Buy KEC International, target Rs 460: IIFL

IIFL has buy call on KEC International Ltd. with a target price of Rs 460. . The current market price of KEC International Ltd. is Rs 388.85. Time period given by the brokerage is a year when KEC International Ltd. price can reach defined target. .

KEC International Ltd., incorporated in 2005, is a mid-cap power company with a market cap of Rs 9973.74 crore.

Investment rational by IIFL Institutional Equities

We believe management guidance is realistic, and implies earnings to grow in line with sales in FY19. KECI has delivered robust 87% earnings Cagr over FY15-18 and consistently beat expectations, despite only 6% Cagr in revenues. Efforts to diversify and scale new EPC verticals in Rail and Civil space are starting to play out, with comparable project margins. Further, revenue and earnings growth is likely to be stronger in FY20ii as longer cycle projects of Rs25bn (15% of backlog) enter theexecution phase. We revise our FY19ii/20ii earnings estimates upwards by 4%/6%, and expect 20% earnings Cagr over FY18-21ii. We value KECI at 18x Mar-20ii EPS, and our TP of Rs460 implies 21% upside from current levels. Maintain BUY