Have you heard about the one where a cable maker walks into a bar? No. It’s because nothing fun is ever associated with cables (unless EL James and her shades of Grey have something to do with it). Therefore, it must be difficult to build an engaging cable brand. For example, what kind of taglines could the company have, to have people wear them on T-shirts and caps? “Wired right” or “Sparks don’t fly”? Or what kind of events could they host, to catch the interest of a spender? Maybe “a conclave on the advances in rubber insulation”? Even with an open bar, that event will be sparsely attended.
Retail sales is hard to crack in cables but those who have done it, like Polycab, the biggest cable manufacturer in India, reap big rewards. KEI has chosen the safer route, selling to other businesses (B2B) and government agencies. Its strategy has been working well (See: Wired right). Sales started picking up after 2003, with revenue doubling in certain years. It recently bagged its largest contract from Tamil Nadu Transmission Corporation for extra high voltage (EHV) cables of 400kv worth Rs.1.48 billion — putting KEI in the league of handful companies across the world to manufacture 400 kv EHV cables. But, the market is not giving it much love.
KEI is available at a lower-than-industry valuation of 11x, even when Polycab is trading at 16x. Is the reading on the gauge right?