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KEC International Ltd (KEC) is rapidly improving its competitive
positioning by undertaking strategic M&As and boosting capabilities to
execute larger size T&D projects. With the positive global
macroeconomic environment, strong tendering activity expected from
PGCIL and state utilities and higher focus on the American market, we
project KEC will post robust growth of the order book (23% in FY10-13E
to | 10,711 crore) and revenues (21% to | 6,853 crore). We are initiating
coverage on the stock with a BUY rating.
Robust growth in orders: Banking on domestic and international markets
KEC has the second-largest global manufacturing capacity in transmission
towers (post acquisition of SAE Towers). With strong domestic tendering
activity expected in Q4FY11E and FY12E-FY13E and traction in Middle
East and Africa transmission orders, we expect robust growth of KEC’s
order book in FY12E-13E. KEC’s acquisition of SAE Towers (leadership
position in Americas) strengthens the former’s market position and client
base in large developed markets (as opposed to its earlier focus on
emerging markets). Consequently, we project KEC’s consolidated order
book and revenues will grow to | 10,711 crore (23% CAGR in FY10-13E)
and | 6,853 crore (21% CAGR in FY10-13E), respectively.
Capabilities enhancement initiatives
KEC enjoys a robust competitive positioning due to its captive supplies of
cables (merger with RPG Cables business in Q3FY10) and strategic
acquisitions (Jay Signalling – now undertakes full range of railway infra
projects). These capabilities allow KEC to bid aggressively for projects.
Lastly, in our view, KEC could become a formidable player in the T&D EPC
space having recently secured its largest substation segment order till
date in Kazakhstan.
Valuations
At the CMP of | 82, the stock is trading at a P/E of 9.7x and 8.3x on
FY11E and FY12E EPS, respectively. With higher T&D orders in India and
abroad, increasing focus on non-power related businesses, strong
execution capabilities and stable EBITDA margins, we project KEC’s
consolidated revenues and EPS will grow at 21% and 18% CAGR in
FY10-13E, respectively. We have valued the stock at 10x FY12E EPS to
arrive at a fair value of | 97/share. We are initiating coverage on the
stock with a BUY rating.
Company Background
Established in 1945, KEC International Ltd (KEC) is one of India’s leading
EPC players in the infrastructure engineering space. With an order book of
| 8,000 crore (Q3FY11), the company undertakes projects in the power
transmission, power distribution, railways and telecom sectors. KEC has a
sizable international presence after executing power transmission projects
in over 20 countries. International projects constituted over 54% of the
total order book in Q3FY11.
The company’s revenues have grown at 23% CAGR in FY06-10 to | 3,908
crore driven by robust international expansion and higher power sector
spending in India. In Q3FY11, transmission projects accounted for ~72%
of the order book (including SAE Towers), followed by the power systems
(20%), railways (5%) and cables (2%) segments. The company has the
capability to undertake turnkey transmission line projects up to 800 KV
and design and engineering of substations up to 500 KV.
FY10-11 has been marked by a series of events that have strengthened
KEC’s manufacturing capabilities. These include the acquisition of the USbased
SAE Towers (largest lattice tower manufacturer in the Americas),
merger with RPG Cables (formation of cables SBU) and acquisition of Jay
Signalling Pvt. Ltd. (adding capabilities for railways signalling projects).
Headquartered in Mumbai, the company has staff strength of 3,200
personnel. It was acquired by the RPG Group in 1982.
Investment Rationale
Strong sales visibility; robust order inflows likely from India and abroad
With an order book of | 8,000 crore (Q3FY11), KEC enjoys strong sales
visibility (TTM book-to-bill ratio of 1.8x). We expect robust order intake in
FY12E-FY13E driven by higher tendering activity by PGCIL and state
utilities to meet their XIth and XIIth Plan targets along with a positive
outlook for T&D projects in Africa and the Middle East. KEC’s acquisition
of SAE Towers in Q2FY11 provides the former a leading position in the
lucrative Americas market in addition to a strong client base – providing
attractive opportunities for KEC to grow its order book. Lastly, the railway
sector is expected to emerge as a sunshine sector with the company’s
enhanced capabilities. It will be in a position to undertake the entire
gamut of railway sector infra projects with a recent strategic acquisition.
