Motilal Oswal has given Buy recommendation for K E C Intl recommended buy rating on the stock with a target price of Rs 580 in its research rep with a target price of Rs. 580 in its research report issued on Feb 01, 2022
Motilal Oswal’s research report on K E C Intl
KECI reported a weak operating performance, with EBITDA declining by 20% YoY on account of commodity price inflation, continued losses in the SAE business in Brazil, and unusual rainfall affecting certain operations. Adjusted PAT declined by 36% YoY and was 35% below our expectation. Working capital deterioration was a negative development. However, strong order inflows at INR67b (+174% YoY) overshadowed weak operating performance. We believe EBITDA margin has bottomed out and should start showing gradual improvement over the next few quarters and inching towards the 10% range in FY24E. While commodity prices and rising working capital has emerged as key negatives for KECI, the management’s diversification efforts into the Railways and Civil segment has opened up new growth avenues. Commodity price inflation and rising interest costs should impact near term earnings till the time low margin orders are completely executed. We cut our FY22E/FY23E EPS estimate by 16%/8%, but broadly maintain our FY24E estimate as new order inflows are likely bid at higher commodity prices. Hence, margin should revert to mean levels.
We maintain our positive bias as the company is successfully scaling up through diversification, thus prioritizing its long term business trends over near term macro risks. We maintain our Buy rating, with a TP of INR580/share (16x FY24E EPS).
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At 17:30 KEC International was quoting at Rs 519.50, up Rs 2.55, or 0.49 percent.
It has touched an intraday high of Rs 521.75 and an intraday low of Rs 517.05.
It was trading with volumes of 14,425 shares, compared to its thirty day average of 21,706 shares, a decrease of -33.54 percent.
In the previous trading session, the share closed up 2.60 percent or Rs 13.10 at Rs 516.95.
The share touched its 52-week high Rs 550.00 and 52-week low Rs 368.00 on 26 October, 2021 and 06 May, 2021, respectively.
Currently, it is trading 5.46 percent below its 52-week high and 41.29 percent above its 52-week low.
Market capitalisation stands at Rs 13,355.74 crore.