Skip to content

    K E C Intl.

    KECNeutral
    Construction·30 Jan 2026
    Management Summary

    KEC delivered strong revenue growth led by a 31% surge in its core T&D business, which now accounts for 67% of total revenue. However, the company faced significant headwinds in its Civil and Water segments due to labor shortages and payment delays, leading to a downward revision in margin guidance. While the order book remains robust at over ₹41,000 crores, debt levels have spiked, though management expects normalization by year-end.

    Highlights

    8

    • Record quarterly revenue of ₹6,001 crores, representing 12% YoY growth.

    • EBITDA margins expanded by 20 bps YoY to 7.2% in Q3; 9M margins at 7.1%.

    • Operating PAT reached ₹171 crores for Q3 and ₹457 crores for 9M FY26.

    • Year-to-Date (YTD) order intake stands at ₹19,300 crores, with T&D contributing 70%.

    • Total order book plus L1 position exceeds ₹41,000 crores.

    • Net debt including acceptances rose to ₹6,806 crores, primarily due to Saudi receivable timing and water project delays.

    • Management revised full-year EBITDA margin guidance downwards to 7% - 7.5% from previous 8% levels.

    • Labor shortages impacted Q3 revenue by an estimated ₹500 - ₹600 crores.

    Concerns

    2

    • Labor Shortages

    • Water Project Payment Delays

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹6,001 Cr+12%YoY
    2. 02EBITDA Margin7.2%
    3. 03Operating PAT₹171 Cr
    4. 04Interest Cost2.9%
    5. 05Order Book₹36,725 Cr

    Segment breakdown

    • T&D₹4,161 Cr67.5%
    • Civil₹923 Cr15.0%
    • SAE Towers₹525 Cr8.5%
    • Cables & Conductors₹556 Cr9.0%
    Donut· Share of Revenue

    Guidance & targets

    4
    CategoryTargetPriority
    Margin
    EBITDA Margin
    7% to 7.5%
    		Medium
    Debt
    Net Debt
    ₹5,500 crores
    		High
    Other
    Working Capital Days
    110 to 115 days
    		High
    Revenue
    Order Intake Target
    ₹35,000 crores
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Labor Shortages

    Shortage of 2,000 to 4,000 laborers impacting execution, particularly in Civil projects. — Management acknowledged

    high

    Water Project Payment Delays

    Muted payments from state governments (Odisha, MP) leading to a 'calibrated' (slowed) execution approach. — Both acknowledged

    high

    Metro Project Commissioning Delays

    Completed viaducts awaiting inauguration, leading to ongoing maintenance costs of ₹15-20 crores per month without revenue. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Specific names of Chinese components being imported.
    • Exact margin targets for FY27.

    Q&A highlights

    3

    “Because of the slowdown in Water, which is obviously a much higher margin... we have also, based on prudence, have started providing for some of these numbers.”

    Confirms that previous 8%+ margin targets are no longer achievable this fiscal due to execution delays and provisioning.

    asked by Vaibhav Shah

    2 min read5 chapters

    Detailed Narrative

    01

    T&D Segment Drives Growth Amidst Structural Shift

    The T&D business remains KEC's primary growth engine, delivering ₹4,161 crores in revenue for Q3, a 31% YoY increase. A significant structural shift is occurring in India, where 75% of orders are now coming from private players via the TBCB route, up from 45% last year. The business secured its largest-ever domestic order of ₹1,050 crores from a private developer, and the international pipeline remains robust across the Middle East and Africa.

    02

    Margin Guidance Reset Due to Execution Headwinds

    Management has lowered its FY26 EBITDA margin guidance to a range of 7% to 7.5%, down from previous expectations of 8% to 8.5%. This revision is attributed to slower progress in high-margin Water projects, closure costs for legacy metro projects, and delays in claim settlements. Additionally, labor shortages and design changes due to new seismic zone regulations in the NCR region have put further pressure on execution timelines and profitability.

    03

    Debt Levels and Working Capital Stress

    Net debt including acceptances stood at ₹6,806 crores as of December 31, 2025, an increase of over ₹1,200 crores YoY. This spike was driven by strong revenue growth, strategic inventory building, and a delay in receiving large payments from Saudi Arabia (which were subsequently received in early January). Management remains committed to reducing net debt to ₹5,500 crores by March 2026 and maintaining working capital between 110 and 115 days.

    04

    Civil Business Pivots to Buildings and Factories

    The Civil segment is undergoing a strategic shift, with 60-65% of its ₹11,000 crore order book now comprised of Buildings & Factories (B&F). Management is deliberately defocusing on low-margin road projects due to intense competition. Despite a ₹923 crore revenue performance in Q3, the segment faced a ₹500-600 crore revenue hit due to labor shortages, though the outlook remains positive with multiple orders in hospitals and industrial plants.

    05

    SAE Towers and International Recovery

    SAE Towers showed a robust recovery with 70% revenue growth in Q3, reaching ₹525 crores. The business has secured ₹1,250 crores in YTD orders, primarily from the North American market (Mexico/U.S.). With an order book and L1 position exceeding ₹2,600 crores, SAE now provides strong revenue visibility for the next two years and is operating at double-digit margins.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.