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Buy KEC International; target of Rs 162: ICICI Direct

ICICI Direct is bullish on KEC International has recommended buy rating on the stock with a target price of Rs 162 in its research report dated November 10, 2016.

November 17, 2016 / 03:31 PM IST
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ICICI Direct's research report on KEC International

Similar to FY16 trends, KEC witnessed strong order inflows to the tune of Rs 5928 crore, up 12.2% YoY. In Q2FY17 alone KEC managed to bag orders worth Rs 3043 crore. Apart from this, the company is L1 in orders worth Rs 3800 crore. The management commentary also suggests that domestic ordering opportunity from SEBs is quite strong coupled with opportunities in international markets. The order backlog as of Q2FY17 was at Rs 10785 crore, which is skewed towards the domestic markets with a share of 61%. Going ahead, we expect order inflows to grow 30% YoY to Rs 11328 crore while for FY18E we have built in a moderate decline on a high base at Rs 10600 crore.

A strong backlog and back ended pick-up of execution from H2FY17 onwards will ensure revenue and PAT CAGR of 13% and 20% YoY, respectively, in FY16-18E. This coupled with a scaling up of new business verticals, especially will provide necessary growth levers. Improvement in working capital will further strengthen balance sheet. We retain our target price of Rs 162/share with a BUY rating on the stock.

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first published: Nov 17, 2016 03:31 pm