Stock in focus - KEC International - Reliance Securities

KEC International operates in power T&D, railways, civil, solar, urban and smart infra, Oil & Gas pipelines, and cables segments. It has established footprint in >100 countries. Contribution of non- As KECI's business largely depends on large institutions and project funding through multilateral agencies, it would be relatively less impacted by COVID-led disruptions.

- Its order book stood at ~Rs203bn (1.8x of FY20 revenue) as of 1Q FY20, while it is favorably placed (L1) in orders worth ~Rs45bn.

- Railways segment is likely to be key earnings driver for next couple of years led by strong order inflow and order book of Rs60bn, while T&D business is expected to report steady growth led by pick-up in ordering activities.

- KECI has maintained its order inflow from PGCIL despite slowdown in capex. It expects revenue share of non-T&D to increase to 40-45% in next 3 years from 36% currently. The company is now also looking at the Far East and SAARC region in addition to Gulf region for international business.

- The company expects its civil segment report a decent top-line performance in FY21. It already has 4 metro civil projects, 2 orders from defence sector and an order for construction of data centre. We maintain BUY on KECI with a 2-Year Target Price of Rs400 valuing the stock at 14x FY23E earnings.

Shares of KEC INTERNATIONAL LTD. was last trading in BSE at Rs.329.7 as compared to the previous close of Rs. 325.2. The total number of shares traded during the day was 12226 in over 950 trades.

The stock hit an intraday high of Rs. 332 and intraday low of 324.1. The net turnover during the day was Rs. 4021654.

Source : Equity Bulls

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