KEI Industries, Deeapk Nitrite and Kalyani Steel are on the radar of Anand Rathi Share and Stock Brokers
Anand Rathi Share and Stock Brokers recommends the following stocks:
CMP 338 Target 379
KEI’s revenue clocked robust, 44 percent, growth boosted by the EPC and cable divisions. EPC reported a sturdy, 119 percent, increase in revenue, aided by cables which rose 29 percent y/y. Management guided to an annual 20 percent growth in the top-line
The new government in UP and greater spending by state transmission companies increase growth opportunities. Greater brand promotion and a wider distribution network augur well.
Exports shot up 28 percent y/y. Following the branch expansion overseas, exports are expected to clock robust growth.
KEI’s retail division is moving up the value chain, backed by the company’s strong brand equity and wide distribution network in India and abroad.
The robust order-book offers assurance of growth over the next two years. Greater spending by state transmission utilities provides growth opportunities.
We expect a 29 percent CAGR in PAT over FY17-19, supported by the rising revenue and better margins. We maintain our Buy call, valuing the stock at 18x FY19 earnings.
CMP 222 Target 264
DNL is one of the leading global players for several niche chemical products used in - Colorants, Petrochemicals, Agrochemicals, Rubber, Pharmaceuticals, Paper, Textile
DNL has recently increased its focus on adding high value products. (Greenfield expansion plan at Dahej, Gujarat for manufacturing phenol (2, 00,000 ton/year) and acetone (1, 20,000 T/year).
With the completion of its Phenol project, the top line for the company is expected to almost get doubled by FY-19E.
Also, due to India’s heavy dependence on the imports due to lack of domestic production capacity and imposition of around 7.5 percent cumulative anti dumping duties, the macro scenarios for the domestic market looks promising for the company.
At CMP, the stock is trading 27x time FY18E and 11.3x FY19E earnings. We recommend BUY on Deepak Nitrite Limited with a target price of Rs.264 per share.
CMP 423 Target 605
KSL is a leading manufacturer of forging and engineering quality carbon and alloy steels using the blast furnace route.
65 percent sales are outside the group and 35 percent from group companies. Exports is less than 5 percent of total revenues.
It is also a certified supplier to the Indian Defence and supplies steel for bomb shells and barrel applications & components for heavy vehicles. KSL has earned the status of preferred steel supplier for engineering, automotive, seamless tube and primary aluminum industry.
The company has national and international clients like Alcan Iceland, Caterpillar Inc, Ford, Volvo, Indian Railway and Tata Motors. Major clients are Maruti Suzuki, Hyundai, M&M etc.
Going ahead we expect the company to grow its revenues at 10 percent CAGR on back of revival in industry it works and demand for steel. We expect KSL to maintain its margins in the range of 20-22 percent
Currently, the stock is trading at PE of 10.4x its FY18E EPS & 8.7x its FY19E EPS. We are initiating our coverage on Kalyani Steel Limited with “BUY” recommendation and target price of Rs.605 per share.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.