KEI Industries Ltd Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rahul Agarwal - InCred Capital. - Analyst : Yes. Thank you so much for the opportunity. Good afternoon, sir. Sir, firstly, I should say from the numbers that housing buyers is actually doing better than cables for KEI? will the industry trend is actually the [resolve] ? And our entire industry has been in the low single digit volume growth for wire last, you know, 2 to 3 quarters now? what has got a market share gains? Could you just give some color and understanding of how you have gone about this, please?

Question: Rahul Agarwal - InCred Capital. - Analyst : Okay. So it allows us to extend this question. When I look at the regional dealer sales, which you report in your presentation, it looks like North and East have grown way faster versus the North-South looks like low single digits, or could you share some feedback on demand trends in these regions are just two that I can tie it up based on why buyers are doing better than cable KEI?

Question: Rahul Agarwal - InCred Capital. - Analyst : Got it. Anil ji the question essentially was also on the regional side, when I look at the numbers, looks like north and east are doing 15% to 20% at South is low single digit or West is recovery.

Question: Rahul Agarwal - InCred Capital. - Analyst : Okay, got it, sir. Sir, on the CapEx, one question, I understand you gave a plant wise CapEx. I couldn't capture everything. What I wanted to know is if you can help the full-year number for consolidated CapEx for the Company for fiscal 24, 25 and 26 that will help full 24 will be close to INR 450 crores around and next year, it will be close to INR 500 plus crores.

Question: Rahul Agarwal - InCred Capital. - Analyst : Got it. And last question on volume growth, you said 13% for Q3. Is it possible to give 9 month number?

Question: Rahul Agarwal - InCred Capital. - Analyst : Okay. Perfect.

Question: Rahul Agarwal - InCred Capital. - Analyst : Right sir, congratulations for another consistent quarter and come back in the queue. All the best.

Question: Bhavin Pande - Athena Research. - Analyst : Good afternoon, and I hope I'm audible. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Bhavin Pande - Athena Research. - Analyst : Sir we could see that subcontracting expenses for EPC have gone down both on a sequential as well as Y-o-Y basis, principally throw some light on that?

Question: Bhavin Pande - Athena Research. - Analyst : But sir, even when you look at quarterly numbers, the margins have expanded for EPC. So, we are waiting to get some cost condition with a working.

Question: Bhavin Pande - Athena Research. - Analyst : Sir the numbers you gave for KPI 415, 500 . All of it is for the EHP. segment or certain.

Question: Bhavin Pande - Athena Research. - Analyst : Okay. Okay. That's great. Congratulations on another great set of numbers. I get back into the queue. Thank you.

Question: Riya Mehta - Aequitas Investments - Analyst : Thank you for giving the opportunity of my question is in terms of is the exports have significantly increased for in terms of the current issues that are happening on the freight. Could you help us how our contracts plays that are reporting on incremental freight costs and the impact of the current geopolitical issues? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Riya Mehta - Aequitas Investments - Analyst : Are you seeing any decrease in demand because of that or any delays and inventory?

Question: Riya Mehta - Aequitas Investments - Analyst : Got it. And in terms of capacity expansion of the AHV of compared to the current capacity, how much would we increase it?

Question: Riya Mehta - Aequitas Investments - Analyst : So we will be facing almost two times the capacity we are currently facing. And I right.

Question: Riya Mehta - Aequitas Investments - Analyst : Got it. And in terms of margins? do we see any of our maintaining a margin going forward?

Question: Riya Mehta - Aequitas Investments - Analyst : Got it. And any guidance in terms of where their export demand is coming from in cases, export has already actually where is it coming from? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Riya Mehta - Aequitas Investments - Analyst : Got it. Thank you. That's it from my side.

Question: Praveen Shay - PL, India, - Analyst : Thank you for taking my question. Sir. First question is on domestic institutional business. So that number there, we see the growth on the Y-O-Y side. So, is it only the capacity constraint or something else?

Question: Praveen Shay - PL, India, - Analyst : Okay

Question: Praveen Shay - PL, India, - Analyst : Right, And you're making a higher margin, and that's also where you are allocating. You have to understand this yes,

Question: Praveen Shay - PL, India, - Analyst : Second questions on the EHV cable. And there also there is a very strong growth we had seen for a quarter and even for 9 month. So can you guide for the way forward how you are seeing the EHV. Numbers to improve from here onwards? And also, to add on if capacity allocation also a function of a year like is a more of the EHV., you are producing inflation, the other cable and the growth is there, and the demand is high. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Praveen Shay - PL, India, - Analyst : Okay. And what the utilization in EHV. You are at

Question: Praveen Shay - PL, India, - Analyst : Okay. Sir, Thank you. Sir I will come back in the queue.

Question: Alok Deshpande - Nuvama Institution Equities. - Analyst : Yeah, good afternoon my question is on exports of what is the kind of working capital cycle that we should look at on the exports business?

Question: Alok Deshpande - Nuvama Institution Equities. - Analyst : Okay. So similar to the domestic, especially businesses, what we should assume?

