Why KEC International Share Price is Rising

After a brief slump in November, Indian markets are back to doing what they do best. Climb higher!

The market momentum seen over the last few days is continuing and broader markets are also reflecting the trend. FII selling too seems to have abated for the time being.

Amid this rise, many stocks are also seeing an upswing. KEC International being one of them.

As one of the leaders in infrastructure and EPC, KEC could be benefiting from broader uptrend in the market. Investors are taking notice, and the stock's climb suggests something big might be brewing.

What's driving the stock?

Let's find out.

Stock Hits Lifetime High on Securing Order Worth Rs 10.4 bn

Shares of KEC International reached their lifetime yesterday after the company on Friday disclosed that it won new orders worth Rs 10.4 bn.

The infrastructure EPC major secured the new orders in its transmission and distribution (T&D) business in the international markets that includes supply of towers, hardware and poles in Americas and 220 kV transmission lines in CIS.

The management said that it was delighted with the continuous order wins in its T&D business. The order in CIS has reinforced its presence in this region and further strengthened its International T&D order book.

The company's subsidiary, SAE Towers, has secured multiple orders across USA, Mexico and Brazil, demonstrating an uptick in the American T&D market.

With these orders, the order intake in 2024 now stands at over Rs 173 bn, reflecting a remarkable growth of 75% YoY. The company appears well-positioned to meet its FY25 order inflow guidance of around Rs 250 bn.

Last week, it secured three big orders totalling nearly Rs 40 bn, bringing its FY25 order intake. Additionally, its lowest bidder (L1) portfolio stands at Rs 84 bn, further supporting its order pipeline.

These order wins are expected to drive robust revenue growth in FY25 and FY26, given the typical order execution cycle of 18-24 months.

The management has set an ambitious operating profit margin guidance of 7.5% for FY25.

To achieve this, the company's margin in the second half of FY25 would need to reach 8.3%, assuming a full-year revenue growth of 15%.

However, this target may be challenging, as the highest operating profit margin the company has recorded in the past 14 quarters was 7.2% in December 2021 quarter.

What Next?

KEC International's future looks promising, driven by its strong order book and strategic focus on growth. The company has secured substantial orders, particularly in the Transmission & Distribution (T&D) sector, which will play a key role in driving revenue.

The company on 27 November 2024 secured turnkey orders worth Rs 17 billion (bn) in the transmission & distribution (T&D) business from Power Grid Corporation of India Ltd (PGCIL). The projects include the design, supply, and installation of 765 kV transmission lines and GIS substations.

With these orders, the company's order intake in the year 2024 stands at Rs 163 bn, a growth of over 60% compared to last year.

Further, its T&D business received orders for a 400 kV transmission line project in Oman and the supply of towers, hardware, and poles in the Americas. The civil division won contracts in the industrial segment within India.

The company's growth strategy includes expanding its presence in international markets, particularly in regions like the Middle East, Africa, and South Asia. Its continued investment in new technologies and infrastructure will further strengthen its competitive position.

Additionally, KEC is focusing on reducing debt and improving margins, which is expected to enhance profitability in the coming quarters.

KEC International is also focusing on growing its renewables business, with a keen interest in green energy projects such as solar, wind, and green hydrogen. This aligns with global trends toward sustainability and positions the company as a key player in the energy transition.

Its plans to spin off the cable business into subsidiaries will help sharpen the focus and allow optimal capital allocation, which could unlock further value for stakeholders.

How KEC International Share Price has Performed Recently

In the past month, shares of the company have gained over 25%.

The stock has risen close to 100% in 2024 and gained around over 340% in the last five years.

The stock touched its 52-week high of Rs 1,312 on 4 December 2024 and a 52-week low of Rs 586 on 29 December 2023.

At the current price, the company trades at a price to earnings multiple of 140 and price to book value multiple of 6.48x.

About KEC International

KEC International is a major player in the engineering, procurement, and construction (EPC) sector, under the RPG Group.

The company operates in key infrastructure sectors such as power transmission and distribution, railways, civil, urban infrastructure, solar, smart infrastructure, oil and gas pipelines, and cables.

KEC International's capabilities cover the entire EPC value chain, from planning to project completion. The company has executed challenging projects in difficult environments, supported by its engineering, procurement, and project management expertise.

Its manufacturing facilities are located in India, Dubai, Brazil, and Mexico, allowing it to maintain a global supply chain across six continents and more than 105 countries.

With over 75 years of experience, KEC International has built a strong reputation in the EPC industry. The company focuses on customer satisfaction, quality, and safety in its operations. Its commitment to integrity and respect for people and the environment guides its corporate responsibility efforts.

To know more about the company, check out KEC International financial factsheet and its latest quarterly results.

For a sector overview, read our engineering sector report.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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