Motilal Oswal is bullish on K E C Intl has recommended buy rating on the stock with a target price of Rs 230 in its research report dated May 30, 2020.
Motilal Oswal 's research report on K E C Intl
KEC’s 4QFY20 operating results were slightly below our estimates, with revenue miss of 9%. However, lower interest expense (down 23% YoY) was a positive surprise on account of change in the borrowing mix as well as lower average borrowing (v/s last year). KEC is steadily diversifying its business to avoid concentration risk from the power T&D business. Non-T&D business’ share has increased to 46% of the order book from 12% in FY14, and we expect it to further increase to 60% by FY22E, led by the Railways/Civil segment. We have cut our FY21/22E earnings by 12%/10% due to lower order inflow assumption. We forecast revenue/EBITDA/adj. PAT CAGR of 6%/4%/2% over FY20-22E, taking into account the order book position and the need to keep working capital under control.
Outlook
Strong promoter parentage and focus on the balance sheet should help KEC emerge stronger post the COVID-19 crisis v/s peers. Maintain Buy with reduced TP of INR230 (prior: INR250).
For all recommendations report, click here
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