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Shares of Kalpataru Projects International (KPIL) rallied 15 per cent to Rs 1,369.95 on the BSE in Tuesday’s intra-day trade. This came after the company said it has signed three contracts with Aramco for the third expansion phase of Master Gas System Network (MGS‐3) in Saudi Arabia. This included a contract value of SAR 3.4 billion (presently equivalent to around Rs 7,550 crore).
On March 5, 2024, KPIL had said the company was selected for engineering, procurement and construction (EPC) contracts by Aramco for MGS-3 project.
The EPC scope covers laying of over 800 kms of lateral gas pipeline. The exact contract value of the three packages will be confirmed upon execution. The MGS‐3 aims to expand the existing gas network in order to provide gas supply to various industrial consumers in the region, KPIL had said in press release.
Since March 5, the stock of KPIL has surged 37 per cent. At 09:58 am; KPIL was trading 6 per cent higher at Rs 1,266.10, as compared to 0.27 per cent decline in the S&P BSE Sensex.
KPIL is one of the largest specialised EPC companies engaged in power transmission and distribution, water supply and irrigation, railways, oil and gas pipelines, urban mobility (flyovers & metro rail), highways and airports. KPIL is currently executing projects in over 30 countries and has a global footprint in over 70 countries.
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In past six months, the stock price of KPIL has more than doubled or zoomed 111 per cent. In comparison, the benchmark index rallied 12 per cent.
KPIL’s consolidated order inflow in FY24 grew by 19 per cent to Rs 30,000 crore (+L1 of Rs 5,000 crore) led by the T&D and the oil and gas segments while the order book grew by 27 per cent Y-o-Y to Rs 58,400 crore.
For FY25F, management has given consolidated revenue growth guidance of 20 per cent led by the strong order book. Management has maintained its guidance of 4.5-5 per cent profit before tax (PBT) margin (standalone). Despite posting record revenue growth and capex of Rs 400 crore in FY24, the net debt in the standalone business decreased by 29 per cent compared to the previous quarter, touching Rs 1,830 crore at the end of FY24.
The T&D market witnessed significant improvement driven by the increasing adoption of renewables and the rise in power demand, leading to infrastructure development and accreditation. Analyst at InCred Equities estimate robust revenue and EBITDA CAGR of 18 per cent and 25 per cent, respectively, over FY24-26F. Further reduction in the share pledge is likely to drive a rerating, in our view, the brokerage firm said.
Higher commodity prices, working capital and debt level, coupled with order inflow slowdown, are the key downside risks, the brokerage firm said.
