Buy Kalpataru Power Transmission; target of Rs 670: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Kalpataru Power Transmission

The merged entity of Kalpataru Power Transmission (KPP) saw revenue growth of 9.8% YoY to Rs35.1bn, led by decent execution in domestic and international geographies. EBITDA margin contracted by 32bps YoY to 8.7%. Order pipeline remains healthy with strong traction in domestic Water and B&F, International T&D and Oil & Gas. Interest cost synergies of ~Rs500-700mn will accrue from the merger in FY24. Further, management has guided for revenue growth of ~15% in FY23 and 20%+ in FY24 & FY25 each. We remain positive on KPP’s in the long run owing to 1) robust order backlog, 2) strong export market outlook, 3) growing opportunities in water and commercial real estate, along with government’s thrust on capex in civil infrastructure, railways, and energy transition, 4) post-merger cost & operational synergies, and 5) deleveraging via non-core asset monetization. The stock is currently trading at a PE of 14.0x/10.8x/8.6x FY23/24/25E EPS. Upgrade to ‘BUY’

Outlook

We estimate FY23/24/25E EPS at Rs35.3/45.7/57.3 and upgrade to ‘Buy’ from Accumulate with TP of Rs670 (Rs549 earlier), after factoring in robust order inflows along with merger synergies materializing from Q1FY24.

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Kalpataru Power Transmission - 14 -02 - 2023 - prabhu