KEC International Limited — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

KEC International delivered a strong Q1 FY26 performance characterized by robust top-line growth and significant bottom-line expansion. The T&D business remains the primary engine, benefiting from a surge in domestic and Middle Eastern (specifically Saudi Arabia) demand. While the Civil segment faced headwinds from labor shortages and payment delays in water projects, management expects a recovery in H2, supported by a record order book and aggressive debt reduction targets.

Highlights

  • Revenue reached ₹5,023 crores, reflecting an 11% YoY increase, primarily driven by T&D execution.

  • EBITDA grew 19% YoY with margins expanding 50 bps to 7.0%.

  • PAT stood at ₹125 crores, a significant 42% YoY growth, outpacing EBITDA growth due to lower interest and depreciation.

  • Order book remains robust at ₹34,409 crores; including L1 positions, the total exceeds ₹40,000 crores.

  • T&D segment contribution to total revenue increased to 63% from 55% in the previous year.

  • Net debt (including acceptances) reduced by ₹250 crores YoY to ₹5,348 crores despite revenue growth.

  • Management guided for an 8% to 8.5% EBITDA margin for FY26 and closer to 10% for FY27.

Concerns

  • Payment Delays in Water Segment

Key financials

  1. Revenue ₹5,023 Cr +11%YoY
  2. EBITDA Margin 7%
  3. PAT ₹125 Cr +42%YoY
  4. Net Debt ₹5,348 Cr -4.5%YoY
  5. Order Book ₹34,409 Cr
  6. Interest Expense 3%

What they filed

Q1 FY27: revenue down 3.3%, net profit down 98.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,484 4,758 6,048 4,030 4,949 +10%4,808 +1%5,260 −13%3,898 −3%
EBITDA230 281 352 197 308 +34%276 −2%273 −22%156 −21%
Net profit58 73 161 37 106 +82%39 −47%247 +53%1 −99%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹4,951 Cr Total
  • T&D (Total) ₹3,157 Cr 63.8%
  • Civil ₹940 Cr 19.0%
  • Railways ₹471 Cr 9.5%
  • Cables ₹383 Cr 7.7%

Guidance & targets

Margin

  • EBITDA Margin Margin · FY26 · High confidence 8% to 8.5%
    So for FY '26, we have actually guided at 8% to 8.5% already, okay? So I think I don't see any major issue at least in meeting the lower end of it.

    — Vimal Kejriwal, MD & CEO

  • EBITDA Margin Margin · FY27 · Medium confidence 10%
    So FY '27, we will be probably reaching closer to 10%

    — Vimal Kejriwal, MD & CEO

Debt

  • Net Debt Level Debt · by year-end FY26 · High confidence ₹4,500 crores
    But overall, for the year as a whole... debt will translate to something around INR4,500 crores of debt level by the year-end despite a 15% growth on the top line.

    — Rajeev Aggarwal, CFO

Other

  • Net Working Capital Days Other · by year-end FY26 · High confidence 110 days

    Previously 128 days → 110 days

    which is why we have been very comfortable in saying that the net working capital, which is today 128 days will probably come down to 110 days is what we are still committing.

    — Vimal Kejriwal, MD & CEO

Revenue

  • Renewables Revenue Revenue · next 2-3 years · Medium confidence ₹3,000 - ₹4,000 crores
    And I think in the next 2 to 3 years, we are expecting this business to be -- from INR3,000 crores to INR4,000 crores is what we expect it to be.

    — Vimal Kejriwal, MD & CEO

Risks & concerns

  • Payment Delays in Water Segment

    high

    Significant outstanding receivables (~₹800 crores) in the Jal Jeevan Mission projects are impacting working capital and civil segment growth.

    Both acknowledged

  • Labor Shortages

    medium

    Faced a 30-35% labor shortfall in June, which has improved to 10% but still impacts T&D erection gangs for large 765kV lines.

    Management acknowledged

  • Competitive Intensity in UAE

    low

    Management noted some increase in intensity in UAE, though Saudi Arabia is seeing a reduction in bidders for large orders.

    Management acknowledged

Areas of evasion (2)

  • Specific EBITDA/PAT for Asian Cables (redirected to IR)
  • Exact quantification of revenue loss due to labor shortage (called it 'difficult to say')

Q&A highlights

3 direct
Standalone Margin Dip Direct
One is our international business, which is housed in UAE and all that is doing very well. Secondly... our civil margins -- you saw a degrowth in the civil revenue. So because of which on the leverage impact, we had a much lower margins in civil.

Explains the disconnect between consolidated margin improvement and standalone margin pressure due to segment mix and fixed cost under-absorption.

Asked by Parikshit, HDFC Securities

Power Grid Bribery Case Impact Direct
I don't think it's going to impact our T&D growth in any manner... almost 50% or more orders are now going into non-PGCIL... And I'll say almost 80% of [L1 pipeline] is in international T&D market.

Management downplays the risk of being barred by PGCIL by highlighting their diversification into private TBCB projects and international markets.

Asked by Renu Baid, IIFL Capital Services

Water Segment Receivables (Jal Jeevan Mission) Direct
We have received around INR257 crores in the first quarter... we've got around INR50 crores this month also. So the money is flowing... not flowing in, but trickling in some parts.

Addresses a major sector-wide concern regarding stuck payments in government water projects, indicating a slow but positive recovery.

Asked by Vaibhav Shah, JM Financial

2 min read 5 chapters

Detailed narrative

T&D Dominance and Middle East Tailwinds

The T&D business grew by 26% YoY, now contributing 63% of total revenues. Management highlighted Saudi Arabia as a key growth driver, noting a reduction in competitive intensity for large-value orders. The segment maintains a healthy double-digit EBITDA margin and holds a massive ₹26,000 crore order book plus L1 position, providing strong visibility for the next two years.

Civil Segment Execution Hurdles

Civil revenue of ₹940 crores was impacted by a 30-35% labor shortage in June and delayed payments in the water (Jal Jeevan) segment. Despite these headwinds, the segment secured ₹2,100 crores in new orders, including a landmark entry into the semiconductor EPC space and a premium 70-story residential project. Management expects civil margins to improve as they pivot toward larger ticket-size orders (>₹500 crores) and reduce the number of active sites.

Aggressive Deleveraging Strategy

KEC is focused on reducing net debt from ₹5,348 crores to ₹4,500 crores by the end of FY26. This will be achieved through a reduction in Net Working Capital (NWC) from 128 days to 110 days. Key levers include the liquidation of cable inventory, collection of back-ended payments from three completed metro projects, and the anticipated recovery of ₹800 crores in water segment receivables.

Renewables and New Energy Pivot

The Renewables business saw 87% growth, albeit on a small base, with revenues of ₹136 crores. Management is bullish on scaling this to ₹3,000-₹4,000 crores in the next 2-3 years. They are selectively bidding for solar, wind, and Battery Energy Storage Systems (BESS), while consciously avoiding module supply risks to protect margins.

Railway Segment Realignment

The Railway business has seen a revenue decline over the last three years (from ₹4,000 crores to ₹2,500 crores) as the company shifts focus from conventional electrification to high-tech areas like Kavach and international signaling projects. Management expects a 'bottoming out' in this segment, with growth returning from Q2 FY26 onwards as new international bids in the Middle East materialize.

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