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Nomura initiates buy on KEC International, target price Rs 388

KEC International (KEC) has demonstrated strong EPS growth of 32% (FY15-19) on improving EBITDA margins;

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Updated: Dec 16, 2019, 08.52 AM IST
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Nomura has initiated coverage on KEC International in the long term with a target price of Rs 388. The stock ended up 1.6% at Rs 289.75 on Friday while BSE Sensex closed 428.00 points up at 41,009.71.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 2808.81 crore, up 16.43 % from last quarter sales of Rs 2412.45 crore and up 16.62% from last year same quarter sales of Rs 2408.45 crore. The company has reported net profit after tax of Rs 139.12 Crore in latest quarter.

The company’s top management includes Mr.A T Vaswani, Mr.D G Piramal, Mr.G L Mirchandani, Mr.H V Goenka, Mr.M S Unnikrishnan, Mr.Ramesh D Chandak, Mr.S M Kulkarni, Mr.S M Trehan, Mr.Vikram S Gandhi, Mr.Vimal Kejriwal, Ms.Nirupama Rao. Company has Price Waterhouse Chartered Accountants LLP as its auditors. As on 30-09-2019, the company has a total of 257,088,370 shares outstanding.

Investment Rationale

KEC International (KEC) has demonstrated strong EPS growth of 32% (FY15-19) on improving EBITDA margins; however, the Street has lately been concerned about KEC’s flattish prospects in domestic power transmission & distribution and the recent rise in its working capital levels, said Nomura. The firm expects revenue growth to be driven by the Railways and revival in global T&D over FY20-22.

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