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Hidden Gem - KEC International Ltd.

ICICIdirect Research 06 Jun 2025 DISCLAIMER

KEC International (KEC) is one of the EPC majors in key infrastructure sectors such as power T&D, railways, civil, urban infrastructure, solar, smart infrastructure, oil & gas pipelines and cables. It has a strategic mix in portfolio of T&D (57%) and non-T&D (43%). It has Strong T&D prospects in domestic and international markets (33% of backlog from international markets)

The company believes the domestic T&D and civil to grow in the range of 30-40% and 25% in FY26E on back of robust order book, bidding pipeline and sectoral tailwind. Overall T&D business is expected to grow by 20% whereas railways business is expected to see revival by FY27E (this is a deliberate attempt given strong competitive intensity and higher working capital requirement). In our view other segments like civil will grow in double digits. Hence, we expect revenues to grow by 14.4% CAGR over FY25- FY27E. The company currently has ₹180000 crore of bidding pipeline and the management expects order inflows of ₹30000 crore, with 70% from T&D business for FY26E.

The company bagged orders worth ₹4378 crore so far in FY26. The current order book stands at ₹40,000 crore including L1 position of ₹2500 crore. KEC further has ₹180,000 crore order bid pipeline it expects to win orders worth ₹30,000 crore in FY26E of which 70% to be in T&D Business.

With strong backlog and bid pipeline of ₹180000 crore, we believe KEC possess strong revenue growth visibility over the next couple of years. The company is expected to deliver revenue CAGR of 14.4% coupled strong recovery in margins which will drive PAT CAGR at 49.2% over FY25-FY27E We ascribe Buy rating with a revised target of ₹1050 (22xFY27E EPS).

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