We project KEC’s order book will grow at 23% CAGR in FY10-13E to |
10,711 crore dominated by the power transmission sector. Consequently,
revenues are estimated to grow at 21% CAGR in FY10-13E to | 6,853
crore.
Well-placed to secure domestic transmission orders…
KEC is currently executing over 30 projects each for PGCIL and state
utilities and private sector clients. With a strong domestic client base and
execution capabilities and substantial power sector spending planned, we
believe the company is well placed to capitalise on the domestic
opportunity. In Q3FY11, the domestic order book in the power
transmission segment constituted ~46% (including power systems,
cables and railways) of the overall order book.
In H1FY11, the domestic order intake was subdued due to bunching of
orders by KEC’s key client, PGCIL, in the second-half of year. In Q3FY11,
we have already seen traction in order intake with KEC securing large
projects from Rajasthan Rajya Vidyut Prasaran Nigam (| 313 crore), PGCIL
(two projects worth | 265 crore), Parbati Koldam Transmission Company
(| 95 crore), etc. Furthermore, we expect a strong order intake in FY12E
as PGCIL and state utilities award contracts to meet their XI Plan targets.
Lastly, the company is scouting for opportunities in South Asian countries
(Nepal, Bangladesh and Bhutan) in the T&D space. We expect these
countries to award large projects over the next few years.
…strongly placed to secure orders in Middle East and Africa too
The international transmission segment has been a major focus area for
KEC (~54% of the total order book in Q3FY11). The company has been
undertaking transmission projects mainly in the Middle East, Africa and
Central Asia for over 60 years. Currently, it is executing projects in over 20
countries.
With the improved global macroeconomic environment, stable
commodity prices and massive power sector capex, KEC has enjoyed
robust order inflows from the Middle East and Africa from FY10-YTD
FY11. These include several repeat orders from existing clients. With
transmission sector capex in the Middle East and Africa pegged at a
whopping US$60 billion in 2007-15 (as per industry sources), a large
opportunity exists for transmission line manufacturers.
…and higher focus on Americas through SAE acquisition
With the acquisition of the US-based tower manufacturer SAE Towers in
Q2FY11, KEC is expected to increase its focus on the relatively developed
markets of North America and Latin America. This is in contrast to its
earlier focus on emerging economies with fast growing power sector
spending. SAE Towers is one of the largest tower manufacturers in North
America and Latin America. It has an annual manufacturing capacity of
100,000 MT (Mexico 35,000 MT, Brazil 65,000 MT). With the integration of
SAE, KEC has become the world’s second-largest transmission tower
manufacturer with a manufacturing capacity of 250,000 MT/annum.
The acquisition opens up large transmission sector market opportunities
for KEC in North America and Latin America (estimated at US$162 billion
in 2007-15) in addition to margin expansion opportunities (SAE has
EBITDA margins of 14% vs. ~10% for KEC). KEC plans to increase the
capacity utilisation of SAE from the current 60% to 100% over the next
three years. Margin expansion is possible fuelled by higher utilisation
rates, operational synergies and cost savings in procurement and
administration functions.
The fruits from the acquisition are already visible with KEC recently
securing a large transmission line project from the Canada-based E&C
player SNC Lavalin (total project value of | 735 crore; executable over the
next five years).
Largest-ever substation projects secured in Kazakhstan in Q4FY11
KEC also undertakes projects related to substations (up to 500 KV) and
rural electrification. In Q3FY11, the segment accounted for ~19% of the
total order book. With the government increasing its budget allocation for
rural electrification under RGGVY and KEC’s success in securing
substation projects in India and abroad, we have a positive outlook for
FY11E-13E.
In Q4FY11, KEC secured its largest substation segment order till date from
Kazakhstan Electricity Grid Operating Co (KEGOC) valued at | 942 crore.
The order has been secured in consortium with a local player and is for
supply of 38 substations (varying voltage levels up to 1,150 KV)
executable over 33 months. In our view, successful execution of this large
project will position KEC as a turnkey supplier catering to the T&D sector
(substantial opportunities for such players in the XII Plan when key
domestic clients shift to EPC ordering). Till date, KEC has executed
relatively smaller scale substation projects in India and abroad.
Additionally, till YTD FY11, the company has secured two projects from
PGCIL for constructing 400 KV substations in West Bengal and Orissa.
