PL First Cut – KEC International (KECI) 2QFY24

PL First Cut – KEC International (KECI) 2QFY24 – Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd

KEC International (KECI) 2QFY24 Results-First Cut- Slight miss on revenue, EBITDA margins inline

Result summary

✳️Consol Sales grew 10.7% YoY to ~Rs45bn (PLe ~Rs47.5bn and consensus Rs46.6bn), led by healthy execution in Civil (up 42.4% YoY to Rs10.5bn), Cables (up 5.9% YoY to Rs4.1bn), T&D (up 7.3% YoY to Rs22bn), while it declined for Railways business (down 12.1% YoY to Rs7.8bn).

✳️EBITDA grew 54.2% YoY to ~Rs2.7bn (PLe ~Rs2.9bn and consensus estimate of ~Rs3bn) while EBITDA margins expanding by 172bps YoY to 6.1% in line with PLe of 6.1%, aided by gross margin expansion of 150bps YoY to 23.2%.

✳️PAT Rs558mn vs Rs552mn in Q2FY23 (PLe Rs740mn and consensus estimate Rs865mn). In Q2FY23 KEC had reported negative tax of Rs287mn (due to negative differed tax) resulting in higher PAT.

✳️YTD order Inflows came in at ~Rs90bn.

✳️Order book stands at ~Rs313bn (1.7x TTM revenue), up ~14% YoY and is L1 in orders worth ~Rs40bn.

✳️Net Working Capital (NWC) has been brought down by 8 days to 140 days as on Q2FY24 vs 148 days as on Q2FY23.

✳️At the CMP, the stock is currently trading at 30.3x/14.4x FY24/25E. We have ‘Hold’ rating on stock with TP of Rs645.