Buy Kalpataru Projects International; target of Rs 1500: Motilal Oswal

Motilal Oswal's research report on Kalpataru Projects International

Kalpataru Projects’ (KPIL) 2QFY26 performance was in line with our estimates as strong execution offset the impact of slightly lower margins. Revenue growth was driven by strong execution across T&D, B&F, and the oil & gas division. Prospect pipeline for KPIL remains strong across T&D and buildings & factories, while the company continues to be cautious on water and railways projects. With a strong order book of INR647b and a fairly diversified mix across better-margin projects, we expect KPIL to benefit from 1) execution ramp-up from the existing strong order book, 2) margin improvement, 3) comfortable working capital, and 4) divestment of non-core assets. We marginally cut our estimates by 8%/2%/2% for FY26/27/28 to bake in the slightly lower margin and lower other income. The stock is currently trading at attractive valuations of 17.1x/14.7x P/E on FY27/28E earnings. Reiterate BUY with a revised SoTP-based TP of INR1,500, valued at 18x P/E on Dec’27 estimates for the core business.

Outlook

KPIL is currently trading at 17.1x/14.7x P/E on FY27/28 earnings. Reiterate BUY with a revised SoTP-based TP of INR1,500, based on 18x P/E for the core business.