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Chola Securities
KEC International (Buy)
Target: ₹460
CMP: ₹397.30
KEC International’s Q3-FY21 revenues came in at ₹3,280 crore, up 7 per cent y-o-y and 1 per cent q-o-q, aided by the growth in non- T&D business and normalisation of supply chains/ and labour levels.
While T&D business declined by 12 per cent, non-T&D Civil and Railways business grew by 206 per cent and 44 per cent y-o-y. During Q3-FY21, the overall T&D business (including SAE Tower) revenue declined 12 per cent y-o-y to ₹180 crore. Non-T&D business (railways, civil, cables, other) registered robust growth of 51 per cent to ₹150 crore, on y-o-y basis led by better execution.
The railways business revenue came in at ₹86.60 crore, up 44 per cent while civil business segment revenue grew multifold to ₹26.70 crore, registering a growth of 206 per cent y-o-y on low base. Cables business grew 22 per cent o ₹30.50 crore.
KEC has submitted tenders to the tune of ₹3,000 crore. The management is optimistic on international T&D markets, railways and civil segment for new orders.
We maintain positive view on KEC, given its strong order book which provides revenue visibility and demonstrated execution capabilities as well as healthy new order inflow. We maintain our ‘Buy’ rating on the stock with revised target price of ₹460 (earlier ₹397).
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