Kalpataru Projects shares: Should you buy, hold, sell this stock?

Kalpataru Projects International Ltd (KPIL) reported an inline results for the September quarter, even as water projects dragged the overall performance amid delayed collections. While trimming their target prices, a few brokerages maintained their 'Buy' ratings on the stock, as KPIL is seen as a key beneficiary of the robust T&D pipeline across domestic and international geographies, buoyant outlook for B&F projects, and improving performance at international subsidiary. The stock is up 94 per cent in the past one year. 

"KPIL’s focus on margin improvement, working capital management, and non-core asset divestment will augur well going forward. We cut our estimates by 6 per cent/8 per cent/5 per cent for FY25/FY26/FY27 to factor in weaker-than-expected water segment performance; we roll forward our target price valuation to December 2026," said MOFSL.

This brokerage maintained its target price of Rs 1,500 based on 19 times PE for the core business on an improved prospect pipeline. 

Emkay Global maintained its 'Buy' rating on KPIL with revised target price of Rs 1,450  against Rs 1,550 earlier, mainly due to an 8 per cent cut in earnings estimates for FY26 and a 5 per cent cut for FY27. 

"With persistent challenges in the railway/water businesses, we believe the initial revenue guidance for FY25 looks difficult to achieve. Nevertheless, T&D (domestic and international), Building and Factories, and Oil and Gas segments continue to sustain momentum going ahead," Emkay Global said. 

The current order backlog for Kalpataru Projects stands healthy at about Rs 60,600 crore and KPIL is on track to achieve its order inflow guidance of Rs 22,000-24,000 crore for FY25, analysts said.

The company is L1 in Khavda Transmission project, which augurs well given the upcoming large HVDC opportunity. On monetisation of non-core assets, KPIL has signed an agreement for sale of its BOOT assets VEPL at an EV of Rs 775 crore, and it is likely to be concluded in FY26. 

"Given the large order book and working capital requirement, the BoD has approved to raise Rs10bn through QIP, which will be done in due course. The company continues to focus on reducing its NWC days below 100, which we believe, should be seen with pick-up in execution and improvement in collection," Emkay Global said.

Nuvama said despite an inline revenue growth of 9 per cent YoY, KPIL reported a PAT growth of 40 per cent YoY and beat its Ebitda estimate by 14 per cent, as Ebitda margins expanded to 8.9 per cent, up 70 bps YoY. 

The Kalpataru Projects International management maintained the PBT margin guidance of 4.5–5 per cent and order inflow (OI) target of Rs 22,000–23,000 crore in FY25E. 

"We continue to find KPIL a strong beneficiary of imminent triggers in India’s transmission capex over the next two–three years. Reiterate ‘Buy’ with a target price of Rs 1,500 (earlier Rs 1,529) at an unchanged 20 times P/E while tweaking our FY25–27 estimates," it said.