Kalpataru Projects Q1 Results Review - Strong Order Book To Offset Transient Weakness: Motilal Oswal

Motilal Oswal Report

Kalpataru Projects International Ltd.’s Q1 FY25 result was impacted by labor issues in select segments. The company reported a revenue growth of 3%YoY, with flat Ebitda and a 7% YoY decline in profit after tax. However, with a strong order book of Rs 572 billion, we expect execution to scale up in coming quarters.

Kalpataru Projects is benefiting from an improved prospect pipeline across domestic T&D and B&F projects. We expect the company to:

1. continue to benefit from its market share of 15-20% in domestic T&D ordering,

2. benefit from non-T&D segments across both domestic and international markets, and

3. focus on net margin improvement over the next few years through interest cost savings and working capital management.

We also expect the monetization of non-core assets, especially Indore real estate, to be completed during FY25. We tweak our estimates to bake in the Q1 performance.

We raise our SOTP-based target price to Rs 1,500, based on slightly higher P/E multiple of 19 times for the core business on an improved prospect pipeline. This is still at a discount to its immediate peer. Maintain Buy.

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