Sharekhan's research report on KEC International
For Q1FY2023, KEC International Limited (KEC) lagged estimates on the profitability front, while sales were in-line led by non-T&D businesses. The quarter continued to be impacted by legacy orders in Brazil, higher interest cost, and steep increase in commodity prices. Management expects improvement from Q3FY2023 as losses in SAE Brazil lessens and commodity prices cool off . Further, working capital and debt level are expected to reduce due to closure of long gestation, low-margin orders. Year-to-date (YTD) order intake is at Rs. 3,472 crore, strong order book of Rs. 23,720 crore, and L1 of over Rs. 8,000 crore.
We retain Buy on KEC with a revised PT of Rs. 515, given strong likelihood of margin improvement in H2FY2023, strong order backlog, healthy order pipeline, and diversified business model.
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