Question: Alok Deshpande - Nuvama Institution Equities. - Analyst : Okay. And , last time of your you mentioned that, you know, of the margin, so should sort of start going up towards what was 11% kind of zone. So with all the new capacities coming up, especially the brownfield ones, or is there more certainty of that happening are moving towards 11% EBITDA margin? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Alok Deshpande - Nuvama Institution Equities. - Analyst : So, the I would say, looking more from excluding the other income part,

Question: Alok Deshpande - Nuvama Institution Equities. - Analyst : Yeah okay. No problem, sir. Congratulations on good set of numbers and good luck to the entirety and Team.

Question: Mahek Talati - Yellow Jersey Investment Advisors - Analyst : Hello, am I audible?

Question: Mahek Talati - Yellow Jersey Investment Advisors - Analyst : Thank you for the opportunity congrulation on the good set of numbers for a couple of questions. First is a clarification. So are we doubling our capacity in the EHV?

Question: Mahek Talati - Yellow Jersey Investment Advisors - Analyst : Okay. And in terms of volume growth, you mentioned that the 9 month volume versus 22% for the cables are used to include it includes both cables and wires. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Mahek Talati - Yellow Jersey Investment Advisors - Analyst : Okay. So if I check, the revenue growth for the 9 months is close to 17%. So realizations are decreasing this quarter in this 9 months.

Question: Mahek Talati - Yellow Jersey Investment Advisors - Analyst : Okay. And in terms of the demand of the EHV and then you mentioned a few quarters back that the capacity, the current capacity?

Question: Mahek Talati - Yellow Jersey Investment Advisors - Analyst : Okay. Understood. Thank you.

Question: Shrinidhi Karlekar - HSBC - Analyst : Yeah, hi, thank you. Good opportunity. Just want to understand some of the growth opportunities are in terms of EHV cables also going some of the HVDC projects. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Shrinidhi Karlekar - HSBC - Analyst : Sorry, I just want to understand. Are there a lot of demand coming from the HVDC projects. So I just want to understand, does cable go in some of the sections of this HVDC projects guarantees and the current transmission peak.

Question: Shrinidhi Karlekar - HSBC - Analyst : And anyone to understand how the demand intensity for a conventional coal-based thermal power plant is, like how much demand comes from a typical one gigawatt for the 800-megawatt thermal power plants. How is the demand at the moment?

Question: Shrinidhi Karlekar - HSBC - Analyst : Sir I just wanted to understand, is there a way to generally follow up for 800-megawatts? How much was crores of cable typically goes and the current pricing,

Question: Shrinidhi Karlekar - HSBC - Analyst : Okay. Those are my questions thank you, for answering. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Achal Lohade - JM Financial. - Analyst : Sir good afternoon. And thank you for the opportunity. Congratulations for great set of numbers. What I wanted to ask, given the capacity addition by us and the peers, how do you see? and the kind of demand what you're seeing? And this question is more on the cables front? How do you see the demand supply, you know, for the for the cables in each of the segments. We have not lost a little bit on that.?

Question: Achal Lohade - JM Financial. - Analyst : Yes. so, sir, actually I completely get your point. What I would now was trying to ask is that and you know what we what we hear in the market is that given the capacity shortage. Obviously, there is a slight element of price premium, which is being charged, and, you know, given the kind of capacity additions that are happening, or could there be a risk to the pricing, I guess, tell your, you know, visibility on the demand and the growth, what you're factoring is obviously a very realistic, but I'm just curious to understand from a overall industry perspective, could there be a case of excess capacity in hand, if at all any on a price premium going away or normalization of the price?

Question: Achal Lohade - JM Financial. - Analyst : Understood I think this is very helpful. So thank you so much and Wish u all the best.

Question: Rahul Maheshwari - AMBIT Asset Management - Analyst : Yes, am I audible?

Question: Rahul Maheshwari - AMBIT Asset Management - Analyst : Yeah. First of all, congratulations to the entire KEI Industrial management team for consistent performance. Two questions. One, can you help us to understand the total opportunity size for the speciality segments like solar, it will be and how your R&D and the process in terms of talking with the OEMs and how much time it will take to replicate or the revenue to slow down for the specialty segment up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call I'm not talking from an infrastructure and power point of power sector point of view, but the new emerging sector where the government just recently talked about the rooftop solar. So can you give some color on that, that will be heavily helpful?

Question: Rahul Maheshwari - AMBIT Asset Management - Analyst : Can you quantify I mean how big it can become? It is currently you are supplying to the data centers and EV, etc. I don't want a absolute number, but even if you can give a ballpark range that how big it can contribute to your any sales,

Question: Rahul Maheshwari - AMBIT Asset Management - Analyst : And the second question, as you maintain that the KEI is building capacity because they are in refreshing the growth, the growth, which you have guided for 16, 17%.Is it a conservative growth of any plan you are looking from of a second from a Board point of view,

Question: Pulkit Patni - Goldman Sachs - Analyst : So thank you for taking my questions. A couple of questions. First one is we recent heard this announcement on INR 1 crore rooftop solar projects are likely to report any rough sense on what is the kind of cable opportunity that this could create assuming that the entire INR 1 crore was to be installed? That's question number one.

