The brokerage firm Nomura has revised its target price on KEC International lower to Rs 970 from Rs 1,030.
The revision in the target price comes after the company reported slower than expected non-Transmission and Distribution execution and higher interest costs in its recent quarter.
Nomura has also cut KEC International’s earnings per share forecast for FY26-FY27 by 7%.
Also Read Rail Vikas Nigam Share Price Today Live Updates, 01 Feb, 2025: Rail Vikas Nigam on the radar IOC sets capex target for FY26 at Rs 33,000 crore Jefferies, Nuvama cut target price for Dr Reddy’s. 3 thing to know… Zerodha’s Nithin Kamath raises alarm over instant pre-approved loans, shares personal experience
Let’s take a look at the key reasons why the brokerage firm has maintained the buy rating but has cut the target price.
Nomura on KEC International Nomura: Q3FY25 performance below expectations
As per the brokerage, the company reported a net sales of Rs 53.5 billion, a 7% YoY growth, but falling short of both Nomura’s and Bloomberg consensus estimates by 1% and 5%, respectively.
Furthermore, the civil and railway segments underperformed, with civil showing no growth YoY and railway falling by 30% YoY.
It was still below the brokerage’s estimates by 2% and 6%. The company’s PAT came in at Rs 1.3 billion, up 34% YoY and 52% QoQ, though it also missed expectations by 15% and 20% respectively.
ALSO READJB Pharma is riding the CDMO Opportunity. Jefferies reiterates buy… Nomura: Higher interest costs and working capital challenges
The brokerage pointed out that the higher than expected interest cost, which stood at Rs 1.7 billion, was a key factor in the missed earnings.
As per the brokerage, “This higher interest cost (3.2% of sales) was 40 basis points above our forecast.”
Furthermore, the firm noted that despite the challenges in execution and interest costs, KEC International’s order inflows are on track. The brokerage anticipates that KEC will surpass its FY25 target of Rs 250 billion in order inflows with a healthy pipeline of Rs 1.5 trillion.
Nomura: Focus on margin improvement and future growth
The brokerage firm highlighted of key strategies in place to drive this improvement, including a shift in the company’s execution mix towards T&D.
» Read More
