KEC International: Powering Ahead with Record Order Book and Profitability Surge in Q2 FY26

KEC International Ltd., a global infrastructure EPC major and an RPG Group Company, has delivered a robust performance in the second quarter and first half of fiscal year 2026. The company reported a significant 19% year-on-year (YoY) increase in revenues for Q2 FY26, reaching INR6,092 crores. For the first half of the fiscal year, revenues grew by 15% YoY, aligning with management's full-year guidance. This strong top-line growth was complemented by an impressive surge in profitability, with EBITDA growing by 34% in Q2 and both Profit Before Tax (PBT) and Profit After Tax (PAT) soaring by 88% YoY. EBITDA margins expanded by 80 basis points to 7.1% in Q2 FY26, reflecting a clear emphasis on profitable growth.

The T&D business emerged as the primary growth engine, contributing a substantial 67% to the total net sales and registering a remarkable 44% YoY revenue growth in Q2 FY26. This stellar performance was driven by robust execution across diverse geographies, including India, the Middle East, CIS, and the Americas. The company achieved a significant milestone by securing its largest-ever EPC order in the UAE (over INR3,100 crores) and its largest-ever substation order in Saudi Arabia (over INR1,000 crores). These strategic wins have not only widened KEC's portfolio and client base but also solidified its leadership in the region. The company's subsidiary, SAE Towers, also performed strongly, with revenues of INR429 crores for the quarter, reflecting a robust 35% growth, supported by good traction in hardware orders in Brazil and steady order momentum in Mexico.

Navigating Sectoral Dynamics and Strategic Initiatives

While the T&D segment thrived, other business verticals presented a mixed picture. The Civil business reported revenues of INR968 crores, with execution impacted by prolonged monsoons, labor shortages, and delayed payments in the water segment. Despite this, the business strengthened its order book with over INR3,000 crores in the Buildings & Factories segment, including a significant order for civil and structural works for a thermal power plant. Management has adopted a calibrated approach to water projects given the payment scenario and is strategically stepping out of lower-margin infrastructure projects. The Transportation business recorded revenues of INR425 crores, focusing on timely execution and securing three new orders for the Train Collision Avoidance System (TCAS) under KAVACH.

KEC International is also making significant strides in its strategic initiatives. Capacity expansion at the Butibori tower facility is underway, expected to be completed by year-end, to meet increasing demand for transmission infrastructure. The company is investing in an E-Beam facility and Elastomeric cables, with commercial production for Elastomeric cables expected by the end of FY26 and the E-Beam facility by Q1 FY27. These investments are aimed at optimizing material costs, improving margins, and catering to high-performance applications in defense, automotive, and railway sectors. The Oil & Gas pipeline business achieved a key milestone by securing prequalification from a leading Middle East utility, positioning it for international growth.

Financial Health and Future Outlook

In terms of financial health, KEC's net debt, including acceptances, stood at INR6,480 crores as on September 30, 2025, an increase from INR5,265 crores in the previous September. This rise is attributed to strong revenue growth, strategic inventory build-up due to benign commodity prices, delayed payments in water projects, and spillover of large collections. However, management expects debt levels to normalize going forward and aims for debt to be around INR5,000 crores. Interest expenses as a percentage of revenue have reduced, indicating improved financial efficiency.

The company's order intake for the year-to-date has surpassed INR16,000 crores, reflecting a healthy 20% YoY growth. With a combined order book and L1 position exceeding INR44,000 crores, KEC has strong revenue visibility. The tender pipeline remains robust, with opportunities worth over INR1,80,000 crores, particularly in T&D and Civil. Management is confident in delivering sustained profitable growth, driven by a strong focus on execution, expanding capacity, and a diversified order book. The company also continues to make progress on its ESG and sustainability goals, with improvements in happiness quotient, diversity, occupational health & safety, and environmental metrics.

Management's Vision for Sustained Growth

KEC International's management is focused on driving sustained and profitable growth in the coming quarters. They anticipate the Civil business to grow by 15-20% in the next fiscal year with higher single-digit margins, and the railway business to consolidate and pick up after a flattish period. The company is actively pursuing international opportunities in Civil, Transportation, and Oil & Gas, leveraging its prequalifications and expanded geographical footprint. With a strategic approach to project selection, cost optimization, and operational efficiency, KEC International is well-positioned to capitalize on the promising business outlook in infrastructure development.