KEC International Navigates Q3 FY26 with Robust Revenue Growth Amidst Margin Pressures

KEC International Ltd., a global infrastructure Engineering, Procurement, and Construction (EPC) major and a flagship company of the RPG Group, has announced its financial results for the third quarter (Q3 FY26) and nine months (9M FY26) ended December 31, 2025. The company reported record revenues and healthy operating profitability, driven primarily by strong performances in its Power Transmission & Distribution (T&D) and Cables & Conductors businesses. Despite these achievements, KEC is actively managing challenges related to project execution delays and margin pressures in certain segments.

For Q3 FY26, KEC delivered revenues of INR6,001 crore, marking a 12% year-on-year growth. The nine-month period saw revenues reach INR17,116 crore, a 14% increase compared to the previous year. Operating PBT surged by 37% in Q3 and 53% in 9M, while Operating PAT grew by 32% in Q3 and 51% in 9M. This robust bottom-line growth outpaced the EBITDA growth of 15% in Q3 and 22% in 9M. The T&D segment's contribution to overall revenues significantly increased to 67% for the nine-month period, up from 57% last year, underscoring its strategic importance.

Navigating Operational Headwinds

While the financial results showcase strong growth, KEC International has been transparent about the operational challenges impacting certain segments. The Civil business, despite a strong order book, faced execution hurdles due to labor shortages, delays in the release of work fronts, and slow payments in water projects. These factors led to an under-recovery of overheads and impacted revenue realization. Similarly, the Transportation business experienced margin and cash flow pressures from delayed project completions and heightened competition from Tier II/Road players.

Management acknowledged that these issues led to a revision in the full-year EBITDA margin guidance, which is now expected to be between 7% and 7.5%, down from an earlier projection of 8% to 8.5%. The company also disclosed an exceptional provision of INR59 crore in Q3 FY26 related to the new Labor Code. Furthermore, net debt, including acceptances, increased to INR6,806 crore as of December 31, 2025, from INR5,574 crore a year prior. This increase was attributed to strong revenue growth, strategic inventory build-up due to benign commodity prices, muted payments in water projects, and large collections spilling over into January 2026. However, the company noted that debt levels have already reduced by approximately INR300 crore in January 2026 and are expected to normalize by March 2026.

Strategic Focus and Future Outlook

KEC International is proactively addressing these challenges through strategic recalibrations. The company has de-focused on civil projects with intense competition and is prioritizing high-quality, margin-accretive opportunities. In the Transportation segment, the focus is on Train Collision Avoidance System (TCAS) under KAVACH, securing three orders year-to-date. This aligns with the government's emphasis on railway safety and modernization, presenting a robust multi-year pipeline.

In a significant development, KEC has forayed into the Wind Energy segment, securing a breakthrough order for a 100+ MW Wind project. This diversification within renewables complements its existing solar projects, with the execution of 500-megawatt solar projects in Karnataka and Rajasthan progressing well towards completion. The Oil & Gas pipeline business also secured its third international order in the Middle East, strategically expanding its global footprint amidst a subdued domestic tender pipeline.

Capacity expansion initiatives are well underway, with successful enhancements at plants in Dubai, Jaipur, and Jabalpur. The expansion of the Butibori facility in Nagpur is expected to be completed by March 2026, further strengthening KEC's ability to meet rising demand. The company's YTD order intake stands at INR19,300 crore, and its robust order book, including L1 positions, exceeds INR41,000 crore, providing strong revenue visibility. Management has set an order intake target of approximately INR35,000 crore for the next financial year.

Commitment to Sustainability and Growth

KEC International's commitment to sustainability is evident through its ESG initiatives, including targets for increasing happiness quotient, diversity, and occupational health and safety. The company is also focused on circularity, water positive approaches, energy consumption reduction, carbon emission reduction, and sustainable procurement. These initiatives are integrated into the company's culture pillars, aiming for execution excellence, customer centricity, and technological leadership.

Despite the challenges, KEC International remains well-positioned for sustained and profitable growth. The company's strong focus on execution, expanding capacity, a robust order book, and a substantial tender pipeline, particularly in T&D and Civil, are expected to drive performance in the coming quarters. The management's proactive approach to market realities and strategic investments in high-growth segments underscore its commitment to long-term value creation and investor trust.