The company reported a consolidated net profit of Rs 22.1 crore in Q2FY14, up 34 percent, versus Rs 16.5 crore year-on-year (YoY). Total income stood at Rs 1,778 crore, up 6.6 percent, versus Rs 1,668 crore (YoY). Its EBITDA rose up 30.4 percent at Rs 112 crore compared to Rs 85.8 crore (YoY).
However, it is unlikely to see double digit margins , he added.
Chandak further highlighted that the second quarter is a seasonally weak quarter for infrastructure companies due to monsoon and the company is not facing any execution problems.
Meanwhile, KEC International hopes to clock 14-16 percent growth in sales for FY14.
Below is the edited transcript of Ramesh Chandak's interview with CNBC-TV18
Q: One thing that the street is quite positive is that they expect your operating margins to improve going forward. They improved quite a bit in Q2 and you have also indicated that your low margin legacy orders will also soon get completed, so overall in FY14 what is the expectation, how much the EBITDA margins can improve?
A: We are expecting EBITDA margins to be about 1 percent more than last year. Going forward, FY15 onwards, there will be a substantial improvement in the margin. This time we have some legacy contracts, which will get over by this year. In spite of that, our EBITDA margin should be about 1 percent more than last year.
Q: Revenue growth was muted last quarter. Our average has been about 22 percent but last quarter was only about 7 percent was that a one-off and will that be addressed as we go forward?
A: Quarter-to-quarter execution might change, but we are expecting around 14-16 percent growth and that should come according to us.
Q: You said that in FY14 margins will improve by 1 percent and FY15 it will be substantially higher, can they even touch the double-digit mark, your operating margins, in FY15?
A: No, I don't think so. They will not be double digit, but they will be in the range of 8-9 percent.
Q: Just to go back to Q2, did you have some execution problems and was that a bit of a one of in that case?
A: It is not a question of execution problem. It is a cycle of how you are executing, which contracts are coming to execution and because of the rainy season this year rainy season got extended not much work can be done. That impact is there.
KEC Intl stock price
On November 28, 2013, at 14:10 hrs KEC International was quoting at Rs 43.20, up Rs 0.35, or 0.82 percent. The 52-week high of the share was Rs 74.45 and the 52-week low was Rs 23.25.
The latest book value of the company is Rs 37.99 per share. At current value, the price-to-book value of the company was 1.14.
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