Buy KEC International -Moving towards the US$1bn mark; Anand Rathi

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


KEC International
Moving towards the US$1bn mark; maintain Buy
KEC is expected to report ~US$1bn revenue for FY11 and an
order book of US$1.6bn by Mar’11. It continues to be our toppick
for its balanced order book mix, strong order inflows and
execution, increasing share of orders from non-power segments
and compelling valuations. Maintain Buy with TP of `129.

 3QFY11 results surprise positively. KEC reported 12.9% yoy
growth in revenue (`10.7bn). EBITDA grew sharply by 28% yoy
to `1.2bn chiefly due to margin expanding ~140bps yoy to 11.6%.
SAE Towers saw EBITDA margin of 19.8% in 3Q. Net profit
grew 25% yoy to `580m, 30% more than we estimated.
 Order book surpasses historical records. The order book
surpassed the US$1.7bn (`80bn) mark, 2x FY10 sales. KEC
secured orders of +`20bn in 3Q and +`54bn in 9MFY11.
 Outlook. We expect revenue and earnings CAGR of 13% and
19% over FY10-13 respectively owing to its burgeoning order
book, early turnaround of the cable segment and growth in
American markets (SAE).
 Key revisions. We revise our EBITDA and net profit for FY11
by +6.2% and +14.4% respectively, owing to strong 3Q results
and margin expansion of 60bps yoy. We revise our revenue and
net profits by +3% and +5.6% for FY12 due to higher order
inflow assumptions.
 Valuation and Risks. We upgrade our price target to `129 (from
`122 earlier), 14x FY12e earnings. Key risks include execution
delays, rising commodity prices and interest rates and competition.