KEC International secures Rs 1,423cr Saudi contract, shares surge over 6%

KEC International Ltd, a leading global infrastructure Engineering, Procurement, and Construction (EPC) company under the RPG Group, saw its stock surge significantly, reaching a 52-week high of ₹988.00 on September 5, 2024. The stock jumped 6.08% from its previous close, underscoring strong investor sentiment. Over the last year, KEC International Ltd’s shares have delivered a return of 45.63%, significantly outperforming the Sensex, which has returned 25.04% during the same period.

KEC International Ltd’s robust performance is linked to its recent strategic initiatives in the Middle East. The company recently secured new orders worth ₹1,423 crore for the design, supply, and installation of 380 kV transmission lines in Saudi Arabia. This latest contract follows earlier significant orders in the UAE and Oman, further strengthening KEC’s market leadership in the Middle East. As of September 2024, the company’s year-to-date (YTD) order intake stands at over ₹11,300 crore, reflecting a remarkable growth of approximately 75% compared to the same period last year.

KEC International Ltd has continued to build on its strong order book with several recent developments. Beyond the recent Saudi Arabian order, KEC International secured orders worth ₹1,171 crore in the Middle East earlier this year. These orders span across verticals such as Power Transmission and Distribution (T&D), Civil, Railways, Urban Infrastructure, Renewables, Oil & Gas Pipelines, and Cables.

The company has also won several large orders from the Indian Railways sector. These include a ₹950 crore order for the construction of railway bridges and track-laying projects in Northern India. These contracts are part of the government’s initiative to upgrade the national rail infrastructure, which is expected to enhance KEC’s domestic footprint and contribute to its growth.

KEC International has been diversifying its business portfolio, and its Civil business segment has seen significant growth. The company recently bagged orders worth ₹300 crore for the construction of residential and commercial complexes in metro cities across India, indicating its expanding footprint beyond traditional T&D projects.

As part of its restructuring efforts, KEC International Ltd is set to demerge its cables business into a separate subsidiary, valued at ₹5,400 crore. This move aims to optimize capital allocation and unlock shareholder value. The demerger is expected to be completed within the next 3-6 months, which will allow KEC International to focus more on its core EPC business and further enhance operational efficiency.

KEC International Ltd’s recent stock performance has been marked by consistent gains. In the past month, the company’s stock rose by 5.21%, and over the last three months, it surged by 19.72%. The company’s market capitalization stands at ₹24,181.73 crore. These positive movements reflect growing investor confidence, underpinned by KEC’s strong order book and robust execution capabilities.

The company’s outlook remains positive, with brokerage firm Emkay maintaining an “Add” rating and increasing the target price to ₹1,050 from ₹950. Emkay cites KEC International’s strong order inflows and a solid foundation for meeting its FY25 inflow guidance as key factors driving the firm’s optimistic forecast.

KEC International Ltd’s recent performance, backed by strategic order wins across various sectors and plans for restructuring, indicates a strong trajectory for sustained growth. The company’s expanding portfolio, especially in high-growth regions like the Middle East, along with its planned demerger of the cables business, showcases its strategy to enhance shareholder value and maintain its leadership position in the global EPC sector.