Is it a wise investment to purchase shares of Infra stock, currently trading at a discount of over 35% despite its strong financial standing
Infra stock: This stock represents a leading EPC company in India, specializing in power transmission, railways, civil infrastructure, cables, and renewable energy projects on a global scale. Currently trading at a 36 percent discount due to market downturn, investors are debating whether this presents a buying opportunity or a risk. Let’s delve into whether this stock is a wise investment choice.
Stock Price Movement
With a market capitalization of Rs. 22,414.04 crores, shares of KEC International Limited closed at Rs. 842 per equity share, marking a decrease of approximately 3.71 percent from the previous day’s closing price of Rs. 874.40. The stock has fallen nearly 36 percent from its 52-week high of Rs. 1,312.
Company Overview
Established on March 18, 2005, KEC International Limited is a prominent Indian multinational in the EPC sector, specializing in power transmission, distribution, railways, civil infrastructure, and cables. As part of the RPG Group, the company holds the position of India’s second-largest manufacturer of electric power transmission towers.
Order Book
The company has achieved a remarkable year-to-date order intake of Rs. 13,482 crores, showcasing a 50 percent year-on-year growth, with 69 percent stemming from the Transmission and Distribution (T&D) sector. Additionally, the order book now surpasses Rs. 34,088 crores, and when combined with the Rs. 8,500 crore L1 position, the total value exceeds Rs. 42,500 crores.
Business Segment Performance
The company has demonstrated robust performance across its various business segments. In the Transmission & Distribution (T&D) sector, revenues surged by an impressive 28 percent to Rs. 2,831 crores. This growth was fueled by exceptional project execution in India and a surge in orders from regions such as the Middle East.
Despite facing challenges such as labor shortages and delayed payments, the Civil segment managed to achieve revenue of Rs. 1,152 crores, marking a 9 percent increase. On the other hand, the Railway segment experienced a 35 percent decline in revenue. However, the segment secured new orders worth Rs. 1,300 crores, with a focus on metro projects.
In the Oil & Gas sector, revenues stood at Rs. 92 crores, reflecting slower growth attributed to a decrease in tendering activities. Efforts are currently being directed towards international expansion to boost growth in this segment. The Cables segment, on the other hand, witnessed a 7 percent growth, generating revenue of Rs. 441 crores. This growth was primarily driven by strategic investments made in the segment.
The company is making great strides in the renewables sector, particularly with major solar projects in Rajasthan and Karnataka, bolstered by a robust order book. Furthermore, the company has garnered recognition for its sustainability endeavors, earning a place among India’s leading companies in ESG initiatives.
Margin Guidance
Regarding margin guidance, the management has established a goal of attaining EBITDA margins ranging from 9 percent to 10 percent by the conclusion of the financial year. This optimistic forecast is underpinned by factors such as enhanced project execution, improved cost management, and the resolution of outstanding payment issues, all of which are anticipated to drive profitability in the upcoming months.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.