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News: In Q4FY23 KEC reported strong topline at Rs 5525 crore, which grew 29.2% on YoY basis, (above our estimate of Rs 5164.4 crore) and 26% YoY to Rs 17282 crore in full year FY23. Consolidated absolute EBIDTA came in at Rs 283.5 crore, which grew by 12.6% on YoY basis with EBITDA margins of 5.1% (below our estimate of 6.7%) and contracted by 76bps on a YoY basis while it has improved sequentially by 56bps. Adj. PAT came at Rs 72.2 crore (below our estimate of Rs 121 crore) which declined by 35.6% on YoY basis. KEC’s FY23 order inflows came robust at Rs 22,378 crore which grew by 30% YoY with order book of Rs 30553 crore, while the company is L1 in orders worth more than Rs 3500 crore. KEC have brought down their net debt including acceptances by ~Rs1,100 crore to Rs 4985 crore in Q4FY23 in the last 3 quarters against their initial guidance of |500 crore reduction with Net working capital days stands at 118 days (Vs. 139 days in Q3FY23).
View: As per management guidance this was the last quarter for subdued margins. Though SAE Brazil has delivered a positive EBITDA for Q4FY23 and is on track to deliver a gradual improvement in profitability in the coming quarters, KEC has a strong visibility in terms of backlog and has exhibited strong pick up in T&D and non T&D revenues, short to medium term performance will hinge on the commodity outlook which will dictate the recovery in margin trajectory and overall profitability.
Impact: Negative