Breaking Down KEI Industries Limited Financial Health: Key Insights for Investors

Dig into KEI Industries Limited's latest financial snapshot to see why investors are talking: Q2 FY26 revenue jumped 19.38% year‑over‑year to ₹2,726.35 crore (H1 FY26 revenue: ₹5,317 crore, up 22.25%), supported by a healthy order book of ₹3,921 crore and robust dealer/distribution contribution of 54.12% in Q2; profitability shows momentum with Q2 PAT at ₹195.75 crore (up 30.8%) and EBITDA growth (Q1 FY26 EBITDA ₹297.62 crore, +28%), while liquidity and solvency remain resilient with a net cash position of ₹732 crore and disciplined working capital (declining receivables, inventories rising in line with sales); growth is underpinned by aggressive capex - a near-final ₹2,000 crore Sanand facility expected to boost top line materially, FY25 capex >₹1,100 crore (₹312 crore spent H1), and FY26 guidance of ₹400-700 crore - even as risks persist: cable utilisation pressures (up to 95% in Q3 FY24), a sharp 116.19% YoY rise in exports to ₹425 crore in Q2 FY26, a 41.12% fall in EPC sales in Q2, and a market reaction that saw the share price slip over 5% to ₹4,428.50 on October 16, 2024; with QIP activity (52,63,157 shares raising ₹2,000 crore and an reported unutilized amount of ₹13,848.31 crore invested in bank deposits), evolving margins (EBITDA margins around 11% and PAT margins near 7.5%), and capacity expansion plans - this analysis breaks down the numbers and trade‑offs investors need to assess before deciding whether KEI's valuation versus peers and exposure to institutional/export contracts align with their portfolio objectives

KEI Industries Limited (KEI.NS) - Revenue Analysis

• Q2 FY26 revenue: ₹2,726.35 crore - up 19.38% YoY from ₹2,283.82 crore in Q2 FY25.
• H1 FY26 revenue: ₹5,317 crore - up 22.25% YoY versus H1 FY25.
• Order book: approximately ₹3,921 crore, providing visibility into future revenue conversion.

• Channel mix: Institutional + exports = 41.55% of sales; Dealer & distribution = 54.12% of sales in Q2 FY26.
• Dealer/distribution sales grew 17.31% YoY in Q2 FY26, reflecting strong retail traction.
• Growth drivers include promotional campaigns, outdoor marketing and sponsorships that expanded geographic reach and strengthened retail visibility.

KEI Industries Limited (KEI.NS) - Profitability Metrics

• Q1 FY26 showed improvement in margins and operating profitability versus the prior-year quarter.
• Q2 FY26 delivered a notable sequential and year-on-year rise in PAT driven by higher volumes and margin retention.
• Q3 FY25 continued the trend of modest margin expansion versus Q3 FY24, reflecting operational leverage.

• EBITDA growth: Q1 FY26 reported EBITDA of ₹297.62 crore, up ~28% year-on-year - a key driver of margin resilience.
• Margin trajectory: EBITDA margin rose to 11.49% in Q1 FY26 from 11.25% in Q1 FY25; PAT margin improved to 7.56% from 7.28%.
• PAT trends: Q2 FY26 PAT at ₹195.75 crore (stated +30.8% vs ₹150.25 crore in Q1 FY25) and Q3 FY25 PAT ₹164.81 crore (up from ₹150.67 crore in Q3 FY24) indicate consistent profitability gains across recent quarters.

KEI Industries Limited (KEI.NS) - Debt vs. Equity Structure

• QIP raised: ₹2,000 crore via allotment of 52,63,157 fully paid-up equity shares to eligible QIBs (Nov 2024).
• Primary uses of QIP proceeds:
  • Setting up a new cable manufacturing facility at Sanand, Ahmedabad.
  • Repayment/prepayment of outstanding debts.
  • General corporate purposes.
• As of March 31, 2025, an amount of ₹13,848.31 crore (unutilized QIP-related liquidity) was invested in bank deposits with scheduled banks.

• Implications for capital structure:
  • Equity base expanded materially via the QIP, improving equity cushion and reducing reliance on incremental debt for near-term expansion.
  • Proceeds explicitly earmarked for debt repayment/prepayment, indicating a strategic move to lower financial leverage and interest burden.
  • Large short-term liquidity parked in bank deposits (₹13,848.31 crore) provides flexibility to fund capex (FY25 capex > ₹1,100 crore; ₹312 crore already spent in H1 FY25) and FY26 capex guidance of ₹400-700 crore without immediate reliance on debt markets.
• Operational capacity and leverage considerations:
  • Healthy capacity utilization (Cables 78%, House wires 71%, Stainless steel wire 93%) supports revenue generation to service any residual debt and fund ongoing capex.
  • Planned capex for FY26 (₹400-700 crore) is moderate relative to available liquidity, suggesting limited incremental leverage if management deploys existing deposits before tapping borrowings.

