KEC International Ltd. share price target

Strong performance: KECI reported revenues at Rs24bn (+26% yoy, +13% qoq), driven by strong execution in T&D; (Rs15bn, +20% yoy), SAE (Rs3bn, +41% yoy) and Railways (Rs2bn, +98% yoy). The Civil segment also reported robust growth at Rs870mn (up by 335% yoy) albeit on a low base. Revenue in the Solar segment declined by 42% yoy to Rs340mn, impacted by frequent changes in policies. Revenue in the Cable segment declined by 2% yoy to Rs2.7bn. EBIDTAM increased by 64bps yoy to 10.1%. APAT increased by 78% yoy to Rs1.11bn. Order inflow more than doubled to Rs55bn (+105% yoy) T&D; (excl. SAE) Rs24bn (+25% yoy), SAE Rs1.5bn (+150% yoy), Cables Rs2.7...

Consol. revenue grew 26% YoY to INR24.0b in 3QFY18. All business segments, excluding cables, registered strong growth. Cables business during the quarter was impacted by a higher GST rate of 28%. T&D business (including SAE)registered 23.4% growth YoY, while Railways grew by 99% YoY and Civil by321% YoY. T&D contributed 77% of revenue, followed by Cables (11%),Railways (9%) and Solar, Civil and Water (5 %). Management guided for revenue growth of 15-20% in FY19, which will be supported by a pick-up in execution of T&D orders in hand and strong growth in non-T&D segments.

Significant improvement in order KEC International Ltd. (book during FY17, we estimate KECI) to witness substantial improvement in execution in next 2-3 years. Further on the back of...

Diversification with intent to intensify growth: KEC, predominantly a power T&D; EPC player, has diversified into multiple segments (e.g. solar, cables, railways and civil construction) to leverage its execution capabilities and intensify growth. The company aims to achieve 20% revenue growth over the next few years, and expects segments like railways and civil construction to contribute meaningfully toward this. Domestic T&D; business to be driven by state capex: KEC believes that the recent slowdown in ordering from PGCIL would be more than offset by...

Sector: Power Transmission /Mid Cap | Earnings Update 2QFY18 Background: KEC International (KEC), the flagship company of the RPG (Harsh Goenka) group, is a leading EPC player in T&D; (Transmission & distribution) Space. KEC has over six decades of experience with presence across 63 countries globally and strong execution capabilities. KEC, the global leader in Power Transmission EPC has...

Despite higher commodity prices, KEC's overall EBITDA margin expanded by 139bps YoY to 10.1% in 2QFY18 owing to absence of low-margin legacy orders in Water, Railways and Power Systems segments and execution of recently bagged better-margin orders by SAE Towers. Its...

Excluding impact of GST, KEC International reported a strong set of Q2FY18 numbers. Key positive takeaways were strong execution in international T&D; business, traction in railways business coupled with higher-than-expected EBITDA margins and muted finance costs that drove profitability despite some disappointment in revenues Topline increased 2.8% YoY to | 2132.2 crore, below our estimate of | 2229 crore. Had it not been for the impact of GST, revenues would have grown ~7% YoY. KEC reported strong growth in railways...

Cables (11%), Railways (6%), and Solar, Civil and Water (4%). Management broadly maintained its revenue growth guidance of 10-15% YoY for FY18, which will be supported by a pick-up in execution of T&D; orders in hand and strong growth in the non-T&D; segments. Consol. EBITDA margin expanded 120bp YoY to 10.1% in 2QFY18, led by an improved performance from the standalone business. SAE Towers reported an operating margin of 7.4% in 2QFY18 v/s 14.5% in 2QFY17. Management raised its FY18 operating margin guidance to 10% from 9-9.5% earlier. Net...

We raise our P/E multiple to 17x (15x earlier), and thereby upgrade the stock to BUY with a TP of Rs 330/sh (17x Jun-19 EPS). KECIs revenue at Rs 18.6bn came in line with our estimates. With the execution of high-margin Railway orders, EDITDA margin expanded 100bps to 9.5%. Lower interest cost (-12.3% YoY, Rs 0.6bn) and higher other income (+96% YoY, Rs 98mn) resulted in APAT growth of 103.5% YoY to Rs 0.6bn. As at June-17 end, the orderbook stood robust at Rs 135bn (+7.1% QoQ; +30.1% YoY). Further, KECI is L1 in orders worth Rs 45bn.