KEC International - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 358, MCap: Rs. 9202 crore)

KEC reported a decent set of numbers for Q3FY21 numbers on the revenue front led by strong execution in non-T&D segment while the T & D segment remained muted due to slower execution pace. However, margins saw some impact on the back of change in business mix (higher contribution by non-T&D). KEC's YTD order inflow came in at Rs. 6827 crore.

Q3FY21 Earnings Summary

- The topline came in at Rs. 3289.2 crore which grew by 7% on YoY basis, (below our estimate of Rs. 3588.0 crore aided by strong growth in non-T&D. During Q3FY21, the overall T&D business (including SAE tower) revenue declined by 12% on YoY basis to Rs. 1882 crore. While Non-T&D business (Railways, Civil, Cables, other) registered a robust growth of 51% to Rs. 1475 crore, on YoY basis led by better execution. The railways business revenue came in at Rs. 866 crore, up 44% while civil business segment revenue multi-fold to Rs. 267 crore, registering a growth of 206% on YoY on low base. Cables business grew by 22% toRs. 305 crore, YoY. Overall, T&D contributed 55% followed by railways (26%), Cables (9%) and Civil (8%) to revenues

- KEC's YTD order inflow came in at Rs. 6827 crore, YoY while Q2FY21 inflows came in at Rs. 2461 crore. The unexecuted order book as on Q3FY21 stood at Rs. 17918 crore, while the company is L1 in orders worth Rs. 6100 crore. T&D business contributed 54% to order book while non- T&D contributed 46% to order book. On the order inflow front, T&D contributed 64% followed by railways (16%), Civil (10%) and Cables (9%). Geographically, International order inflows contributed 48% and Domestic contributed 52%

- EBITDA margins came in at 9.1% (below our estimate of 9.5%), down by 130 bps on a YoY basis mainly impacted by change in business mix, while absolute EBIDTA came in at Rs. 298.7 crore, which declined by 6.2% on YoY basis

- Interest cost decreased by 18.8% YoY to Rs. 65.8 crore leading to interest to sales ratio to decline by 60bs on YoY to 2.0%. KEC's Net Debt (excluding acceptances) has increased by Rs. 219 crore, sequentially to Rs. 2644 crore, as on December 30, 2020. Net working capital day's stand stable at 144 days which is expected to normalize further in Q4 owing to judicious monitoring of cash flows and focus on collection of receivables especially retention

- PAT came in at Rs. 145.1 crore (below our estimate of Rs. 171.9 crore) which remained flat on YoY basis, aided by higher other income which grew by 90.2% to Rs. 3.9 crore on YoY basis

KEC has delivered strong performance in non-T&D business segments like railways and Civil during the quarter, which supported overall performance for the quarter. While the T & D segment is expected to ramp-up in coming quarters.

We would be coming out with a detailed report post the conference call.

Shares of KEC INTERNATIONAL LTD. was last trading in BSE at Rs.357.6 as compared to the previous close of Rs. 358. The total number of shares traded during the day was 5216 in over 280 trades.

The stock hit an intraday high of Rs. 359.1 and intraday low of 351. The net turnover during the day was Rs. 1857721.

Source : Equity Bulls

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