Buy KEC International Ltd For Target Rs.1,030 by Axis Securities Ltd
Recommendation Rationale
* Healthy Order Backlog Ensuring Revenue Visibility: As of 30th September 2025, the company’s order book stood at Rs 39,325 Cr. Additionally, it holds an L1 position in projects worth Rs 5,000 Cr, primarily in the T&D segment, offering strong revenue visibility over the next 18–24 months. Backed by its proven execution capabilities and the government’s continued emphasis on infrastructure development, KEC remains well-placed to deliver consistent growth, projecting a 16% CAGR between FY25 and FY27E.
* Encouraging Pipeline of Tenders Enhances Order Inflow Prospects: A robust tender pipeline of Rs 1,80,000 Cr provides strong visibility for sustained order inflows in the coming quarters. Of this, Rs 22,000–23,000 Cr pertains to domestic T&D, Rs 38,000–42,000 Cr to international T&D, and the remainder to non-T&D segments. For FY26, the company has targeted order inflows of Rs 30,000 Cr, of which Rs 16,050 Cr has already been secured, reflecting continued traction and steady execution momentum.
* Strengthening Margins Leading to Better Bottom-line Performance: Despite challenges such as labour shortages and delays in receivables from the water segment, EBITDA margins improved, driven by strong execution in international T&D projects and a higher share of margin-accretive assignments. Margins are expected to rise to 9% by FY27, with EBITDA projected to deliver a 32% CAGR over FY25–27E.
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