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Prabhudas Lilladher Report
We revise our earning per share by -0.6%/3.0% FY25/26E factoring in better margin profile and revenue visibility owing to healthy order intake. KEC International Ltd. reported decent revenue growth of 6.3% YoY, while Ebitda margin expanded by 23 basis points YoY to 6.0%. Domestic transmission and distribution outlook remains robust led by energy transition.
T&D pipeline in the Middle East is strong, while healthy opportunities exist in Bangladesh, Latin America, CIS and Australia. Cables and conductors business is seeing increased traction and better profitability.
KEC is improving capabilities in renewables to position itself to win additional orders. Meanwhile, civil business faced challenges due to labor shortages, leading to a conservative order booking approach as the management focuses on optimizing working capital.
We remain positive on KEC for the long term given its
strong order book,
healthy execution momentum,
robust T&D outlook, especially in renewable energy, and
growing Cables business.
The stock is currently trading at a price to earning of 28.5 times/16.9 times FY25/26E earnings.
We maintain ‘Hold' rating with a revised target price of Rs 880 (Rs 750 earlier), valuing the stock at a price to earning of 17 times FY26E (15 times FY26E earlier) given strong revenue visibility and improving margin profile.
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