KEI Industries Limited (KEI.NS) - Liquidity and Solvency

• Net cash (including acceptances): ₹732 crore as of Q2 FY26, reflecting a net cash position on the balance sheet.
• Order book: approximately ₹3,921 crore, providing multi-quarter revenue visibility and supporting working capital needs.
• Working capital trends: trade receivables have declined versus March 2025, indicating improved collection efficiency; inventories have risen in line with sales growth (preparing for demand without signs of overstocking).
• Trade payables have increased significantly, signaling extended credit terms from suppliers and aiding cash conversion.
• Geographic diversification: operations across 60+ countries with offices in four countries, which supports revenue stability and risk diversification.

KEI Industries Limited (KEI.NS) - Valuation Analysis

• Share price movement: Declined by over 5% to ₹4,428.50 on October 16, 2024 despite operational momentum.
• Revenue growth: Reported 17.21% year-over-year revenue growth in Q2 FY25, indicating demand traction in the quarter.
• EPS trend: Earnings per share for Q3 FY24 stood at ₹17.00, up 17% from ₹14.00 in Q3 FY23.
• P/E and market cap: Specific price-to-earnings (P/E) ratio and market capitalization figures are not specified in the available sources; these should be obtained from real-time market data before final valuation judgments.

• Relative valuation: Compare implied multiples (P/E, EV/EBITDA) using up-to-date market cap and earnings to peers in cables, wires, and electrical infrastructure to gauge premium/discount.
• Growth vs. price reaction: The >5% intraday price drop on October 16, 2024 occurred despite 17.21% revenue growth in Q2 FY25 - indicating possible short-term market sentiment or news-driven selling that may not reflect fundamentals.
• Earnings momentum: A 17% YoY increase in EPS (Q3 FY24) supports earnings momentum, but investors must annualize and confirm consistency across additional quarters.
• Data gaps: Because P/E and market cap are not provided in the cited sources, obtain current market-data feeds to calculate forward and trailing multiples before making allocation decisions.
• Qualitative factors: Order book health, margin sustainability, commodity/input cost trends, and execution risks should be layered onto quantitative valuation metrics.

KEI Industries Limited (KEI.NS) - Risk Factors

• Capacity constraints: Cable business utilization reached ~95% in Q3 FY24, pressuring production flexibility and driving aggressive capacity expansion.
• Expansion capex: Large planned capital expenditures to alleviate constraints may strain short-term liquidity and increase leverage if funded through debt.
• Export exposure: Export sales rose 116.19% YoY to ₹425 crore in Q2 FY26, increasing sensitivity to currency volatility, trade barriers, and geopolitical risks.
• EPC segment weakness: EPC sales declined 41.12% YoY in Q2 FY26, signaling execution, order-book timing, or competitiveness issues in project segments.
• Profitability pressure: EBITDA margin slipped by 30 basis points to 10% in Q1 FY26 versus prior quarter, reflecting margin volatility from raw material, price competition, or mix shifts.
• Customer concentration and large contracts: Heavy reliance on institutional and export contracts exposes KEI to payment, contract renegotiation, and counterparty risk.

• Liquidity and financing: If capex is debt-funded, interest costs and leverage ratios may rise; if equity-funded, dilution is possible. Monitoring short-term cash conversion and working capital cycles is critical.
• Operational execution: Bringing new capacity online on time and within budget is a key execution risk-delays could amplify the current utilization bottleneck and margin pressures.
• Macro and commodity risk: Raw material price swings (copper, aluminium) materially affect margins; export growth increases FX exposure requiring hedging discipline.
• Order-book and receivables risk: Large institutional contracts can lead to concentrated receivables and payment timing uncertainty, affecting free cash flow.

KEI Industries Limited (KEI.NS) - Growth Opportunities

• Sanand (Gujarat) greenfield manufacturing - final stages of a ₹2,000 crore capex expected to add ~₹6,000 crore to the top line when fully ramped.
• FY25 capex program - company planned >₹1,100 crore; ₹312 crore already spent in H1 FY25.
• FY26 planned capex - ₹400-700 crore earmarked to support new capacities and backward integration.
• Export acceleration - Q2 FY26 export sales rose 116.19% YoY to ₹425 crore, signaling scalable international traction.
• Brand & retail buildout - expanded geographic reach, promotional campaigns, outdoor marketing and sponsorships to strengthen retail distribution and visibility.
• Diversification & customer mix - wide product portfolio across cables, wires and specialty conductors, low customer concentration supporting resilient demand.

• Near-term growth drivers: commissioning of Sanand capacity, continued FY25/FY26 capex deployment, and sustained export momentum (Q2 FY26: ₹425 crore).
• Medium-term upside: ₹6,000 crore potential revenue from Sanand once stabilized, plus incremental gains from strengthened retail and international channels.
• Execution risks to monitor: timely commissioning, working capital strain from rapid expansion, and margin pressure from raw material volatility.