ICICI Direct recommended hold rating on KEC International with a target price of Rs 330 in its research report dated August 08, 2019.
ICICI Direct's research report on KEC International
KEC’s Q1FY20 revenue came in at Rs 2412.5 crore up 14.6% YoY. This was above our estimate of Rs 2361.3 crore. Overall T&D business registered robust growth of 25.3% to Rs 1599 crore. The railways business continued their growth momentum with revenues up 67% to Rs 522 crore. Cable business grew 1.6% to Rs 263 crore. Civil, solar businesses reported a subdued performance. EBITDA margins were at 10.4% (better than our estimate of 10.2%), improving 10 bps YoY. During Q1FY20, KEC’s order inflow came in at Rs 1115 crore while the YTD order book was at Rs 19016 crore.
We expect strong order inflows in FY20 across sectors. We value KEC at 12x P/E on FY21E EPS to arrive at a fair value of Rs 330/ share. We maintain our HOLD rating. Key risks: Any slowdown in execution of T&D backlog and rise in interest costs, may impact profitability.
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