Bargain hunting? Mutual funds raise stake in KEI Industries to 22% in Q4, even as stock tanks 43% in 4 months

Mutual funds have boosted their stake in KEI Industries, one of the leading manufacturers of wires and cables (W&C) such as EHV cables, HT cables, and LT cables, during the March quarter, taking their holding to the highest level since December 2021.

As of the end of March 2025, 32 mutual funds collectively held a 21.9% stake in KEI Industries, equivalent to 2.02 crore shares. This marks a notable increase from the 17.87% stake held at the end of the previous quarter in December, according to Trendlyne’s shareholding data.

Mutual funds have been gradually accumulating shares in KEI Industries over recent quarters. At the end of FY24, their combined stake in the company stood at 13.33%. The jump in holdings during the December quarter came after key fund houses picked up additional stakes in the company — with Kotak Nifty Midcap 150 Index Fund increasing its holding to 3.42%, up from 2.32% in the previous quarter.

Motilal Oswal Arbitrage Fund also bought an additional 1.08% stake, taking its total holding to 2.82% at the end of the quarter, Trendlyne data showed. While domestic institutional investors have increased their exposure to the company, foreign institutional investors (FIIs) trimmed their holdings in Q4FY25, reducing their stake from 29.8% in Q3FY25 to 25.8%.

The promoter stake in the company remained unchanged at 35%, while general public shareholding stood at 15.7%, a 1.2% increase compared to 14.5% in Q3FY25.

KEI Industries share price crashed over 43% from recent peak 

The company's shares have recently experienced a severe decline, with investors on Dalal Street pushing the stock to lose 43% of its value from the December peak of ₹4,706 per share to trade at the current level of ₹2,686 apiece.

This significant pressure on the stock can be attributed to the potential rise in competition, as major conglomerates like the Adani Group and Aditya Birla Group have entered the market. 

Adani Enterprises, on March 20, announced its entry into the cables and wires industry through a joint venture between its wholly owned subsidiary Kutch Copper Limited (KCL) and Praneetha Ventures. In late February, UltraTech, an Aditya Birla Group company, also announced its entry into the cables and wires (C&W) segment as part of its strategy to become a comprehensive ‘Building Solutions’ provider.

The entry of both companies into the ₹845 billion cables and wires market (as of FY24) has dented investor sentiment, raising concerns about intensified competition, potential pricing pressures, and a shift in market dynamics that could challenge existing players.

Meanwhile, analysts believe that the entry of Adani and the Birla Group is unlikely to impact the FY25–28 earnings of cables & wires (C&W) players. However, they will be monitoring any additional announcements from the companies that could have a longer-term effect on the demand-supply dynamics of the C&W sector.

The cables & wires industry has been growing rapidly in recent years, driven by strong government focus on infrastructure development, the rising trend of nuclear families, increased electrification in rural areas, and the growth in cable and wire exports.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.