IGI Logo

Kalpataru Projects International’s (KPIL) 1QFY24 standalone PAT at INR 1.26bn beats estimate of INR 1.2bn (consensus: INR 1.24bn) led by higher margins, other income and lower interest costs. Revenue/EBITDA grew by 15%/17% YoY to INR 36.2bn/INR 3.1bn. EBITDA margin expanded by 20bps YoY to 8.7% (estimate: 8%). Net debt increased by INR 7.1bn YoY/INR 5.4bn QoQ to INR 22.2bn as on June-23. NWC reduced sharply by 28 days YoY to 106 days. KPIL received consolidated order inflows of INR 74bn in YTD and targets inflows of INR 250bn for FY24 backed by strong pipeline across segments. Order backlog grew 28% YoY to INR 473bn as on June-23 (2.8x TTM revenues). KPIL has maintained its revenue growth guidance of 30% and PBT margin guidance of 4.5-5% for FY24. KPIL targets to monetize Vindhyachal BOOT asset by Dec-23 and liquidate majority of the inventory in Indore real estate project in FY24. Maintain BUY with revised price target of INR 750.

* Standalone earnings beat estimates led by higher margins and other income: Revenue grew by 15% YoY to INR 36.2bn and sharply below estimate of INR 39.9bn. However, EBITDA at INR 3.14bn was largely in-line with estimate of INR 3.2bn led by higher EBITDA margin (up 20bps YoY at 8.7%; estimate: 8%). Interest costs grew by 23% YoY to INR 750mn (estimate: INR 850mn). Other income declined by 56% YoY on high base (included dividend of INR 440mn from LMG) to INR 290mn (estimate: INR 200mn). Standalone PAT declined by 23% YoY to INR 1.26bn (estimate: INR 1.2bn).

* Consolidated backlog strengthens to INR 473bn; guidance maintained: KPIL received consolidated order inflows of INR 74bn in YTD and targets order inflows of INR 250bn for FY24. Order backlog grew by 28% YoY to INR 473bn (2.8x TTM revenues) as on June-23. KPIL maintained revenue growth guidance of 30% with PBT margin guidance of 4.5-5% for FY24. While net debt increased by INR 7.1bn YoY/INR 5.4bn QoQ to INR 22.2bn as on June-23, it targets to keep leverage at similar levels YoY in Mar-24.

* Monetization on track; Fasttel performance improves: KPIL targets to monetize Vindhyachal road asset by Dec-23. However, it will have to fund INR 700mn in FY24 towards principal repayment (o/s debt: INR 5.7bn). It also plans to sell majority inventory (expected collection of c.INR 2.6bn) in Indore real estate project in FY24. Fasttel posted losses in FY22/23 but turned PBT positive in 1Q and likely to be positive in FY24 as well. KPIL changed management team entirely and focus is on profitability rather than growth.

* Maintain BUY with revised price target of INR 750: We estimate robust revenue/EPS CAGR of 26%/34% over FY23-25E for KPIL on standalone basis. KPIL trades at 12.1x FY25E standalone EPS. Currently, c.47% of promoter holding (41.1%) is pledged towards the promoter’s real estate business, which acts as an overhang on the stock. Material reduction in these pledges can drive multiple re-rating. We value standalone EPC business at 13x FY25 EPS and investments in BOT assets, international subsidiaries and Indore real estate at INR 66/share. Maintain BUY with SoTP-based revised price target of INR 750.

* Key risk: Any materially adverse outcome of the recent IT raids on the company/group.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.jmfl.com/disclaimer

CIN Number : L67120MH1986PLC038784

Above views are of the author and not of the website kindly read disclaimer