Comments
Reliance Securities
KEC International (Buy)
CMP: ₹294.5
Target: ₹383
KEC International Ltd is engaged in the construction of utility projects. Its geographical segments include India and outside India. Its power transmission and distribution business includes providing end-to-end solutions in power transmission and distribution. Its cables service offerings include extra-high voltage (EHV) cabling solutions provided through cable selection and cabling system, and manufacturing of a range of power (high tension and EHV cables), control, telecommunication and instrumentation cables.
KEC International’s order book has hit an all-time high of ₹20,600 crore (2x of FY18 revenue), it is favourably placed (L1) in orders worth ₹1,800 crore. The domestic order inflow remained muted due to slower ordering from the private sector and lower growth from Railways.
The company received a healthy inflow from SAARC region. We expect strong order intake traction to continue led by higher T&D spending by the State Electricity Boards, improved railways ordering and recovery in overseas markets.
We expect KEC International’s earnings to clock 13 per cent CAGR through FY18-21E on the back of strong order book, healthy outlook in non-T&D and other emerging segments.
We maintain our ‘buy’ recommendation on the stock with a revised target price of ₹ 383, valuing the stock at 15x FY21 earnings.
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