KEI Industries shares declined over 2% in Thursday's morning trade following reports of Income Tax Department search operations. According to CNBC TV18, the stock was trading at ₹5,019.95, down ₹125.7 or 2.44% amid investor reaction to the developments. The market response reflects immediate investor concerns about the tax department's activities.
As reported by CNBC TV18 citing unidentified sources, the Income Tax Department's search operations are covering around six locations associated with KEI Industries. The searches were said to be underway at the time of reporting. The operations are reportedly covering multiple company-linked locations, with premises in Delhi being among the locations being searched.
According to Prabhudas Lilladher's latest research report, KEI Industries reported W&C revenue growth of 19.3% in Q4FY26, demonstrating strong top-line performance despite operational challenges. However, volume growth remained muted to ~2% in Q4FY26 due to capacity constraints as existing plants in Rajasthan were operating at peak utilization and the Sanand plant ramp-up was delayed. Exports declined 10% and Middle East exports were impacted in March 2026 due to shipping disruptions but resumed in April 2026 at higher freight costs via Fujairah port.
The company's export contribution is targeted at ~20% of revenue in FY27, with improving traction in the US market. Prabhudas Lilladher estimates revenue/EBITDA/PAT CAGR of 22.5%/24.1%/19.9% for FY26-28E. The Sanand plant's last phase is expected to be commissioned by Q4FY27, supporting scale-led margin expansion, with EBITDA margin guidance maintained at 10.5%-11% for FY27.
Despite strong fundamentals, Prabhudas Lilladher has downgraded KEI Industries to 'Accumulate' from 'BUY' due to recent runup in stock price. The brokerage has revised the target price to ₹5,660 from ₹5,545, valuing the stock at 40x FY28 earnings. This downgrade reflects the current market valuation levels despite the company's positive operational outlook and growth prospects.
