Buy KEC International; target of Rs 365: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • T&D segment growth: Expected to lead the recovery, driven by a strong order book and favorable product mix, with a focus on India and international markets.
  • Margin recovery: Expected from FY28, driven by a shift in mix towards T&D and manufactured products, and the exit from legacy projects.
  • Debt reduction: Net debt is expected to decrease, aided by collections from new orders, retention releases from Saudi projects, and positive railway cash flows.
  • Order book visibility: Provides revenue visibility for the next 18 months, with a strong order inflow and a record order book of ~INR400b.

Thesis Validation Checklist

To validate the investment thesis, watch for:

  • T&D segment growth: Improvement in T&D execution, driven by the Ministry of Power's RoW reforms and the resumption of PGCIL orders.
  • Margin expansion: Gradual margin recovery from FY28, driven by a favorable product mix and the exit from legacy projects.
  • Debt reduction: Decrease in net debt, aided by collections from new orders and retention releases from Saudi projects.
  • Order book growth: Continued strong order inflow, driven by a favorable tender pipeline and a strong market position.