KEC International

KEC Buy Report from economic times

KEC International
CMP: Rs 730.15
Target price: Rs 870

HSBC has reiterated an ‘overweight’ recommendation on KEC International due to factors like strong order backlog and improvement in EBITDA margin. “KEC International has a Rs 50.5-billion order backlog with international orders contributing 68%, which includes the Middle East, Africa, and Commonwealth of Independent States (CIS),” says the report.

The foreign brokerage has increased its EBITDA margin forecast to 13% for FY08E and FY09E after the company reported an improvement in EBITDA margin for the first nine months of the current fiscal. However, an increase in interest costs has led to a marginal impact on net profit, it adds. The brokerage also notes that the high court has given its approval for the merger between the two group companies, RPG Transmission and NITEL. HSBC believes that the company has continuously improved its EBITDA margin and is currently either above or in line with peers. “Thus, we expect the valuation discount to peers like Jyoti Structures and Kalpataru Power to narrow,” it adds.

You can see this report at ET
too.