KEC International (KEC)’s net sales grew by 33% year on year ( YoY) and 42% quarter on quarter ( QoQ) to Rs2,069 crore. The EBITDA margin reported at 8.2% is 230bps lower Y-o-Y but 50bps higher Q-o-Q.
We believe there is a marginal improvement in the EBITDA margin compared to the last two quarters (historical lows) but is still under pressure. Due to higher interest cost and tax outgo, profit after tax (PAT) was lower by 5% Y-o-Y to Rs74.4 crore.
As per our rough estimates, the stock is trading at 6-7x its FY2013 and FY2014 earnings, in line with its peers. We believe the visible margin pressure is likely to remain as headwinds for the stock. In the near term, an interest rate cut could act as a trigger for the stock.
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We believe there is a marginal improvement in the EBITDA margin compared to the last two quarters (historical lows) but is still under pressure. Due to higher interest cost and tax outgo, profit after tax (PAT) was lower by 5% Y-o-Y to Rs74.4 crore.
As per our rough estimates, the stock is trading at 6-7x its FY2013 and FY2014 earnings, in line with its peers. We believe the visible margin pressure is likely to remain as headwinds for the stock. In the near term, an interest rate cut could act as a trigger for the stock.
....more info