Accumulate Kalpataru Projects International; target of Rs 1368 Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Kalpataru Projects International

We revise our FY25/FY26E EPS estimate by -12.3%/-15.9%, due to delayed collection in the Water business impacting revenue. Kalpataru Projects International (KPIL) reported healthy quarterly performance with standalone revenue growth of 7.6% YoY and EBITDA margin improvement of 39bps YoY to 8.4%. Strong execution of a robust order book across various segments contributed to revenue growth, although delayed collections negatively impacted the Water business. Net working capital (NWC) days increased to 118 vs 104 days in Q2FY24; however, moderating working capital intensity will help reduce NWC days. Demand outlook remains robust in T&D, B&F and Water sectors, while execution ramp-up will aid growth in the O&G segment. The company will remain selective in order booking in Railways. The management continues to guide for a PBT margin of 4%-4.5%, while aiming to reduce NWC days to below 100. We remain positive on KPIL in the long run owing to 1) strong order pipeline across segments, 2) focus on geographical expansion for segments such as Water, Railways, Civil etc. 3) increasing pre-qualification for large contracts and 4) operational & cost synergies arising from merger with JMC.

Outlook

The stock is trading at a P/E of 30.7x/19.8x on FY25/26E core-EPS. We roll forward to SepFY26E and maintain ‘Accumulate’ rating with a revised SoTP-based TP of Rs1,368 (Rs1,413 earlier) valuing the core business at a PE of 18x on Sep-FY26E (18x on FY26E earlier).

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Kalpataru Projects International - 30102024 - prabhu