Target: ₹236

CMP: ₹182.45

Overall outlook remains positive for the segments that drive the growth for the company.

The power sector in India continues to remain one of the governments primary focus areas, as increasing number of reforms involving digitalisation are expected to be implemented in the next few years. In the long term, reform is also expected to take place at the distribution level, including privatisation and a shift towards renewables, in which India has committed itself to an ambitious target.

In the transportation sector, the development of the metro lines across India, the modernisation of the railways, and focus on building more and better airports indicate that these are up for expansion in the near future.

Oil and Gas are also expected to undergo a period of transition as the case for renewables becomes undeniably stronger. Companys performance for FY22 and Q1-FY23 was strong wherein execution have remained strong after a long hiatus reaching ₹1,500 crore in one year for the first time while PAT turned black after 10 years.

Company strategy remains aligned to prioritise cash and margins. Overall, the company remains cautiously optimistic in the short to mid-term with support from the government in the form of investment, reforms and policies. We initiate coverage on SEIL with target price of ₹236.