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News: KEC International (KEC) reported mixed Q3FY25 performance with revenue at ₹5,349 crore up 7% YoY, mainly from T&D business which grew 17% YoY. The renewables business grew by 52% YoY to ₹238 crore, whereas the civil business was flat; Transportation and Oil & Gas business declined by 30% and 59% YoY respectively. Led by better operational performance consolidated EBITDA grew 22% YoY to ₹375 crore, EBITDA Margins expanded ~90bps YoY to 7%. As a result, PAT came in at ₹130 crore up 52% YoY, PAT margins expanded 50 bps YoY to 2.4%. The YTD order inflows of more than ₹22000 crore was up 70% YoY (of which T&D is 72%), order backlog at ₹37400 crore, L1 position of ~4000 crore. The NWC days were 134 days up 5 days YoY.
View: With a robust order book of ₹41,400 crore including L1(T&D is ~59%) and strong order bid pipeline of ~₹1.5 trn, we believe KEC poses strong revenue growth over the next couple of years. Focus on improving margins coupled with strong revenue growth in T&D business, effective leverage and working capital management will drive up the stock.
Impact: Neutral