KEC International Ltd. share price target

KEC International reported a strong set of numbers despite widespread expectations of disruption in execution due to lockdown from mid of Mar.'20. KEC reported Revenues/EBITDA/PAT for Q4FY20 at Rs. 3671cr/371cr/193cr lower by 4%/7%/3% on YoY basis.

Strong backlog, execution ramp-up to help sustain growth On the order inflow front, KEC's FY20 order inflow was at | 11331 crore, down 19.5%. Also, it has already received orders worth | 739 crore for YTD FY21E. We believe with an L1 of | 3500 crore combined with strong order pipeline in railways (conventional railway, new track lines, overhead electrification), Green Energy Corridor (GEC) as well as new opportunities in Saarc, MENA, Africa and Middle East Region should help KEC see reasonable order inflow in FY21E. KEC expects good traction in order...

Strong promoter parentage and focus on the balance sheet should help KEC emerge stronger post the COVID-19 crisis v/s Revenue came in at INR36.7b, down 4.4% YoY (9% below est.). Management believes that there is no wage inflation risk to EBITDA margins due migration of laborers; however, KEC is planning to use automation increasingly to bring Order book stood at INR205b (excl. Order inflows were lower by 20% YoY at INR113b, owing to delayed tendering activity due to the COVID-19 led shutdown. Of all segments, Railways order book stood at ~INR60b, with management confident of growing it ~30% YoY in FY21E. rating on the stock with a reduced TP of INR230 given (a) the strong order book position (INR205b; 1.7x its TTM revenue + L1 position of INR40b), (b) the declining business concentration risk due to foray into railways, civil, etc. and (c) reasonable valuations.

majority of orders from agencies like PGCIL, Indian railways (RVNL/RITES),metrocorp,andmultilateralbanks,whichinour viewwouldberelativelylessimpactedbythepandemic.KECI tobenefitfromupgradationofrailinfra,risingelectrification, DFCCprojects,metroprojects&smartinfra.Orderpipelineis lookingstrongat~Rs400bn(DomesticT&D;:Rs200bn,MENA region:Rs80bn,Railways:Rs100bn) Though management refrained from giving any guidance,we...

The pandemic and subsequent nationwide lockdown in the country impacted KEC's ongoing projects. We therefore, lower our revenue estimates for FY20-21E by 3.7% and...

Leading EPC player in Power T&D; space: PowerGrid has set FY20 capex at Rs 15,000 cr out of which Rs 10,500 cr has already been spent by 9MFY20; the capex figure for FY21 is set at Rs 10,500 cr.

Companies like Larsen & Toubro and KEC with exposure to the Middle East and North Africa (MENA) region are expected to get impacted by the recent more than 60% fall in crude oil prices to US$22/barrel. This is expected to impact overall orders/awarding from the MENA region. Companies like Elgi Equipments, AIA Engineering, Thermax, Engineers India and Kalpataru Power with exposure to international geographies like Europe, Middle East, China for sales or essential raw material may get impacted. However, lockdowns in India, UK, Europe and other geographies due to Covid-19 are...

KEC International Limited (KEC) is a global infrastructure Engineering Procurement and Construction major. It has presence in the verticals of Power T&D; (Transmission & Distribution), Cables, Railways and Water & Renewable. Q3FY20 revenue grew by 16% YoY led by 21% YoY growth in T&D; segment (SAE towers 122%) & Railway 9% YoY. EBITDA margin declined marginally by 27bps YoY to 10.4% despite 209bps improvement in gross margin to 30.3%....

Strong backlog to ensure 15.2% revenue CAGR (FY19-21E) On the order inflow front, YTD order inflows during 9MFY20 came in at | 9820 crore with orders coming in from railways, T&D; and good traction from SEBs. Even though order inflow stayed flattish, we believe with an L1 of | 2500 crore combined with strong order pipeline in railways (conventional railway, new track lines, overhead electrification), green energy corridor and new opportunities in the oil and gas sector (gas & water pipeline, etc) should help KEC achieve its order inflow target of | 14000 crore. KEC expects good...

In 3QFY20, KEC posted consolidated revenue growth of 16% YoY to INR 30.7bn led by strong execution of orders; and 21% growth in T&D; segment (SAE up 2.2x), while non-T&D; business declined by 4% YoY. EBITDA increased 13% YoY to INR 3.2bn; margins remained flat at 10.5%. Aided by lower interest cost, PBT grew by 21% YoY to INR 2bn, while PAT surged by 31% YoY to INR 1.45bn .With 9MFY20 reporting 15% YoY growth in revenue, KEC has maintained its FY20 revenue growth guidance at 15%. T&D; growth traction continues, rising 21.5% YoY on the back of better execution and robust YoY growth in SAE division (up 121.3%). SAE revenue continues to grow backed by Brazil EPC execution...