KEC International shares gained 3.3 per cent on Wednesday after multiple brokerages turned bullish on the company following its September-quarter results. The transmission and engineering major reported healthy revenue growth and margin expansion, leading analysts to raise their recommendations and price targets.
Nomura and Motilal Oswal have each assigned a ‘Buy’ rating to the stock, projecting 15- 20 per cent upside from current levels. The company’s improving execution in core transmission projects, stabilising non-T&D operations, and expected easing of debt have renewed investor confidence.
Nomura on KEC International: ‘Buy’
Nomura has reiterated its ‘Buy’ rating with a target price of Rs 985, implying upside of xx% from curremt. The brokerage is valuing KEC at 20 times its projected June 2027 earnings. In its note dated November 11, the brokerage said the company delivered an “execution beat” during the quarter as project momentum offset a mild margin miss.
Revenue rose 19 per cent year-on-year to Rs 6,091 crore from Rs 5,113 crore, while EBITDA grew 34 per cent to Rs 430 crore. Profit after tax surged 88 per cent to Rs 161 crore. EBITDA margin improved to 7.1 per cent from 6.3 per cent in the same period last year.
Nomura said KEC remains well-positioned to benefit from the capital expenditure cycle in India’s power transmission and distribution sector. The brokerage expects debt levels to normalise by the end of the financial year as receivables from delayed projects are collected.
Order inflows for the year to date stood at Rs 16,050 crore, while the order book grew 15 per cent year-on-year to Rs 39,325 crore, equal to 1.7 times trailing revenue. The management’s guidance of 15 per cent revenue growth and 8 per cent EBITDA margin for FY26 is achievable, Nomura said, adding that the tender pipeline remains strong at over Rs 1.8 lakh crore.
Motilal Oswal on KEC International: ‘Buy’
Motilal Oswal Financial Services upgraded KEC to ‘Buy’ from ‘Neutral’ with a revised target price of Rs 920, noting that the valuation now looks attractive after the recent price correction.This implies upside of xx% from current levels.
The brokerage expects revenue, EBITDA and net profit to grow at 17, 23 and 33 per cent compounded annual rates respectively between FY25 and FY28, driven by stronger order inflows and margin recovery. It expects EBITDA margins to improve to 7.7 per cent in FY26 and reach 8 per cent by FY27 and FY28.
At current levels, the stock trades at 19.1 times FY27 and 15.1 times FY28 projected earnings. Motilal Oswal said these levels are reasonable given the company’s improving execution and declining leverage. “We cut our estimates slightly to reflect higher debt and working capital, but the valuation remains favourable,” the brokerage said.
The T&D segment grew 44 per cent year-on-year, the cables business expanded 19 per cent, while the civil segment contracted 15 per cent due to monsoon-related delays. Motilal Oswal expects the T&D and non-T&D mix to stabilise at 68:32 by FY27. It also expects return on equity to rise to 18.2 per cent and return on capital employed to 15.6 per cent by FY28.
KEC: Transmission and distribution remain core growth driver
Both brokerages said KEC’s transmission and distribution business continues to drive growth, contributing nearly 60 per cent of the total order book.
During the first half of FY26, the company won major projects worth over Rs 12,000 crore in the Middle East, Africa and CIS regions, including its largest-ever EPC contract worth Rs 3,100 crore in the UAE. Domestically, KEC is executing five high-voltage direct current projects and expects an uptick in intra-state tenders under the competitive bidding model.
SAE Towers, its international subsidiary, has sustained strong demand from Latin America, and the company’s Nagpur tower manufacturing capacity is being expanded to meet export needs.
KEC: Non-T&D businesses show early signs of recovery
The civil, cables and railways divisions, which faced challenges in previous quarters, are showing gradual improvement, according to Motilal Oswal.
Railway revenue declined 15 per cent to Rs 425 crore in the September quarter, but KEC is selectively pursuing high-margin projects and new contracts in the Train Collision Avoidance System space. Nomura said these projects, along with international opportunities, could revive the segment over the medium term.
KEC: Working capital and debt metrics in focus
Nomura a noted that working capital remains elevated. Days outstanding rose to 125 from 116 a year earlier, and net debt increased to Rs 6,480 crore from Rs 5,270 crore.
According to Nomura, net working capital excluding cash stood at Rs 8,011 crore, or 34 per cent of sales, which is manageable given the size of ongoing global projects.