 "Why Kalpataru Projects, KEC Int'l stocks may outperform; analysts decode")
India’s power transmission sector is seeing renewed traction with the Central Electricity Authority’s (CEA) ordering pipeline expanding steadily in recent months after a soft patch in the early part of FY26, according to Motilal Oswal Financial Services.
Analysts at Motilal Oswal see sustained demand visibility for transmission Engineering, Procurement, and Construction (EPC) companies such as Kalpataru Projects International (KPIL) and KEC International (KEC), supported by large-scale projects, international opportunities and improving margin prospects.
On the bourses at 10:00 AM, Kalpataru Projects was trading 0.55 per cent higher at ₹1,308.15 per share, while KEC International was down 0.24 per cent at ₹880.50. In comparison, BSE Sensex was trading 0.31 per cent higher at 82,037.62 levels.
“CEA’s pipeline has been building up over the last few months, with projects worth nearly ₹70,000 crore recommended by the National Committee on Transmission (NCT) to the Ministry of Power in the last six months,” said Teena Virmani and Prerit Jain, research analysts at Motilal Oswal. They added that the addressable market for transmission projects stands at ₹1-1.5 trillion over the next 12-18 months, driven by 45 ISTS-TBCB projects awarded last year, with a capex potential of ₹1.5 trillion.
Execution timelines of 24-54 months for these projects are expected to ensure “a healthy order pipeline and improved revenue visibility” for transmission-focused players. State-run Power Grid Corporation of India Ltd. (PGCIL) aims to corner a 50-60 per cent market share in overall TBCB tendering and has outlined a capex of ₹28,000 crore for FY26.
The competitive landscape is also intensifying, with established players such as Adani Energy Solutions, Resonia (formerly Sterlite Power) and Tata Power facing new entrants including Reliance Industries, Torrent Power, D R Agarwal Infracon and KCC Buildcon.
“Companies like KPIL and KEC, which work with both PGCIL and private developers, thus have a strong addressable market over the next few years,” Motilal Oswal noted. ALSO READ: Karbonsteel Engineering makes solid debut; shares list at 16% premium
Focus on HVDC, international markets
The transmission opportunity is set to broaden with high-voltage direct current (HVDC) projects. During FY25, 45 ISTS-TBCB schemes were awarded, including two HVDC projects. For FY26, the brokerage expects projects such as the Khavda-South Olepad (KPS III) HVDC line and the Leh-Ladakh HVDC project to be finalised.
Both KPIL and KEC are targeting HVDC and international markets alongside non-T&D segments. Commodity price stability is likely to aid profitability. “T&D margins are already in double digits for both KEC and KPI. A sustained decline in commodity prices is likely to improve margins for transmission EPC players in the future,” analysts said.
KPIL: Strong order book visibility
Kalpataru Projects International continues to benefit from robust traction in its transmission segment, with order inflows of ₹10,200 crore, ₹11,200 crore and ₹14,500 crore in FY23, FY24 and FY25, respectively, analysts at Motilal Oswal said. The share of T&D revenue has steadily increased from 42 per cent in FY23 to 53 per cent in FY25.
Thus, