Sure Securities has provided a buy rating to KEC Intercontinental with a target price of Rs 267 centered on 12 occasions FY22 EPS.
KECI reported in-line final results as sales/EBITDA de-grew 4 per cent/7 for each cent yoy while adjusted PAT remained flat yr on yr. sales were sturdy in SAE Tower (+39 for each cent yoy) & Railway (+36 for each cent year on year) divisions though domestic T&D execution dropped by 17 per cent yr on yr as KECI misplaced revenues of Rs 5-6 billion thanks to Covid-19 disruptions. Order textbooks (which include L1 of ~Rs 40 billion) stood at Rs 240 billion (+1 for every cent year on calendar year). Order inflow was Rs 27.6 billion in the fourth quarter of FY20 (+8 for every cent year on calendar year).
However the administration has refrained from giving any direction, the brokerage is estimating ~8 for every cent sales decline with ~100 bps margin reduction in FY21 owing to short term headwinds like i) domestic lockdown, ii) unavailability of workforce, iii) supply disruptions and iv) amplified prices & adverse functioning leverage.
The brokerage expects a sturdy restoration in FY22 earnings (+35 per cent progress year on yr) led by diversified and healthful order backlog, capacity to bag orders in hard moments & verified execution keep track of file.
Valuations are desirable as KECI is investing at 9 periods FY22 EPS, nearing bottom cycle numerous vs extended term normal 1-yr forward P/E of 14 times.
Risk to the call : Delay in order influx/execution thanks to COVID-19 disruptions Deterioration in NWC to increase leverage.
For the quarter finished March 31, 2020, the firm documented consolidated sales of Rs 3671.00 crore, up 19.46 for every cent from past quarter sales of Rs 3073.11 crore and down -4.43 per cent from previous year’s identical quarter sales of Rs 3841.17 crore. The corporation reported net profit soon after tax of Rs 192.88 crore in the most recent quarter.
Promoters held 51.66 per cent stake in the firm as of March 31, 2020, while FIIs held 8.71 per cent, DIIs 27.36 for every cent and general public and many others 12.18 per cent.