Stocks to Buy Today: On 25 September 2023, the financial services firm Sharekhan Limited published the latest research report on KEC International shares, assigning a ‘buy’ rating to the stock. The comprehensive analysis also provides valuable insights into the company’s financial health.
Sharekhan Limited is Bullish on KEC International and has recommended a ‘buy’ rating on the stock with a target price of Rs 770. Let’s take a closer look at their recommendations for the KEC International share price target set by Sharekhan Limited.
Sharekhan Limited Research Report: KEC International Share
Sharekhan, in its recent research report, reaffirmed a ‘Buy’ rating on KEC International Limited (KEC) with an unaltered price target (PT) of Rs. 770. The decision stems from anticipated solid execution and profitability, underpinned by a robust order book and an ameliorating working capital cycle.
There exists a myriad of opportunities spanning key segments, including Transmission & Distribution (T&D), civil, and oil & gas. These are chiefly spurred by governmental capital expenditure both domestically and in international terrains like the Middle East, SAARC, and the CIS region.
Highlighting the company’s financial health, KEC boasts a substantial and diverse order book worth Rs. 35,000 crores, inclusive of L1 orders. It has notably secured approximately 30% of the projected order inflow for FY24, set at Rs. 25,000 crore.
With the stock trading at approximately 17 times its FY25E EPS, revenue is built at a Compound Annual Growth Rate (CAGR) of around 15%. Profit After Tax (PAT) is forecasted to witness a colossal surge of around 139% from FY23 to FY25E. This upswing is attributed to notable margin expansion coupled with a stabilized interest cost as all legacy orders culminate by the end of H1FY24.
KEC’s impending growth trajectory is poised to be steered by stellar execution backed by its sturdy order book and margin augmentation. The impending normalization of its working capital cycle, coupled with a decline in its leveraged position due to the finalization of lingering orders in Brazil by H1FY24, is anticipated to propel profitability.
A robust order book of Rs. 35,000 crore, inclusive of L1 orders, instills confidence in the company’s projection that revenue will exceed the Rs. 20,000 crore benchmark, registering an approximately 15% year-on-year upturn. The guidance for order inflow is pegged at Rs. 25,000 crore for FY24, marking an 11% year-on-year ascent. Furthermore, the year-to-date (YTD) announced order inflow has commendably surpassed Rs. 7,500 crore, reflecting a 30% growth vis-Ã -vis the previous year.
The firm continues to scout opportunities in international markets, particularly in the Middle East, SAARC, and the CIS region. KEC’s successful diversification into other high-growth sectors, including civil, railways, and oil & gas, has significantly scaled its business operations.
Despite grappling with margin pressures and diminished profitability due to legacy orders, KEC, powered by a sound order book and robust order prospects across its businesses, has showcased commendable revenue growth. Encouragingly, dwindling losses in the SAE towers in Brazil have now pivoted to PBT positive. The enterprise anticipates a 15% revenue augmentation for FY2024 and foresees a sequential uptick in its margins, particularly given the reduced losses in SAE, Brazil and heightened profitability in international orders.
- CMP — Rs. 657
- Target — Rs. 770
- Type — Buy
- Report — Click Here
Company Details
| Market Cap (INR) | 16,899 crore |
| 52-week Range (INR) | 748 – 405 |
| NSE Volume (No. of Shares) | 7.81 lakh |
| BSE Code | 532714 |
| NSE Code | KEC |
| Free Float (No. of Shares) | 12.4 crore |
Company Shareholding
| Promoters | 51.9 |
| FII (Foreign Institutional Investors) | 11.6 |
| DII (Domestic Institutional Investors) | 26.7 |
| Others | 9.9 |
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