KEI is likely to be a major beneficiary of key government initiatives in power, infrastructure and real estate sector. It has high return ratios, free cash flows and low debt to equity (0.7x FY20). Currently, KEI trades at 12.5x FY20 EPS. Given the high growth expectation along with healthy financials, we believe that the stock deserves higher valuations. We value KEI at 18x FY20EPS to arrive at a fair value of INR 537/share (44% upside) and initiate coverage with a BUY recommendation
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Motilal Oswal was founded in 1987 as a small sub-broking unit, with just two people running the show. Today it has a 2000 member team with a networth of Rs7 bn and market capitalization as of March 31, 2008 at Rs19 bn.
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