Kalpataru Projects International Limited — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

KPIL delivered a quarter of contrasting results: record-breaking order wins and significant debt reduction were offset by execution and collection challenges in the Water business. While core segments like T&D and Oil & Gas are firing on all cylinders, the company had to temper its full-year growth guidance due to payment delays in government-funded water projects. Management remains bullish on the medium-term outlook, backed by a massive ₹61,000+ crore order book and improving balance sheet strength.

Highlights

  • Record order inflow of ₹20,185 crores in Q3 FY25, leading to an all-time high order backlog of ₹61,429 crores.

  • Consolidated revenue grew 17% YoY to ₹5,732 crores, driven by T&D (+42%), B&F (+26%), and Oil & Gas (+123%).

  • Consolidated net debt significantly reduced by 27% QoQ to ₹2,694 crores, aided by a successful QIP and efficient working capital management.

  • Water business faced severe headwinds due to slow JJM collections, resulting in a ₹2,000 crore revenue shortfall against original targets.

  • Full-year FY25 revenue growth guidance revised downward to 13-15% (from 18-20%) due to the Water segment drag.

  • Standalone PBT margin stood at 4.5% for Q3, with management targeting ~5% for Q4 FY25.

  • Promoter pledging reduced to approximately 24% from previous highs of 50%.

Concerns

  • Working Capital Stress in Water Business

Key financials

  1. Revenue ₹5,732 Cr +17%YoY
  2. EBITDA Margin 8.4%
  3. PBT (Consolidated) ₹202 Cr +5%YoY
  4. Order Inflow ₹20,185 Cr
  5. Order Backlog ₹61,429 Cr
  6. Net Debt (Consolidated) ₹2,694 Cr -27%QoQ

What they filed

Q1 FY27: revenue up 8.8%, net profit up 31.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,136 4,826 6,204 5,040 5,419 +31%5,788 +20%6,964 +12%5,482 +9%
EBITDA348 402 523 428 447 +28%481 +20%672 +28%488 +14%
Net profit132 157 242 201 200 +52%211 +34%220 −9%265 +32%
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

  • T&D
    42% Revenue Growth
  • B&F
    26% Revenue Growth
  • Oil & Gas
    123% Revenue Growth
  • LMG (Sweden)
    100% Revenue Growth₹3,143 Cr Order Book

Guidance & targets

Revenue

  • Consolidated Revenue Growth Revenue · FY25 · Medium confidence 13-15%

    Previously 18-20% → 13-15%

    So right now, we believe we should be more in the range of 13% to 15% for annualized basis at a consol basis... Q4 growth will be 15% to 20% both stand-alone and consol.

    — Manish Mohnot, MD & CEO

Margin

  • Standalone PBT Margin Margin · Q4 FY25 · High confidence ~5%
    we are targeting to reach closer to 5% margins at the PBT level in Q4 itself

    — Manish Mohnot, MD & CEO

Capex

  • Total Capex Capex · FY25 · High confidence ₹600-650 crores
    We expect capex to be more in the range of INR600 crores to INR650 crores on the balance sheet in the current year.

    — Manish Mohnot, MD & CEO

Other

  • Working Capital Days (Standalone) Other · Q4 FY25 · Medium confidence 100 days
    We still are targeting it to reach the 100 days and hopefully, we will be there even without Water connection being significant in Q4

    — Manish Mohnot, MD & CEO

Debt

  • Cash Flow Improvement from Assets/Water Debt · FY26 · Medium confidence ₹1,000 crores
    But definitely on VEPL, Indore and Water backlog, we should see INR1,000 crores of improvement in cash flow getting into the next year.

    — Manish Mohnot, MD & CEO

Risks & concerns

  • Working Capital Stress in Water Business

    high

    Working capital days in Water have spiked to over 140 days due to delayed government payments, requiring ₹1,000 cr infusion.

    Both acknowledged

  • Labor Availability

    medium

    Management cited labor shortage as a persistent challenge impacting execution pace, particularly in T&D.

    Management acknowledged

  • Currency Devaluation in Brazil

    medium

    Devaluation of the Brazilian Real impacted USD-denominated loans in the Fasttel subsidiary, leading to PBT losses.

    Management acknowledged

Areas of evasion (1)

  • Specific value of arbitration claims in their favor (cited confidentiality/governance).

Q&A highlights

3 direct
Water Business Shortfall and Guidance Revision Direct
The entire shortfall of closer to INR2,000 crores would be in the water business. Had that shortfall not been there, you would have been very closer to achieving a 18% to 20% guided revenue growth.

Explains the primary reason for the downward revision in annual revenue guidance and quantifies the impact of the Water segment's issues.

Asked by Parikshit Kandpal

Jal Jeevan Mission (JJM) Exposure and Collections Direct
Our JJM allocation for order book is closer to 75% to 80%... we still have closer to INR700 crores of unbilled -- or billed certified uncertified line with various water utilities.

Reveals the high concentration of the Water order book in JJM and the significant amount of cash currently stuck in the system.

Asked by Sumit Kishore

Saudi Aramco Oil & Gas Project Progress Direct
We've still not reached a threshold of 10% to recognize margins. We would be reaching that threshold in the current quarter... Next year, out of the $800-odd million on that project, we believe that closer to 40% would get delivered.

Provides visibility on revenue recognition and margin contribution from a major international project starting Q4 FY25.

Asked by Bhoomika Nair

2 min read 5 chapters

Detailed narrative

Record Order Book Provides Multi-Year Visibility

KPIL achieved a record-high order backlog of ₹61,429 crores as of December 2024, representing a book-to-bill ratio of nearly 3x. The Q3 inflow of ₹20,185 crores was particularly strong, driven by major wins in HVDC (Sweden), domestic T&D, and metro rail (Nagpur). Management expects the T&D bidding pipeline to remain robust, with ₹2.5 to ₹3.5 trillion of opportunities expected by 2029, driven by renewable energy integration.

Water Business: The JJM Collection Bottleneck

The Water segment, previously a high-growth engine, has become a temporary drag due to budget constraints at the central government level for Jal Jeevan Mission (JJM) projects. This led to a ₹2,000 crore revenue shortfall and forced the company to infuse ₹1,000 crores of its own capital to maintain project momentum. However, with the new budget allocation of ₹67,000 crores for FY26, management expects collections to normalize starting March/April 2025.

Strategic Debt Reduction via QIP

A key highlight of the quarter was the significant reduction in net debt, which fell by 27% QoQ on a consolidated basis. This was primarily driven by the proceeds from a successful QIP issue in December 2024, which saw participation from marquee investors. Standalone net debt dropped to ₹1,820 crores, and management is targeting a net debt to EBITDA ratio of 1x in the near term while maintaining standalone working capital at 100 days.

Divergent Performance in International Subsidiaries

The company's international footprint showed mixed results. LMG Sweden performed exceptionally well, doubling its revenue YoY and maintaining healthy EBITDA margins around 4.8-5.5%. Conversely, Fasttel in Brazil faced PBT losses due to the devaluation of the Brazilian Real against USD-denominated loans. Management expects Fasttel to reach breakeven in FY26 as currency volatility subsides and margins improve from a healthier order book.

Execution Momentum in T&D and Oil & Gas

Core execution remained strong outside of the Water segment. T&D revenue grew by 42% YoY, while Oil & Gas saw a massive 123% jump. The large Saudi Aramco project is nearing the 10% execution threshold, which will trigger margin recognition in Q4 FY25. Management expects this project to contribute significantly to revenue over the next 2-3 years with high single-digit EBITDA margins.

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