Kalpataru Projects International Ltd: Growth, Challenges, and Future Plans

Kalpataru Projects International Ltd: Performance, Challenges, and Future Outlook

Business Environment and Challenges

Kalpataru Projects International Ltd is navigating through some challenges in the market. The company is dealing with labor shortages, geopolitical uncertainties, and stretched working capital in its Water business. However, management remains focused on improving execution and strengthening its position in the industry.

Financial Performance (Q3 FY’25)

Kalpataru Projects International Ltd delivered solid growth in the third quarter of FY 2025:

Revenue: Consolidated turnover reached ₹5,732 crores, marking a 17% year-on-year (Y-o-Y) increase.
Stand-alone revenue grew by 16% Y-o-Y.
EBITDA Growth: 13% at the consolidated level and 17% at the stand-alone level.
EBITDA Margins: 8.4% (consolidated) and 8.3% (stand-alone).
Profit Before Tax (PBT):
- Consolidated PBT: ₹202 crores (5% growth Y-o-Y).
- Stand-alone PBT: ₹218 crores (12% growth Y-o-Y).

Performance by Business Segments

Transmission & Distribution (T&D)

Revenue increased 42% Y-o-Y, driven by strong order inflows.

Buildings & Factories (B&F)

Growth of 26% Y-o-Y, reflecting strong execution in construction projects.

Oil & Gas

Recorded exceptional growth of 123% Y-o-Y.

Water Business

Slower growth due to delayed payments from Jal Jeevan Mission (JJM) projects.
Expected improvement after the Union Budget’s ₹67,000 crore allocation for tap water coverage in FY 2025-26.

Debt Reduction and Working Capital Management

Consolidated net debt: Reduced by 27% quarter-on-quarter (Q-o-Q) to ₹2,694 crores.
Stand-alone net debt: Reduced by 35% Q-o-Q to ₹1,820 crores.
Net working capital days: Improved to 112 days (stand-alone) and 94 days (consolidated).

Strong Order Book and New Contracts

New Orders: A record ₹20,185 crores in new orders.
L1 Position: ₹2,500 crores worth of projects in the pipeline, mostly in domestic T&D.
Total Order Backlog: ₹61,429 crores as of December 31, 2024.
Notable Project Wins:
- High-voltage direct current (HVDC) projects.
- Metro rail contracts (Nagpur Metro).

International Business Performance

LMG Sweden

Revenue doubled Y-o-Y for Q3 and the first nine months (9M) of FY’25.
Order book stands at ₹3,143 crores.

Fasttel Brazil

Revenue grew by 18% in Q3 and 35% in 9M FY’25.
Order book stands at ₹1,000 crores.

Future Growth Expectations

Management expects 15%-20% revenue growth in Q4 FY’25.
PBT margins projected to remain at 5% (stand-alone).
The Water business is expected to improve with ₹500-₹700 crores in collections over the next two quarters.

Key Challenges and Strategic Focus

The Water business remains a concern due to slow payments, but long-term prospects are positive.
The company is prioritizing large-scale projects in T&D and B&F to optimize resource allocation.
Strong pipeline expected in power transmission and urban infrastructure, driven by increasing demand and modernization needs.

Profitability and Margins

EBITDA margins expected to improve with better execution.
Management is focusing on achieving double-digit margins in the future.

Capital Expenditure (Capex) Plans

Continued investments to support execution and backlog.
Focus on owning construction equipment to enhance efficiency and reduce costs.

Summary

Strong revenue growth across major segments.
Robust order book ensures future business visibility.
Water segment challenges expected to ease post-budget allocation.
Debt reduction and improved working capital strengthen financial health.
International operations show promising growth.
Optimistic outlook with 15%-20% growth targeted in Q4 FY’25.

Frequently Asked Questions (FAQs)

What is driving growth for Kalpataru Projects International Ltd?

The company is seeing strong demand in Transmission & Distribution, Oil & Gas, and Buildings & Factories segments. Large project wins and a strong order book are fueling growth.

How is the company addressing the challenges in the Water business?

Management expects the Union Budget’s tap water allocation to improve cash flow and boost collections in upcoming quarters.

What is the company’s financial outlook for Q4 FY’25?

The company aims for 15%-20% revenue growth, with stable PBT margins around 5% (stand-alone).

How is the international business performing?

Both LMG Sweden and Fasttel Brazil reported strong growth, adding to the company’s global expansion strategy.

With solid execution, a healthy order pipeline, and a strategic focus on growth areas, Kalpataru Projects International Ltd is well-positioned for continued success.