KEC International Ltd. share price target

KEC International Limited (KEC) revenues grew by 17% y-o-y driven by strong execution in T&D; business (domestic and international), where revenue grew by 30%, despite multiple challenges. SAE revenues doubled y-o-y due to three large order executions and it will continue to contribute strongly for next couple of quarters. The non-T&D; comprising railways, civil and other businesses came lower by 3% y-o-y, wherein railways saw a 35% y-o-y growth, whereas the civil segment saw a decline due to muted industrial capex. Blended operating margins remained...

We met KEC International's management to update ourselves with current industry environment and the company's future outlook. The management highlighted that order inflows continue to remain tepid during Q2FY2020 till date although would not affect execution for FY2020 due to its strong order backlog. KEC during FY2020 till date announced order inflows of over Rs. 1900 crore and had guided for Rs. 16000-17000 crore inflow target for FY2020 which may fall short by Rs. 3000-4000 crore. However, with current order backlog...

Execution Picks UP. Order Inflows to Pick Up from Q2: Revenues surged on T&D; business growth: The revenues had a growth of 14.6% YoY majorly on the strong growth of T&D; business (25%). The non T&D; business just grew by 4% due to decline in civil & solar segment performance and flat growthin cables segment.

Strong execution in T&D; business, on the road to recovery Overall T&D; EPC business registered strong execution, which led to revenue of | 1599 crore, up 25.3% YoY in which T&D; (KEC) grew 28.5% to | 1294 crore while SAE revenue grew 13.2% to | 305 crore. For the quarter, KEC's YTD order inflow came in at | 1115 crore. T&D; contributed 59% while cable contributed 33% to order inflows. The unexecuted order book as on YTDFY20 was at ~ | 22500 crore, (including L1 position of | 3500 crore). We build in order inflow CAGR at 10% in FY19-21E with order inflow worth...

KEC International (KEC) has reported a healthy performance in 1QFY20 with its revenue growing by 15% YoY to Rs24.1bn in-line with our estimate of Rs24bn led by a strong 25% YoY growth in T&D; segment. EBITDA increased by 16% YoY, while EBITDA margin rose by 10bps YoY to 10.4%. PAT increased by 4% YoY to Rs886mn impacted by lower other income (down 75% YoY) and higher interest cost (up 23% YoY). While its order book stood at Rs190bn (1.7x of FY19 revenue) as of 1QFY20-end, it is favourably placed (L1) in orders worth ~Rs35bn. Order inflow declined significantly by 65% YoY to ~Rs10bn due to weak ordering activity in domestic T&D; business and no new order in railway segment due to General Elections. Despite lower order inflow, the...

KEC International Limited (KEC) revenues showed 15% y-o-y growth driven by strong execution in T&D; business both in domestic as well as international T&D; registering 25% revenue growth despite challenges due to election. Non T&D; comprising railways, civil and other businesses registered 5% y-o-y where in railways registered 67% y-o-y growth. Blended operating margins remained flat at 10.4 y-o-y % . Net profit increased marginally due to higher depreciation & interest cost (impacted due to lease accounting policy change)...

Execution momentum good; guidance retained for FY20; Maintain Buy In Q1, execution momentum grew, with revenue rising by 16% YoY. However, EBIDTA and PAT were marred by one off costs. The company retained the revenue and order inflow guidance given in Q4FY19, with the order pipeline in FY20 more promising in H2; The current order book is strong at `190bn. The T&D;, railways, and civil projects will drive earnings growth of 20% CAGR over FY19-21, in our view. We maintain our estimates considering strong revenue and order inflow guidance and solid return...

Thanks to growing demand for electricity, GOI continues to exert significant thrust on Indian power T&D; industry and has earmarked capex of Rs 2.6 tn in the 13th National Electricity Plan (FY17-22);...

While Power Grid has traditionally been the largest customer for the company, we estimate that it now forms only ~7% of the order book (v/s ~30% in FY16) with KEC actively capitalizing on other growth opportunities as well. Subsequently, we believe that Power Grid is now no more the largest customer for the company.