Technology

KEI Industries (KEI) is a cable manufacturing company and also engaged in
Engineering, Procurement and Construction (EPC) business. It offers high and low
tension cables, control and instrumentation cables, house wires, stainless steel
wires, and high-technology specialty cables. Its manufacturing facilities are
located at Bhiwadi, Chopanki & Silvassa. Through export KEI is present in over 45
countries across the globe. We expect KEI to report net revenue CAGR of ~13% to
~Rs3,335cr over FY2016-19E mainly due to (a) higher order book execution in
EPC segment (b) growth in EHV business and (c) higher B2C sales and (d) higher
exports. On the bottom-line front, we expect a CAGR of ~24% to Rs118cr over the
same period on the back strong revenue and lower interest cost. At the CMP of
Rs124, the stock trades at 8.1x its FY2019E EPS of Rs15.3. We initiate coverage on
the stock with a Buy recommendation and target price of Rs153 based on 10x
FY2019E EPS, indicating an upside of ~23% from the current levels.

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