At a Glance
KEC International, the RPG Group’s EPC powerhouse, reported Q1 FY26 revenue of ₹5,023 crore (↑11% YoY) and PAT of ₹125 crore (↑42% YoY). Operating margins held at 7%, proving that amidst rising costs and high borrowings, KEC can still pull off a profitable quarter. Order book stands at ₹34,409 crore, with another ₹6,000 crore in L1 pipeline. Stock trades at ₹864 with a pricey P/E of 38. The real question – will order execution keep up, or will debt interest eat up the gains?
Introduction
KEC International is everywhere – from transmission lines in Africa to metro projects in India. It’s like the overachieving student who never sleeps. However, this quarter’s results show that while the company’s topline keeps growing, profitability still has room for improvement. Interest costs remain heavy, and execution delays occasionally bite. Investors are watching if the ₹23,000 crore market cap company can scale margins like its towers.
Business Model (WTF Do They Even Do?)
KEC is an EPC (Engineering, Procurement & Construction) player operating in:
- Power Transmission & Distribution: Backbone of its business; building power grids globally.
- Railways & Urban Infra: Metro, railway electrification – riding India’s infra boom.
- Cables, Solar, Oil & Gas Pipelines: Smaller segments but important.
In simple terms: they build big, they build everywhere, and they get paid (eventually).
Financials Overview
Q1 FY26 Highlights:
- Revenue: ₹5,023 Cr (↑11% YoY)
- Operating Profit: ₹350 Cr (OPM 7%)
- PAT: ₹125 Cr (↑42% YoY)
- EPS: ₹4.68
Annual FY25: revenue ₹21,847 Cr, PAT ₹571 Cr. Growth is steady, but margins are still a bit anaemic for an infra major.
Valuation
Current P/E at 37.8x is higher than many infra peers.
Fair Value Calculations
- P/E Method:
- Industry P/E ~25x, EPS ₹22.8 → Fair Price ≈ ₹570
- EV/EBITDA Method:
- EV/EBITDA ~10x, EBITDA ₹1,584 Cr → Fair Price ≈ ₹600
- DCF:
- Assuming 12% growth, WACC 9%, terminal 3% → Fair Price ≈ ₹650
💡 Fair Value Range: ₹570 – ₹650 (Current ₹864 is richly valued)
What’s Cooking – News, Triggers, Drama
- Order Book Boom: ₹34,409 Cr with ₹6,000 Cr L1 orders – strong visibility.
- Legal Matter: Noted, but no material impact (yet).
- Re-appointment: CEO Vimal Kejriwal to continue leading the charge.
- Capex? Minimal; focus remains on order execution efficiency.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 22,164 |
| Liabilities | 16,870 |
| Net Worth | 5,347 |
| Borrowings | 3,957 |
Auditor Roast: Borrowings high, but manageable. Assets growing, so at least the loans built something tangible.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Ops | 614 | 311 | 419 |
| Investing | -139 | -243 | -46 |
| Financing | -401 | -145 | -32 |
Commentary: Positive ops cash flow in FY25 is a relief. Infra projects = cash juggling act.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 12% |
| ROCE | 18% |
| P/E | 37.8 |
| PAT Margin | 2.7% |
| D/E | 0.74 |
Verdict: ROCE strong, but high leverage makes investors nervous.
P&L Breakdown – Show Me the Money
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | 17,282 | 19,914 | 21,847 |
| EBITDA | 920 | 1,359 | 1,683 |
| PAT | 176 | 347 | 571 |
Auditor Joke: Revenue climbs, profits climb slower – like an old escalator.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| L&T | 2,55,734 | 15,225 | 31 |
| Kalpataru | 22,316 | 562 | 35 |
| Ircon Intl. | 10,760 | 727 | 23 |
| KEC Intl. | 22,358 | 608 | 38 |
Commentary: KEC’s valuation is richer than most peers, despite lower margins.
Miscellaneous – Shareholding, Promoters
- Promoters: 50.1%
- FIIs: 16% (increasing)
- DIIs: 22.6% (slightly reducing)
- Public: 11.3%
Stable promoter holding, but high FII presence shows foreign confidence (or risk appetite).
EduInvesting Verdict™
KEC International is a solid infra player with a strong order book, global presence, and consistent revenue growth. However, its valuation is expensive and debt remains a concern.
Past Performance:
- Revenue CAGR 13% (5 years) – strong.
- Profit growth volatile but recovering.
Current Scenario:
- Q1 FY26 growth is encouraging, but interest costs limit PAT margin expansion.
Future Outlook:
- Order execution and margin improvement will dictate stock trajectory.
- Any delay in project payments could squeeze cash flow.
SWOT Analysis:
- Strength: Global EPC expertise, diversified segments.
- Weakness: High debt, low PAT margins.
- Opportunity: Infra boom, rail electrification, exports.
- Threat: Rising interest rates, raw material inflation.
Final Word: KEC is building infrastructure everywhere but also building investor expectations sky high. Good business, expensive stock – watch execution like a hawk.
Written by EduInvesting Team | July 29, 2025
SEO Tags: KEC International, Q1 FY26 Results, EPC Infra, RPG Group, Stock Analysis
