Accumulate KEC International; target of Rs 572: Prabhudas Lilladher

Prabhudas Lilladher’s research report on KEC International

KEC International (KECI) reported weak set of quarterly number, mainly led by 1) delay and cost overrun in SAE Brazil, 2) higher commodity price, 3) environmental issue pertaining to three projects in DMRC/RRTS and 4) unseasonal rainfall in southern part impacting execution. Management indicated all legacy orders in SAE will be completed by Q4FY22 end, off which it has already completed one project (two more remaining) and expects operational performance to return to normalcy from FY23. Tender pipeline from international markets remains strong from region likes SAARC, ME and US market, while domestic T&D is expected to pick up from FY23. Given strong OB, execution pickup, margin improvement, healthy outlook in international T&D and non T&D (Railway, Civil), we expect KEC to report revenue/PAT CAGR of 15%/27% between FY21-24E. At CMP stock is trading at 29.6x/15.7x/11.8x FY22/FY23/FY24E.

Outlook

We roll over our TP to FY24E and maintain Accumulate rating on stock with TP of Rs572 (earlier Rs445) valuing at PE of 13x FY24E (earlier 12x FY23E), given strong OB, order inflow visibility and improving margin profile.

More Info on Trent

At 17:30 KEC International was quoting at Rs 519.50, up Rs 2.55, or 0.49 percent.

It has touched an intraday high of Rs 521.75 and an intraday low of Rs 517.05.

It was trading with volumes of 14,425 shares, compared to its thirty day average of 21,706 shares, a decrease of -33.54 percent.

In the previous trading session, the share closed up 2.60 percent or Rs 13.10 at Rs 516.95.

The share touched its 52-week high Rs 550.00 and 52-week low Rs 368.00 on 26 October, 2021 and 06 May, 2021, respectively.

Currently, it is trading 5.46 percent below its 52-week high and 41.29 percent above its 52-week low.

Market capitalisation stands at Rs 13,355.74 crore.

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