For 2QFY2019, KEI Industries (KEI) posted good set of results, exceeding our expectations on both, top-line as well as bottom-line fronts. Revenue grew by ~33% yoy (above our estimate), however, the company reported a marginal dip in operating margins. On the bottom-line front, KEI reported growth of ~45% yoy to`41cr on the back of strong top-line growth.

Outlook and Valuation: We expect KEI to report net revenue CAGR of ~17% to ~`4,708cr over FY2018-20E mainly due to (a) higher order book execution in EPC segment; (b) growth in EHV business; (c) higher B2C sales; and (d) higher exports. On the bottom-line front, we expect a CAGR of ~22% to`215cr over the same period on the back of strong volume growth. At the CMP of `349, the stock trades at 12.6x its FY2020E EPS of `27.8, thus, we maintain our Buy rating on KEI Industry with the Target Price of `500.

Download Full Report View Full Report in Browser