Motilal Oswal has upgraded KEC International Ltd to buy from neutral with a target price of ₹920 per share, implying a 20% upside from current levels. The brokerage said the company delivered a decent Q2FY26 performance, with continued traction in its transmission and distribution (T&D) segment and improving prospects for non-T&D businesses such as civil and railways.
Revenue rose 19% year-on-year, while EBITDA grew 34%, driving a margin expansion of 80 basis points to 7.1%. Net profit surged 88% YoY but came in slightly below estimates due to higher interest costs. Order inflows jumped 81% YoY to ₹105 billion, taking the overall order book to ₹393 billion, up 15% from a year ago.
Motilal Oswal said the T&D segment remains the key growth driver, supported by strong domestic and international demand. It expects non-T&D verticals to recover meaningfully in the second half of FY26 as legacy low-margin projects near completion, aiding overall margin improvement.
The brokerage cut its FY26–28 earnings estimates by 5–11% to factor in higher debt and working capital needs but still projects a 17%/23%/33% CAGR in revenue, EBITDA, and PAT, respectively, over FY25–28, with RoE and RoCE expected to reach 18% and 16% by FY28. At 19x/15x FY27/28E EPS, the stock offers an attractive entry point post correction, Motilal Oswal said, adding that KEC remains a strong play on the private and global T&D capex revival.
Disclaimer: The views and recommendations above are those of Motilal Oswal. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
