The Q3 results by KEC International Ltd missed analyst expectations on majority fronts, leading to cut in target prices for the stock that has already fallen 38 per cent from its December 2024 high. The company management lowered FY25 revenue growth guidance to 12-14 per cent from 15 per cent earlier. Working capital remains a concern, analysts said.
Emkay Global suggested 'ADD' on KEC International while lowering its target price to Rs 950 from Rs1,000 earlier. ICICI Securities cut its FY26 revenue and EPS estimates by 4-7 per cent and revised its target price on the stock to Rs 900 from 1,000 earlier.
Antique Stock Broking said Q3 revenue for KEC International at about Rs 5,350 crore was lower than its expectations, due to muted execution in the civil, cables & railways segments. The Q3 Ebitda at Rs 370-odd crore (up 22 per cent YoY) missed its estimate of Rs 430 crore by 14 per cent on account of weaker revenue booking.
PAT stood at Rs 130 crore (up 34 per cent YoY) against an estimate of Rs 180 crore, missing Antique's estimate by 29 per cent. KEC International has guided to reach normalised high single-digit margin (9.0 per cent) in FY26 as legacy orders move out of the system.
"Improved operating margin profile coupled with improvement in working capital, SAE turning profitable, and business momentum looking robust across key business segments like the T&D, civil business, and the anticipated pick-up in railway capex augurs well for KEC," Antique said.
"But, given weak revenue booking, lower revenue guidance & margin performance on account of multiple challenges faced such as labor shortage, delayed payments in water projects & extended monsoon, we cut our FY25, FY26 and FY27 estimates by 22 per cent, 9 per cent and 12 per cent but maintain BUY," it said.
Nuvama said KEC missed its Q3 PAT estimate by 28 per cent, courtesy lower other income. Execution was soft, leading to an 8 per cent miss on Ebitda, it said adding that margin also stayed subdued at 7 per cent.
"We believe KEC’s long-term growth is intact driven by the T&D capex super cycle (50 per cent/70 per cent of OB/FY25 OI). Even so, achieving the 9 per cent OPM target by FY27E is key. We are tweaking FY25–27E baking in: i) slower FY25 execution/other income; and ii) higher interest costs; ‘HOLD’ with a target of Rs 884 (earlier: Rs 960) at an unchanged 17 times FY27E EPS," it said.