Civil construction in India is a booming sector, contributing over 9% to the GDP. With investments of ₹10 trillion annually, it encompasses infrastructure projects like roads, bridges, and urban development. The industry employs over 50 million people, driving growth in both urban and rural areas across the country.
With a market capitalization of Rs 21,296.69 crore, the shares of Kalpataru Projects International Ltd were trading in green at Rs 1,311.00 per share, increasing around 0.58 percent as compared to the previous closing price of Rs 1,303.40 apiece.
Looking into the company’s financial performance, revenue increased by 22 percent from Rs 4,882 crore in Q4FY23 to Rs 5,971 crore in Q4FY24. During the same period, net profit increased by 21 percent, from Rs 140 crore to a profit of Rs 169 crore.
HDFC Securities, one of the well-known brokerages in India, gave a ‘Buy’ call on the real state stock with a target price of Rs 1,702 apiece, indicating a potential upside of 30 percent from Wednesday’s price of Rs 1,311.00 per share.
Here’s the reason for the probable upward target of 30%:
● KPIL secured new orders worth ₹300.2 billion in FY24 and holds L1 status for an additional ₹39 billion. With an order book of ₹584 billion, 55% from domestic business, the focus areas include domestic T&D, urban infra, B&F markets, and international oil and gas.
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● With a T&D order book of ₹ 206.8 billion, KPIL is well-aligned with global decarbonization trends, focusing on grid infrastructure in over 30 countries. Additionally, securing a significant oil and gas pipeline project in Saudi Arabia in FY24 underscores its international capabilities and potential for strong growth in the hydrocarbon EPC market.
● KPIL aims to reduce working capital, targeting net working capital (NWC) below 100 days by FY25. The strategy involves rebalancing the portfolio towards areas with lower working capital needs, with civil projects like Buildings & Factories (B&F) and water projects now making up 37% of the order book.
● The net debt increase in Q4 FY24 was due to higher working capital needs. However, these are expected to decline in upcoming quarters as Saudi Aramco packages, which are less working capital intensive, come into play. The management is optimistic about improving working capital efficiency.
● KPIL’s foray into solar energy projects in Africa showcases its commitment to sustainable energy solutions, enhancing its role in the global transition to cleaner energy.
The Raipur manufacturing plant has been instrumental in supporting robust project execution, reflecting KPIL’s diversified growth strategy.
Kalpataru Projects International Limited provides EPC services for infrastructure projects such as buildings, industries, electricity transmission, roads, bridges, water pipes, railway track laying, and oil and gas pipelines.
Written by:- Abhishek Singh
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