Kotak sees recovery potential in KEC International despite steep decline

Kotak Institutional Equities has turned optimistic on KEC International despite the company's stock tumbling over 60 percent in the past year, upgrading the infrastructure engineering firm to 'Add' with conviction that near-term headwinds are being offset by structural tailwinds.

The upgrade reflects growing confidence in KEC International's cables and wires business, which analysts believe is gaining traction amid rising demand for electrical infrastructure across India. The segment is viewed as a significant growth driver as the company pivots toward higher-margin product categories.

Beyond its core operations, the company's substantial project pipeline in India's transmission and distribution sector presents a compelling medium-term opportunity. With the government prioritizing grid modernization and renewable energy integration, KEC International is positioned to benefit from substantial capex spending in the power sector.

The 60 percent annual decline in the stock price has created what the brokerage views as a valuation opportunity, with the company's fundamentals not necessarily reflecting the magnitude of the sell-off. Analysts project that execution on existing contracts and new project wins should catalyze recovery in the coming quarters.

For investors, the upgraded rating suggests that despite near-term volatility and macro headwinds, KEC International's structural advantages and market positioning warrant accumulation at depressed valuations.