Buy KEC International; target of Rs 406: Prabhudas Lilladher

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Revenue growth: KEC International's revenue declined 10.2% YoY, but the company has a strong order book of INR 399bn, providing medium-term revenue visibility.
  • Margin recovery: EBITDA margin contracted 210bps YoY to 5.0%, but management expects margin recovery in FY28, driven by execution ramp-up in India T&D and selective order intake in civil and transportation.
  • Working capital and debt: Net debt and working capital remain elevated, but the company targets a reduction in net debt to ~INR 60bn by FY27-end and working capital at ~125 days.

Thesis Validation Checklist

  • Order book growth: Monitor order inflows and order book growth, particularly in T&D and Cables.
  • Margin expansion: Track EBITDA margin expansion, driven by execution ramp-up and cost discipline.
  • Working capital and debt reduction: Monitor progress in reducing net debt and working capital.
  • Execution in T&D and Cables: Watch for signs of improved execution in T&D and Cables, which could drive revenue growth and margin expansion.