Emkay Global Financial has given Buy recommendation for KEC International with a target price of Rs. 540 in its research report issued on Sep 15, 2022
Emkay Global Financial’s research report on KEC International
We recently interacted with the management of KEC International Limited (KEC). We gathered that FY24 would be a clean year as SAE Tower’s (SAE) losses would cease to exist and margin impact due to high commodity prices would recover to earlier times. SAE Towers, which has been reporting losses for the past two years due to delays and high commodity costs, will likely complete the last leg of its EPC projects by Oct-Nov 2022. For FY24, management expects ~8% growth in SAE’s margin. Civil has been the driving force in the near term and will be adding to growth like Railways did a few years back. Diversification (Non-T&D FY22 revenue stood at 50% vs. 17% in FY16) has helped the company maintain healthy sales growth over the years.
We roll forward our valuation to Sept’23 with a revised TP of Rs540 (earlier Rs495). We introduce FY25 EPS at Rs40, largely in line with consensus estimates with ~10% margin. We maintain BUY on the stock.