Buy KEC International; target of Rs 247: Dolat Capital

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Dolat Capital's research report on KEC International

KEC has reported an in-line operating performance despite revenue miss. The lockdown impacted revenues by Rs5-6bn in Q4FY20, which led to the revenue miss. The company expects a good order pipeline, expects to maintain margins despite higher labor costs and comfortable with current working capital conditions. While it has not guided for FY21, we are building in a flat/15% topline growth in FY21E/22E and trim our FY21E and FY22E estimates as outlined in Exhibit 2. Given its strong order book (~2x FY20 sales), we expect execution to pick up post lockdown, while order inflows should revive from T&D and rail capex.

Outlook

Current valuations at PE of 6.5x FY22 are undemanding and we continue to maintain our Buy rating with a TP of ` 247, valuing it at 8XFY22E.

For all recommendations report, click here

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