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KEC International
Global footprint offsets concerns on domestic market
KEC's strong international footprint, along with SAE acquisition offsets the concerns on
rising competitive intensity in the domestic market.
Diversifying to new growth avenues
KECI is also diversifying to railways, an opportunity worth USD300b over FY11-20. The
company built its pre-qualification for most of the railways projects and has current
order backlog of INR4.2b.
Strong execution track record
KECI has strong project management capabilities and has efficiently managed its
working capital requirements with lower than peer cash conversion cycle. The company
has also maintained higher ROEs than its peers.
International presence and new initiatives to drive strong growth
KECI’s current order backlog of INR80.0b provides visibility for 1.6 years (on FY11
sales). We expect KECI to report sales CAGR of 18% and an EPS CAGR of 18% over
FY10-13E. We expect the new businesses to contribute 22.4% of sales in FY12 (SAE
Towers 9.8%, RPGC 7.5%, Railways 5% of sales).
Valuation
KECI trades at forward P/E of 10.8x/8.4x our FY11/FY12 EPS estimates compared to
peers trading at median P/E of 9.2x/8.1x. Reiterate our BUY rating on the stock with a
TP of INR122 based on a P/E of 11.6x (average historic multiple for KECI) our FY12
EPS of INR10.5.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
KEC International
Global footprint offsets concerns on domestic market
KEC's strong international footprint, along with SAE acquisition offsets the concerns on
rising competitive intensity in the domestic market.
Diversifying to new growth avenues
KECI is also diversifying to railways, an opportunity worth USD300b over FY11-20. The
company built its pre-qualification for most of the railways projects and has current
order backlog of INR4.2b.
Strong execution track record
KECI has strong project management capabilities and has efficiently managed its
working capital requirements with lower than peer cash conversion cycle. The company
has also maintained higher ROEs than its peers.
International presence and new initiatives to drive strong growth
KECI’s current order backlog of INR80.0b provides visibility for 1.6 years (on FY11
sales). We expect KECI to report sales CAGR of 18% and an EPS CAGR of 18% over
FY10-13E. We expect the new businesses to contribute 22.4% of sales in FY12 (SAE
Towers 9.8%, RPGC 7.5%, Railways 5% of sales).
Valuation
KECI trades at forward P/E of 10.8x/8.4x our FY11/FY12 EPS estimates compared to
peers trading at median P/E of 9.2x/8.1x. Reiterate our BUY rating on the stock with a
TP of INR122 based on a P/E of 11.6x (average historic multiple for KECI) our FY12
EPS of INR10.5.
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