Motilal Oswal has lowered its target price for KEC International to ₹365, citing execution challenges and weak financial performance. This update follows a difficult second quarter where net profit dropped 81% year-on-year. Investors are currently assessing the company's ability to turn its record order book into profitable growth while managing significant debt and ongoing legal investigations.
Brokerage firm Motilal Oswal has cut its price target for KEC International to ₹365. While the 'Buy' rating remains, the revision follows a challenging period for the infrastructure company. KEC International shares have faced selling pressure, currently trading near ₹316, close to their 52-week lows, reflecting market concerns following the company's recent quarterly results.
In its report for the quarter ending September 2026, KEC International saw its net profit fall 81% compared to the same period last year, down to ₹30 crore. Profit margins were squeezed significantly during the period, impacting the company's bottom line.
The central issue for investors is the gap between a record-high order book and actual delivery. The company currently holds orders worth nearly ₹39,946 crore. However, these orders are not translating into expected profits due to several roadblocks. Management has flagged supply chain disruptions, particularly in Middle Eastern projects, along with land acquisition delays that have pushed back execution timelines. These operational difficulties have effectively capped the company's ability to generate cash from its strong order pipeline.
The company's balance sheet is also under scrutiny. Total net debt, including acceptances, stands at approximately ₹7,793 crore. High working capital requirements—taking about 155 days to convert operations into cash—add pressure to the company's ability to fund projects efficiently. Additionally, the company is dealing with a legal investigation regarding a transmission project, for which a chargesheet has been filed. The financial impact of this legal matter remains uncertain, as noted by the company’s auditor.
Analysts are now adjusting their outlooks, anticipating that margins and working capital cycles may only start showing signs of stabilization and improvement from fiscal year 2028 onwards. For investors, the key monitorables will be the speed at which the company can clear these execution bottlenecks, manage its debt burden, and provide clarity on the outstanding legal investigation. The long-term view remains dependent on whether KEC International can improve its project execution efficiency to match the size of its order book.