Buy Kalpataru Projects Ltd for the Target Rs 1,650 by Emkay Global Financial Services Ltd
KPIL’s operating performance was in line with our estimates, with standalone revenue at Rs62.1bn (+14.7% yoy; Emkay: Rs59.9bn). EBITDA stood at Rs5.2bn (+17% yoy; Emkay: Rs5.1bn), with a margin of 8.4% (+17bps yoy; Emkay: 8.6%). NWC days improved to 81 from 102 in 2QFY26, and net debt decreased by Rs17.9bn yoy to ~Rs4bn. YTD order inflow reached ~Rs239bn, with an additional Rs50bn in L1 positions. The company ended 2QFY27 with its highest-ever order book of ~Rs719bn, providing 2.5 years of revenue visibility. The management reaffirmed its FY27 guidance for at least 15% revenue growth on an annualized basis and PBT margin improvement of >75bps (1HFY27 PBT margin improved by 100bps). However, given healthy prospects (Rs500-700bn over the next 3-6months), the management revised up its order inflow guidance from Rs300bn to Rs350-360bn. Key segments set to drive growth are T&D, B&F, Oil & Gas, and Urban Infra, providing a well-diversified business mix that would support strong execution momentum while sustaining profitability, in our view.
2QFY27 – In-line performance
KPIL’s standalone revenue for 2QFY27 grew 14.7% yoy to Rs62.1bn, on the back of robust execution and a strong opening order book. Key segments, T&D (up 6.6% yoy), B&F (up 19.6% yoy), Oil & Gas (up 58.1% yoy), led revenue growth. However, Water (- 3.7% yoy) and Urban Infra (-10.8% yoy) reported de-growth. EBITDA margin expanded by 17bps yoy to 8.4%, reflecting better execution and improved business mix. Absolute EBITDA grew 17% yoy to Rs5.2bn. Interest cost as a % of sales improved to 1.3% (vs 1.9% in 2QFY26), and NWC days improved to 81 from 102 in 2QFY26. Overall, adjusted PAT grew 34.6% yoy to Rs2.7bn
Order inflow guidance revised up by Rs50-60bn to Rs350-360bn
KPIL’s YTD order inflow stood at ~Rs239bn, with an additional L1 position of Rs50bn. Key segments: YTD, T&D secured orders of ~Rs101bn, while B&F secured ~Rs80bn of orders; Oil & Gas also gained momentum following the large Middle East win. Underpinned by strong YTD ordering and healthy prospects across T&D, B&F, and Oil & Gas (Rs500-700bn of tenders over the next 3-6months), the management raised its FY27 order inflow guidance to Rs350-360bn from Rs300bn. Order backlog remains healthy at ~Rs719bn (BB ratio: 2.5x TTM revenue).
View and valuation
We remain positive on KPIL over the long-term, owing to its focus on securing large highmargin orders, improving execution, maintaining effective working capital control, exiting non-core businesses, and expanding businesses other than T&D and B&F into international markets. The stock is trading at a PER of 16x/14x FY27/28E EPS. We maintain BUY with an unchanged TP of Rs1,650 (18x Sep-28E EPS)
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