Alpha | Kalpataru Projects International Ltd . – Equity Research Desk

Kalpataru Projects International Ltd. – Propelling Value Accretive Growth Globally

Kalpataru Projects International Limited (KPIL), incorporated in 1981 and headquartered in Mumbai, is a globally diversified Engineering, Procurement and Construction (EPC) company operating across six business verticals spanning energy and infrastructure. The company has presence across 76 countries with live projects in 30+ nations, and executes work across five continents, positioning it among the top EPC players globally in the T&D space outside China. KPIL employs over 10,900 people across 40+ nationalities. In-house capabilities span design, engineering, procurement, construction, and operations & maintenance, and are supported by one of the largest transmission tower manufacturing setups in the world with a commissioned capacity of 240,000 MTPA across two plants in India.

Products and Services

The company provides a broad range of services across its diversified business segments.

• Power T&D – Transmission lines, substation, transmission tower manufacturing, solar EPC, tower testing, green hydrogen & derivatives.
• Oil & Gas – Process pipeline, cross country pipeline, refineries & fertiliser plants.
• Buildings and Factories – Residential and commercial buildings, data centres, airports, industrial plants and factories.
• Water and Irrigation – Water supply, irrigation, desalination, intake and treatment etc.
• Urban Infra – Roads and highways, elevated metro rail, tunnelling, flyovers, metro rail etc.
• Railways – Track laying, signalling and telecom, stations facility, rail over bridges, etc.

Subsidiaries – As of FY25, the company has 22 subsidiaries and 1 joint venture.

Investment Rationale

• Strong Order Visibility Anchored by Core Segments – The company’s robust order book of Rs.63,287 crore provides healthy multi-year revenue visibility, supported by Rs.19,456 crore of order inflows in FY26 YTD, ensuring sustained execution momentum over the next three years. With ~70% of the order book concentrated in the T&D and B&F segments – which continue to drive scale and profitability – recent wins reflect strong positioning in large, strategic projects across these core verticals. Order inflows remain largely domestic-led (74%), complemented by international diversification (26%), while additional L1/favourably placed projects of ~Rs.7,000 crore offer near-term conversion potential. Notably, the order book has doubled over the past four years, underlining consistent project wins and reinforcing long-term growth visibility.

• Strengthening Balance Sheet Supporting Scalable Growth – The company continues to enhance its balance sheet strength through improving working capital discipline and prudent debt management, supported by better collections from the water business and steady execution of large residential projects. Net working capital has improved to 79 days at the consolidated level and 97 days at standalone thereby outperforming the year-end target of 100 days, reflecting disciplined bidding and timely project delivery. Consolidated and standalone net debt declined by 29% and 16% QoQ to Rs.2,240 crore and Rs.1,849 crore respectively as of December 2025, driven by improved operational performance and cash flow visibility, with further reduction expected in Q4. Additionally, the divestment of the Vindhyachal Road asset in January 2026 signals a strategic shift away from non-core businesses, enabling capital redeployment into core EPC segments and supporting capital return ratio improvement.

• Strong Segmental Performance Driving Execution Momentum – The company continues to build strong traction across its core T&D and B&F segments, supported by robust order inflows and healthy execution. The T&D business remains a key growth driver, with order backlog exceeding Rs.25,752 crore as of December 2025 (+12% YoY) and revenue growing 37% YoY in 9MFY26 to Rs.8,992 crore, led by strong execution across India and key international markets such as Sweden. Sustained investments in renewable integration and grid infrastructure, backed by an estimated Rs.90,000 crore annual capex pipeline in India by Power Grid Corporation of India Ltd, continue to strengthen visibility. The B&F segment has also delivered strong performance, with order inflows crossing Rs.10,911 crore in FY26 YTD and order book growing 40% YoY to Rs.18,596 crore, driven by wins in data centres, residential, healthcare and industrial projects. Additional growth support comes from the Oil & Gas segment (+58% YoY revenue growth) and Railways (+15% YoY), while improving collections in the water segment are expected to support recovery in execution momentum.

• Q3FY26 – During the quarter, the company reported consolidated revenue of Rs.6,665 crore, up 16% YoY compared to Rs.5,732 crore in Q3 FY25. EBITDA grew 7% YoY from Rs.479 crore to Rs.513 crore, though EBITDA margin contracted 70bps YoY to 7.7%. Net profit stood at Rs.149 crore, up 7% YoY from Rs.140 crore in Q3 FY25.

