Buy KEC International; target of Rs 267: YES Securities
YES Securities is bullish on KEC International has recommended buy rating on the stock with a target price of Rs 267 in its research report dated May 29, 2020.
YES Securities’ research report on KEC International
KECI reported in-line results as Sales/EBITDA de-grew 4%/7% yoy while adjusted PAT remained flat yoy. Sales were robust in SAE Tower (+39% yoy) & Railway (+36% yoy) divisions while domestic T&D execution dropped by 17% yoy as KECI lost revenues of Rs5-6bn due to COVID-19 disruptions. Order book (incl. L1 of ~Rs40bn) stood at Rs240bn (+1% yoy). Order inflow was Rs27.6bn in Q4FY20 (+8% yoy). Consolidated net debt/EBITDA (incl. interest bearing acceptances) was at 2.54x vs 2.15x in FY19. Non-cash working capital as % of sales increased to 25% in FY20 (vs 22% in FY19). While the interest cost/sales ratio stands at ~2.6% in FY20, management is hopeful of reducing it to ~2.3% in FY21.
Valuations are attractive as KECI is trading at ~9x FY22 EPS, nearing bottom cycle multiple vs long term avg. 1-yr forward P/E of 14x. Retain ‘BUY’ with TP of Rs267 at 12x FY22 EPS.
For all recommendations report, click here
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First Published on Jun 2, 2020 01:11 pm