KEI Industries Share Price Falls 4% Despite Robust Results; Here’s Why

Synopsis: KEI Industries shares fell 4% despite strong Q3 FY26 results of Rs 2,954 crore revenue and Rs 235 crore profit due to stretched 42.7x PE valuations, rising competition, copper price concerns, and general profit booking.

The shares of the company, which manufactures and markets Extra-High Voltage (EHV), Medium Voltage (MV) and Low Voltage (LV) power cables and caters to retail and institutional markets, and also provides Engineering, Procurement and Construction (EPC) services, had its shares in focus after the company declared robust results, despite which the stock crashed.

With the market cap of Rs 37,238 crore, the shares of KEI Industries Ltd fell about 4% and made a low at Rs 3,730 , compared to its previous day closing price of Rs 3,940.25, and are trading at a PE of 42.7, whereas its industry PE is at 18.1. The shares have given a return of more than 650% over the last 5 years. 

Q3 FY26 Result highlights 

The revenue from operations for the company stood at Rs 2,954 crore when compared to Rs 2,472 crore in Q3 FY25, up by about 20 per cent on a YoY basis and on a QoQ basis up by 8 per cent from Rs 2,727 crore in Q2 FY26.

When it comes to profitability, the company has gone from an Rs 165 crore profit in Q3 FY25 to an Rs 235 crore profit in Q3 FY26, up 42.4% YoY, and from Rs 204 crore in Q2 FY26, up about 15% QoQ. 

With a relative valuation of around 42x PE in contrast to the industry average of 18x PE, the stock appears to trade at a substantial premium, making it evident that most of the export and growth expectations have already been factored into the stock prices. While visibility in revenues and export growth justifies a certain level of premium, the current price multiple offers scope for very little deviation in this trend.

The entry of large companies like Bajaj Electricals into the wires business makes the degree of competition more intense. This can result in pricing pressures for companies. Though existing companies have certain advantages due to their distribution channels, expansion by branded companies can result in a negative impact on the market share of these companies.

Fluctuations in copper prices remain an important factor for the company, as copper is a key raw material in the cables and wires business. While rising copper prices can lead to short-term margin volatility, the company’s diversified copper–aluminium mix and ability to pass on cost increases to customers through pricing mechanisms help mitigate the overall impact, keeping the effect broadly neutral over the medium term.

The falling stock prices in the recent period can be primarily attributed to general profit-booking tendencies among investors after a strong rally in the stock prices, which were also tagged as highly valued by the investors. It is a usual sight in stocks trading at a premium multiple when investors start booking profits, causing a temporary dip in prices without any major fundamental deterioration in the stock performance.

However, the stock has indicated signs of a recovery trend today and has moved up by 4% from its lowest point, marking a resumption in buying interest at a lower level. This is an indication that investors have started selecting the stock and that the market is quite hopeful about the growth prospects based on capacity expansion and export growth.

Management guidance 

The management guidance for the power cable business remains strong and optimistic, driven by 11% volume growth in Q3 and a sharp surge of 95% in C&W exports, which also caused higher copper consumption despite a gradual structural shift from copper to aluminium. With the current mix of 50:50 copper-aluminium, copper is expected to contribute more in value terms, supporting better realisations. 

The company expects to close FY26 with 19-20% revenue growth and sustain 20%+ growth over the next 3-4 years on the back of new capacity additions, while continued export momentum with a conservative 35-40% growth outlook for FY27 reinforces confidence, even as competitive intensity from new entrants remains an area of uncertainty.

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