Kalpataru Projects execution and record order book reinforce FY27 growth outlook

Investment View and Target Price

Anand Rathi Research retained its BUY recommendation on Kalpataru Projects after a strong start to FY27, supported by execution across its core EPC businesses, record order-book visibility and a materially improved standalone balance sheet. The broker raised its SOTP-based target price to Rs 1,598 from Rs 1,516, while retaining its FY27E and FY28E revenue and EBITDA estimates.

Anand Rathi expects revenue and EBITDA CAGR of about 14 per cent and 17 per cent, respectively, over FY26 to FY28E. Growth is expected to be supported by operating leverage, an improved business mix and balance-sheet strengthening.

Q1 FY27 Financial Performance

Kalpataru Projects reported strong standalone Q1 FY27 results, with revenue, EBITDA and reported PAT increasing about 9 per cent, 14 per cent and 32 per cent year-on-year, respectively.

EBITDA margin expanded to 8.9 per cent, supported by a favourable business mix and operating leverage. Gross margin increased to about 25.6 per cent, while finance cost declined to about Rs 0.67bn from about Rs 0.84bn in Q1 FY26. Revenue growth was driven by Buildings and Factories, Oil and Gas, and Urban Infrastructure, while T&D remained the largest revenue contributor.

Order Book and Revenue Visibility

The consolidated order book stood at a record approximately Rs 666bn at end-June 2026. This represented about 2.5 times trailing-12-month revenue and provided visibility for the next two to three years.

FY27 year-to-date order inflow was about Rs 76.7bn, with a further roughly Rs 73bn to Rs 75bn in L1 or favourable positions. The domestic-international mix of the consolidated order book was 61:39.

Management retained its FY27 order-inflow guidance of about Rs 300bn and indicated that this could be revised upwards after Q2 FY27, depending on award timing. It also retained guidance for about 15 per cent FY27 revenue growth and more than 75 basis points of PBT-margin expansion.

Business Outlook and Margin Drivers

Management expects T&D, Buildings and Factories, and Oil and Gas to be key contributors to margin improvement.

Transmission and Distribution

T&D secured over Rs 41bn of FY27 year-to-date orders and had more than Rs 50bn of L1 or favourable opportunities. Domestic opportunities are supported by electricity demand, renewable-energy evacuation, grid expansion, HVDC and GIS projects.

Buildings and Factories

Buildings and Factories revenue rose about 15 per cent year-on-year, while year-to-date inflows exceeded Rs 28bn and the order book was above Rs 196bn. Management cited opportunities across residential projects, industrial capex, offices, data centres, airports and urban development. Typical EBITDA margins in the business are 10-12 per cent.

Oil and Gas

Oil and Gas revenue rose about 18 per cent year-on-year to about Rs 6.9bn, driven by execution of Saudi projects. The Middle East tender pipeline remains active, although several awards have been delayed.

Balance Sheet and Working Capital

Standalone net debt was about Rs 7.5bn, down 61 per cent year-on-year despite about Rs 2.5bn of Q1 FY27 capex. Net working-capital days improved to 94 from 106 a year earlier, aided by collections in the Water business.

Management is guiding for around 100 working-capital days in FY27 and about Rs 8bn of capex. Water collections improved, but billed and unbilled receivables remained elevated at about Rs 15bn. The company plans to avoid new domestic Water bids for six to nine months until collections improve.

Fasttel Brazil has largely been wound down, while Linjemontage Sweden had an order backlog of about Rs 42.6bn.

Valuation and Earnings Estimates

Anand Rathi values standalone operations at 18 times FY28E EPS and values investments in businesses and SPVs at liquidation or invested value.

Key Risks and Monitorables

• Supply-chain bottlenecks, promoter pledge and scarcity of labourers.
• Fixed-price projects remain exposed to movements in steel and diesel prices.
• Middle East supply-chain disruption and delays in order awards remain monitorable.