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Sunday, May 15, 2011

Stock Report - KEC International

BP Equities, a stock broker firm has recommended to buy stocks for KEC Internation for target of Rs.99 in it's recent stock research report. Checkout the stock report here.

KEC International’s (KECI) Q4 FY 2011 results reported sales of Rs. 15,589 mn. It is up 14.9% YoY and it's net profit of Rs. 786 mn up 25% YoY. The increase in profits was due to margin improvement and higher execution.

KECI has huge order book size of Rs ~78 bn as on April 2011 (around 1.75x its FY10 revenues) executable over period of 18 to 24 months providing optimistic future revenue visibility for coming period. With diversified order book geographically the company is insulated from slow down in order flows from any particular region.

The company has entered into water business and secured breakthrough order of Rs. 310 mn in April. The company intends to mark its presence in complete value chain of Water treatment and Water waste management. It has also received order in Balance of plant (BOP) segment. As the company is entering these segments it would not enjoy high margins as compared to other players.

Stock Valuations
At current stock price of Rs.80, the stock trades at P/E of 13.99 with EPS of 5.72. With expected EPS of Rs.9.07 in FY 2012, the stock trades at forward P/E of 8.8. With this consideration, one may buy stocks of KEC for the target of Rs.100-110 for medium term investment.

Download the detailed stock report here.

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