Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KEI Industries Ltd (BOM:517569, Financial) reported a 15.7% increase in net sales for Q1 FY25, reaching INR 2060.5 crore compared to INR 1780.53 crore in the same period last year.
- EBITDA grew by 24.55% to INR 232.41 crore, with an EBITDA margin improvement from 10.48% to 11.28%.
- Profit after tax increased by 23.77% to INR 150.25 crore, with a net profit margin rising from 6.82% to 7.29%.
- The company saw a 29% growth in its distribution network sales, contributing 53% to the total sales in Q1 FY25.
- KEI Industries Ltd (BOM:517569) has a strong order book of INR 3,590 crore, including significant contributions from domestic and export markets.
Negative Points
- Export sales declined by 24% to INR 233 crore due to logistical issues, although the company expects to make up for this shortfall in the next quarter.
- The stainless steel wire division saw a decrease in sales from INR 58 crore to INR 53 crore compared to the same period last year.
- The company is facing challenges in the timely dispatch of export orders due to customer delays in container placements.
- Despite overall growth, the EHP EPC segment is expected to remain flat on a year-over-year basis.
- There is a significant reliance on the domestic market for dealer-distributor sales, with no current plans to develop a distributor network for exports.
Q & A Highlights
Q: What exactly happened in the quarter for the decline in exports quarter on quarter?
A: We had around INR65 crore worth of cables ready for export, but due to logistic issues, specifically the delay in container placement by the customer, these could not be dispatched. This will be made up in Q2.
Q: Can you provide some color on the dealer distributor-based revenue, which has increased by 29%?
A: The dealer distributor business of wire and cable is all domestic. The export business is done directly. The growth is driven by the domestic market.
Q: Can you give some volume growth numbers for wire and cable for the quarter?
A: In volume terms, we have achieved a growth of 18% based on production.
Q: How did the US market perform for you, and is there an inherent slowdown in that market?
A: The outlook in the US market is very good. We expect substantial growth in the US market this financial year, with an estimated revenue of INR200 crore to INR300 crore.
Q: Can you provide a geographical split of your export market?
A: We have substantial exports to Australia, the Middle East, some countries in Africa, and the US and Europe. Australia has been a significant market for us for the last 10 years.
Q: What kind of cables are you exporting to these markets?
A: We are exporting medium voltage cables, HD cables up to 66 kV, and cables for the oil and gas industry in the Middle East and the US.
Q: Can you explain the pros and cons of selling directly to customers versus through distributors in the export market?
A: Our export model has always been direct business. We believe that direct access to the end user and contractor provides better margins and sustainability compared to distribution.
Q: What is your guidance for overall growth and margins for FY25?
A: We have given guidance for 16% to 17% overall growth for all products and segments. We expect to maintain an EBITDA margin close to 11% for FY25.
Q: Can you provide details on the order book bifurcation?
A: The order book includes INR653 crore for EPC, INR333 crore for extra high voltage power cables, INR2,052 crore for institutional orders in the domestic market, and INR552 crore for export orders, totaling INR3,590 crore.
Q: What is the impact of the recent capacity expansions on your growth projections?
A: The recent capacity expansions in Silvassa and Bhiwadi will support our growth projections of 16% to 17% for the current financial year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
