ICICI Securities recommended hold rating on KEC International with a target price of Rs 260 in its research report dated May 31, 2020.
ICICI Securities research report on KEC International
Led by 39% growth in revenues from overseas subsidiary SAE Towers and 36% growth under railways, KEC reported better than expected execution in Q4FY20 at Rs36.7bn. Lockdown-related headwinds are likely to hit H1FY21E execution while migrant labour exodus will increase costs. However, reduction in commodity prices is likely to offset the higher labour costs and thereby limit any major impact on overall margins. Order prospects continue to be strong in SAARC region, Middle East and the domestic market despite an unfavourable environment.
Outlook
Factoring-in the better than expected execution and margins in Q4FY20, we raise FY21E/FY22E earnings by 41% and 26% respectively. Upgrade to BUY (from Hold) with a revised target price of Rs260 (previously: Rs199).
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