KEC International Ltd (Q4 FY14)

KEC is one of our preferred picks in the T&D space due to the higher concentration of international and transmission orders.

May 07, 2014 08:05 IST India Infoline News Service

CMP Rs77, Target Rs87, Upside 12.3% 
  • Topline growth of 1.2% yoy was lower than expected due to lower execution in its transmission business 

  • KEC continued to report an expansion in margins on a sequential basis

  • Revenue growth in SAE resumed during the quarter after reporting weak numbers in Q3 FY14

  • Tax rate remained high at 50.7% due to higher profit at its subsidiaries

  • Management expects margins to improve from 7% reported in Q4 FY14 on the back of higher contribution from transmission orders and reduction in execution of low margin orders in its new businesses

  • KEC remains our top pick in the transmission space; Maintain Buy with a price target of Rs87

Result table
(Rs mn) Q4 FY14 Q4FY13 % yoy Q3 FY14 % qoq
Net sales 21,759 21,500 1.2 22,016 (1.2)
Material costs (11,681) (12,344) (5.4) (11,110) 5.1
Personnel costs (1,434) (1,178) 21.8 (1,440) (0.4)
Other overheads (7,131) (7,090) 0.6 (8,047) (11.4)
Operating profit 1,514 889 70.3 1,419 6.7
OPM (%) 7.0 4.1 282 bps 6.4 51 bps
Depreciation (176) (155) 13.3 (179) (1.6)
Interest (673) (570) 18.1 (724) (7.0)
Other income 32 50 (35.4) 24 34.9
PBT 697 213 226.9 541 28.9
Tax (353) (352) 0.5 (349) 1.2
Effective tax rate (%) 50.7 164.9 64.6
Adjusted PAT 344 (138) - 192 79.4
Adj. PAT margin (%) 1.6 (0.6) 222 bps 0.9 71 bps
Reported PAT 344 (138) - 192 79.4

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