KEC INTERNATIONAL: ACCUMULATE, CMP Rs. 499,TP Rs.558: Report By PL CAPITAL
Quick Pointers
| • Management reiterated FY27 revenue growth guidance of 12–15% with targeted order inflows of ~Rs300bn. | • Management highlighted a strong order book of ~Rs400bn, providing ~8 quarters of revenue visibility across T&D, civil and renewable businesses |
Ahmedabad, 28 may: Execution remain key focus amid ME disruption: Company Report We attended the annual investor meet of KEC International, where the management discussed the company’s FY26 business performance and growth outlook across key segments. Management highlighted a healthy growth outlook supported by strong domestic T&D demand, improving international traction and diversified infrastructure opportunities. Domestic T&D momentum remains robust driven by renewable integration, rising power demand and increasing HVDC opportunities, with ~7 HVDC projects under discussion and at least two projects expected to be awarded during FY27. International execution remains stable despite geopolitical disruptions in West Asia, while opportunities across Africa, CIS and Middle East energy diversification projects continue to improve. The Civil segment is witnessing healthy traction across large EPC projects, buildings & factories, renewable-linked infrastructure and data centres, while improving project mix and completion of legacy metro projects are expected to support better cash flows and return ratios. Renewables and cables businesses also continue to witness healthy traction supported by capacity additions, renewable investments and rising data-centre opportunities. Additionally, management remains constructive on the long-term data-centre opportunity, aided by expanding MEP capabilities and faster execution timelines.
With a robust order book of ~Rs400bn providing better revenue visibility in near term management reiterated FY27 revenue growth guidance of ~12–15% and targeted order inflow of ~Rs300bn. The stock is currently trading at a P/E of 18.2x/12.5x on FY27/28E earnings. We maintain our ‘Accumulate’ rating, valuing the business at a PE of 14x Mar’28E (same as earlier) arriving at a TP of Rs558 (same as earlier). In the near term, normalization in supply chain disruptions and labour shortages, along with turnaround in Civil business execution will remain key monitorable, however we remain constructive on KEC in the long term given its 1) strong order book, 2) healthy execution momentum, 3) robust T&D outlook, especially in renewable energy, and 4) expansion of Cables business. Robust order book provides strong visibility: Management highlighted a robust order book of ~Rs400bn, providing visibility for the next 7–8 quarters, supported by a strong tender pipeline across T&D, civil and renewable businesses. The order book mix comprises T&D ~62% (~Rs245bn), SAE ~8% (~Rs32bn), Civil ~20% (~Rs100bn), Transportation ~2% (~Rs8bn), Cables ~7% (~Rs28bn) and Others ~1% (~Rs4bn). Management also indicated that the broader tender pipeline remains healthy, particularly in the T&D segment driven by renewable integration and HVDC opportunities.
Return ratios to improve gradually: Management highlighted that the T&D business continues to generate
superior return ratios with 20%+ ROCE, while non-T&D segments such as railways, metro and water projects
have remained relatively weaker. With 3 out of 4 metro projects completed and the final project expected to
conclude by year-end, alongside expected improvement in metro and JJM cash flows and increasing focus on
better-quality civil EPC projects, management expects gradual improvement in overall ROCE going forward.
Management Meet Highlights:
Guidance: Management reiterated FY27 revenue growth guidance of 12–15% with targeted order inflows of
~Rs300bn. The company’s order book remains robust at ~Rs400bn, providing visibility for the next 7–8 quarters
across T&D, civil and renewable businesses.
• The order book mix remains well diversified across T&D, civil, transportation, cables and renewable
businesses.
• Management continues to focus on higher-quality projects with superior cash flows and execution visibility.
• Increasing selectivity in project bidding is expected to support profitability and working-capital discipline.
Transmission & Distribution: Management remains highly positive on the domestic T&D outlook driven by
renewable integration, rising power demand and increasing grid investments. The company continues to see
meaningful opportunities in renewable evacuation and HVDC projects, while T&D remains the highest-return
business within the portfolio.
• Management indicated that 7 HVDC projects are currently under discussion, with at least 2 projects
expected to be awarded during FY27.
• Strong opportunities continue to emerge from renewable evacuation projects including the Khavda and
Rajasthan transmission corridors.
