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* Railway and civil business of KEC is likely to be key earnings driver for next couple of years led by strong order inflow, while T&D business is expected to report steady growth
* KEC has maintained its order inflow from PGCIL despite slowdown in capex. It expects revenue-mix of non-T&D to increase to 40- 45% in next 3 years from 36% f Order book stood at Rs203bn (1.8x of FY19 revenue) as of 4QFY19- end, it is favourably placed (L1) in orders worth ~Rs30bn. f The Management expects revenue to grow by 15-20% in FY20 given a strong order book.
* It expects order inflow to the tune of Rs180bn (+21%) in FY20E led by strong domestic pipeline of Rs250bn, which is in various stage of bidding. Looking ahead, we expect KEC’s earnings to clock 16% CAGR through FY19-21E on the back of strong order book and healthy outlook in T&D and other emerging segments.
* We maintain our BUY recommendation on the stock with an Target Price of Rs383, valuing it at 15xFY21 earnings.
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