Buy KEC International; target of Rs 406: Prabhudas Lilladher

What happened

Prabhudas Lilladher maintained a buy recommendation on KEC International with a target of Rs 406. The report cut its FY28E and FY29E earnings-per-share estimates by 10.2% and 9.7%, citing weakness in civil and transportation work, slower solar project execution and higher interest costs.

Confirmed

Global impact / market context

Lower earnings estimates and reduced FY27 revenue growth guidance point to weaker near-term delivery. If project execution and customer collections stay slow, revenue and cash available could remain under pressure, while elevated borrowed money and interest costs could further weigh on profit and the company’s ability to fund growth.

Analyst inference

The report describes mixed operating conditions: cables revenue grew 17% year on year and SAE Towers grew, but overall quarterly revenue fell 10.2%. Execution challenges span civil, transportation and India power-grid work, while slower project delivery and higher interest costs may weigh on earnings and cash available.

Analyst inference

What to watch

1. Check whether India transmission and distribution execution accelerates as management expects, since completing projects more quickly could support revenue recovery and help absorb costs. Analyst inference
2. Track civil and transportation execution, including labour availability and water collections; continued delays could prolong weak revenue and tie up cash in unfinished work. Analyst inference
3. Watch working capital and net debt, including acceptances, as well as interest costs; higher funding needs could reduce cash available and constrain investment. Analyst inference

Evidence

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