• Expanded tower manufacturing capacity in Dubai, Jabalpur, Jaipur & Butibori plants by 15% to over
4,80,000 MTPA
• Overall tender pipeline remains strong in T&D ~Rs700bn
• T&D continues to remain the company’s highest-return segment with 20%+ ROCE
Change in Estimates
| Current | Previous | ||||||
| FY27E | FY28E | FY27E | FY28E | ||||
| Rating | Accumulate | Accumulate | |||||
| Target Price | 558 | 558 | |||||
| Sales (INR mn) | 263,219 | 297,800 | 263,219 | 297,800 | |||
| EBITDA (INR mn) | 18,425 | 23,228 | 18,425 | 23,228 | |||
| EPS (INR) | 27.4 | 39.8 | 27.4 | 39.8 | |||
| Key Data | KECL.BO | KECI IN | ||||||
| BSE Code | 532714 | ||||||
| NSE Code | KEC | ||||||
| 52-W High / Low | INR 947 / INR 466 | ||||||
| Face Value | 2 | ||||||
| Sensex / Nifty | 76,010 / 23,914 | ||||||
| Market Cap INR | 133 bn / $ 1,389 mn | ||||||
| Shares Outstanding | 266.2 mn | ||||||
| 3M Avg. Daily Value | INR 857.81 mn | ||||||
Shareholding Pattern (%)
| Promoters | 50.10 |
| FIIs | 11.75 |
| Mutual Funds | 24.13 |
| Domestic Institutions | 1.36 |
| Public and Others | 12.66 |
| Promoter’s Pledge | (INR bn) – |
Stock Performance (%)
| Detail | 1M | 3M | 6M | 12M |
| Absolute | (13.2) | (16.1) | (28.8) | (42.1) |
| Relative | (12.5) | (9.3) | (19.8) | (37.4) |
Key Financials – Consolidated
| Y/e Mar | FY25 | FY26 | FY27E | FY28E |
| Sales (INR mn) | 218,467 | 235,055 | 263,219 | 297,800 |
| EBITDA (INR mn) | 15,039 | 16,586 | 18,425 | 23,228 |
| Margin (%) | 6.9 | 7.1 | 7.0 | 7.8 |
| PAT (INR mn) | 5,519 | 6,507 | 7,298 | 10,609 |
| EV (INR mn) | 165,876 | 181,519 | 176,378 | 175,942 |
| Total Debt (INR mn) | 39,575 | 53,778 | 50,778 | 51,778 |
| C&C Eq. (INR mn) | 5,457 | 4,113 | 6,254 | 7,690 |
| EPS (INR) | 20.7 | 24.4 | 27.4 | 39.9 |
| Gr. (%) | 59.2 | 17.9 | 12.2 | 45.4 |
| DPS (INR) | 3.9 | 3.9 | 5.5 | 8.0 |
| Yield (%) | 0.8 | 0.8 | 1.1 | 1.6 |
| RoE (%) | 11.7 | 11.3 | 11.3 | 14.6 |
| RoCE (%) | 11.9 | 10.8 | 10.5 | 12.5 |
| EV/Sales (x) | 0.8 | 0.8 | 0.7 | 0.6 |
| EV/EBITDA (x) | 11.0 | 10.9 | 9.6 | 7.6 |
| PE (x) | 24.1 | 20.4 | 18.2 | 12.5 |
| P/BV (x) | 2.5 | 2.2 | 2.0 | 1.7 |
report by Amit Anwani, Vice President, Research Associate, Institutional Research – PL Capital
(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing.)
(સ્પષ્ટતા: અત્રેથી આપવામાં આવતી તમામ પ્રકારની માહિતી કોઇપણ પ્રકારે રોકાણ/ ટ્રેડીંગ માટેની સલાહ નથી. બજારોમાં રોકાણ જોખમોને આધીન છે અને રોકાણ કરતા પહેલા કૃપા કરીને તમારા સલાહકારની સલાહ લો. વધુમાં અત્રે પ્રગટ થયેલા કોઇપણ સમાચાર કે વિગતો સાથે businessgujarat.in અંશતઃ કે સંપુર્સણપણે સહમત નથી.)
