KEC International Ltd. share price target

KECs 2QFY17 results were ahead of our estimates led by superior margins ( 145bps YoY to 8.9%) and lower interest cost (-13% YoY). Turnaround in railway and SAE, led to the 145bps improvement in margins. As per the mgmt, railway margins would soon inch closer to T&D margins paving way for further margin improvement in FY18E.

Key Beneficiary of High Capex in T&D; Space; Strong Order Inflows to Boost Growth Aided by improvement in operating margin, consolidated PAT of KEC International (KEC) surged by 131% yoy to Rs650mn in 2QFY17. However, its revenue increased marginally by 2.7% yoy due to passing over of benefits of lower commodity prices to clients and delay in converting some large L1 orders. Reported PAT post compensatory income as per IND-AS surged by 34.5% yoy to Rs721mn in 2QFY17. Strong order inflows so far this fiscal are in line with our estimates, which confirm our conviction that KEC would deliver strong earnings growth, going ahead. We...

EBITDA margins of the company were in line with our expectation and stood at 8.4%(+110 bps y/y; -30 bps q/q) owing to better execution of high margin international orders, which are fixed price contracts and aid in a low commodity...

KEC International?s (KEC) 1QFY17 was below our estimates, as flat volumes and lower commodity prices led to 7% YoY decline in revenues. EBITDA margins (8.6%, 110bps YoY) surprised positively led by SAE (~9.5% vs. ~5% for FY16). Consequently, EBITDA miss stood at 7% vs. our estimates. Ind AS PAT was impacted by higher depreciation (restatement of fixed assets). As a result, PAT was lower at Rs 309mn (vs. our expectation of Rs 453mn).

ICICI Securities Ltd | Retail Equity Research KEC International reported disappointing Q1FY17 results, which were below our estimates on all counts. The key disappointment came in...

Negative surprise in revenues was offset by a positive surprise in EBITDA margins, resultingininlineoperationalresults. 9 EBITDA margins expanded 100bps yoy to 8.6% aided by a turnaround in SAE and benefitsoflowerrawmaterialpricesonfixedpricecontracts(~50%oforderbook). Key highlights: 1Q order inflows declined 8% yoy to Rs 28.3bn due to a higher base yoy. Orderbook(Rs104bn)increasedsequentiallybutremainedflatyoy.RevenueatRs17.5bn( 7%yoy)werebelowourestimatesmainlyon:(1)slowerthanexpectedexecutioninitsT&D; segment (66% of total) where revenues fell 13% yoy and (2) lower commodity prices...

Valuation: Recovery of margins in SAE segment, good traction in Railways & Solar segment and healthy T& D order pipeline from select SEB's to aid company post healthy revenues. At the current market price KEC is trading at a P/E of 11.3X its FY18E. We assign a P/E of 14X its FY18E to arrive at a target price of INR 167 and rate the stock as OUTPERFORMER....

Revenue growth impacted by softness in commodity prices and delay in execution of projects: KEC International's (KEC) consolidated revenue for 1QFY17 stood at INR17.5b (down 7% YoY). Revenue was partially impacted on account of the softness in commodity prices (INR1.5b), delay in conversion of L1 orders into firm orders. SAE Tower sales grew by 36% YoY to INR2.6b and the railways business improved by 56% YoY. Consolidated margin improves despite negative operating leverage: Consolidated EBIDTA margin improved by 110bp YoY to 8.6% in 1QFY17, led by...

ff Segmental Performance: Sales from T&D; and Cables & Water segments declined by 14.1%, 12.2% & 43.8% to Rs11.8bn & Rs0.18bn, respectively in 1QFY17. Its Solar Business has grown significantly to Rs1.4bn on low base, while Railway Segment grew 55.6% yoy driven by strong order book. Sales from SAE Tower...

Background: KEC International (KEC), the flagship company of the RPG (Harsh Goenka) group, is a leading EPC player in T&D; Space. KEC has over six decades of experience with presence across 50 countries globally and strong execution capabilities. KEC, the global leader in Power Transmission EPC has also ventured into Power Systems, Cables, Telecom, Railways and Water. KEC has 7 manufacturing facilities spread across India, Brazil &...