Brokerage house Prabhudas Lilladher is bullish on KEC International and has recommended 'Accumulate' rating on the stock with a target price of Rs 140 in its research report dated June 04, 2014.
"The management believes that KEC's margin profile is likely to see steady improvement over the next few years. They expect margins to improve by 80-100bps per annum over the next three years. EBITDA margin for KEC came down from 11% in FY09 to a low of 5.5% in FY13; however, increased to 6.3% in FY14. Low margin orders in Railways and Water segment build PQ (pre-qualification) in this new business and cost overruns in these projects lead to margin erosion. Since the PQ has been successfully built in this business, KEC is taking fresh orders at much higher margin. Reducing backlog of low margin legacy orders and improved margin profile in new orders should help improve overall margin profile of the company.
KEC has been showing a steady growth in core transmission businesses, both in domestic and international markets. However, the company expects Railways and Water to be the key growth drivers for company over the next few years. KEC believes the non-T&D business could be ~40% of sales (against ~15-20% currently) over the next 4-5 years. We believe KEC is ready to benefit from opportunity arising from expected uptick in capex in Railways and Water sector.
Order book for KEC stood at Rs102bn, up 8% YoY. Order inflow for the quarter was up 16% YoY to Rs19.8bn. The company expects orders from Power Grid to remain subdued in FY15, while SEB ordering could see a revival in the coming year. Outlook for International markets also continues to be healthy. We expect stock to deliver 15% CAGR order inflow over the next few years.
Outlook and Valuation: The stock is trading at 11.2x FY16E earnings. We believe that a strong order book and improving margin profile will help company deliver 12% sales and 71% earnings CAGR over FY14-16E. We maintain our 'Accumulate' rating on the stock with a target price of Rs 140", says Prabhudas Lilladher research report.
For all recommendations, Click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
To read the full report click here
Anda sedang membaca artikel tentang
Accumulate KEC International; target of Rs 140: P Lilladher
Dengan url
https://rokokkanker.blogspot.com/2014/06/accumulate-kec-international-target-of.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Accumulate KEC International; target of Rs 140: P Lilladher
namun jangan lupa untuk meletakkan link
Accumulate KEC International; target of Rs 140: P Lilladher
sebagai sumbernya
0 komentar:
Posting Komentar