Accumulate Kalpataru Projects International; target of Rs 1413: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Kalpataru Projects International

Kalpataru Projects International (KPIL) reported weaker quarterly performance with standalone revenue growth of 2.8% YoY and EBITDA margin declining by 23bps YoY to 8.4%. Standalone operations were affected by labor shortages due to general elections. Net working capital days increased to 124 vs 106 days in Q1FY24. Management continues to target <100 NWC days and has guided for revenue growth of 20%+ and PBT margin between 4.5-5% in FY25. Order inflow outlook remains strong across T&D, B&F and Water. The company will remain selective in order booking in Railways given the intense competition. Execution ramp up across segments will drive growth and profitability. 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. The stock is trading at a P/E of 28.8x/17.8x on FY25/26E core-EPS. We value the core business at a PE of 18x FY26E (16x FY26E earlier). Upgrade to ‘Accumulate’.

Outlook

We revise our FY25/FY26E EPS estimates by -0.3%/+3.7%, factoring in execution ramp up in T&D, Water, B&F and Saudi Aramco project in O&G segment and upgrade the rating to ‘Accumulate’ from Hold with a revised SoTP-based TP of Rs1,413 (Rs1,211 earlier).

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Kalpataru Projects International - 010724 - prabhu