Axis Sec sees 25% upside in Kalpataru Projects; stock rises 3% on coverage

Shares of Kalpataru Projects International Ltd (KPIL) rose 2.79 per cent at Rs 1,312 a piece on the BSE in Friday’s intraday trade. Kalpataru Projects share price surged after domestic brokerage firm Axis Securities initiated coverage on the stock with a ‘Buy’ recommendation and a target price of Rs 1,590, implying an upside of 25 per cent from Thursday’s closing price.

 

The brokerage said that is supported by favourable industry tailwinds, strong order book to drive revenue growth, diversified business with geographical presence, and restructuring of business through divestment of non-core assets. 

 

“The company is expected to benefit from a strong order book, favourable sectoral tailwinds in both domestic and international T&D and B&F segments, improved performance of international subsidiaries, supportive government initiatives, and anticipated margin enhancements,” said Uttam Kumar Srimal, and Shikha Doshi of Axis Securities in a report.

 

 

Strong order book  

Analysts stated that KPIL’s order book provides 2–2.5 years of revenue visibility. As of September 30, 2024, the order book stood at Rs 60,631 crore. Futher, FY25 order inflows total Rs 17,325 crore, with Rs 4,000 crore in L1 projects, aligning with the company's Rs 22,000–23,000 crore target. The company is projected to achieve a CAGR of 18 per cent in revenue, 20 per cent in EBITDA, and 33 per cent in PAT over FY24–FY27, they said. 

 

Moreover, the company’s order book is diversified, spanning from Power Transmission & Distribution contributing 37 per cent, Buildings & Factories (22 per cent), Water (17 per cent), and other segments, with 80–85 per cent of FY25 inflows expected from high-margin projects. Internationally, T&D pipelines will drive 25 per cent Y-o-Y topline growth, with EBITDA margins improving beyond 9 per cent.  

 

Restructuring in focus  

Analysts at Axis Securities believe that KPIL is divesting non-core assets, including Road BOOT projects, warehouses, and real estate in Indore, aiming to conclude by FY25. The recent sale of VEPL to Actis for Rs 775 crore supports a leaner balance sheet and sharper focus on core businesses.  

 

Furthermore, with reduced working capital days, low debt, and a promoter pledge cut from 32 per cent to 24.6 per cent, KPIL is also strengthening its financial health, analysts said. “These measures, along with asset monetization, position the company for sustained growth and profitability,” they said. 

 

At 12:47 PM, the stock price of the company advanced by 0.98 per cent at Rs 1,288.75 a piece on the BSE. By comparison, the BSE’s Sensex was down 0.57 per cent to 79,484.42  level.