Capabilities to cater to entire gamut of railway infra sector projects
In our view, KEC is well placed to secure railways sector orders given the
capabilities gained (signalling work) following the acquisition of Jay
Railways Signalling in Q2FY11. KEC is now an integrated player catering
to the entire gamut of railway sector infra projects (ranging from civil
infrastructure and track work, railway electrification and signalling work).
Currently, the company has an order visibility of | 450 crore (including
composite railway construction and overseas contracts in Malaysia).
Aggressive capex plans of Indian Railways on electrification of rail
network, expansion of track length and implementation of metro rail
projects in major cities provide attractive opportunities for companies like
KEC.
Captive source of cable requirements add to competitive advantage
We believe KEC’s captive capabilities to manufacture high and lowtension
power cables and telecom and railways cables provide it a natural
edge vis-à-vis competitors in bidding for projects. This advantageous
position stems from the merger of RPG Cables with KEC in Q3FY10. With
a positive demand outlook for cables (| 77,000 crore in XI Plan) driven by
increased underground cable laying projects, 3G network rollout
(increased fibre optic cables demand), and export opportunities in the
Middle East and Africa, we expect strong traction in cable segment
revenues in FY11E-13E.
KEC plans to set up a greenfield facility in Baroda, Gujarat at a capex of |
120 crore over the next two years. Currently, the company has three
manufacturing facilities in Mysore, Thane and Silvassa.
Increasing focus on telecom towers business
KEC has leveraged its strength in transmission towers for offering telecom
services like turnkey telecom sites using angular, tubular and hybrid
towers to operators and tower management companies. Currently, the
company is managing ~400 telecom sites on a build operate & own
(BOO) basis in Chhattisgarh, Meghalaya and Mizoram. Going forward, it is
well poised to enjoy robust growth in the telecom segment on account of
new tower demand from 3G and BWA services.
Risks and concerns
Forex risk
With KEC’s sizable international operations (~54% of order book in
Q3FY11), the company is vulnerable to lower revenues and profitability
due to the appreciation of the rupee against major international
currencies.
Fluctuations in commodity price
Commodities (steel, zinc and copper) accounted for ~40% of the total
raw material costs in FY10 (standalone entity). With majority of overseas
projects secured by KEC being fixed cost contracts, the company’s
profitability could decline due to higher commodities prices. As of
Q3FY11, 30% of the overall order book is fixed price contracts and is
exposed to fluctuations in commodity price.
Operations in potentially sensitive geographies
With KEC executing a significant proportion of its projects in potentially
sensitive geographies (Africa, Middle East, Central Asia), the company’s
projects could face execution delays due to terrorist attacks, political
unrests, sudden changes in regulatory policies and labour laws (w.r.t.
foreign companies), etc. Any of the above scenarios could result in lowerthan-
expected revenues and earnings for the company. As of Q3FY11, |
30 crore of orders each are based in the troubled areas of Middle East and
North Africa i.e. Egypt and Libya
High working capital requirements
KEC has high working capital requirements (21% of net sales in FY10) as
majority of its domestic clients are government entities (back payment
and high proportion of retention money). Working capital requirements
are funded by the company through borrowings. A higher-than-expected
rise of interest rate in could result in higher interest expenses for KEC
(and lower profitability).
Other factors
Since transmission projects have long gestation periods, certain factors
like manpower shortage, natural calamities, lower infra investment due to
economic slowdown, etc. could result in lower-than-expected project
execution and order intake for the company.
Valuations
At the CMP of | 82, the stock is trading at a P/E of 9.7x and 8.3x in FY11E
FY12E earnings, respectively. With higher T&D orders in India and abroad,
strong execution capabilities and stable EBITDA margins (SAE Tower
acquisition will add to the margin profile for KEC), we project KEC’s
consolidated revenues and EPS will grow at 21% and 18% CAGR in FY10-
13E, respectively. The company also offers the best return ratios in the
sector. The RoEs are expected to be in the range of 23-24% over FY10-
13E. We rate KEC as our top pick in the sector with a return potential of
18% over 12-18 months time frame.
