**KEC International - Q4 FY20 (Audited –Cons)**
CMP: 197
Total revenue from operations 3,671 Cr
3,841 Cr (-4.42%) YoY | 3,075 Cr (19.35%) QoQ
Year ending revenue: 11,965 Cr Vs. 11,001 Cr (8.71%)
Net Profit of 192.8 Cr
198.7 Cr (-3.08%) YoY 144.9 Cr (33.39%) QoQ
Year ending Net profit: 565.5 Cr Vs. 495.7 Cr (14.21%)
EPS (in Rs.) 7.50
7.73 YoY | 5.64 QoQ
Year ending EPS: 22.00 Vs. 19.28
View: Result is in line with the expectation and good. YoY revenue decreased and profit marginally decreased.
**Business Updates & Highlights**:
Q4FY20 EBITDA is around INR 371 Cr Vs. 399 Cr in FY19 therefore down by 7.1%. EBITDA margin in FY20 is 10.1% Vs. 10.4% in FY19.
FY20 EBITDA is INR 1,234 Cr Vs. 1,150 Cr in Q4FY19 therefore up by 7.3% in YoY. EBITDA margin is 10.3% Vs. 10.5% in YoY.
Robust Order Book + L1 of over Rs. 24,000 crore. Order Intake of Rs. 11,331 Cr in FY20 and Rs. 2,765 Cr in Q4 FY20. Which comprises of Domestic 64% and International 36%.
Company has two verticals T&D & Non T&D. T&D cover 68% topline and Non T&D cover around 32%. YoY T&D topline growth is declined by 11% and Non T&D up by 9%.
India revenues at Rs 840 crores grew by 11%. Adjusted for Covid-19 related supply delays, the growth is 15%.For FY20, revenues were Rs 3,517 crores, up by 9%. Adjusted for base impact of discontinued products and Covid 19 related supply delays, the adjusted growth was 12%.
**Financial**
ROE and ROCE is around INR 22% and 29% respectively and book value per share is around INR 104 and share is currently trading at 1.9x of its book value. Company is currently trading at annualized PE of around 9 which is fair as per industry benchmark. Promoter holding is around 51.6% in the company which is good and stable. FIIs and mutual fund hold around 8.7% and 22.9% in the company. Cash and cash equivalent from operating activities as of March 2020 is around INR 87.4 Cr Vs. 198.7 Cr as of March 2019. Company has slightly improved their net working capital and which is currently around four months. Debt equity ratio is around 0.05 as of March 20.
Position: Share strong support price is INR 180/160. Long term investor should continue with the company.
**Share View**: Share price high 358 (52 week) and now 198 almost 44% corrected from their peak. KEC International is a global infrastructure Engineering, Procurement and Construction (EPC) major. It has presence in the verticals of Power Transmission and Distribution, Railways, Civil, Solar, Smart Infrastructure and Cables. The Company is currently executing infrastructure projects in over 30 countries and has a footprint in 100+ countries (includes EPC & Supply). It is the flagship Company of the RPG Group.
Opportunities: Diversified company with strong order book of around 22K Cr which is visibility of strong performance of FY21 as well.
Risk: Working capital / realization of debtor around four month is still high. It can further increase in current pandemic situation. Overall company has increased their net debt as of March, 2020. Company has exposure of INR 148 Cr for contract to complete an 880 km 765 KV and 400 KV transmission line due to liquidity issues being faced by the current sponsors of the project.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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