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Prabhudas Lilladher Report
We revise our FY24/25E earnings per share estimates by -26%/+6.3% after factoring in-
short term impact on margins from execution of legacy projects,
healthy growth prospects (strong order book of ~Rs 305 billion and healthy order prospects) and
improving profitability (refinancing $50 million SAE debt to reduce interest and improving SAE operations).
KEC International Ltd. reported mixed quarterly performance, with strong revenue growth (up 29% YoY), while Ebitda contracted 76 basis points YoY to 5.1%, impacted from execution of few legacy tariff-based competitive bidding projects. Ebitda margin is likely to improve ~100 basis points in H1 FY24 with improvement in SAE performance and execution of new orders.
Net working capital stood at 118 days as on FY23 and targets further reduction by 8-10 days in FY24 with better collection from railways.
Management guided revenue growth of 15% for FY24E with 7% margins and order inflows of Rs 250 billion. We remain positive on KEC International 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.
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