Reduce KEC International, target price Rs 350: HDFC Securities

HDFC Securities has reduce call on KEC International with a target price of Rs 350. The current market price of KEC International Ltd. is Rs 425.15.

KEC International Ltd., incorporated in the year 2005, is a Mid Cap company (having a market cap of Rs 11205.20 Crore) operating in Power sector.

KEC International Ltd. key Products/Revenue Segments include Income from Eng.Construction Contracts, Cables, Scrap, Towers & Structurals, Sale of services, Other Operating Revenue for the year ending 31-Mar-2022.



Financials
For the quarter ended 30-09-2022, the company reported a Consolidated Total Income of Rs 4080.14 Crore, up 22.67 % from last quarter Total Income of Rs 3326.03 Crore and up 13.63 % from last year same quarter Total Income of Rs 3590.75 Crore. Company reported net profit after tax of Rs 55.24 Crore in latest quarter.

Investment Rationale
Given rich valuation, debt-heavy balance sheet, elevated working capital, and weak profitability (with the standalone business now facing margin headwinds), it maintains REDUCE stance. It has cut target price to INR 350/share (14x Sep-24E EPS rolled over). It recalibrates FY23E/24E EPS lower by 26.5/24.9%. Rerating is dependent on debt reduction and margin recovery.

Promoter/FII Holdings
Promoters held 51.88 per cent stake in the company as of 30-Jun-2022, while FIIs owned 12.17 per cent, DIIs 26.46 per cent.