Add KEC International Ltd For Target Rs. 950 By Emkay Global Financial Services Ltd
In-line performance; T&D key growth driver
We maintain ADD and a TP of Rs950 (unchanged) for KEC International (KECI). Q4FY25 results were in line with our estimates; revenue/EBITDA/PAT grew by 11.5%/39%/77% YoY to Rs68.7bn/Rs5.4bn/Rs2.7bn. This was primarily led by T&D, which grew by 28% YoY (including SAE Tower), and the cable business, which posted a 29% YoY increase. Performance in other businesses was weak, with declines in civil (-7%YoY), railways (-26% YoY), and oil and gas (-67% YoY) segments. EBITDA margin improved by 155bps YoY to 7.8%. The domestic T&D opportunity pipeline remains strong, led by increasing momentum in the power sector. Internationally, T&D prospects are expanding across key regions, including the Middle East, Africa, CIS, and the Americas, with Saudi Arabia leading investments in energy transition and T&D infrastructure. Improved cash flows, led by project closures, release of water dues (Rs1.4bn in Q4), and better working capital management (reduced by 12 days) reduced the debt by Rs5.3bn YoY, bringing total debt down to Rs45.6bn. For FY26, the company’s guidance for revenue growth and EBITDA margin is 15% and 8-8.5%, respectively.
Robust order book including L1 positions of Rs45bn
FY25 order intake grew 36% YoY to Rs 247bn (initial guidance of Rs250bn). Overall, T&D (including SAE Tower) continued the strong growth momentum (+61% YoY at Rs180bn), contributing 72% of the total order inflow. Railways order inflow grew by 105% YoY on a low base to Rs 22.2bn. Civil continued under pressure with de-growth of 41% YoY, mainly on the back of water projects. It is expected to improve in FY26. Order book stands at Rs 334bn (1.5x TTM revenue). KEC also holds L1 positions worth ~Rs45bn, primarily in T&D. For FY26, the management has guided for order inflow of Rs300bn, mainly led by T&D and civil businesses.
Balance sheet improved with debt repayment and sequentially lower NWC
Net debt (including acceptances) stood at ~Rs45.6bn (vs Q4FY24/Q3FY25: Rs51bn/Rs56bn). NWC days at 122 came in higher compared to 112 at the end of Q4FY24. However, there was a sequential improvement with 134 days at the end of Q3FY25. This was due to the release of water-related dues and several project closures. The management continues to prioritize cash flow visibility and expects further release of water dues (outstanding Rs8bn). For FY26, the NWC guidance is ~100 days.
Valuation: Maintain ADD
KEC continued to benefit from strong ordering momentum in global T&D opportunity. We expect civil to see pick-up in ordering with visible improvement in water tendering and awarding. The stock is currently trading at a P/E of 24.5x/17.5x on FY26/27E earnings. We maintain ADD with a TP of Rs950.
KEC continued to benefit from strong ordering momentum in global T&D opportunity. We expect civil to see pick-up in ordering with visible improvement in water tendering and awarding. The stock is currently trading at a P/E of 24.5x/17.5x on FY26/27E earnings. We maintain ADD with a TP of Rs950
