India Equity Value investor, Trivikram Consultants

Prashant Vaishampayan

India Equity Value investor

Picking Long Term Multi-bagger stocks

Trivikram Consultants

Trivikram Consultants is an equity research service founded by Prashant Vaishampayan, a registered Research Analyst with SEBI in India. Prashant has done equity research since 1992.  He worked with Jardine Fleming, SG Securities, UBS and Kotak Securities. Since 2010, he is managing his portfolio and doing outsourced equity research for institutional clients. A team of six professionals helps him in equity research. We focus on pharma, agro-chemicals, auto and auto components, banks and financial services, specialty chemicals and niche manufacturing sectors.   

Equity Bottom-Up

<ul class="">
<li>
<a href="https://www.smartkarma.com/entities/6711" target="_blank" data-smartkarma-citation="entities:6711:1">Kei Industries (KEII IN)</a> reported 2QFY19 revenues of Rs 9,968 mn, better than our estimate of Rs 8,669 mn. This revenue growth was driven by better than expected performance from Low tension (LT) cables, High Tenion (HT) cables and house wires.</li>
<li>EBITDA was Rs 1,009 mn, higher than our estimates of Rs 867 mn and reported EBITDA margins were at 10.1%, 10 bps higher than our estimates.</li>
<li>Over FY18-21E, we expect revenues to grow at CAGR 20%. We expect this growth to largely come from LT and HT cables because of capacity expansion. Management maintained its guidance of doubling Extra High Voltage (EHV) cables revenues in FY19E to Rs.2,814 mn. Management is planning capex of ~Rs 400 mn for house wires business. We expect revenues from this capex to start in FY20E.</li>
<li>We expect EBITDA margins to expand 130 bps to 11.0% in FY21E from 9.7% in FY18. Over FY18-21E, we expect EBITDA and PAT to grow at CAGR 25% and 36% respectively.</li>
<li>We assume no change to the current PE multiple of 16x, and apply it to our EPS estimate of Rs 39 per share for the year ending September-20E to arrive at the fair value estimate of Rs 625 over the next 12 months. This represents potential upside of 75% from the market price of Rs 356 (as on 27/11/2018).</li>
</ul>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 190px;">
Particulars (Rs mn)
</td>
<td style="text-align: right; width: 106px;">
Net sales
</td>
<td style="text-align: right; width: 92px;">
EBITDA
</td>
<td style="text-align: right; width: 90px;">
PAT
</td>
<td style="text-align: right; width: 102.05px;">
EPS Rs
</td>
<td style="text-align: right; width: 103.94px;">
ROE(%)
</td>
<td style="text-align: right; width: 100px;">
ROCE(%)
</td>
<td style="text-align: right; width: 91px;">
PE(x)
</td>
</tr>
<tr>
<td style="width: 190px;">
FY18
</td>
<td style="text-align: right; width: 106px;">
34,964
</td>
<td style="text-align: right; width: 92px;">
3,386
</td>
<td style="text-align: right; width: 90px;">
1,447
</td>
<td style="text-align: right; width: 102.05px;">
       18.6
</td>
<td style="text-align: right; width: 103.94px;">
26.9%
</td>
<td style="text-align: right; width: 100px;">
28.0%
</td>
<td style="text-align: right; width: 91px;">
         19
</td>
</tr>
<tr>
<td style="width: 190px;">
FY19E
</td>
<td style="text-align: right; width: 106px;">
42,081
</td>
<td style="text-align: right; width: 92px;">
4,082
</td>
<td style="text-align: right; width: 90px;">
1,762
</td>
<td style="text-align: right; width: 102.05px;">
       22.3
</td>
<td style="text-align: right; width: 103.94px;">
25.6%
</td>
<td style="text-align: right; width: 100px;">
27.8%
</td>
<td style="text-align: right; width: 91px;">
         16
</td>
</tr>
<tr>
<td style="width: 190px;">
FY20E
</td>
<td style="text-align: right; width: 106px;">
50,557
</td>
<td style="text-align: right; width: 92px;">
5,157
</td>
<td style="text-align: right; width: 90px;">
2,564
</td>
<td style="text-align: right; width: 102.05px;">
       32.5
</td>
<td style="text-align: right; width: 103.94px;">
28.4%
</td>
<td style="text-align: right; width: 100px;">
35.0%
</td>
<td style="text-align: right; width: 91px;">
         11
</td>
</tr>
<tr>
<td style="width: 190px;">
FY21E
</td>
<td style="text-align: right; width: 106px;">
60,689
</td>
<td style="text-align: right; width: 92px;">
6,676
</td>
<td style="text-align: right; width: 90px;">
3,642
</td>
<td style="text-align: right; width: 102.05px;">
       46.1
</td>
<td style="text-align: right; width: 103.94px;">
30.1%
</td>
<td style="text-align: right; width: 100px;">
47.4%
</td>
<td style="text-align: right; width: 91px;">
           8
</td>
</tr>
</tbody>
</table>
<div class="content-caption">
 Source- KEI Annual Report FY18, Trivikram Consultants Research as on 27/11/2018
</div>



Kei Industries (KEII IN) reported 2QFY19 revenues of Rs 9,968 mn, better than our estimate of Rs 8,669 mn. This revenue growth was driven by better than expected performance from Low tension (LT) cables, High Tenion (HT) cables and house wires.
EBITDA was Rs 1,009 mn, higher than our estimates of Rs 867 mn and reported EBITDA margins were at 10.1%, 10 bps higher than our estimates.
Over FY18-21E, we expect revenues to grow at CAGR 20%. We expect this growth to largely come from LT and HT cables because of capacity expansion. Management maintained its guidance of doubling Extra High Voltage (EHV) cables revenues in FY19E to Rs.2,814 mn. Management is planning capex of ~Rs 400 mn for house wires business. We expect revenues from this capex to start in FY20E.
We expect EBITDA margins to expand 130 bps to 11.0% in FY21E from 9.7% in FY18. Over FY18-21E, we expect EBITDA and PAT to grow at CAGR 25% and 36% respectively.
We assume no change to the current PE multiple of 16x, and apply it to our EPS estimate of Rs 39 per share for the year ending September-20E to arrive at the fair value estimate of Rs 625 over the next 12 months. This represents potential upside of 75% from the market price of Rs 356 (as on 27/11/2018).





Particulars (Rs mn)


Net sales


EBITDA


PAT


EPS Rs


ROE(%)


ROCE(%)


PE(x)




FY18


34,964


3,386


1,447


       18.6


26.9%


28.0%


         19




FY19E


42,081


4,082


1,762


       22.3


25.6%


27.8%


         16




FY20E


50,557


5,157


2,564


       32.5


28.4%


35.0%


         11




FY21E


60,689


6,676


3,642


       46.1


30.1%


47.4%


           8





 Source- KEI Annual Report FY18, Trivikram Consultants Research as on 27/11/2018


KEI Industries - 2QFY19 – Results In- Line, Benefits From Capex to Start in FY20E