my YouTube channel today, click on the image below. Make sure to drop your views in the comments section if you would love more of such videos and blogs. Until next time!


KEI Industries Fundamental Analysis
GuFic Biosciences Limited Fundamental Analysis


I know pretty well that one stock is not enough for Stockoholics like us. Therefore, in this blog, we will be discussing another gem from one of my Thursday Livestreams. The name of the company is Gufic BioSciences Limited. I found this gem along with the other shiny gem, Oriental Aromatics Ltd. whose video is already out on YouTube. If you have liked that video then keep reading this blog as I have covered the whole company analysis of Gufic BioSciences Ltd. here for you.

What does the company do?
The company manufactures pharmaceutical, herbal, consumer care, and API (Active Pharmaceutical Ingredients) products. Out of these four, the first three are very easy to understand but what is the fourth product? Well, APIs are chemical compounds that are the most important raw material to produce a finished medicine. For instance, Paracetamol is the API for Crocin. The company is also into contract manufacturing (Domestic & International). Contract manufacturing occurs when a small business hires another company to produce its products. It is a form of outsourcing.

About the Company:

Founded by Mr Shri Pannalal Choksi in the year 1970, the Choksi family has more than five decades of experience in the Pharma sector. The company has 3 Domestic Brands:
1. Gufic Super Speciality Business includes Critical care medicines and Infertility products.
2. Gufic Mass Speciality Business includes products like Nutraceuticals and Natural products, Pain /Arthritis, Immune Boosters, respiratory products, and mass Anti-infectives that are supplied in bulk to General Practitioners, Pediatricians, Gynaecologists, and Physicians.
3. Gufic Speciality Business includes Gufic Stellar (Range of Unique Ortho-Gynaec products) & Gufic Aesthaderm (Range of Derma-Cosmetics mainly licensed).
Interesting points about the company:
They are pioneers in Lyophilization and one of the largest manufacturers of Lyophilized injections in India. Lyophilization is a water removal process typically used to preserve perishable materials and to extend shelf life. This process is done to avoid degradation, and it improves the stability and solubility of the medicine. Not only this, but they are also the pioneers in antibiotics like Amoxicillin and Dispersible Kid Tab.
Sector Analysis:
a. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. The domestic pharmaceutical industry includes a network of 3,000 drug companies & ~10,500 manufacturing units.
b. According to the Indian Economic Survey 2021, the domestic pharmaceutical market is expected to grow 3x in the next decade. It is estimated at US$ 42 billion in 2021 and is expected to reach US$ 65 billion by 2024 and further expand to reach ~US$ 120-130 billion by 2030.
c. Indian Active Pharmaceutical Ingredient (API) industry is ranked 3rd largest in the world. The majority of APIs for generic drug manufacturing across the globe are sourced from India, which also supplies approximately 30% of the generic APIs used in the US.
(Source: IBEF & Annual Report)

Annual Financial Analysis:(Figures in Rs. Crores)
Quarterly Analysis:

Financial Metrics:

I hope you enjoyed reading about this small-cap company which must have fulfilled your excitement. If you have not yet watched the video on Oriental Aromatics Ltd, click on the image below. Until next time.

GuFic Biosciences Limited Fundamental Analysis