November 21, 2016 / 12:24 IST
H1FY17 order intake grew by 29% YoY supported by a turnaround in SAE tower business and a traction in railway segment. SAE tower business witnessed a stupendous growth of 276% YoY and Railway at 158% YoY in H1FY17. KEC holds strong L1 orders of Rs 3800cr+ and is expected to convert into the order book in the coming quarters. We expect KEC is likely to receive an order inflow of Rs 10,876cr & Rs 13,159cr respectively in FY17E and FY18E, which will drive the order book by CAGR of 23% over FY16-18E.
Healthy orders & improvement in SAE business will leverage the margins and earnings growth. We factor sales & adj. PAT to grow at CAGR of 9% & 20% over FY16-18E. We value KEC at a P/E of 13x (3yr average) on FY18E earnings and have a ‘Buy’ rating with a revised target price of Rs 163.
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