KEC International Ltd. expects cash flows and return on capital employed to improve from the December quarter, even as cost pressures in international markets and challenges in its civil and railway businesses continue to weigh on profitability. Managing Director and CEO Vimal Kejriwal said the company remains confident about its transmission and distribution business, supported by a strong tender pipeline and growing opportunities in India and overseas markets.
Speaking to NDTV Profit, Kejriwal said that the company has maintained its revenue growth guidance of 12% to 15% and is targeting high single-digit margins by FY28. It has set a FY27 order inflow target of nearly Rs 30,000 crore, with 60-70% expected from the transmission and distribution segment.
READ | KEC International Bags Rs 1,014 Crore Transmission And Distribution Orders In India
KEC International Order Book, Tender Pipeline
KEC International recently secured new orders worth Rs 1,014 crore in its India transmission and distribution business, including its first 765 kV transmission line project linked to a pumped storage plant in Western India. Its year-to-date order intake has crossed Rs 9,600 crore.
Kejriwal said the company has an additional Rs 6,500 crore in L1 positions, largely in transmission and distribution, which it expects to convert into orders. Its tender pipeline exceeds Rs 2 lakh crore, split broadly between T&D and non-T&D businesses.
The company is also pursuing opportunities in high-voltage direct current transmission projects and has entered the data centre power evacuation segment. KEC is in discussions with several data centre developers for transmission lines and substations, while also bidding for civil construction projects in the segment.
Kejriwal said the outlook for T&D remains strong, supported by India's renewable energy expansion and infrastructure investment in the Middle East. International order inflows are expected to contribute Rs 9,000 to Rs 10,000 crore to the FY27 target.
Middle East Costs, Jal Jeevan Mission Payments
The Middle East, which accounts for around a quarter of KEC's order book and L1 positions, remains a key execution challenge. Supply chain disruptions and elevated freight, insurance, logistics, and power costs have affected project deliveries and margins. The company is discussing cost recovery with customers, with the impact expected to extend from the June quarter into the September quarter.
Kejriwal said tender conversions in the region, particularly Saudi Arabia, have been slower than expected, although the opportunity pipeline continues to expand.
Separately, delayed payments under the Jal Jeevan Mission have increased working-capital requirements in KEC's water business. Receivables from projects in Madhya Pradesh and Odisha had reached Rs 800 to Rs 900 crore, of which Rs 400 to Rs 500 crore was overdue. He also said that collections have begun improving, with Rs 110 crore received during July and August.
Cash Flows To Improve Before Margins
Kejriwal expects cash flows and return on capital employed to improve from the third quarter as payments from completed projects come in. However, pressure in the civil and railway businesses could continue to affect margins in the near term.
He said a more sustained improvement in margins is expected from the next financial year, with FY28 emerging as a key milestone for the company's profitability.
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