Question: Pulkit Patni - Goldman Sachs - Analyst : I should ask the second question. Yeah, so my second question is, you know, the number one player in the industry obviously recently had these tax issues. And my question is one, does it change anything in the industry structure in terms of industry practices. Secondly, you being the second largest player, is there a possibility of the benefiting in terms of market share, etc? You know, more dealers wanting to work with us. Just I mean, to whatever extent you can share about, I mean, I don't intend seeing how it benefits us, but just that we are the second largest player does it change the industry dynamic in any way in our favor?

Question: Pulkit Patni - Goldman Sachs - Analyst : Very, fair. Thank you so much for the Answer.

Question: Rahul Agarwal - InCred Capital. - Analyst : Yeah, thank you for the follow-up, Sir, first question on the price gap between KEI wires. And the leaders right now?

Question: Rahul Agarwal - InCred Capital. - Analyst : So that was my next question. It's easy to understand how far are we to basically be at similar pricing? I think that was essential.

Question: Rahul Agarwal - InCred Capital. - Analyst : Okay, got it. Secondly strategy, I think we've reached two pretty optimized level of working capital, which shows 90 days now of sales, excluding cash. Henceforth. This is where the Company stabilizes organically.

Question: Rahul Agarwal - InCred Capital. - Analyst : Right, So hence, what is all going to be like year-on-year, whatever efficiency improvement we can get we can get. But most of that EPC will out of our way, right?

Question: Rahul Agarwal - InCred Capital. - Analyst : Okay, got it. And lastly, an easy one question to you. Interim budget is next week, your sense of what could influence our cable and wire sector. You know, of course, we know that higher CapEx allocation is a known factor, but from a sales perspective, anything in your mind which could which could help business trends or sustain current business trends?

Question: Rahul Agarwal - InCred Capital. - Analyst : I agree sir, just trying to understand

Question: Rahul Agarwal - InCred Capital. - Analyst : Yes, I'm aware of that. All right. Thank you so much and all the best and look forward to we do.

Question: Bhavin Pande - Athena Research. - Analyst : Hey thanks for the follow. just wanted to check on the trend of advertisement and promotion expenses, how they have sort of been before this quarter.

Question: Bhavin Pande - Athena Research. - Analyst : Okay. Actually coming to the IPL. So last year, I think we finished our franchisee because we wanted more sort of reach and discovery in the southern market. So given the looking at the payback that has come for the sort of looking to renewal or the maybe we'll do a different crowd this time.

Question: Bhavin Pande - Athena Research. - Analyst : And that's wonderful. That's wonderful. Thank you so much and all the best.

Question: Shubham Agarwal - Axis Capital. - Analyst : Thank you for the opportunity and congrats on the consistent set of results. I think I just got dropped or were you talking about CapEx in the opening remarks? If you could repeat and reiterate

Question: Shubham Agarwal - Axis Capital. - Analyst : On the CapEx going forward, going another 100, 50 crores will be spent in this quarter. So close to next year, it will be close to 500 crores plus expenditure. That will be mainly on the [Panad Project] mark was already, I think.

Question: Kalpath Manish - Narveker - Analyst : Hello sir congratulations good set of numbers and thanks for taking my question. So my first question is basically on industry growth. So you spoke about 12%, 13% of industry growth. But on the other building materials cement slowdown in the. leader do you actually and I do understand the medium-term growth been like around that level with the CapEx spend, etc. But do you expect some kind of slowdown maybe for in the near term for us a few quarters or so because of election are also on the industry side, standing assets sometimes from

Question: Kalpath Manish - Narveker - Analyst : Yes, thanks for that. And my second question is more on the retail side. Again, used to be like dealers is telling the dealers to be whatever, 45, 50%, our total sales right in this piece I just wanted to get some sense how you think the dealers behave in situations of copper price movements are basically, I mean, recently authorized and directed energy back in December and so do you view how does the restocking and destocking kind of work on the dealers side?

Question: Kalpath Manish - Narveker - Analyst : Thank you so much.

Question: Modhith. Kabra - Ella capital - Analyst : I thank you all. Just one question, sir, is there any insight on exports into Europe region or somewhere else because of the Red Sea crisis, the geopolitical and tighter or that area any deferment during the quarter.

Question: Modhith. Kabra - Ella capital - Analyst : Okay. So there are no impact on orders as the price impact is there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2024 / 6:30AM, KEIN.NS - Q3 2024 KEI Industries Ltd Earnings Call

Question: Modhith. Kabra - Ella capital - Analyst : Okay.

Question: Raj Shah - AMBIT - Analyst : Yeah, hello, sir. Congratulations for the good set of numbers. So I think the power of a long-term question so took now we are close to around $1 billion of revenues. So just wanted to understand that going forward, say the next 4 to 5 years, do we want to become more of a consumer company? So our advertising expenses still are less than 1% of our sales. So do you want to take the shift from industrial company to a consumer company are still want to remain focused on cables and wires and not for into the other segments such as consumers in a segment like appliances or other segments.

Question: Raj Shah - AMBIT - Analyst : Okay. Thank you.