For 3QFY2018, KEI Industries (KEI) posted good set of results, exceeding our expectations on both, top-line as well as bottom-line fronts. Revenues grew by ~24% yoy (above our estimate), however, the company reported lower operating margins. On the bottom-line front, KEI reported growth of ~51% yoy to `39cr on the back of strong top-line growth and lower interest cost.
Outlook and Valuation: We expect KEI to report net revenue CAGR of ~18% to ~`3,660cr over FY2017-19E 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 `156cr over the same period on the back strong revenue and lower interest costs. At the CMP of `400, the stock trades at 19.8x its FY2019E EPS of `20.3. Thus, we maintain our Buy rating with the Target Price of `486.

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