Technology

For 1QFY2019, KEI Industries (KEI) posted mixed set of results. Top-line was lower compared to our estimates, however, the company was able to maintain the bottom-line growth. Revenues grew by ~7% yoy (below our estimate) but company reported improvement on operating margin front. On the bottom-line
front, KEI reported growth of ~17% yoy to `32cr on the back of operating margin
improvement and lower interest cost.

Outlook and Valuation: We expect KEI to report net revenue CAGR of ~16% to ~`4,646cr 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 ~19% to `207cr over the same period on the back of strong revenue and lower interest costs. At the CMP
of `433, the stock trades at 15x its FY2020E EPS of `26.8, thus, we maintain our Buy rating on KEI Industry with the Target Price of `508.

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