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Dolat Capital Report
KEI Industries Ltd. results were above our estimates, owing to higher exports, higher than expected sales from cables division and good demand from Tier 2 and Tier 3 cities.
Cables division is expected to bounce back to normal levels in H2 FY21 considering the government push for rural electrification and metro transport. However, wires segment may see slow recovery due to slowdown in real estate sector.
KEI Industries’ focus has been on various brand building exercises and expanding its dealer network, as this sales channel offers higher brand stickiness as well as better margins and lower working capital requirement.
However, in H1 FY21 they will not spend much on brand building exercises. They expect dealer segment to grow by 8-10%. Retail sales reduced to 25% in Q1 FY21 which will normalise to 32-34% of total sales.
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