Kalpataru Projects Can Rally 25% On Industry Tailwinds, 'Buy' The Stock Says Motilal Oswal

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Motilal Oswal Report

We continue to remain positive on Kalpataru Projects International Ltd. based on its positioning across fast-growing power transmission and distribution- engineering, procurement and construction as well as the buildings and factories segment.

The company has a strong order book of Rs 606 billion spread across domestic and international geographies, providing healthy revenue visibility of 2.5-three years.

Following a weak execution in H1 FY25, a ramp-up is expected in the coming quarters, driven by the strong order book and easing payment situation. Benign commodity prices provide comfort on margin expansion, and interest expenses are likely to come down post the recent fund raise via QIP.

Promoter pledge has already come down to around 8% of the total shareholding, and with the expected IPO of real estate arm, we expect this to gradually wane down further. We slightly revise our estimates downward and roll forward our target price to Mar’27 estimates. Reiterate Buy on Kalpataru Projects with an SoTP-based target price of Rs 1,500, valuing core business at 19 times on two-year forward earnings.

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