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Prabhudas Lilladher Report
We attended KEC International Ltd.'s analyst meet wherein the management highlighted that traction continues from both transmission and distribution (domestic as well as international markets) and civil segment.
KEC International will continue to focus on revenue growth, profitability and better working capital management. Tender pipeline stands at ~Rs 1 trillion. Margins are expected to gradually improve from H1 FY24 and likely to reach ~7% in FY24 with completion of legacy orders and improvement in SAE performance.
Order book including level-one stands strong at ~Rs 340 billion as on FY23. Given strong order book position management will be selective in bidding orders and only bid for order with minimum margin threshold and cash flow visibility.
Management guided revenue of Rs 200 billion, with order inflow of Rs 250 billion and Ebitda margin of ~7% for FY24. We remain positive on KEC for long term given its-
strong order book,
healthy execution momentum,
strong T&D outlook and
revenue visibility from non-T&D segments like civil, railways, oil and gas etc.
We revise our estimate by ~3.4% for FY25, driven by strong tender pipeline in T&D (domestic and international), strong traction in civil segment and focus on international markets for non T&D segment.
The stock is trading at price-to-earning of 26.4 times/12.4 times FY24/25E.
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