We have valued the core business at | 97 per share (80% weight to FY12E
with a multiple of 11x and 20% weight to FY12E book value at 1.3x). The
key downside risk apart from the macro headwinds would be lengthening
of the political crisis in the MENA region causing slippages to the existing
order book and inflow of fresh orders from that region.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
KEC International Ltd (KEC) is rapidly improving its competitive
positioning by undertaking strategic M&As and boosting capabilities to
execute larger size T&D projects. With the positive global
macroeconomic environment, strong tendering activity expected from
PGCIL and state utilities and higher focus on the American market, we
project KEC will post robust growth of the order book (23% in FY10-13E
to | 10,711 crore) and revenues (21% to | 6,853 crore). We are initiating
coverage on the stock with a BUY rating.
Robust growth in orders: Banking on domestic and international markets
KEC has the second-largest global manufacturing capacity in transmission
towers (post acquisition of SAE Towers). With strong domestic tendering
activity expected in Q4FY11E and FY12E-FY13E and traction in Middle
East and Africa transmission orders, we expect robust growth of KEC’s
order book in FY12E-13E. KEC’s acquisition of SAE Towers (leadership
position in Americas) strengthens the former’s market position and client
base in large developed markets (as opposed to its earlier focus on
emerging markets). Consequently, we project KEC’s consolidated order
book and revenues will grow to | 10,711 crore (23% CAGR in FY10-13E)
and | 6,853 crore (21% CAGR in FY10-13E), respectively.
Capabilities enhancement initiatives
KEC enjoys a robust competitive positioning due to its captive supplies of
cables (merger with RPG Cables business in Q3FY10) and strategic
acquisitions (Jay Signalling – now undertakes full range of railway infra
projects). These capabilities allow KEC to bid aggressively for projects.
Lastly, in our view, KEC could become a formidable player in the T&D EPC
space having recently secured its largest substation segment order till
date in Kazakhstan.
Valuations
At the CMP of | 82, the stock is trading at a P/E of 9.7x and 8.3x on
FY11E and FY12E EPS, respectively. With higher T&D orders in India and
abroad, increasing focus on non-power related businesses, strong
execution capabilities and stable EBITDA margins, we project KEC’s
consolidated revenues and EPS will grow at 21% and 18% CAGR in
FY10-13E, respectively. We have valued the stock at 10x FY12E EPS to
arrive at a fair value of | 97/share. We are initiating coverage on the
stock with a BUY rating.
Company Background
Established in 1945, KEC International Ltd (KEC) is one of India’s leading
EPC players in the infrastructure engineering space. With an order book of
| 8,000 crore (Q3FY11), the company undertakes projects in the power
transmission, power distribution, railways and telecom sectors. KEC has a
sizable international presence after executing power transmission projects
in over 20 countries. International projects constituted over 54% of the
total order book in Q3FY11.
The company’s revenues have grown at 23% CAGR in FY06-10 to | 3,908
crore driven by robust international expansion and higher power sector
spending in India. In Q3FY11, transmission projects accounted for ~72%
of the order book (including SAE Towers), followed by the power systems
(20%), railways (5%) and cables (2%) segments. The company has the
capability to undertake turnkey transmission line projects up to 800 KV
and design and engineering of substations up to 500 KV.
FY10-11 has been marked by a series of events that have strengthened
KEC’s manufacturing capabilities. These include the acquisition of the USbased
SAE Towers (largest lattice tower manufacturer in the Americas),
merger with RPG Cables (formation of cables SBU) and acquisition of Jay
Signalling Pvt. Ltd. (adding capabilities for railways signalling projects).
Headquartered in Mumbai, the company has staff strength of 3,200
personnel. It was acquired by the RPG Group in 1982.
Investment Rationale
Strong sales visibility; robust order inflows likely from India and abroad
With an order book of | 8,000 crore (Q3FY11), KEC enjoys strong sales
visibility (TTM book-to-bill ratio of 1.8x). We expect robust order intake in
FY12E-FY13E driven by higher tendering activity by PGCIL and state
utilities to meet their XIth and XIIth Plan targets along with a positive
outlook for T&D projects in Africa and the Middle East. KEC’s acquisition
of SAE Towers in Q2FY11 provides the former a leading position in the
lucrative Americas market in addition to a strong client base – providing
attractive opportunities for KEC to grow its order book. Lastly, the railway
sector is expected to emerge as a sunshine sector with the company’s
enhanced capabilities. It will be in a position to undertake the entire
gamut of railway sector infra projects with a recent strategic acquisition.
