KEC International Ltd. share price target

Management reiterated its FY24 order inflow (+15% YoY), revenue and EBITDA margin (~7%) guidance

The stock is currently trading at13x 25E EPS. We maintain our BUY recommendation with a TP of Rs570/share, implying an upside potential of 11% from the CMP.

KEC International’s (KECI) Q4FY23 performance was ahead of our estimates with revenues up 29%/26% YoY/QoQ to ~Rs55bn, led by a robust order backlog and healthy execution in T&D and civil businesses. EBITDA margin at 5.1%, lower than our estimates (although up 56bps QoQ), was impacted by execution of low- margin legacy orders.

Q4 revenue/PAT ahead of estimates at Rs 55bn/Rs 722mn; revenue growth guidance of 15%+ for FY24 on strong order inflow

Diversifying away from power T&D

On YTD basis, KEC International (KECI) has achieved an order intake of Rs210bn (+49% YoY) against our FY23 estimates of Rs200bn, led by growth across businesses. Interestingly, as indicated in our earlier note Capital Goods: Revival in transmission capex on the cards, we have started seeing a pickup in domestic T&D awarding with PGCIL being awarded 8 projects (4 projects in 9MFY23) on TBCB basis.

We recommend a BUY on KEC International Limited with a Target Price of Rs.504 an upside of 10% from CMP of Rs.458 and Stop Loss Rs.428