Synopsis:
KEC International reported a 42 percent year-on-year rise in net profit to Rs 125 crore and 11.3 percent revenue growth in Q1FY26. However, sequential figures declined sharply, dragging the stock 1.2 percent lower. Strong T&D performance and robust order book supported growth, but execution challenges impacted overall profitability.
A specialty engineering stock slipped nearly 1.2 percent in Tuesday’s trade after reporting a steep sequential decline in both revenue and profitability for the June quarter. Despite healthy year-on-year growth across segments, the quarter-on-quarter fall raised concerns over margin pressure and execution delays in some verticals.
KEC International Ltd, with a market cap of Rs 22,895 crore, opened at Rs 878 but slipped to an intraday low of Rs 853.30, down 1.2 percent from the previous close of Rs 863.75. The weakness came amid cautious sentiment following a sharp drop in quarterly earnings on a sequential basis.
What’s the News?
Quarter-on-Quarter (Q1FY26 vs Q4FY25): Revenue from operations declined 26.9 percent from Rs 6,872 crore to Rs 5,023 crore. Operating profit dropped 35.1 percent from Rs 539 crore to Rs 350 crore. Profit before tax fell 53.5 percent from Rs 342 crore to Rs 159 crore, while net profit declined 53.4 percent from Rs 268 crore to Rs 125 crore.
Year-on-Year (Q1FY26 vs Q1FY25): Revenue grew 11.3 percent from Rs 4,512 crore to Rs 5,023 crore. Operating profit rose 29.6 percent from Rs 270 crore to Rs 350 crore. Profit before tax increased 42.0 percent from Rs 112 crore to Rs 159 crore, while net profit also surged 42.0 percent from Rs 88 crore to Rs 125 crore.
Comments from Management
Mr. Vimal Kejriwal, MD & CEO of KEC International Ltd., said, “We have started the year on a strong note by delivering a healthy revenue growth, substantial increase in profitability and a reduction in debt levels.
Despite headwinds such as persistent manpower shortages and geopolitical uncertainties, we have continued to deliver consistent profitable revenue growth. Profitability has also seen stellar growth, with PBT and PAT both growing by over 40 percent.
The outlook across major businesses remains optimistic. With a strong focus on execution, a robust and diversified order book & L1 of over Rs 40,000 crore and a substantial tender pipeline, we are well positioned to deliver sustained profitable growth in the coming quarters.”
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Operational Highlights
The T&D segment led the charge, contributing 63 percent to total revenues versus 55 percent a year ago, supported by strong execution in both domestic and international markets.
EBITDA margins improved 50 basis points to 7.0 percent, and PBT margins rose 70 basis points to 3.2 percent. Interest expense as a percentage of revenue declined by 40 basis points. PAT margins improved 60 basis points to 2.5 percent.
Order intake during the quarter stood at Rs 5,517 crore, largely from T&D and Civil segments, taking the consolidated order book to Rs 34,409 crore, with additional L1 of over Rs 6,000 crore.
Segment-wise, the Civil business was impacted by labour shortages in water projects, while Renewables posted an 87 percent revenue growth. The Transportation segment is actively executing KAVACH orders and eyeing more deals. Cable and Oil & Gas businesses also reported steady progress with commissioning and international wins.
Financial Snapshot
KEC ended the quarter with a net debt of Rs 5,348 crore, down Rs 250 crore from the year-ago period, despite a trailing 12-month revenue growth of 11 percent. However, net working capital stretched slightly to 128 days from 122 days in June 2024, reflecting stress in project execution timelines.
About the Company
KEC International Ltd, the flagship infrastructure EPC company of the RPG Group, is a global player in Power T&D, Civil, Railways, Renewables, Cables, and Oil & Gas pipelines. It has executed projects in over 110 countries and is backed by RPG Enterprises, a diversified conglomerate with interests in tyres, pharma, IT, and innovation-led businesses.
Written By Manan Gangwar
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