Accumulate KEC International; target of Rs 911: Prabhudas Lilladher

Prabhudas Lilladher's research report on KEC International

We revise our FY26/27 EPS estimates by -4.0%/-1.8%, factoring in continued weakness in Civil, Railways and O&G despite strong growth in T&D. KEC International (KEC) reported revenue growth of 11.5% YoY, while EBITDA margin expanded by 155bps YoY to 7.8%. Domestic T&D continues to remain robust while traction in the Middle East, CIS and Americas will drive international T&D business. The Cables business value unlocking will be further aided by capacity expansions across E-Beam and Elastomeric cables. In the O&G business, management plans to pursue only international opportunities amid smaller domestic project sizes and delays. Additionally, labor shortages and payment collection delays in water projects continue to impact Civil business. Management remains selective on railway order booking, focusing on better working capital management. Reflecting confidence in the domestic market outlook, management has guided for ~15% YoY revenue growth with margin of 8-8.5% along with order intake of ~Rs300bn and NWC days of <100 days in FY26.

Outlook

We roll forward to Mar’27E and maintain ‘Accumulate’ rating with a revised TP of Rs911 (Rs801 earlier) valuing the stock at a PE of 18x Mar’27E (18x Sep’26E earlier).