Summary
KEC International Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 6:00 PM
Event Participants
Executives 2 Rajeev Aggarwal, Vimal Kejriwal
Analysts 6 Amit (PL Capital), Ashwani (Emkay Global Financial Services), Balasubramanian (Arihant Capital), Harshit (Axis Capital), Parikshit (HDFC Securities), Saket Kapoor (Kapoor Company), Vaibhav Shah (JM Financial)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹6,001 crores | +12% YoY; record quarterly revenue led by T&D execution momentum. |
| 9M Revenue | ₹17,116 crores | +14% YoY; T&D segment contribution increased to 67% of total. |
| EBITDA Margin | 7.2% | +20 bps YoY; impacted by slow water projects and metro closure costs. |
| 9M EBITDA Margin | 7.1% | +50 bps YoY from 6.6% in 9M FY25. |
| Interest Expense | 2.9% of Revenue | -30 bps YoY; sustained focus on interest cost optimization. |
| Operating PAT (Q3) | ₹171 crores | Excludes exceptional provision of ₹59 crores for new Labor Code. |
| Order Intake (YTD) | ₹19,300 crores | 70% of intake secured by T&D segment; L1 position at ₹4,500 crores. |
| Order Book | ₹36,725 crores | Strategic shift toward private sector in India T&D (75% market share). |
| Net Debt | ₹6,806 crores | Increased from ₹5,574 crores YoY due to inventory and water project payment delays. |
Geographic & Segment Commentary
- T&D (Transmission & Distribution): Delivered revenue of ₹4,161 crores (+31% YoY) driven by strong execution in India and Middle East. The business secured its largest-ever ₹1,050 crore domestic order and successfully commissioned the Ahmedabad-Navsari line.
- Civil: Recorded revenue of ₹923 crores; performance was hampered by labor shortages (impact of ₹500-600 crores) and slow collections in the Water segment. Strategic focus has shifted entirely to Buildings & Factories, which now constitutes 60-65% of the segment’s ₹11,000 crore order book.
- SAE Towers: Achieved robust revenue growth of 70% to ₹525 crores with double-digit margins. The business secured ₹1,250 crore in YTD orders for tower supply in Mexico, USA, and Brazil, benefiting from a North American market uptick.
- Cables & Conductors: Reported ₹556 crores in revenue (+37% YoY) with record nine-month profitability. Growth was driven by an improved product mix and high demand in the conductor business.
Company-Specific & Strategic Commentary
- Capacity Expansion: Butibori facility expansion to be completed by March 2026; small investments made in Brazil and hardware facilities to meet global T&D demand.
- Private Sector Shift: Privatization of intrastate T&D via the TBCB route saw private player market share rise to 75% from 45% YoY; KEC is prioritizing orders from private developers like Adani and Sterlite.
- Technological Diversification: Entered the Wind Energy segment with a 100+ MW order; focusing on technology-led railway projects like KAVACH (1,836 route km under deployment) over low-margin civil work.
- Operational De-risking: Consciously de-growing the Transportation business for 1-2 years to exit legacy/low-margin projects and resolve claims.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 EBITDA Margin | 7.0% - 7.5% | Lowered from 8-8.5% due to Water segment delays and project closure costs. |
| Net Debt | ₹5,500 crores by March 2026 | Expected normalization through large collections and strategic inventory reduction. |
| Working Capital | 110 - 115 days | Management expects to maintain current levels despite execution scale-up. |
| FY27 Order Intake | ~₹35,000 crores | Based on a robust tender pipeline of ₹180,000 crores across segments. |
Risks & Constraints
| Risk | Context |
|---|---|
| Labor Availability | Shortage of 3,000-4,000 workers impacting the Civil segment; Q3 revenue hit estimated at ₹500-600 crores. |
| Water Project Payments | ₹1,400 crore order book exposure with ₹900 crore receivables; management has adopted a “cash-and-carry” execution model. |
| Execution Delays | Row (Right of Way) issues and non-availability of substation land are slowing high-margin T&D projects. |
| Working Capital | Slow closure of legacy railway and metro projects is keeping capital blocked and interest costs high in absolute terms. |
Q&A Highlights
Margin Guidance Revision
- Question: Why has the margin guidance been reduced to 7.0%-7.5%? (Vaibhav Shah)
- Answer: Primarily due to the slowdown in high-margin Water projects and unexpected maintenance costs for completed metro projects awaiting inauguration (Vimal Kejriwal).
Private Sector T&D
- Question: What is the impact of PGCIL’s reduced domestic share? (Rupesh)
- Answer: Private sector now holds 75% of TBCB orders; KEC is successfully securing orders from all major private players including Adani, Sterlite, and IndiGrid (Vimal Kejriwal).
Chinese Supply Chain
- Question: How does opening up imports from China benefit KEC? (Amit)
- Answer: As an EPC player, KEC benefits from easier procurement of critical components (transformers/GIS) which currently have 18-24 month lead times (Vimal Kejriwal).
Debt Reduction
- Question: What is the plan for bringing down the ₹6,806 crore debt? (Parikshit)
- Answer: Large receivables from Saudi moved into January; debt already fell by ₹300 crores in Jan and ₹5,500 crores is the year-end target (Vimal Kejriwal/Rajeev Aggarwal).
Key Takeaway
KEC International delivered record quarterly revenues of ₹6,001 crores, led by a 31% surge in the T&D business. Despite top-line growth, management lowered FY26 EBITDA margin guidance to 7.0%-7.5% due to execution headwinds in the Water segment, labor shortages in Civil, and higher maintenance costs for legacy metro projects. Strategically, the company is pivoting toward private sector T&D (now 75% of the market) and technology-intensive railway projects like KAVACH, while de-risking from low-margin civil transportation work. With a robust order book plus L1 position of over ₹41,000 crores and a tender pipeline of ₹180,000 crores, KEC remains positioned for volume growth. The company targets a substantial debt reduction to ₹5,500 crores by March 2026 as legacy project closures and international collections accelerate.
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