Kalpataru Projects International: Strong Q3 FY26 Performance Driven by Robust Execution and Strategic Divestments

Kalpataru Projects International Limited (KPIL) has delivered an exceptionally strong performance in the third quarter and first nine months of fiscal year 2026, significantly outpacing its own guidance. The company, a leading EPC player in power transmission and distribution and civil infrastructure, reported a consolidated revenue of INR 19,365 crore for 9M FY26, marking a robust 27% year-on-year growth. This performance is well ahead of its full-year revenue growth guidance of 25%. Profit Before Tax (PBT) before exceptional items surged by an impressive 69% year-on-year for 9M FY26, reflecting a healthy improvement in margins.

The company's operational performance has been broad-based, with most business verticals contributing to healthy double-digit growth. The Transmission & Distribution (T&D) segment, a core strength, saw its revenue grow by 37% for 9M FY26, reaching INR 8,992 crore. The Buildings & Factories (B&F) segment also demonstrated strong momentum, with revenue increasing by 17% to INR 4,870 crore. The Oil & Gas business delivered a remarkable 58% growth, driven by robust execution in its Saudi project. Urban Infra and Railways segments also contributed positively, growing by 61% and 15% respectively. While the Water business experienced a decline in revenue due to delayed fund releases from clients, management expressed optimism for improved collections in Q4 FY26.

Strategic Wins and Order Book Strength

KPIL's order book remains exceptionally strong, standing at INR 63,287 crore as of December 31, 2025, providing significant revenue visibility for approximately three years. The company secured new orders worth INR 19,456 crore year-to-date in FY26, with an additional INR 7,000+ crore in favorably placed orders. This positions KPIL well to meet its annual inflow target of INR 26,000+ crore. The T&D business alone has an order backlog of over INR 25,752 crore, reflecting a 12% year-on-year growth. The B&F business also saw its order book grow by 40% year-on-year to INR 18,596 crore, adding prestigious projects in data centers, large residential complexes, hospitals, and industrial works.

In a significant development, KPIL announced on January 1, 2026, that it, along with its joint venture, secured new orders totaling INR 719 crore. This includes an order for an elevated metro rail project in Thane, Maharashtra, further strengthening its presence in the urban infrastructure sector. This win reinforces the company's confidence in the growth potential of its Urban Infra business in India and highlights its robust execution capabilities.

Financial Discipline and Balance Sheet Strengthening

One of the most critical achievements for KPIL in FY26 has been the significant strengthening of its balance sheet. Consolidated net debt declined by a remarkable 29% quarter-on-quarter, reaching INR 2,240 crore. Standalone net debt also saw a 16% quarter-on-quarter reduction to INR 1,849 crore. This improvement is attributed to enhanced operational performance and strategic capital allocation. The company's net working capital days improved to 79 days at the consolidated level and 97 days at the standalone level, both performing significantly better than the year-end target of 100 days. This reflects a relentless focus on timely project delivery and a disciplined bidding approach aimed at improving returns on invested capital.

KPIL also successfully completed the divestment of its 100% equity stake in the Vindhyachal Road asset in January 2026. This transaction, based on an enterprise value of approximately INR 799 crore, resulted in net cash inflows exceeding INR 600 crore. Furthermore, the company is on track to fully monetize its Indore real estate project inventory before the end of March 2026. These strategic divestments are key to reducing leverage and redeploying capital into core EPC businesses, thereby enhancing return ratios.

Addressing Challenges and Future Outlook

While the overall performance has been strong, KPIL acknowledged challenges in its water business, where revenue declined due to delayed fund releases from clients. However, management noted improving collections, particularly from the UP JJM project starting January 2026, and expects better performance in Q4. The Brazilian operations (Fasttel) also continued to face difficulties, incurring an EBITDA loss of INR 186 crore for 9M FY26. The company is actively reviewing this business, with the historical order book nearly completed, and anticipates a reduction in consolidated losses from this segment going forward.

Looking ahead, KPIL is well-positioned to capitalize on global megatrends such as energy transition, sustainable mobility, urbanization, and digital transformation. The company anticipates continued growth momentum, supported by clear visibility in T&D, B&F, and Civil businesses. Management expects revenue growth for the full year to be approximately 25%, accompanied by an improvement in earnings of at least 50 basis points at the standalone level and 100 basis points at the consolidated level. The company is confident in achieving a consolidated EPS exceeding INR 50 per share for the current year and expects growth momentum to continue with margin improvement in financial year 2027. KPIL's strategic alignment with evolving market needs, integrated expertise, robust execution capabilities, and global reach underpin its confident outlook.