HDFC Securities has given Buy recommendation for KEC International with a target price of Rs. 476 in its research report issued on Feb 01, 2021

HDFC Securities’ research report on KEC International

KEC reported revenue/EBITDA/PAT at Rs 33/3/1.5bn, marginally behind our estimates. Slower execution in Brazil and NCR impacted the top-line. YTD, order inflow stood at Rs 68.3bn and the company is confident of a good show in 4QFY21, given its strong order pipeline. KEC is seeing good traction in railways and civil segment, even as the domestic T&D ordering has slowed down. Order book stood at Rs 179bn (ex. L1 of Rs 60bn), of which 38% is from international market. Net debt increased to Rs 37.4bn in 3QFY21 from Rs 34.8bn at the end of Sep-20. NWC also increased from 132 to 144 days during the same period. With robust prequalification in domestic/international markets and across sectors, KEC is well-placed for a re-rating. However, sustained higher commodity prices could impact the margins.

Outlook

We maintain BUY on KEC with unchanged target price of Rs 476/sh, 14x Dec-22 EPS.

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