Skip to content

    Kalpataru Proj.

    KPILGood
    Construction·29 Oct 2024
    Management Summary

    KPIL delivered a steady Q2 FY25 performance characterized by strong growth in T&D and Oil & Gas, offsetting a significant 43% decline in the Water business due to collection delays. Management is pivoting towards higher-margin projects, with consolidated EBITDA margins approaching the 9% mark. While revenue guidance was slightly tempered from '20%+' to 'slightly lower' due to the Water segment, the record order book and healthy L1 position provide strong visibility for FY26.

    Highlights

    8

    • Consolidated revenue grew 9% YoY to ₹4,930 crores in Q2 FY25.

    • Consolidated EBITDA margin expanded by 70 bps YoY to reach 8.9%.

    • Order book stands at a record ₹60,631 crores, with H1 FY25 inflows of ₹11,865 crores.

    • Oil & Gas segment reported explosive revenue growth of 170% YoY due to Saudi Aramco project execution.

    • T&D revenue grew 25% YoY, driven by robust domestic and international execution.

    • Net Debt declined to ₹3,668 crores (Consol) and ₹2,973 crores (Standalone) as of September 2024.

    • Working capital intensity moderated, with consolidated WC days declining by 5 days to 98 days.

    • Board approved a QIP fundraise of up to ₹1,000 crores to support growth and capex.

    Concerns

    1

    • Receivable delays in Water segment

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹4,930 Cr+9%YoY
    2. 02EBITDA₹438 Cr+18%YoY
    3. 03EBITDA Margin8.9%
    4. 04PAT₹126 Cr+40%YoY
    5. 05Order Book₹60,631 Cr

    Segment breakdown

    • T&D₹22,269 Cr39.2%
    • B&F₹13,000 Cr22.9%
    • Oil & Gas₹8,474 Cr14.9%
    • Water₹10,500 Cr18.5%
    • Urban Infra₹2,600 Cr4.6%
    Donut· Share of Order Book

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    Order Inflow
    ₹22,000 to 23,000 crores
    		High
    Profitability
    PBT Margin
    4.5% to 5%
    		Medium
    Revenue
    Revenue Growth
    Slightly lower than 20%
    		Medium
    Other
    Working Capital Days (Standalone)
    Below 100 days
    		High
    Other
    Interest Cost as % of Sales
    Below 2%
    		Medium

    Risks & concerns

    5
    RiskSeverity

    Receivable delays in Water segment

    Two states have outstanding payments for >180 days, impacting execution and cash flow. — Management acknowledged

    high

    Sequential increase in finance costs

    Interest costs rose due to higher borrowing early in the quarter and 9-10% interest on customer advances. — Analyst acknowledged

    medium

    Geopolitical disruption in Bangladesh

    Work stopped for 3 months; teams have recently returned, but revenue recognition is delayed until Q4. — Analyst acknowledged

    low

    Areas of Evasion(2)

    • Specific names of the 2 states with Water collection issues
    • Exact timeline for the QIP launch

    Q&A highlights

    3

    “majority of the business where we are, are capex intensive in nature... we've done INR1,500 crores cost of capex out of our free cash flows [in last 3 years].”

    Explains why the company is raising equity despite debt reduction: to fund equipment for Saudi projects, international transmission lines, and potential manufacturing acquisitions.

    asked by Vaibhav Shah

    2 min read5 chapters

    Detailed Narrative

    01

    T&D and Oil & Gas Drive Growth Momentum

    The T&D business remains the primary growth engine, reporting 25% YoY revenue growth in Q2 FY25. Management highlighted a massive domestic pipeline, with ₹15,000 to ₹20,000 crores of HVDC tenders expected in the next 3-4 months. Simultaneously, the Oil & Gas segment saw a 170% revenue surge, primarily driven by the mobilization and start of execution on the large Saudi Aramco projects, which are expected to peak in FY26.

    02

    Water Business Headwinds Impact Guidance

    The Water segment faced a 43% revenue decline due to collection delays in two key states, where receivables have been outstanding for over 180 days. This disruption led management to revise its overall FY25 revenue growth guidance from '20% plus' to 'slightly lower'. While three states have seen improved payment traction recently, normalcy across the entire business is not expected for another 2-3 months.

    03

    Strategic Asset Monetization and Fundraise

    KPIL has signed definitive agreements to divest the Vindhyachal Expressway (VEPL) for an enterprise value of ₹775 crores, which is expected to result in a ₹100 crore gain over equity. To support future growth, the Board approved a ₹1,000 crore QIP. Management justified this by citing the capex-intensive nature of new projects (like Saudi Aramco) and the need for liquidity as milestone-based payments become more common.

    04

    Margin Expansion and PBT Focus

    Consolidated EBITDA margins reached 8.9%, up 70 bps YoY, as the company executes higher-margin orders from the last two years. Management is shifting focus toward PBT margins, guiding for 4.5% to 5% for FY25. They expect a further 25-50 bps improvement in standalone margins next year, driven by a better project mix and moderating interest costs as a percentage of sales.

    05

    HVDC and Metro Pipeline Visibility

    KPIL is currently L1 in a large HVDC project (Khavda) worth approximately ₹3,000 crores. The company is also aggressively bidding for metro projects, recently becoming L1 for a 17-km elevated metro in Nagpur. Management believes the metro sector offers attractive risk-adjusted returns due to sensible competition (5-6 players) and stable funding from multilateral agencies like JICA and ADB.

    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.