Target: ₹1,550
CMP: €1,322.70
We reiterate Buy on Kalpataru Projects International Ltd (KPIL) and increase our TP to ₹1,550 (previous TP: ₹1,450). Strong order momentum, mainly led by T&D (both domestic and international) and Building & Factories (B&F), steady execution coupled with gradual improvement in EBITDA margin, and focus on tight working capital control support our investment thesis.
KPIL’s order inflow since the beginning of the year stands at ₹16,300 crore (approximately 85 percent B&F and T&D) and its order book of over ₹60,000 crore provides strong revenue visibility. KPIL management has completed fundraising through QIP at ₹1,215/share. On disinvestment of non-core assets, management expects cash flow of around ₹650 crore (Vindhyachal Expressway and Indore Real Estate) and improvement in ROCE.
With sheer focus on execution and cash collection, KPIL has managed to keep its working capital days in check over the years, culminating in a relatively lean balance sheet compared to its nearest peer. KPIL caters to multiple high-growth end markets and has managed its margins and NWC volatility across cycles. Looking ahead, we expect a healthy revenue/EBITDA/PAT CAGR of 18/24/39 percent for FY24-27. The industrial tailwind, coupled with a robust order book, is strongly contributing to KPIL’s one-year forward PER remaining at 20x.
