Buy KEC International; target of Rs 435: Sharekhan

Sharekhan's research repor on KEC International

Execution run-rate and labour availability pick-up to ensure higher y-o-y revenue for Q2FY2021 and FY2021. Strong order inflows YTD along with Rs. 30,000 crore-35,000 crore bidding pipeline visibility over the next three months. Expect 1.2x and 2.5x y-o-y rise in revenue for rail and civil in FY2021. Rail division continues faster execution, while order tendering is likely to gain traction. YTD collections better than last year. Interest outgo contained with lower rate debt. Dubai unit to commence fully from Q3FY2021, ability to supply Rs. 400 crore-500 crore order p.a. Provides edge in international orders with benefit of freight and exemption of customs duty.

Outlook

We retain Buy on KEC International Limited (KEC) with a revised PT of Rs. 435, taking into account improving operations and reasonable valuations.

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