Prabhudas Lilladher has accumulate call on KEC International with a target price of Rs 473. The current market price of is Rs 447.2. Time period given by analyst is one year when its price can reach defined target.

KEC International, incorporated in the year 2005, is a mid cap company (having a market cap of Rs 11490.56 Crore) operating in Power sector.

Its key products/revenue segments include income from eng. construction contracts, cables, scrap, towers & structurals, sale of services, other operating revenue for the year ended March 31, 2022.


Financials

For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 3326.03 crore, down 22.26 per cent from last quarter total income of Rs 4278.17 crore and up 30.86 per cent from last year for the same quarter total income of Rs 2541.71 crore. The company has reported net profit after tax of Rs 31.02 crore in latest quarter.

The company’s top management includes Mr.HV Goenka, Mr.MS Unnikrishnan, Mr.Vikram Gandhi, Mr.Ramesh Chandak, Mr.SM Trehan, Ms.Nirupama Rao, Mr.GL Mirchandani, Mr.Dilip G Piramal, Mr.AT Vaswani , Mr.Vimal Kejriwal, Mr.Vinayak Chatterjee. Company has Price Waterhouse Chartered Accountants LLP as its auditors. As on June 30, 2022, the company has a total of 26 crore shares outstanding.

Investment Rationale

The brokerage remains positive on KEC in the long run given its

1) strong OB,

2) healthy execution momentum,

3) strong domestic & international T&D outlook and

4) strong growth visibility from non-T&D segments like Civil, Railways, Oil & Gas etc.

Given the healthy tender pipeline and reviving margin profile the brokerage expects KEC to report revenue CAGR of ~15% and PAT CAGR of ~59% (amidst low base) from FY22 to FY24E.

The stock is trading at PE of 20.3x/11.9xFY23/24E. The brokerage maintains Accumulate rating on stock with TP of Rs473 (same as earlier) valuing it at PE of 13x FY24E.

Promoter/FII Holdings
Promoters held 51.88 per cent stake in the company as of June 30, 2022, while FIIs owned 12.17 per cent, DIIs 26.46 per cent.

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