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T&D Business Gaining Traction; Order Book Provides Revenue Visibility

Est. Vs. Actual for Q1FY26: Revenue – INLINE; EBITDA Margin – MISS; PAT – MISS

Change in Estimates post Q1FY26 (Abs.)

FY26E/FY27E: Revenue: 0%/0%; EBITDA: -1%/0%; PAT: -3%/0%

Recommendation Rationale

• Healthy Order Backlog Ensuring Revenue Visibility: As of 30 th June, 2025, the company's order book stands at Rs 34,409 Cr. This, combined with an order inflow of Rs 5,517 Cr, provides strong revenue growth visibility for the next 18-24 months. Additionally, KEC holds the L1 position in projects valued at over Rs 40,000 Cr, primarily in the T&D business. With its established execution track record and the government's increasing focus on infrastructure development, the company is well-positioned for steady revenue growth, projecting a 15% CAGR from FY25 to FY27E.

• Encouraging Pipeline of Tenders Enhances Order Inflow Prospects: A substantial tender pipeline of Rs 1,80,000 Cr ensures a healthy order intake for the company in the foreseeable future. Out of the Rs 1,80,000 Cr bid pipeline, Rs 30,000 Cr is from domestic T&D, Rs 60,000 Cr is from international T&D, and the balance is from non T&D. For FY26, KEC has set a target of Rs 30,000 Cr in order inflow, out of which Rs 5,517 Cr has already been achieved, maintaining its growth momentum.

• Strengthening Margins Leading to Better Bottom-line Performance: Despite labour shortage and delay in receivables from the water segment, EBITDA margins have improved, primarily driven by the execution of international T&D projects and high-margin assignments. We expect margins to improve to 9% in FY27. Interest expense has lowered due to a reduction in debt, which has further increased profitability. We pencil in EPS CAGR of 55% over FY25-27E.

Sector Outlook: Positive

Company Outlook & Guidance: The management has guided for 15% revenue growth with EBITDA margins in the 8-8.5% range in FY26. The order inflow target for FY26 is Rs 30,000 Cr.

Current Valuation: 20x FY27 EPS (Earlier Valuation: 20x FY27 EPS)

Current TP: Rs 1,030/share (Earlier TP: Rs 1,030/share)

Recommendation: We maintain our BUY rating on the stock.

Financial Performance

KEC International (KEC) reported a positive set of numbers in Q1FY26, with revenue at Rs 5,023 Cr (up 11% YoY), EBITDA of Rs 350 Cr (up 29% YoY), and PAT of Rs 125 Cr (up 42% YoY). The company’s EBITDA margin stood at 7% in Q1FY26, compared to 6% in Q1FY25, vs our estimate of 7.4%. Its order book composition is as follows: 60% T&D, 28% Civil, 9% Transportation, 1% Renewables, 1% Oil & Gas, and 1% Cables. The domestic-to-international order book split stood at 65:35. The T&D and non-T&D share in the order intake is currently 59:41.

Outlook:

KEC has a well-diversified and robust order book and an L1 position, providing healthy revenue visibility for the next 18-24 months. Moreover, the favourable government emphasis on T&D and the extension of JJM till 2028 in the Union Budget bode well for the company moving forward.

Valuation & Recommendation:

The stock is currently trading at 25x/17x FY26E/27E EPS. We maintain our BUY rating on the stock and value it at 20x FY27E EPS with a TP of Rs 1,030/share, implying an upside of 20% from the CMP.

Key Concall Highlights

• Order Book: As of 30 th June, 2025, the company’s order book stands at Rs 34,409 Cr. The company has received an order inflow of Rs 5,517 Cr in Q1FY26, marking a % YoY increase. It has set a target for an order inflow of Rs 30,000 Cr in FY26. The order intake composition is as follows: 59% T&D, 38% Civil, 1% Transportation, 1% Renewables, and 3% Cables. The current T&D to non-T&D share in the order intake stands at 59:41.

• Bidding Pipeline: The company’s combined order book and L1 position is over Rs 40,000 Cr, with an active bidding pipeline exceeding Rs 1,80,000 Cr.

• Capex: The company has provided Capex guidance of Rs 400+ Cr for FY26.

• Borrowings and Net Working Capital: As on 30th June, 2025, net debt, including acceptances, stands at Rs 5,348 Cr, even with a revenue increase on a trailing 12-month basis. The net working capital (NWC) has increased to 128 days in Q1FY26.

Segmentwise Performance Q1FY26

T&D

• The company reported the revenue of Rs 3,157 Cr, marking a robust 26% YoY growth in its T&D segment. Order intake stood at over Rs 3,200 Cr across India, the Middle East, and the Americas. It maintains a robust orderbook and L1 of Rs 26,000 Cr. The management plans to actively participate in this segment and has bid for several HVDC opportunities in both domestic and international markets. An inquiry is underway regarding an alleged bribery case involving the company and Power Grid officials. We await further clarity on the outcome and will keep stakeholders informed.

• SAE: In SAE, the business reported revenue of Rs 359 Cr for the quarter, up 4% YoY.

Non-T&D

• Civil: The segment generated revenue of Rs 940 Cr, execution impacted by continued labour shortages and delayed payments. Moreover, collections have started in the water segment. The company strengthened its footprint in the metals and mining segment with a repeat order for an upstream project for a steel plant. Notably, it has secured two landmark orders in the buildings and factories vertical. The first represents the largest order in terms of value secured by the company to date, and the second involves building the tallest structure it has ever undertaken. This marks its entry into the premium high-rise residential segment featuring towers rising over 70 stories above ground. The order inflow is over Rs 2,100 Cr with an order book plus L1 of Rs 10000 Cr. KEC is confident that the Civil business will continue to be a key growth driver.

• Transportation: The company reported revenue of Rs 471 Cr. The management plans fast-track completion of existing projects, optimise working capital and selectively bid for high-quality opportunities in both domestic and international markets.

• Cables: The company reported revenue of Rs 383 Cr. The capital investment for EBeam and Elastomeric cables is progressing as planned, and the management expects commercial production to commence by the end of this FY26.

• Oil & Gas: The company secured a second international order for a terminal station in Africa. The management will be focusing on the international market, considering the low tender pipeline and extremely competitive scenario in India.

• Renewables: The company reported revenue of Rs 136 Cr, up 87% on a YoY basis. KEC is executing two large solar projects in Karnataka and Rajasthan.

Key Risks to Our Estimates and TP

• Lower order intake may impact revenue growth.

• A rise in commodity prices may impact margins.

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