We project KEC’s order book will grow at 23% CAGR in FY10-13E to |
10,711 crore dominated by the power transmission sector. Consequently,
revenues are estimated to grow at 21% CAGR in FY10-13E to | 6,853
crore.
Well-placed to secure domestic transmission orders…
KEC is currently executing over 30 projects each for PGCIL and state
utilities and private sector clients. With a strong domestic client base and
execution capabilities and substantial power sector spending planned, we
believe the company is well placed to capitalise on the domestic
opportunity. In Q3FY11, the domestic order book in the power
transmission segment constituted ~46% (including power systems,
cables and railways) of the overall order book.
In H1FY11, the domestic order intake was subdued due to bunching of
orders by KEC’s key client, PGCIL, in the second-half of year. In Q3FY11,
we have already seen traction in order intake with KEC securing large
projects from Rajasthan Rajya Vidyut Prasaran Nigam (| 313 crore), PGCIL
(two projects worth | 265 crore), Parbati Koldam Transmission Company
(| 95 crore), etc. Furthermore, we expect a strong order intake in FY12E
as PGCIL and state utilities award contracts to meet their XI Plan targets.
Lastly, the company is scouting for opportunities in South Asian countries
(Nepal, Bangladesh and Bhutan) in the T&D space. We expect these
countries to award large projects over the next few years.
…strongly placed to secure orders in Middle East and Africa too
The international transmission segment has been a major focus area for
KEC (~54% of the total order book in Q3FY11). The company has been
undertaking transmission projects mainly in the Middle East, Africa and
Central Asia for over 60 years. Currently, it is executing projects in over 20
countries.
With the improved global macroeconomic environment, stable
commodity prices and massive power sector capex, KEC has enjoyed
robust order inflows from the Middle East and Africa from FY10-YTD
FY11. These include several repeat orders from existing clients. With
transmission sector capex in the Middle East and Africa pegged at a
whopping US$60 billion in 2007-15 (as per industry sources), a large
opportunity exists for transmission line manufacturers.
…and higher focus on Americas through SAE acquisition
With the acquisition of the US-based tower manufacturer SAE Towers in
Q2FY11, KEC is expected to increase its focus on the relatively developed
markets of North America and Latin America. This is in contrast to its
earlier focus on emerging economies with fast growing power sector
spending. SAE Towers is one of the largest tower manufacturers in North
America and Latin America. It has an annual manufacturing capacity of
100,000 MT (Mexico 35,000 MT, Brazil 65,000 MT). With the integration of
SAE, KEC has become the world’s second-largest transmission tower
manufacturer with a manufacturing capacity of 250,000 MT/annum.
The acquisition opens up large transmission sector market opportunities
for KEC in North America and Latin America (estimated at US$162 billion
in 2007-15) in addition to margin expansion opportunities (SAE has
EBITDA margins of 14% vs. ~10% for KEC). KEC plans to increase the
capacity utilisation of SAE from the current 60% to 100% over the next
three years. Margin expansion is possible fuelled by higher utilisation
rates, operational synergies and cost savings in procurement and
administration functions.
The fruits from the acquisition are already visible with KEC recently
securing a large transmission line project from the Canada-based E&C
player SNC Lavalin (total project value of | 735 crore; executable over the
next five years).
Largest-ever substation projects secured in Kazakhstan in Q4FY11
KEC also undertakes projects related to substations (up to 500 KV) and
rural electrification. In Q3FY11, the segment accounted for ~19% of the
total order book. With the government increasing its budget allocation for
rural electrification under RGGVY and KEC’s success in securing
substation projects in India and abroad, we have a positive outlook for
FY11E-13E.
In Q4FY11, KEC secured its largest substation segment order till date from
Kazakhstan Electricity Grid Operating Co (KEGOC) valued at | 942 crore.
The order has been secured in consortium with a local player and is for
supply of 38 substations (varying voltage levels up to 1,150 KV)
executable over 33 months. In our view, successful execution of this large
project will position KEC as a turnkey supplier catering to the T&D sector
(substantial opportunities for such players in the XII Plan when key
domestic clients shift to EPC ordering). Till date, KEC has executed
relatively smaller scale substation projects in India and abroad.
Additionally, till YTD FY11, the company has secured two projects from
PGCIL for constructing 400 KV substations in West Bengal and Orissa.
