Kalpataru Projects International Limited: A Strong Q2 FY26 Performance Amidst Strategic Shifts

Kalpataru Projects International Limited (KPIL) has delivered an exceptional performance in the second quarter of fiscal year 2026, showcasing robust growth and enhanced profitability. The company reported its highest-ever second-quarter revenue and profitability, underscoring the effectiveness of its diversified business strategy and efficient operational execution. Consolidated revenue for Q2 FY26 surged by 32% year-on-year to ₹6,529 crore, while Profit After Tax (PAT) witnessed an impressive 89% increase, reaching ₹237 crore. This strong financial showing is a testament to KPIL's focus on on-ground execution, prudent working capital management, and strategic investments in high-growth areas.

The growth was broad-based across several key segments. The Power Transmission & Distribution (T&D) business led the charge with a 51% year-on-year revenue increase, contributing ₹3,031 crore. The Building & Factories (B&F) segment also performed strongly, growing by 20% to ₹1,698 crore. Urban Infra demonstrated remarkable growth of 65%, reaching ₹283 crore, while Oil & Gas saw a 21% rise to ₹559 crore. However, the Water business experienced a 5% decline in revenue to ₹517 crore, primarily due to collection delays in certain projects. Despite this, the overall performance highlights KPIL's ability to leverage its diverse portfolio and execute large-scale projects effectively.

Strategic Initiatives and Future Outlook

KPIL's strategic focus extends beyond immediate financial results. The company has made significant capital expenditures, approximately ₹2,400 crore from FY22 to H1 FY26, with ₹340 crore in the first half of FY26 alone. These investments are primarily directed towards high-growth businesses like T&D and B&F, aimed at enhancing competitiveness and project delivery capabilities. Management is also actively working to expand its international presence, particularly in the Oil & Gas sector, with an eye on large opportunities in the Middle East across oil and gas, T&D, and solar EPC projects. This proactive approach is expected to drive the next phase of growth for these businesses.

Another key strategic move is the planned divestment of Vindhyachal Expressway Private Limited (VEPL), expected to close in H2 FY26. This move is part of KPIL's broader strategy to strengthen its balance sheet and optimize its asset portfolio. The company's consolidated order book remains robust at ₹64,682 crore as of September 30, 2025, providing a clear pathway for sustained business growth in the coming quarters. Order inflows for FY26 have already reached ₹14,951 crore, with an additional ₹5,000 crore in favorably placed tenders, primarily in international T&D.

Challenges and Management Confidence

Despite the strong performance, KPIL faces certain challenges. Delays in collections from water projects, particularly in Uttar Pradesh and Jharkhand, continue to impact working capital. The company has invested an additional ₹700 crore in this business in the first six months to complete projects, highlighting the capital intensity required. Furthermore, the Fasttel subsidiary continues to report negative EBITDA and PBT, and management is not bullish on its growth in the near term, focusing instead on stabilization and profitability.

However, management remains confident in its growth strategy and long-term outlook. They are on track to achieve a targeted revenue growth of 25% plus for FY26 and reaffirm their guidance for a minimum 50 basis points improvement in PBT margins. The company's net working capital days have improved, and its Net Debt/Equity ratio remains prudent at 0.46x (Consolidated), providing ample capacity to pursue future growth opportunities. KPIL's commitment to profitable growth, efficient execution, and strategic capital allocation positions it well to capitalize on the significant infrastructure needs driven by global megatrends.

Sustained Growth and Disciplined Execution

Kalpataru Projects International Limited's Q2 FY26 results underscore a period of sustained growth and disciplined execution. The company's ability to deliver robust financial performance, coupled with a strong and diversified order book, provides a solid foundation for future expansion. While navigating challenges in specific segments, KPIL's strategic focus on high-growth areas, prudent capital management, and commitment to sustainability initiatives demonstrate a clear path towards creating long-term value for its stakeholders. The management's confidence in achieving its full-year guidance further reinforces the positive outlook for the company.