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Strong 2Q performance

Kalpataru Project (KPIL)’s 2Q result was ahead of our estimates due to better-thanexpected execution. Order inflows for 1HFY27 stood at a healthy INR239b, up 60% YoY, taking the total order book to INR718b, up 11% YoY. KPIL has been able to reduce its net debt and has managed its working capital cycle very well compared with other players in the industry. We tweak our estimates by 1%/1% for FY28/29 and expect itsrevenue/ EBITDA/PAT to clock a CAGR of 14%/14%/17% over FY26-29. We reiterate our BUY rating with a TP of INR1,650, valuing the core business at 18x two-year forward earnings.

Revenue and EBITDA in line; PAT beats our estimate

Revenue for the quarter stood at INR62b (+15% YoY). Growth was driven by strong execution across key segments barring water and railways. T&D/B&F/ O&G segment revenues were up 7%/20%/58% YoY. Water/Infrastructure segments revenues declined 4%/11% YoY. In railways, KPIL is focusing on project closures. Gross margin remained flat YoY at 24.1%. Absolute EBITDA grew 17% YoY to INR5.2b, while EBITDA margin expanded 10bp YoY to 8.4%. PAT increased 35% YoY to INR2.7b, vs. our est. of INR2.5b. A lower-thanexpected tax rate led to a beat on our PAT estimate by 7%. YTD order inflows for FY27 stood at INR239b, indicating order inflows of ~INR163b in 2QFY27 bringing the order book to INR719b as of Sep’26-end. OCF for 1HFY27 was positive at INR10b vs. negative OCF of INR4.4b in 1HFY26. FCF for 1HFY27 was positive at INR5.1b vs a negative INR8b in 1HFY26

Strong order intake

KPIL’s order book reached INR719b as of Sep’26, with YTD inflows rising to INR239b and an additional L1 position of ~INR50b. Order inflows have been very strong vs. our full year estimate of INR326b. The company expects bid submissions of more than INR500-700b across T&D, B&F, and O&G over the next six months. Given this, we believe the company may also surpass the guidance of INR300b of inflows, despite selective bidding. With ~2.5x years of revenue visibility at the current order backlog, we expect order inflows/ revenue to record a CAGR of 20%/14% over FY26-FY29.

T&D: Domestic wins anchor growth

T&D (ex-Brazil) revenue grew 8% YoY to ~INR60b in 1HFY27 (2Q: INR31b, 7% YoY). YTD orders stood at INR101b, with KPIL favorably placed for a further ~INR50b, and ~65% of these orders came from domestic clients. T&D bid submissions of INR150-200b are expected over the next two months, led by India, with a segmental growth expectation of 15-20%. We believe the pickup in domestic orders, after a dip in FY26, positions T&D up for faster growth as these orders enter execution over 2HFY27-FY28. We expect T&D to clock a revenue CAGR of 12% over FY26-29E, led by an order inflow CAGR of 15%.

Financial outlook and view

We revise our estimates by 1%/1% for FY28/FY29 and expect revenue/EBITDA/PAT to grow at a CAGR of 14%/14%/17% over FY26-29. The stock is trading at 20.7x/17.4x/14.8x P/E on FY27/28/29 earnings. Reiterate BUY with a revised TP of INR1,650, valuing the core business at 18x Sep’28E EPS.

Key risks and concerns

A slowdown in execution, lower-than-expected order inflows, a spike in commodity prices, and an increase in promoter pledges are some of the key concerns that can weigh on the financials and valuations of the company.

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