Shares of KEC International, an RPG Group company, fell to a fresh 52-week low today amidst negative market sentiment stemming from its Q1 FY27 earnings announcement. The stock declined by 1.5% to Rs 438, down from its previous close of Rs 444.50. This drop reduced the firm's market capitalization to Rs 11,676 crore.
The infrastructure EPC major has seen its stock price fall by 9% since its Q1 earnings were revealed on August 10. Over the past year, KEC International shares have depreciated by 43%, and a significant 46% over two years, indicating high volatility with a beta of 1.17.
Disappointing Q1 Financial Performance
For the first quarter of fiscal year 2027, KEC International reported a consolidated net profit of Rs 73 crore, marking a substantial 42% decrease compared to Rs 125 crore in Q1 FY26. Revenue remained flat year-on-year at Rs 5,024 crore. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also saw a 17% decline to Rs 291 crore, with the EBITDA margin narrowing by 120 basis points to 5.8%.
Profit before tax for the June 2026 quarter stood at Rs 90 crore, a 43% drop from Rs 159 crore recorded in the same period last year.
Geopolitical and Supply Chain Headwinds
The company's performance has been significantly hampered by ongoing geopolitical disruptions and persistent supply chain challenges, particularly in the Middle East. This region accounts for approximately 25% of KEC International's order book, totaling around Rs 10,000 crore, primarily split between Saudi Arabia and the UAE.
Elevated logistics, freight, and fuel costs have increased execution expenses and caused delays in project completion and raw material dispatches. Management anticipates these pressures to continue into Q2 FY27, with a meaningful margin recovery not expected until Q3 FY27 or later. Approximately Rs 300 crore in revenue was deferred in Q1 FY27 due to these Middle East disruptions, with some spillovers projected into the second quarter.
Discussions are ongoing with customers to recover these incremental costs. Supply-side disruptions are more pronounced, with 25-30% of project revenues reliant on supplies sourced from outside the region, further impacted by higher shipping costs and route disruptions.
Analyst Outlook
Brokerage firm Axis Direct revised its price target for KEC International shares downwards to Rs 540 from an earlier Rs 590, while maintaining a 'buy' recommendation. Motilal Oswal also holds a 'buy' call with a price target of Rs 580, valuing the stock at 15x FY28E EPS.
Motilal Oswal expects KEC International to achieve a CAGR of 14% in revenue, 13% in EBITDA, and 24% in adjusted PAT over FY26-28, despite the current challenges.
About KEC International
KEC International is a global infrastructure Engineering, Procurement, and Construction (EPC) major. It operates across various verticals including Power Transmission & Distribution, Civil, Transportation, Renewables, Oil & Gas Pipelines, and Cables & Conductors. The company has a presence in over 110 countries and is the flagship firm of the RPG Group.