KEC International - Q2FY21 Result Update - ICICI Direct

KEC reported a decent set of Q2FY21 numbers that were better than our estimates on the revenue front led by better execution in the non-T&D segment while T&D segment stayed flat. However, margins saw some impact on the back of higher than expected operating cost. KEC's YTD order inflow came in at Rs. 4366 crore, up 16%, YoY. Recognition of Covid expenses, higher contracting expenses and forex loss in Brazilian projects led EBIDTA margins to come in a tad below expectations. With strong backlog and tendering pipeline, we believe KEC will perform strongly in H2FY21-FY22E across all parameters.

Valuation & Outlook

Hardly any company apart from KEC will deliver growth in FY21 in terms of order inflows, revenue execution and maintaining balance sheet discipline. Also, with a backlog of Rs. 19515 crore, strong profitable traction in railways, civil business will further derisk its business model in the medium term. We expect KEC to deliver 11.1%, 15.7% revenue, PAT CAGR, respectively, in FY20-22E. Hence, it exhibits best growth parameters in the midcap capital goods space. Better performance and visibility call for multiple upgrades at 14x FY22E, which gives us a target price of Rs. 410/share. We maintain BUY.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_KECIntl_Q2FY21.pdf

Shares of KEC INTERNATIONAL LTD. was last trading in BSE at Rs.337.25 as compared to the previous close of Rs. 328.9. The total number of shares traded during the day was 18766 in over 1086 trades.

The stock hit an intraday high of Rs. 342.5 and intraday low of 332. The net turnover during the day was Rs. 6347073.

Source : Equity Bulls

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