Buy KEC International; target of Rs 450: ICICI Securities

February 13
20:42 2018

ICICI Securities’ research report on KEC International

The order inflows of 9MFY18 stood at |11300 crore, up 31% YoY, coupled with L1 status of |4000 crore. On the same lines, the order backlog stood at Rs 17148 crore thereby rendering very strong revenue visibility over FY18E-FY20E. Strong growth in order wins emanated from across segments as T&D business contributed 64% of the order inflows while newer business segment like railways and civil construction stood at 24% and 4% as of 9MFY18.


Robust growth in order backlog backed by strong order wins, massive scale up in new business, consistency in margin expansion and improvement in balance sheet matrices will drive the ROCE of the business to 21.4% by FY20. This will be aided by 20% PAT CAGR over FY19E-FY20E. We believe, KEC will continue to witness rerating of P/E multiples on the back of robust outlook. We value the company at 18x FY20E EPS to arrive at a fair value of Rs 455/share and maintain Buy rating.

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