KEI Industries Shares Decline Due to Margin Contraction and High Costs

KEI Industries, a notable player in the cable manufacturing sector, has witnessed a significant drop in its share prices over the past two trading sessions. The stock has experienced a 14 percent decline, attributed to a contraction of operating margins observed in the July-September quarter. The contraction is primarily due to escalated raw material costs, increased finance costs, and a rise in employee expense benefits.

As of October 17, KEI Industries’ share price dropped nearly five percent, trading at Rs 4,170.10 per share on the National Stock Exchange (NSE). This marks a 4.90 percent drop at 11:10 AM, with the scrip hitting an intraday low of Rs 4,115. This decline comes in the wake of a reported decrease in operating margins, which fell to 9.7 percent in the September quarter compared to 10.4 percent during the same period last year, as reported by Moneycontrol.

Despite the decline in margins, KEI Industries recorded a net profit increase of 10.3 percent, amounting to Rs 154.8 crore for the second quarter of Fiscal Year 2025, as opposed to Rs 140.3 crore in the equivalent quarter the previous year. The company also reported a revenue rise of 17.2 percent, reaching Rs 2,279.6 crore, up from Rs 1,945 crore in the corresponding period last year. Moreover, the cable manufacturer disclosed an order backlog of approximately Rs 3,847 crore by the end of the second quarter.

In light of these developments, analysts have revised their predictions for KEI Industries. Jefferies maintained a ‘Buy’ rating for the company, increasing the target price from Rs 5,365 to Rs 5,720 per share. On the other hand, domestic brokerage Motilal Oswal also reiterated its ‘Buy’ recommendation, albeit with a reduced target price from Rs 5,300 to Rs 5,100.

Investors are advised to consider the views and tips provided by experts independently. Moneycontrol cautions that the opinions expressed do not necessarily reflect those of the platform or its management, urging users to consult certified experts before making any investment decisions.

Furthermore, KEI Industries’ trading volumes on NSE and BSE significantly increased by 1796.23 percent compared to the previous session, which market analysts view as a crucial indicator when coupled with price fluctuations. Technically, the stock is trading above its 300-day Simple Moving Average (SMA) while remaining below the shorter-term SMAs, suggesting current support and resistance levels.

In terms of market context, KEI Industries operates with a Return on Equity (ROE) of 20.25 percent, a Price-to-Earnings (P/E) ratio of 63.50, and a Price-to-Book (P/B) value of 11.44. The firm lacks promoter holding but shows 1.42 percent mutual fund holding and a 31.11 percent foreign institutional investor holding, which increased from 30.75 percent in the previous quarter.