Buy KEC International, target price Rs 500: Motilal Oswal

Motilal Oswal has buy call on KEC International with a target price of Rs 500. The current market price of KEC International Ltd. is Rs 420.65. Time period given by analyst is one year when KEC International price can reach defined target.

KEC International Ltd., incorporated in the year 2005, is a Mid Cap company (having a market cap of Rs 10777.14 Crore) operating in Power sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 2541.71 Crore, down -41.88 % from last quarter Total Income of Rs 4372.87 Crore and up 14.82 % from last year same quarter Total Income of Rs 2213.67 Crore. Company reported net profit after tax of Rs 46.14 Crore in latest quarter.


Investment Rationale
The brokerage cuts FY22E EPS by 8%, factoring in weaker-than-expected margins. However, it broadly maintains FY23/24E EPS estimates given the strong order inflow outlook. It maintains Buy rating, with TP of INR500/share (16x FY23E EPS), given: a) the company’s strong execution track record, b) declining business concentration risk due to its foray into Railways, Civil, etc., and c) reasonable valuations.

Promoter/FII Holdings
Promoters held 51.8 per cent stake in the company as of June 30, 2021, while FIIs held 11.1 per cent, DIIs 26.5 per cent and public and others 10.6 per cent.