HDFC Securities: KEC International On Track For Accelerated Recovery
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HDFC Securities Report
The key takeaways from KEC International Ltd.’s FY20 annual report are as follows:
1) a geographically well-diversified order book and robust pipeline; International transmission and distribution (SAARC/Middle East and North Africa, ex-SAE Towers) and Civil and Railways would continue to drive growth in FY21E.
2) moderate profitability, dipped in FY20.
3) incremental borrowing cost (current interest rate less than 7%) has come down (FY20 finance cost at 2.8%; -20 basis points YoY); approximately 55% debt is in forex.
4) sustained increase in wheeling charges intensity has led to lower cash flow from operations/Ebitda over past two years, but net working capital is stable.
Our channel checks for capital goods suggest that well-diversified companies are witnessing accelerated recovery in execution as international operations remain mostly unaffected while the labour situation is improving locally.
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