KPIL Share: With a ₹65,457 Cr Order Book, Can KPIL Lift Margins Beyond 5%?

Synopsis: Kalpataru Projects International Limited delivered strong FY26 growth with record revenues, improving profitability, and a Rs 65,457 crore order book. Backed by strong momentum in T&D, Buildings & Factories, and Oil & Gas, the company is focusing on high-margin complex projects, balance sheet strength, and execution efficiency to sustainably push margins beyond 5%.

Kalpataru Projects International Limited entered FY27 with its strongest-ever order book of Rs 65,457 crore after delivering robust revenue growth, margin expansion, and improved cash flows in FY26. The company is witnessing strong opportunities across transmission, buildings, urban infrastructure, and oil & gas businesses while maintaining a disciplined approach towards project selection. 

With lower debt, better working capital management, and increasing focus on large design-build contracts, KPIL is aiming to improve profitability further despite geopolitical risks, labour shortages, and execution-related challenges across key markets. With a market cap of Rs 21,800 crore, the shares of Kalpataru Projects International Ltd are trading at Rs 1,277 and are trading at a PE of 21.5 compared to their industry’s PE of 17.5. 

A Record Year of Strong Execution

FY26 was one of the best operational years for Kalpataru Projects International Limited, where the company met all its set objectives at the start of the year. The company had estimated a growth of 20-25% in revenue, an expansion of 100 bps in PBT margin consolidation, better management of working capital, and order inflows of Rs 26,000 crore-Rs 28,000 crore for the year. 

As per management commentary, all these were achieved in the fiscal year under discussion. Revenue grew 22% YoY to reach Rs 27,143 crore. Revenue also grew 23% YoY in standalone figures. Growth was broad-based across businesses, although the water segment remained relatively weaker. 

Projections regarding the bottom line were also surpassed. The consolidated PBT before exceptional items increased by 62% on a YoY basis to Rs 1,334 crore, while the consolidated PBT margin increased by 120 basis points to 4.9%, which was higher than the guidance provided by the management of 4.5-4.75%. 

The PAT margin of the stand-alone entity after excluding exceptional items and extraordinary income from VEPL came out to be 5.9%, which was higher than the guidance given by the company itself of 5.5%. Management cited better business mix, operational efficiency, and increasing leverage as some reasons behind the increase in margins.

A Rs 65,457 Crore Order Book Sets the Stage

The foremost pillar underpinning KPIL’s future success in terms of growth is its large order book worth Rs 65,457 crore as of the end of FY26. Management has stated that such an order book is diversified across various segments and is not dependent on any one particular segment. 

Orders received by KPIL in FY26 have crossed Rs 26,000 crore, out of which around half of the order book was generated from large-ticket projects of the size of Rs 1,000 crore and above. This is critical for KPIL since, in its journey forward, KPIL will focus on large and complex EPC contracts where execution ability is valued over pricing competitiveness.

Management is repeatedly highlighting that KPIL is no longer chasing growth merely through volume. KPIL’s future strategy will involve focusing on projects that are strategically important to KPIL, design & build projects, and profitable projects. 

KPIL already has Rs 5,000 crore visibility post-FY26 end along with some large L1s, while order book inflows in FY27 could cross Rs 30,000 crore. Such a strategy is visible, especially in business lines like T&D, Buildings & Factories, Oil & Gas, and Urban Infrastructure.

A stronger order mix could therefore become one of the biggest enablers for margin expansion beyond the 5% threshold. Management believes margin growth will not only come from lower finance costs and balance sheet efficiencies but also from improved execution quality and a greater share of complex projects with higher entry barriers. 

T&D Remains KPIL’s Growth Backbone

The Transmission & Distribution segment continues to be the largest and most strategically important of all segments for the company. The division closed FY26 with an order book size of Rs 28,572 crore after winning orders worth close to Rs 13,000 crore in the year. Revenue growth in the segment was 25% y-o-y, aided by projects in India, the Nordics, South America, Africa, and the Middle East. Of the total orders, 35% were domestic orders, while 65% came from the international market.

Management’s outlook on the medium-term opportunities in T&D is extremely positive. As per the company, in the domestic transmission market, bids are anticipated for over Rs 1 lakh crore, while for similar/higher opportunities abroad within the next 6-9 months, they are anticipated for over Rs 1 lakh crore. Drivers of growth include the integration of renewable energy, grid connections, northeast transmission development, thermal power transmission and HVDCs. Management estimated the overall HVDC opportunity to be around Rs 30,000-35,000 crore.

Despite the large opportunity size, KPIL remains cautious about indiscriminate expansion. The company stated that its focus is increasingly on large design-build projects and selective high-margin contracts rather than maximising order intake. This strategy appears to be already reflecting on profitability. Management disclosed that the T&D business continues to operate at double-digit EBITDA margins exceeding 10-11%, and this trend is expected to sustain in FY27 as well. 

B&F Business Moves Up the Value Chain

Buildings & Factories was yet another big revenue driver for FY26, with revenue growing by 19% while orders grew by approximately 40% to Rs 11,460 crores. At year-end, the segment had a healthy backlog of Rs 18,295 crores. The company bagged large residential orders in the South Indian and NCR markets along with gaining experience in data centre projects, airports, and factories.

