For 3QFY2017, KEI Industries (KEI) posted good set of results, exceeding our
expectations on both, top-line as well as bottom-line fronts. Revenues grew by
~28% yoy (above our estimate), however, the company reported flat operating
margins. On the bottom-line front, KEI reported growth of ~83% yoy to Rs27cr on
the back of strong top-line growth and lower taxes. We expect KEI to report net revenue CAGR of ~14% to
~Rs3,455cr over FY2016-19E 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 ~26% to Rs123cr over the
same period on the back strong revenue and lower interest costs. At the CMP of
Rs168, the stock trades at 10.5x its FY2019E EPS of Rs15.9. Thus, we maintain our
Buy rating with the Target Price of Rs207.

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