KEC International posts weak Q1FY23 numbersKEC - 584 Change: 16.50 (2.91 %)
News: KEC reported a weak set of Q1FY23 numbers given the margin miss and rise in debt and interest cost. The topline came in at Rs 3318.1 crore which grew by 30.6% on YoY basis, (above our estimate of Rs 2815.2 crore) owing to healthy growth in both T&D & Non T&D business. Absolute EBIDTA came in at Rs 168.5 crore, which increased by 5.4% on YoY basis with EBITDA margins came in at 5.1% (below our estimate of 6.7%), down by 122 bps on a YoY basis while declined by 81 bps on QoQ basis mainly impacted primarily due to the elevated commodity prices & logistics costs and SAE Brazil performance. Adj. PAT came in at Rs 31.1 crore (below our estimate of Rs 60.2 crore) which declined by 32.6% on YoY basis. The silver lining was highest ever order book + L1 of over Rs 30,000 crore. KEC’s Q1FY23 order inflows came strong at Rs 3472 crore.
View: T&D business (including SAE tower) revenue grew by 17% on YoY basis to Rs 1645 crore. While Non-T&D business (Railways, Civil, Cables, other) registered a robust growth of 46% to Rs 1819 crore, on YoY basis led by better execution. KEC’s interest cost increased by 54% YoY to Rs 100 crore and net debt (excluding acceptances) has increased by Rs 885 crore, YoY to Rs 3418 crore, owing to few EPC orders in Railways, where the billing is linked to erection i.e. milestone payments and loss in the SAE Brazil subsidiary. KEC has a strong visibility in terms of backlog and has exhibited strong pick up in T&D & 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.