KEC International - Strong on revenues, inflows, balance sheet; margin remains key risk - Kotak

KEC's strong revenue growth (32%) was marred by sharp margin contraction (160 bps), leading to a disappointing PAT (down 26%). We expect some margin recovery in 2H and FY2014E on completion of low-margin PGCIL orders and some improvement in margins of new segments as they scale up. Inflows momentum remains strong (Rs37 bn in 1HFY13).

Also note yoy improvement in working capital levels (90 days against 110 days). Retain BUY. Key risk to our estimates relates to potential margin disappointment in case recovery does not pan out.

Source : Equity Bulls

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