Capabilities to cater to entire gamut of railway infra sector projects
In our view, KEC is well placed to secure railways sector orders given the
capabilities gained (signalling work) following the acquisition of Jay
Railways Signalling in Q2FY11. KEC is now an integrated player catering
to the entire gamut of railway sector infra projects (ranging from civil
infrastructure and track work, railway electrification and signalling work).
Currently, the company has an order visibility of | 450 crore (including
composite railway construction and overseas contracts in Malaysia).
Aggressive capex plans of Indian Railways on electrification of rail
network, expansion of track length and implementation of metro rail
projects in major cities provide attractive opportunities for companies like
KEC.
Captive source of cable requirements add to competitive advantage
We believe KEC’s captive capabilities to manufacture high and lowtension
power cables and telecom and railways cables provide it a natural
edge vis-à-vis competitors in bidding for projects. This advantageous
position stems from the merger of RPG Cables with KEC in Q3FY10. With
a positive demand outlook for cables (| 77,000 crore in XI Plan) driven by
increased underground cable laying projects, 3G network rollout
(increased fibre optic cables demand), and export opportunities in the
Middle East and Africa, we expect strong traction in cable segment
revenues in FY11E-13E.
KEC plans to set up a greenfield facility in Baroda, Gujarat at a capex of |
120 crore over the next two years. Currently, the company has three
manufacturing facilities in Mysore, Thane and Silvassa.
Increasing focus on telecom towers business
KEC has leveraged its strength in transmission towers for offering telecom
services like turnkey telecom sites using angular, tubular and hybrid
towers to operators and tower management companies. Currently, the
company is managing ~400 telecom sites on a build operate & own
(BOO) basis in Chhattisgarh, Meghalaya and Mizoram. Going forward, it is
well poised to enjoy robust growth in the telecom segment on account of
new tower demand from 3G and BWA services.
Risks and concerns
Forex risk
With KEC’s sizable international operations (~54% of order book in
Q3FY11), the company is vulnerable to lower revenues and profitability
due to the appreciation of the rupee against major international
currencies.
Fluctuations in commodity price
Commodities (steel, zinc and copper) accounted for ~40% of the total
raw material costs in FY10 (standalone entity). With majority of overseas
projects secured by KEC being fixed cost contracts, the company’s
profitability could decline due to higher commodities prices. As of
Q3FY11, 30% of the overall order book is fixed price contracts and is
exposed to fluctuations in commodity price.
Operations in potentially sensitive geographies
With KEC executing a significant proportion of its projects in potentially
sensitive geographies (Africa, Middle East, Central Asia), the company’s
projects could face execution delays due to terrorist attacks, political
unrests, sudden changes in regulatory policies and labour laws (w.r.t.
foreign companies), etc. Any of the above scenarios could result in lowerthan-
expected revenues and earnings for the company. As of Q3FY11, |
30 crore of orders each are based in the troubled areas of Middle East and
North Africa i.e. Egypt and Libya
High working capital requirements
KEC has high working capital requirements (21% of net sales in FY10) as
majority of its domestic clients are government entities (back payment
and high proportion of retention money). Working capital requirements
are funded by the company through borrowings. A higher-than-expected
rise of interest rate in could result in higher interest expenses for KEC
(and lower profitability).
Other factors
Since transmission projects have long gestation periods, certain factors
like manpower shortage, natural calamities, lower infra investment due to
economic slowdown, etc. could result in lower-than-expected project
execution and order intake for the company.
Valuations
At the CMP of | 82, the stock is trading at a P/E of 9.7x and 8.3x in FY11E
FY12E earnings, respectively. With higher T&D orders in India and abroad,
strong execution capabilities and stable EBITDA margins (SAE Tower
acquisition will add to the margin profile for KEC), we project KEC’s
consolidated revenues and EPS will grow at 21% and 18% CAGR in FY10-
13E, respectively. The company also offers the best return ratios in the
sector. The RoEs are expected to be in the range of 23-24% over FY10-
13E. We rate KEC as our top pick in the sector with a return potential of
18% over 12-18 months time frame.
We have valued the core business at | 97 per share (80% weight to FY12E
with a multiple of 11x and 20% weight to FY12E book value at 1.3x). The
key downside risk apart from the macro headwinds would be lengthening
of the political crisis in the MENA region causing slippages to the existing
order book and inflow of fresh orders from that region.
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