KEC International: At 52-week low, Geojit expects more downside in infra stock

Shares of KEC International Ltd , which are trading near their 52-week low, may see more downside, according to brokerage Geojit. It has turned cautious on the infrastructure stock after the company reported weaker-than-expected results for the first quarter of FY27. The brokerage said KEC's revenue remained flat at Rs 5,023 crore, as supply chain disruption linked to the Middle East crisis and labour shortages affected performance. The infra stock fell to a 52 week low of Rs 399.95 on September 3 this year. It closed at Rs 410 in the current session. Market cap of the firm stood at Rs 10,914 crore.

Geojit said execution remained uneven across segments, margins weakened and profitability continued to face pressure. While the company's order book remained strong and order inflows improved, the brokerage said earnings visibility and return ratios were likely to remain subdued in the near term.

Execution in the civil and cable divisions remained steady, supported by improved demand, while execution in the T&D, railway and solar segments remained weak. EBITDA margin declined by 118 basis points year-on-year to 5.8%, due to higher input costs and slower execution in railway and civil projects. Geojit said it expected margin pressure to persist in the near term and weigh on profitability.

The company reported a 10% year-on-year increase in its order book to Rs 37,697 crore in Q1FY27, driven by a 14% rise in order inflows. KEC is targeting order inflows of Rs 30,000 crore in FY27, with 60-70% expected to come from the T&D business.

Given the impact of prolonged execution delays and elevated project costs, Geojit said it cut its FY27 and FY28 earnings forecasts by 36% and 25%, respectively. The brokerage said persistent cost inflation, execution disruptions in the Middle East and weak margins in legacy projects continued to affect profitability, and it revised its rating on the stock to SELL with a target price of Rs 368, based on a price-to-earnings multiple of 11x on FY28 EPS.