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Rajoo

Engineers (Buy)

CMP: ₹51.00

Target: ₹70

Strong order book to give 20 per cent plus top-line CAGR over FY20: The order inflow for Rajoo Engineers (REL) is strong and is expected to grow at 20 per cent plus CAGR in the standard product portfolio (standalone basis). Company launched two new products in ₹5 crore price bracket which received great response from the market and is expected to provide upward push to revenue growth. During H1FY18, the sales were relatively weaker due to poor off-take from the client side on account of GST implementation; however order flow has since stabilised.

REL on current gross block of ₹72 crore (including machinery imported from Japan and Germany to the tune of ₹23 crore in H1FY18) expects to achieve turnover of ₹200 crore with asset turnover of 3x. Company has also slowly worked to improve its product portfolio towards high-end machinery which will support higher margin. REL intends to create additional infrastructure post FY20E onwards.