Target: ₹1,550
CMP: ₹1,322.70
We reiterate Buy on Kalpataru Projects International Ltd (KPIL) and roll forward our TP to ₹1,550 (previous TP:₹1,450). Strong ordering 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 control on working capital support our investment thesis.
KPIL’s YTD order inflow stands at ₹16,300 crore (about 85 per cent B&F and T&D) and order backlog is above ₹60,000 crore provides strong revenue visibility. KPIL management has completed the fund-raise through QIP at ₹1,215/share. On the divestment of non-core assets, the management expects about ₹650 crore cashflow (Vindhyachal Expressway and Indore Real Estate) and improving ROCE.
With sheer focus on execution and cash collections, KPIL has managed to control its working capital days over the years, culminating into a relatively lean balance sheet compared with the closest peer. KPIL offers a play on multiple high-growth end-markets, and has managed its margins and NWC volatility across cycles. Going ahead, we model a healthy revenue/EBITDA/PAT CAGR of 18/24/39 per cent during FY24-27. Industrial tailwinds, coupled with a robust order book, strongly aid in maintaining KPIL’s one-year forward PER at 20x.
