Shares of KEC International surged in Friday's trade after the infrastructure EPC major announced fresh orders worth Rs 1,030 crore across its businesses. Kotak Institutional Equities also upgraded the stock to 'Add', pointing to traction in the cables business and a strong domestic transmission pipeline.
In a regulatory filing on October 8, the company said its transmission and distribution business had secured orders for a 400 kV transmission line in Bhutan and an additional order for a 380 kV transmission line in Saudi Arabia, along with orders for the supply of towers, hardware and poles in the Americas. Its renewables business won an order for a 300-plus MW wind project from a well-known private developer in southern India, while the cables and conductors segment picked up various orders in India and overseas markets.
Following the announcement and the Kotak upgrade, the stock jumped nearly 5 per cent in intraday deals on the BSE, hitting a day's high of Rs 366.50 against the previous close of Rs 349.85. Around 12.45 pm it was trading at Rs 353. The company's year-to-date order intake has now crossed Rs 8,600 crore.
Why Kotak turned positive
The upgrade comes despite a brutal year for the stock, which has declined about 60 per cent. Kotak cited weak margins in the non-transmission segments, slower execution in the water business on delayed payments, a seven-month debarment from Power Grid tenders and execution disruptions in West Asia amid geopolitical tensions.
But the brokerage is bullish on what comes next. It said KEC is well placed to benefit from India's accelerating transmission capex cycle, noting that the Central Electricity Authority has outlined Rs 7.9 trillion of transmission investments over the next decade to support more than 900 GW of non-fossil fuel capacity, with the Rs 1.86 trillion Green Energy Corridor Phase III adding further visibility.
The cables business is entering a multi-year growth phase, Kotak said, with revenue potential expected to reach Rs 50 billion over the next three to four years, implying a compound annual growth rate of 30 per cent. It expects earnings before interest, tax, depreciation and amortisation margins of 6 per cent until the first half of FY28, recovering to 7.7 per cent by FY2029, and cut its fair value to Rs 400 from Rs 470 earlier.
Sources:
KEC Int'l: Why Kotak upgraded stock to 'Add' despite 60% fall in a year - Business Standard
KEC International Share Price Jumps Over 4% On Order Win; Kotak Upgrades To 'Add' - NDTV Profit
In a regulatory filing on October 8, the company said its transmission and distribution business had secured orders for a 400 kV transmission line in Bhutan and an additional order for a 380 kV transmission line in Saudi Arabia, along with orders for the supply of towers, hardware and poles in the Americas. Its renewables business won an order for a 300-plus MW wind project from a well-known private developer in southern India, while the cables and conductors segment picked up various orders in India and overseas markets.
Following the announcement and the Kotak upgrade, the stock jumped nearly 5 per cent in intraday deals on the BSE, hitting a day's high of Rs 366.50 against the previous close of Rs 349.85. Around 12.45 pm it was trading at Rs 353. The company's year-to-date order intake has now crossed Rs 8,600 crore.
Why Kotak turned positive
The upgrade comes despite a brutal year for the stock, which has declined about 60 per cent. Kotak cited weak margins in the non-transmission segments, slower execution in the water business on delayed payments, a seven-month debarment from Power Grid tenders and execution disruptions in West Asia amid geopolitical tensions.
But the brokerage is bullish on what comes next. It said KEC is well placed to benefit from India's accelerating transmission capex cycle, noting that the Central Electricity Authority has outlined Rs 7.9 trillion of transmission investments over the next decade to support more than 900 GW of non-fossil fuel capacity, with the Rs 1.86 trillion Green Energy Corridor Phase III adding further visibility.
The cables business is entering a multi-year growth phase, Kotak said, with revenue potential expected to reach Rs 50 billion over the next three to four years, implying a compound annual growth rate of 30 per cent. It expects earnings before interest, tax, depreciation and amortisation margins of 6 per cent until the first half of FY28, recovering to 7.7 per cent by FY2029, and cut its fair value to Rs 400 from Rs 470 earlier.
Sources:
KEC Int'l: Why Kotak upgraded stock to 'Add' despite 60% fall in a year - Business Standard
KEC International Share Price Jumps Over 4% On Order Win; Kotak Upgrades To 'Add' - NDTV Profit