• FY25 – During FY25, the company reported consolidated revenue of Rs.22,316 crore, representing a ~14% YoY increase. EBITDA stood at Rs.1,834 crore, up 13% YoY, and profit after tax was recorded at Rs.567 crore, posting a growth of 10% YoY.

• Financial Performance – The 3-year revenue and net profit CAGR stands at 15% and 14% respectively between FY23-25. Notably, the company reported TTM revenue and net profit growth rates of 25% and 62%, respectively. The company has a debt-to-equity ratio of 0.69x, and the 3-year average ROE and ROCE are around 10% and 15% for FY23-25 period.

Industry

The Indian infrastructure and power transmission sector sits at the heart of the country’s economic transformation, underpinning key end-markets. India’s total installed electricity capacity reached 505 GW as of October 2025, with renewable energy now accounting for nearly 50% of the installed base including 129.9 GW of solar and 53.6 GW of wind – driving massive demand for new transmission and evacuation infrastructure. As of May 2025, transmission lines of 220 kV and above measured 4,94,994 circuit kilometres, and India plans to invest Rs.9,15,920 crore by 2032 exclusively in additional transmission lines to support its goal of nearly tripling clean power capacity. On the civil infrastructure side, India’s National Highways network expanded to 1,46,342 km in FY25 with 10,660 km constructed during the year, while Indian Railways earned a record Rs.2,62,000 crore (US$30.58 billion) in FY25 revenue with a budgetary CAPEX of Rs. 2,65,200 crore (US$31.43 billion) for FY26. India is expected to spend Rs.143 lakh crore (US$1,727 billion) on infrastructure across seven fiscals through 2030, more than double the Rs.67 lakh crore spent in the preceding seven years, positioning the country as one of the fastest-growing infrastructure markets globally.

Growth Drivers

• Infrastructure capex outlay – Union Budget 2025-26 raised the capital investment outlay for infrastructure to Rs.11,21,000 crore (US$128.64 billion), equivalent to 3.1% of GDP, with record allocations for roads and railways driving a sustained EPC project pipeline
• Power transmission boom driven by renewable scale-up – India’s 500 GW non-fossil fuel target by 2030 necessitates Rs. 9,15,920 crore (US$107 billion) in new transmission investments by 2032.
• Liberalised FDI and policy support – 100% FDI is permitted under the automatic route in the power sector, with cumulative FDI in construction infrastructure reaching Rs.3,15,768 crore (US$36.85 billion) between April 2000 and June 2025.

Peer Analysis

Competitors – IRB Infrastructure Developers Ltd, Techno Electric & Engineering Company Ltd, etc.

Compared to peers, KPIL demonstrates strong return ratios and superior earnings quality, with a CFO/PAT of 2.95x indicating consistent cash conversion relative to reported profits. The company’s diversified revenue-mix across six business verticals and geographies provides more stable performance through sectoral cycles, reducing dependence on any single end-market.

Outlook

The company remains on track to deliver its FY26 growth targets, supported by a stronger balance sheet, improving project mix and disciplined execution. The completed divestment of a non-core asset and continued reduction in promoter pledge reflect a sharper focus on capital efficiency and governance. With a steady inflow of higher-margin projects, PBT margins have already improved by 110 bps (consolidated) and 80 bps (standalone) in 9MFY26, ahead of full-year guidance. A robust order backlog, primarily in T&D and B&F, provides strong revenue visibility while supporting margin expansion. Net debt reduction and efficient working capital management continue to enhance financial flexibility despite Rs.500+ crore capex deployed during the year. The company expects ~25% revenue growth in FY26, along with earnings improvement of at least 100 bps at the consolidated level and 50 bps at standalone and remains confident of achieving consolidated EPS exceeding Rs.50 for the year.

Valuations

We believe the company offers a compelling play on margin-accretive growth backed by a strengthening balance sheet, improving project mix and strong execution visibility. We recommend a BUY rating in the stock with the target price (TP) of Rs.1,467, 26x FY27E EPS. We also encourage maintaining a stop-loss at 20% from the entry price to manage potential downside risk effectively.

SWOT Analysis

Disclaimer: Investments in the securities market are subject to market risks, read all related documents carefully before investing. Securities quoted here are exemplary, not recommendatory. Please consult your financial advisor before investing. Please note that we do not guarantee any assured returns for the securities quoted here.

Research disclaimer: Investment in the securities market is subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

For more details, please read the disclaimer.