Emkay Global has maintained its Buy rating on Kalpataru Projects International (KPIL). The brokerage house is bettering on the company’s relatively low exposure to West Asia. They have set a target price of Rs 1,450, implying an upside of 36.2%.
Limited West Asia exposure
The current crisis across West Asia is not a big worry. Just 10% of the company’s overall orders have exposure in West Asia. While there are supply-related challenges for the Power Transmission & Distribution (T&D) business that may cause a $20-30 million revenue impact in Q4FY26, there is no expected impact on Gas Pipeline execution as the client, Saudi Aramco, supplies the raw materials.
Strong growth drivers in T&D and B&F
The T&D and Buildings & Factories (B&F) segments are expected to continue driving growth. The company’s management is confident in achieving a 20-25% revenue CAGR for Power T&D and an 18-20% CAGR for B&F over the next few years. This is likely to be on the back of energy transition, grid modernisation, and large residential and data centre opportunities.
In FY22-25, the capex uptick in Power T&D and B&F segments benefited Kalpataru Projects, recording 26% CAGR in standalone order inflow. “Large residential developers, opportunities in data centres, and entry into newer domestic regions (MMR, NCR, etc) drove B&F order inflows,” said Emkay Global.
Operational challenges at domestic plants
Both the Raipur and Gandhinagar plants are currently operating at 80% utilisation, 20% lower than their full capacity. This lower utilisation is due to gas supply issues, leading the company to indicate the use of Low-Density Oil (LDO) as an alternative fuel source.
Improvement in water business payments
There has been positive movement in the Water business regarding payment releases. The company received approximately Rs 600 crore in Jal Jeevan Mission (JJM) related payments in Q4, though outstanding payments for this segment still remain more than Rs 1,000 crore.
Headwinds in Brazil (Fasttel)
The company’s Brazilian subsidiary, Fasttel, continues to face significant challenges. The brokerage firm said that the company is likely to recognise an impairment for this business in the near term.
Kalpataru Projects share price performance
The share price of Kalpataru Projects has risen 1.2% in the last five trading sessions. The stock has declined 6.8% in the past one month and 12.2% in the last six months. Kalpataru Projects’ stock price has surged 13% over the previous 12 months.
