Kalpataru Projects Surges 265% in 25 Months – Is It Time to Buy This Capital Goods Multibagger?

Kalpataru Projects International (KPIL), a major player in global power transmission & distribution, railways, oil & gas, and civil infrastructure, has seen its share price increase significantly over the past 25 months. During this period, the shares rose from ₹356 to ₹1,303, delivering an impressive 265% return.

HDFC Securities, a domestic brokerage firm, expects the stock price to continue rising. They attribute this to the company’s strong order book, solid financial profile, expanded international presence, growing demand in the domestic T&D segment, diversified expertise in EPC sectors, global reach, strategic divestment of non-core assets to improve RoCE, and ability to manage large-scale projects.

The brokerage believes these strengths will help KPIL capitalise on major infrastructure investments, particularly in power transmission, urban mobility, oil & gas, and water sectors in both India and international markets.

Kalpataru Projects offers comprehensive solutions in the design, testing, fabrication, and construction of transmission lines, oil and gas infrastructure, and railway projects on a turnkey basis. The company operates in 73 countries, with ongoing projects in over 30 countries.

Robust Order Book

According to HDFC Securities, KPIL’s order book is well-diversified across various segments, including transmission, railways, building & factory construction, urban infrastructure, and water.

At the end of FY24, the order book stood at ₹58,415 crore, marking a 27.2% increase compared to FY23. Orders worth ₹30,022 crore (excluding ₹5,000 crore in L1 orders) were secured in FY24, reflecting a 19% increase over FY23. The order book indicates strong visibility, equating to 3.5 times FY24’s standalone revenue.

KPIL expects around ₹50,000 crore in tender opportunities in the domestic T&D market over the next 2–3 years. The B&F business is projected to maintain double-digit growth, supported by a healthy order book and strong visibility in residential and commercial buildings, airports, industrial plants, data centres, and more.

In the oil & gas segment, HDFC Securities highlighted the company’s success in the Middle East, securing an LOI for a large gas pipeline project. Government capital expenditure is expected to drive urban infrastructure projects.

The company also secured two underground metro rail tunnel projects, enhancing its execution capabilities and strengthening its competitive position to handle large-scale projects effectively.

In the railways segment, KPIL is focusing on key areas such as metro electrification, S&T, RRTS, and high-speed rail. Recently, KPIL, along with its JVs and international subsidiaries, secured new orders worth ₹2,333 crore in T&D, EPC, and residential building segments.

More Rally Ahead?

HDFC Securities expects KPIL’s revenue, EBITDA, and PAT to grow at a CAGR of 24%, 32%, and 53%, respectively, over FY24–26E. They estimate the base case fair value of the stock to be ₹1,346 (17.5x FY26E EPS) and the bull case fair value to be ₹1,461 (19x FY26E EPS) over the next two to three quarters. The bull target price indicates a 12% upside for the stock from its latest closing price.

The brokerage advised investors to buy the stock within the range of ₹1,216–1,240 (16x FY26E EPS) and consider adding more on dips to the ₹1,099–1,121 range (14.5x FY26E EPS).

“KPIL’s robust order booking driven by T&D and civil, increasing market share in local and international markets, improving growth outlook, strong balance sheet, and NWC give us comfort. The space has enough revenue visibility for the medium term,” said HDFC Securities.