KEC International Q1 FY27: Flat Revenues, Lower Margins, Stronger Order Visibility

KEC International started FY27 with a quarter that looked stable on revenue but weaker on profitability. Consolidated revenue for Q1 FY27 was 5,024 crore, flat versus Q1 FY26. EBITDA fell to 291 crore from 350 crore, and EBITDA margin compressed to 5.8% from 7.0%. PAT declined to 73 crore from 125 crore.

Management positioned the quarter as resilient in a difficult operating environment. The key drags were the West Asia crisis and its knock-on impact on logistics and input costs, labour shortages, and slower execution in water projects due to delayed payments.

The operating issues were real, and management called them out

In the conference call, management said the Middle East continues to operate near normal on the ground. The problem is not access to sites. The problem is the supply chain. Shipments to GCC countries had earlier come to a standstill and then gradually resumed with delays. Freight costs, war-related surcharges, and insurance remain elevated. These costs hit margins immediately, while recovery from customers can take time.

KEC also noted that procurement and execution can be deferred until customers align on recovery of additional costs. That creates revenue and margin timing issues. Management said the challenges impacted Q1 and could spill into Q2.

The company also cited calibrated execution in water projects because of delayed payments and delays in legal closure or settlement of claims in transportation and metro projects.

Segment revenue mix remained T&D heavy, with cables showing momentum

KEC’s consolidated segment revenue for Q1 FY27 showed a familiar shape. Transmission and Distribution remained the primary contributor.

In business updates, management highlighted:

T&D recorded revenue of 3,217 crore. Order intake was about 3,600 crore across India, Middle East, Africa and the Americas. The company also secured its first transmission line order for evacuation of power to a data centre in Western India from a private developer.

Civil delivered revenue of 993 crore, with growth linked to execution across multiple sites but tempered by labour shortages and slower water execution due to payment delays.

Transportation revenue was 259 crore. The company emphasized completion of ongoing projects and selective bidding in areas such as Automatic Block Signalling and TCAS.

Cables and Conductors recorded revenue of 601 crore, growing 57% year on year. Management said elastomeric cables will commence production in Q2 FY27, followed by commissioning of the E Beam plant in Q3 FY27. These investments are expected to strengthen the specialty portfolio and support long term margin expansion.

Renewables saw order wins of about 800 crore across wind and solar, and management said it is executing over 600 MW of cumulative capacity.

Orders, L1 and the pipeline are the quarter’s strongest datapoints

Order visibility stayed strong. The company reported year to date order intake of 6,303 crore. The consolidated order book stood at 37,697 crore. Including the L1 position, order book plus L1 was stated to be over 40,000 crore.

Management also cited a tender pipeline exceeding 2,00,000 crore, split broadly between T&D and non T&D. In the call, management said the Middle East accounts for about 25% of overall order book and L1, broadly split between Saudi Arabia and the UAE.

Despite the current disruption, management said new tenders are still being announced in the region, though conversion is taking time.

Working capital and debt are still the key investor sensitivities

KEC reduced net debt including acceptances to 6,568 crore as of 30 June 2026 from 6,722 crore as of 31 March 2026. Management said debt could have been lower but for delayed collections from Afghanistan and higher inventory levels due to disruptions.

On Afghanistan, management indicated about 300 crore is due for payment and expected in Q2. On Jal Jeevan Mission water projects, management cited gross debtors of around 800 to 900 crore, with around 400 to 500 crore overdue. The dues were said to be split equally between Odisha and Madhya Pradesh.

The company reiterated its working capital ambition and deleveraging plan. Management guided to 110 working capital days by end of FY27 and a debt reduction of about 1,200 crore, taking total debt to around 5,500 crore by March.

FY27 guidance held, but margin guidance remained absent

KEC reiterated its earlier FY27 revenue growth guidance of 12% to 15%. Management said the exact outcome will depend on how the conflict evolves, but it expects deferred execution to be recovered because this is EPC revenue that can shift across quarters.

The company did not provide a margin guidance. Management indicated that Q2 may not show a significant improvement and that improvements are expected from Q3 onwards, with a view that high single digit margins in FY28 should be possible.

Takeaways

Q1 FY27 showed KEC’s order book strength but also highlighted how quickly external shocks can compress margins in an EPC model. The company’s near term swing factors are clear: stabilization in Middle East logistics, collections from Afghanistan, normalization of working capital in water projects, and closure of legacy transportation and metro issues.

If the company executes its working capital roadmap and improves conversion from the large pipeline, the financial profile could improve meaningfully over the coming quarters, even though management has stopped short of giving a formal margin target for FY27.