KEI Industries Stock Jumps Over 3% as Labour Strike Ends; Production Loss Limited to ₹10 Crore

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KEI Industries Stock Jumps Over 3% as Labour Strike Ends; Production Loss Limited to ₹10 Crore

KEI Industries said that the labour strike at its Rakholi and Chinchpada units has been called off, and the operations have been normalised.

June 21st, 2024 News

KEI Industries Ltd. experienced a notable increase in its share price, climbing more than 3% to ₹4,565 on June 21, following the resolution of a labour strike at two of its production units. The company announced that operations at its Rakholi and Chinchpada units have been normalized, limiting the production loss to approximately ₹10 crore.

Key Highlights:

Labour Strike Resolution: The labour strike at KEI Industries' Rakholi and Chinchpada units has been called off, and operations have resumed to normal levels.
Production Loss: Due to the strike, KEI Industries incurred a production loss of approximately ₹10 crore. The company plans to ramp up production to compensate for the loss.
Share Price Increase: KEI Industries' stock rose over 3%, trading at ₹4,565 following the announcement of the strike's resolution.

Operational Updates:

KEI Industries Chairman and Managing Director Anil Gupta, in an interaction with CNBC TV18, confirmed that production at the affected units is back to normal. Earlier this week, the company had estimated a production loss worth ₹8 crore per day due to the strike.

Gupta also noted that the company's Q1 performance aligns with the guidance provided earlier. He reaffirmed the revenue growth guidance of 15-16% for the fiscal year 2024-25, expecting demand traction to continue, bolstered by recent capital expenditures.

Capex and Growth Prospects:

KEI Industries has invested around ₹84 crore in capex at the Chinchpada facility in the financial year 2024. During the March quarter earnings call, the management indicated plans to continue brownfield capex at the unit, with an additional ₹65 crore to be spent in the next one to two months.

Gupta projects a 50% growth in exports for KEI Industries this fiscal year. The domestic B2C business is also expected to expand by 50%. Currently, KEI Industries holds nearly 12% market share in cables and approximately 10% overall market share.

The company is also focusing on reducing its working capital by 8-10 days annually, enhancing operational efficiency.

Conclusion:

The resolution of the labour strike and the normalization of operations at KEI Industries' production units have provided a positive impetus to the company's stock. With strategic investments and a focus on growth in both domestic and export markets, KEI Industries is well-positioned to achieve its revenue targets for the fiscal year 2024-25. Investors will be closely watching the company's progress as it ramps up production and continues its capex initiatives.