Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
F o r e x l o s s s p o i l s t h e s h o w …
KEC International (KEC) reported revenue growth of 26% YoY at | 1263
crore, which was above our expectations. The negative surprise came in
from the MTM loss of forex exposure on raw materials and translation
losses to the tune of | 13 crore and | 4 crore, respectively. This coupled
with slower execution in the Middle East led to lower EBITDA margins of
7.2% (decline of 290 bps YoY). Consequently, PAT at | 22 crore
disappointed as we had built in PAT of | 44 crore. Even though the
management expects to restore margins back to 9% for FY12, the
H1FY12 performance will lead to earnings revision for FY12 and FY13.
ƒ Order backlog growth solid to support revenue visibility
KEC witnessed order backlog growth of 20% YoY to | 8450 crore with
order inflows to the tune of | 1200 crore during Q2FY12. This, we believe,
provides reasonable revenue visibility (book to bill ratio of 1.7x based on
TTM revenues). We estimate revenue CAGR of 16% CAGR over FY11-
FY13E. KEC is facing delays in its Middle East order book to the tune of |
400 crore. Overall, 58% of the overall backlog is from international
markets whereas, in terms of business segment. The transmission and
power system business comprises 69% and 23% share in the overall
backlog, respectively, as of Q2FY12.
ƒ Revising down earnings for FY12 and FY13
Given the macro backdrop, particularly for the power sector, and rising
borrowing costs, we are revising down our estimates for FY12 and FY13.
Our revision mainly comes in at the EBITDA level as we have pruned our
margins by 140 bps and 80 bps for FY12 and FY13 to 9% and 9.5%,
respectively. Hence, we have lowered our PAT estimates by 29% and
26% for FY12 and FY13, respectively.
V a l u a t i o n
Though we have revised our PAT estimates sharply for KEC, the
valuations have priced in most of the negatives. Hence, valuations at 8.4x
and 6.7x are attractive. We maintain our BUY rating with a lower target
price of | 76 (9x FY13E EPS)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
F o r e x l o s s s p o i l s t h e s h o w …
KEC International (KEC) reported revenue growth of 26% YoY at | 1263
crore, which was above our expectations. The negative surprise came in
from the MTM loss of forex exposure on raw materials and translation
losses to the tune of | 13 crore and | 4 crore, respectively. This coupled
with slower execution in the Middle East led to lower EBITDA margins of
7.2% (decline of 290 bps YoY). Consequently, PAT at | 22 crore
disappointed as we had built in PAT of | 44 crore. Even though the
management expects to restore margins back to 9% for FY12, the
H1FY12 performance will lead to earnings revision for FY12 and FY13.
ƒ Order backlog growth solid to support revenue visibility
KEC witnessed order backlog growth of 20% YoY to | 8450 crore with
order inflows to the tune of | 1200 crore during Q2FY12. This, we believe,
provides reasonable revenue visibility (book to bill ratio of 1.7x based on
TTM revenues). We estimate revenue CAGR of 16% CAGR over FY11-
FY13E. KEC is facing delays in its Middle East order book to the tune of |
400 crore. Overall, 58% of the overall backlog is from international
markets whereas, in terms of business segment. The transmission and
power system business comprises 69% and 23% share in the overall
backlog, respectively, as of Q2FY12.
ƒ Revising down earnings for FY12 and FY13
Given the macro backdrop, particularly for the power sector, and rising
borrowing costs, we are revising down our estimates for FY12 and FY13.
Our revision mainly comes in at the EBITDA level as we have pruned our
margins by 140 bps and 80 bps for FY12 and FY13 to 9% and 9.5%,
respectively. Hence, we have lowered our PAT estimates by 29% and
26% for FY12 and FY13, respectively.
V a l u a t i o n
Though we have revised our PAT estimates sharply for KEC, the
valuations have priced in most of the negatives. Hence, valuations at 8.4x
and 6.7x are attractive. We maintain our BUY rating with a lower target
price of | 76 (9x FY13E EPS)
No comments:
Post a Comment