Elecon Engineering -Sustained momentum; Retain BUY ::Emkay

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Elecon Engineering

Sustained momentum; Retain BUY

BUY

CMP: Rs 65                                        Target Price: Rs 89

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n     We retain our positive bias on EEL post meeting management – Reiterate that tide has turned and EEL is poised to witness sharp recovery in earnings in FY10-12E period

n     MHE division – expected to grow at 15-20% in FY12E with sustained order inflow momentum. Current order book of Rs13.5 bn lends full revenue visibility for FY12E

n     TE division to witness sustained growth momentum – expect to grow at 17-18% in FY12E. Progress on recently acquired David Brown Gear Systems on track

n     Retain FY11E earnings estimates of Rs6.9 and fine tune FY12E estimates by -5% to Rs8.9. Maintain our Buy rating with revised price target of Rs89