Legacy projects continue to affect margins

Company

11 Mar 2024 | 5 Min Read

KEC International's 3QFY24 results were lower than expected due to supply chain issues and muted execution in the Railways segment.

Revenue grew 14% YoY to INR50b, missing estimates.

EBITDA margin was flat QoQ and lower than expected.

PAT growth of 449% YoY came on a low base.

The company expects to benefit from a strong domestic T&D tendering pipeline and plans to reduce working capital.

However, margin improvement guidance has been shifted to FY25, resulting in earnings cuts for FY24/25/26E.

The company has an order book of INR301b and is L1 in an additional INR8b of tenders.

The Railways segment continues to be sluggish due to increased competition and spending on locomotives and wagons.

The company expects a revenue CAGR of 16% over FY23-26 and improved return ratios.

The stock is currently trading at a P/E of 23.2x on FY25E earnings.