Stock market is a sure-shot way to becoming rich, but only a few possess wisdom, courage, patience and insight to make big money on Dalal Street. Many have tried and failed, these investors in KEI Industries have ridden their success formula to become very rich!
How to become a crorepati? Most of us juggle with this question at some point in life. But only a few manages to find the answer and actually become one. Well, stock market is a sure-shot way to becoming rich, but only a few possess wisdom, courage, patience and insight to make big money on Dalal Street. Many have tried and failed, these investors in KEI Industries have ridden their success formula to become very rich! It transpires that those who invested in KEI Industries not so long ago, in 2013, and showed exemplary patience to hold on to the stock to this day, are sitting on a strong profit of over 4000 per cent!
To put the number in perspective, Rs 10 lakh invested in this stock turned into Rs 4.1 crore and that too in just 5 years! That is indeed magical! Engaged in manufacturing and marketing of Power Cables, KEI reported strong turnkey revenue, leading to 17 per cent revenue beat in the March quarter of FY18.
The company’s profit after tax (PAT) for the quarter came in at Rs 49.5 crore, a year-on-year increase of 40.6 per cent.
And there is more in store for those who are looking to make some splendid gains. Brokerage Edelweiss Securities has a Buy rating on the stock with a target price of Rs 580.
“We believe, a gradual brand and distribution overhaul and capacity expansion will help KEI enhance its B2C business, which currently lags large peers. Also, focus on debt reduction will help post 32 per cent earnings CAGR over FY18-20. We maintain BUY/SO,” said Edelweiss Securities in a results review report.
The company’s management is focusing on term debt reduction that helped prune interest cost by 4 per cent in Q4FY18.
Brokerage Motilal Oswal Securities revised KEI’s earnings estimates upwards for FY19 and FY20, given its outperformance in 4QFY18. “We expect revenue/ EBITDA/ PAT CAGR of 20.8%/ 26.2%/ 34.0% over FY18-20E. KEI is likely to be a major beneficiary of key government initiatives in power, infrastructure and real estate sector. It has high return ratios, free cash flows and stable net debt to equity,” said MOSL in a research note.
“Given the high growth expectation along with healthy financials, we continue to maintain BUY rating with a revised target price of Rs 563/share at 17x FY20EPS,” added MOSL.
KEI Industries is increasing its presence in the affordable housing segment. The management mentioned that margins in institutional sales segment has been expanding due to strong demand.
“We have upgraded our estimates as we expect demand from the power sector to be very strong and the company would continue to boost its retail sales through higher penetration and focus on brand improvement. We maintain our Buy rating and revised our target price to Rs 505 from earlier Rs 470,” said IIFL in a research note.