Hold KEC International; target of Rs 750: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on KEC International with a target price of Rs 750 in its research report dated May 08, 2024.

Broker Research

May 09, 2024 / 15:23 IST

hold

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on KEC International

We revise our EPS by -2.1% in FY25 owing to margin weakness in Railways, and +1.2% in FY26 factoring in strong execution. KEC International (KEC) reported decent revenue growth of 11.6% YoY while EBITDA margin expanded by 116bps YoY to 6.3%. Indian T&D opportunity pipeline is robust given the push on renewable energy and new thermal projects to cater to rising power demand. International T&D prospects continue to remain strong across Saudi Arabia, UAE and USA. Civil business outlook is healthy, especially in residential building segment, but metro and water order intake are key monitorables. Meanwhile, Railway business continues to face execution delays, supply chain constraints and heavy competition. New aluminium conductor facility will aid margin improvement in Cables. Solar business may ramp up from FY26 onwards. We remain positive on KEC for the long-term given its 1) strong order book, 2) healthy execution momentum, 3) robust T&D outlook, especially in renewable energy and 4) growing civil business.

Outlook

The stock is currently trading at a P/E of 24.0x/14.7x FY25/26E. We roll forward to FY26E and maintain ‘Hold’ rating with a revised TP of Rs750 (Rs686 earlier), valuing it at a P/E of 15x FY26E (14x Dec-25E earlier) given strong T&D prospects and improving margin profile.

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