KEC International T&D order book and SAE Towers momentum support growth visibility

Investment View and Valuation

In its August 21, 2026 report, CD Research retains a BUY recommendation on KEC International Ltd. The broker views the company’s transmission and distribution (T&D) franchise and accelerating SAE Towers momentum as the principal supports for medium-term growth.

CD Research has revised its target price to Rs 610 from Rs 999, based on 18 times FY28E earnings. At the report CMP of Rs 424, KEC traded at 15.6 times FY27E EPS of Rs 27.25 and 12.5 times FY28E EPS of Rs 33.91. The broker forecasts return on equity of 12.1 per cent in FY27E and 13.5 per cent in FY28E.

Q1 FY27 Performance

KEC International reported Q1 FY27 revenue from operations of Rs 5,023.54 crore, broadly flat year on year. T&D remained the largest contributor, generating about Rs 3,217 crore, or around 64 per cent of consolidated revenue.

T&D execution was affected by Middle East supply-chain and logistics constraints and right-of-way challenges in India. SAE Towers delivered revenue of around Rs 450 crore, up more than 25 per cent year on year, supported by demand in the US, Mexico and Brazil.

Consolidated operating profit declined to Rs 290.81 crore in Q1 FY27 from Rs 350.10 crore in Q1 FY26. T&D margins remained at around double-digit levels, while civil and transportation profitability continued to be weak.

Order Book and Growth Visibility

Order visibility remains substantial. KEC secured more than Rs 6,300 crore of orders in Q1 FY27, including around Rs 3,600 crore in T&D. The order book stood at Rs 37,697 crore, excluding nearly Rs 3,000 crore of L1 positions, taking order book plus L1 positions above Rs 40,000 crore. Domestic projects represented 54 per cent of the order book.

The company is evaluating tenders and orders worth around Rs 2,00,000 crore, predominantly in T&D. KEC won its first transmission-line order for power evacuation to a data centre in western India, is pursuing HVDC packages and has entered the Middle East tower-supply market.

SAE Towers received about Rs 1,700 crore of orders year to date, nearly four times the year-ago level. This included the company’s largest-ever US tower-supply order, while SAE’s order book plus L1 positions exceeded Rs 3,800 crore.

FY26 Financial Performance

For FY26, KEC’s revenue grew 7.6 per cent to Rs 23,505.54 crore, led by T&D and cables and conductors. T&D, including SAE Towers, contributed around Rs 15,883 crore, or 68 per cent of revenue, compared with 59 per cent in FY25.

FY26 operating profit increased 11.1 per cent to Rs 1,869.27 crore, while operating margin improved by around 30 basis points to approximately 8.0 per cent. Profitability was nevertheless constrained by labour shortages, delayed payments in water projects, legacy metro and transportation project closure costs, and Middle East supply-chain disruption.

Capital Expenditure and Cable Business

KEC plans capital expenditure of Rs 350 crore in FY27 and Rs 400 crore in FY28 for tower facilities and cable capabilities. Cable revenue rose 22.8 per cent to Rs 2,217 crore in FY26 and increased 56.9 per cent year on year to Rs 601 crore in Q1 FY27.

Existing aluminium-conductor capacity can support around Rs 3,000 crore of revenue. New elastomeric and E-beam cable facilities are intended to broaden applications in defence, railways, shipping and industry.

CD Research notes that the existing cable mix is commoditised and generates low-single-digit margins. This leaves potential for improvement as speciality cables scale.

Earnings Outlook

CD Research estimates revenue growth of 13.1 per cent in FY27E and 11.3 per cent in FY28E. The broker estimates cumulative FY26–28E revenue of Rs 79,652 crore and cumulative PAT of Rs 2,281 crore.

Key Risks

• Sustained geopolitical disruption in West Asia.
• Higher freight and input costs.
• Shipment and bought-out-equipment delays.
• Right-of-way bottlenecks.
• Slow collections from water projects.
• Labour shortages.
• Delayed closure of legacy projects.

The broker also flags that expected working-capital moderation has been disappointed previously. Debt reduction depends on receipts from Afghanistan, water projects and metro dues.