Shares of KEC International, the flagship company of the RPG Group, soared 6.16% to record a new all-time high of ₹586.15 apiece during Wednesday's trade. This came after the company secured new orders across its various businesses.
KEC International, in an exchange filing on Tuesday, announced that its railway business had received orders in India for technologically enabled and conventional/emerging segments.
In the civil business, the company said it secured orders in the residential and commercial building segments in India. In the transmission and distribution (T&D) segment, KEC International bagged orders for T&D projects in both India and the USA.
Additionally, the company won orders for various types of cables in both India and overseas under its cables segment. The total worth of these new orders was Rs. 1,373 crore, according to the company's exchange filing.
Mr. Vimal Kejriwal, MD & CEO, KEC International Ltd. commented, "We are pleased with the new order wins secured across our business verticals, especially in railways." In line with the government’s focus on increasing capacity, speed, and safety of the Indian Railway network, we have forayed in the emerging segment of Automatic Block Signaling (ABS) to increase line capacity through automation."
"Our civil business continues to witness an exponential growth trajectory, which is reflected in the orders secured. The repeat order in T&D from an existing private developer reaffirms the growth of the India T&D business. We are also witnessing a good traction in the tower supply orders, especially in North America," he added.
The company's shares have delivered a healthy return of 52% in the last one year. At current levels, the stock is trading 61% higher than its 52-week low of ₹352 apiece.
Following its Q4FY23 earnings, brokerage firm HDFC Securities has maintained its 'Reduce' rating on the stock.
The brokerage said the company reported a robust order inflow for FY23, surpassing its revised guidance, resulting in a healthy order book of ₹340 billion, equivalent to approximately twice its FY23 revenue. The company has also experienced positive developments in collections from Afghanistan, with an additional ₹500 million received in Q4FY24 and an expected ₹2 billion by the end of May 2023, the brokerage noted.
Furthermore, KEC International has successfully reduced its consolidated net debt, including interest-bearing acceptances, by ₹6.3 billion to ₹49.9 billion as of December 2022. The interest cost for FY23 came in at 3.12% of revenue, reflecting an increase of 2.3% compared to the previous year. However, the company anticipates a decline in interest costs starting from Q1 FY24 onward, the brokerage stated.
For FY24, KEC International has guided for a 15% YoY revenue growth, targeting an EBITDA margin of approximately 7%, and an order inflow of ₹250 billion. Despite these positive developments, HDFC Securities has maintained a 'Reduce' rating on the stock, citing the debt-heavy balance sheet, elevated working capital, and weak profitability.
The brokerage has trimmed its target price of ₹400 per share from ₹514 earlier. The potential rerating of KEC International's stock will depend on the company's ability to reduce its debt and achieve margin recovery, said HDFC Securities.
21 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
