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Rightly positioned

Kalpataru Projects (KPIL) is adequately positioned to benefit from improved ordering in the transmission and B&F segments and is looking to expand its presence in the oil and gas (O&G) segment. With an order book of INR666b as of 1QFY27 and strong order inflows of ~INR200b in YTDFY27, revenue visibility for next 2.5-3 years looks healthy. The company has also been able to improve its revenue mix, thereby resulting in better control over margin, working capital and net debt vs. its peers. With most of its noncore assets now out of the books and a strong balance sheet, management is focusing on strengthening its presence in high-growth areas and building capabilities for large projects. We retain BUY on KPIL with a revised SoTP-based TP of INR1,670 on roll forward, valuing the core business at 18x two-year forward earnings

Strong inflows from domestic and international boost revenue visibility

KPIL’s order inflows stood at INR77b in 1QFY27 and have ramped up since, with YTDFY27 inflows at ~INR200b (up 30% YoY from 1HFY26) – about two-thirds of the FY27 target of INR300b. These inflows have come from diverse segments such as power T&D, B&F and O&G. KPIL also won a major gas pipeline EPC order of ~INR40b in the UAE and continues to add overseas T&D and water mandates. Domestically, T&D and B&F remain the key drivers, with B&F backlog at INR196b and T&D backlog at INR296b as of 1QFY27. KPIL is also L1 in projects worth over INR120b, providing further visibility for inflows in 2HFY27. We maintain our estimates and build inflows of INR350b/INR395b for FY27/28, providing revenue runway over the medium term.

Building up O&G segment after T&D and B&F

KPIL is building up its O&G segment as a third growth leg after T&D and B&F. The Mar’24 order of USD907m from Saudi Aramco to lay over 800km of lateral gas pipelines is currently under execution. The O&G segment formed 6% of the INR666b order book as of 1QFY27. KPIL is planning to expand its presence in the segment and is qualified with large utilities in the Middle East (Saudi Arabia, Abu Dhabi, Kuwait, Qatar). It has recently bagged a large EPC contract (>INR40b) from a gas pipeline project in the UAE.

Favorable revenue mix

Most of the order inflows have come in T&D and B&F and the combined share of T&D and B&F in the overall order book was around 74% as of Jun’26. In both T&D and B&F, the company has built a strong presence across years and the margin profile is relatively better than railways and water. Water segment formed 11% of order book in 1QFY27, and the payment situation is also easing out from central and state authorities. Going forward, we expect T&D/nonT&D mix at 51%/49%.

Financial outlook

We expect KPIL’s growth to be driven by a healthy prospect pipeline (YTDFY27 inflows of ~INR200b and an order backlog of INR666b as of 1QFY27-end), improving execution, diversification in non-T&D segments, a stable-to-improving margin trajectory, and comfortable leverage. We estimate revenue/EBITDA/PAT CAGR of 14%/14%/18% over FY26-29.

Valuation and recommendation

We maintain our estimates with an EBITDA margin of around 8.8% for the years ahead. KPIL is currently trading at 20.1x/17.3x/14.6x P/E on FY27E/FY28E/FY29E earnings. We retain our BUY rating with a revised SoTP-based TP of INR1,670 on roll forward, valuing the core business at 18x P/E on Dec’28E EPS.

Key risks

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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