Among the most important developments in B&F’s business is the increasing shift to design-build projects. As management pointed out, almost half of the segment’s projects have now been switched to design-build projects. These projects entail a higher degree of involvement of engineering, execution, and pricing capabilities compared to conventional EPC projects. The switch is likely to help in margin improvements and returns ratios in the future.

KPIL management highlighted that investments made in shuttering systems, cranes, and other project-related equipment have helped improve efficiency in project execution. According to KPIL, having the right execution capability via investments in project execution-related capex has enabled it to undertake big projects in various geographies at once.

Oil & Gas Emerges as a Key Opportunity

The oil & gas sector emerged as the best-performing among all business verticals, with revenue growing by 55% in FY26. Execution of Saudi Arabia-based projects was consistent despite geopolitical challenges in the Middle East region. According to management, there are increasing talks with clients in Saudi Arabia, Abu Dhabi, Qatar, and Kuwait and an expectation of an uptick in the number of tenders during FY27.

Despite no significant orders coming in as yet, KPIL sees a strong potential opportunity from the oil & gas vertical. As per estimates from management, the oil & gas opportunity from the mentioned countries is likely to be in the range of Rs 50,000 crore to Rs 70,000 crore over the next six months. Further, KPIL has managed to qualify technically for a number of projects and is currently bidding on those.

Additionally, management highlighted that many contracts in the Middle East oil & gas industry are not awarded just on the basis of the lowest bidder but depend on other factors such as execution capabilities, delivery timelines, track record, and mobilisation of resources. Thus, it would be beneficial for KPIL, which has built up engineering and international execution capabilities over the past few years.

If the company starts converting some of these opportunities into large projects during the second half of FY27, the oil & gas business could become an important contributor to revenue growth and margin expansion. 

Stronger Balance Sheet Boosts Profitability

Other reasons for improved profitability have been the significant strength gained in the balance sheet of KPIL. Net debt has come down by more than 50% to Rs 915 crore for consolidated operations and by 32% to Rs 749 crore for standalone operations. The net debt/equity ratio has fallen to a multi-year low of 0.1x.

There has also been improvement in management of working capital. The working capital cycle has fallen to 75 days for consolidated operations and to 90 days for standalone operations despite delays in collection in the water segment. Thanks to the fall in debt and improved cash management, cost of sales declined by 80 basis points to 1.8%. Operating cash flows have increased by 68% to Rs 1,535 crore, and ROCE was above 21%.

These results were delivered despite the expenditure of nearly Rs 900 crore for capex in FY26. The management expects that capex expenditure of approximately Rs 800 crore plus can continue in FY27 as well, which will be for plant modernisation, expansion of the equipment base, building international capability, and setting up of execution infrastructure. Ownership of strategic execution assets provides KPIL an edge in large EPC projects where mobilisation simultaneously at various locations is crucial. Lower leverage and improving operational efficiency are therefore expected to continue supporting PBT margins in the coming years. 

Geopolitical and Execution Risks Remain

While the operational outlook for KPIL looks strong, the management highlighted several near-term risks. The first major risk is geopolitical issues in the Middle East region, which hampered the supply chain operations during Q4 FY26. It was estimated by the management that around Rs 200-250 crore was lost in terms of revenues due to these issues during the quarter. While operations continued at the project sites, delays in material and supply chains have caused the timeline for execution.

The other issue faced by the management includes the availability of labour, especially during elections and festivals. A labour shortage is seen to be relatively higher in the domestic market compared to international projects in April and May months. Apart from labour and geopolitical risk, the company also highlighted diesel price as a risk parameter, while risks associated with commodities continue to remain hedged.

As per the information provided by KPIL, nearly 50% of the company’s order book includes variable prices, while the rest, 50%, is fixed price. The company has already hedged about 90% exposure related to aluminium, zinc, and copper, while nearly 80% foreign currency risk is also hedged.

Meanwhile, the water business still carries receivables of around Rs 1,600 crore, though management expects most of this amount to be recovered within the first half of FY27. 

Can KPIL Sustain Margins Above 5%?

Based on the performance of KPIL during its FY26 period, it appears that the company is moving into a different structural stage compared to its previous periods. There are improvements in its business mix, the order book is becoming more skewed towards high-value and complicated projects, leverage has declined by a significant amount, and the company has improved its capabilities in several verticals.

Management’s guidance is for a revenue growth rate of about 15% for FY27 alongside an expected improvement in the margin of its consolidated PBT by 75-100 basis points.

Should such guidance be realised, consolidated PBT margins will easily surpass 5% in a sustainable way for the very first time. Contributing to this will be an increase in the contribution of the company’s T&D, B&F, and oil & gas business segments.

The strategic focus of the company seems to be very evident. Rather than pursuing all opportunities, KPIL is focusing on those where its expertise, execution ability, and size become its strengths. While this would mean that KPIL might not receive maximum orders in some years, the overall effect on its profitability and other metrics such as returns and cash flows would definitely improve over time.

Given its highest-ever pipeline worth Rs 65,457 crore, high visibility in its infrastructure verticals, and improving financial prudence, it looks like KPIL is set to deliver yet another successful year. The only question now for FY27 is whether KPIL can maintain the higher level of profitability going forward.

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