KEI Industries (KEI)

FairStock Score: 27/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong growth momentum: 5-year revenue CAGR of 18.41%, latest sales growth 22.24%, and profit growth 34.83%.
• Efficient capital use with ROCE of 21.29% and negligible debt/equity of 0.04.
• Healthy financial soundness indicators: Piotroski F-Score 7/9 and Altman Z-Score 6.88.
• Latest quarter net profit of ₹235 Cr on sales of ₹2,955 Cr shows meaningful profitability.

Concerns

• Extreme valuation: P/E 56.43, P/B 8.00, and PEG 4.76 leave no margin of safety; Graham Number of ₹1,131.19 is far below the market price.
• Negative free cash flow of ₹-1,533 Cr despite reported profits raises doubts about earnings quality.
• Dividend yield of only 0.09% means no income cushion for shareholders.
• Anomalous EV/EBITDA of -98.51 and promoter holding of 35% warrant deeper scrutiny.

AI Analysis

At first glance, KEI Industries impresses with growth. Sales expanded 22.24%, profits 34.83%, and five-year revenue CAGR of 18.41%. ROCE at 21.29% indicates decent capital allocation, while debt/equity of 0.04 means the balance sheet is not stretched. Piotroski F-score of 7 and Altman Z of 6.88 point to financial soundness. But I buy a business only when the price leaves room for error. Here the market has already priced in perfection: P/E 56.43, P/B 8.00, PEG 4.76. The Graham Number – a rough fair-value gauge – is ₹1,131.19 against a price of ₹4,838.80, leaving a margin of safety of negative 349%. That is the opposite of what Graham taught. I am also troubled by free cash flow of ₹-1,533 Cr despite reported profits of ₹235 Cr in the latest quarter; profits that do not turn into cash need extra scrutiny. The dividend yield of 0.09% shows shareholders are relying entirely on appreciation. ROE of 14.88% is respectable but hardly spectacular for such a rich multiple. Promoter holding at 35% is acceptable but not commanding. This is a fast-growing cable company with real operating strengths, but at this price I am being paid to take enormous risk, not to be compensated for it. The EV/EBITDA figure of -98.51 is odd and reinforces my caution. As Buffett would say, it is far better to buy a wonderful company at a fair price, but this is not a fair price. KEI may be a wonderful business, but it fails my test of intrinsic value and margin of safety. I will keep it on my watchlist, not in my portfolio.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer