Shares of KEC International have experienced a significant downturn, dropping 32% over the past six months. This decline comes as brokerages reassess their outlook for the infrastructure EPC major following its fourth-quarter (Q4) results, which were declared on May 16.
Brokerages Revise Target Prices
Several leading brokerage firms have adjusted their target prices for KEC International, largely due to ongoing geopolitical challenges and supply chain disruptions.
HDFC Securities on KEC
HDFC Securities maintained an 'Add' rating but reduced its target price for KEC International to Rs 557 from an earlier Rs 781. The brokerage noted that KEC's Q4 performance fell short of its revenue, EBITDA, and adjusted profit after tax (APAT) estimates. They further explained, "We have reduced the valuation multiple from 17x to 15x, owing to slower-than-expected margin recovery trajectory as supply chain issues prolong."
Axis Direct's Assessment
Despite acknowledging near-term hurdles, Axis Direct upheld a 'Buy' rating for KEC International, albeit slashing its target price to Rs 590 from Rs 920 per share. Axis Direct views the recent stock correction as an attractive entry point for medium to long-term investors, anticipating a compelling risk-reward profile. The firm projects strong growth, expecting revenue, EBITDA, and PAT to grow at a CAGR of 13%, 19%, and 29% respectively from FY26-28E.
PL Capital's Outlook
PL Capital retained an 'Accumulate' rating but lowered its target price to Rs 558 from Rs 748. The brokerage highlighted that the ongoing crisis in West Asia has led to "slower project execution and inability to dispatch material from the Dubai factory." Consequently, PL Capital revised its EPS estimates downwards for FY27E and FY28E. However, they remain optimistic about KEC's long-term prospects, citing its robust order book, healthy execution momentum, a strong outlook for the Transmission & Distribution (T&D) sector—especially in renewable energy—and the expansion of its Cables business.
Factors Impacting Performance
The primary reasons cited for the trimmed targets include the geopolitical situation in West Asia, which has hampered project execution and material dispatch, as well as broader supply chain issues affecting margin recovery. These factors have contributed to KEC International's shares trading lower on the BSE, closing slightly higher at Rs 472.10 on Wednesday, up 0.55% from its previous close.