CMP: 389.50 Target Price: 473.00 Upside:21%
Reasons to Invest:
- KEC International, an RPG Group firm, is a global infrastructure EPC (engineering, procurement and construction) major and has presence in power transmission and distribution, cables, railways, water, renewables and civil space. Globally, the company has empowered infrastructure development in more than 63 countries.
- Recently, it has secured new orders of Rs 2035 crore across all its business units. KEC International’s transmission and distribution segment has bagged orders worth Rs 161 crore for turnkey construction of 132KV and 220Kv transmission line in Bengal while its railways division has secured orders of Rs 1769 crore in North and East india and Cables, Civil, solar businesses has won orders of Rs 105 crore. YTD order inflow stood at Rs 11300 crore, up by 31% YoY. Railways account for 24% of order inflow. Due to good orders under Railways divison, management is confident for capacity creation and sees it as a major growth driver in the coming years. You might like this : Fundamental Analysis Of EIH Ltd | Invest For 9 To 12 Months For 25% Upside
- Order execution is back on track and margin is expected to stabilize on account of cost control measures. Management expects traction in ordering activity from SEBs (State Electricity Board) mainly from south India and Bihar. Further, railway electrification orders would pick up and revenue from railway is expected to double in FY19. Healthy order book and improvement in margins would drive the earnings growth.
- Its debt levels has reduced from Rs.3221 crore to Rs.2096 crore over the last 12 months , which is made up of current and long term debt and management expects more reduction of debt in coming years.
- During Q3FY18, consolidated net income (total comprehensive income) of the company has more than doubled (up 129%) to Rs 107.63 crore even while the sales for the quarter was up by 26% to Rs 2404.94 crore. Doubling of bottom-line on a revenue growth in mid twenties is largely due to good operating show. You may like this: Flex Foods Ltd. – A Hidden Gem Stock
KEC International is continuously performing well and delivering in all the three parameters of revenue, profitability and order intake. Management of the company expects international business to pick up with large order inflow from Jordan, Saudi, Far East (Indonesia, Thailand), etc and international T&D, sub-stations and civil infra will be key drivers for FY18
order intake growth of 10%. Moreover, the management has maintained in annual guidance of 15% growth in FY19 revenue. We expect the stock to see a price target of Rs.473 in 8-10 month time frame on a one year average P/E of 23.59x and FY19 (E) Earnings Per Share of Rs.20.03.
Face Value Rs.: 2.00
52 Week High/Low 437.95/175
M.Cap Rs. in Cr.: 10013.59
EPS Rs.: 15.94
P/E Ratio (times) 24.44
P/B Ratio (times) 5.94
Dividend Yield (%) 0.41
Stock Exchange BSE
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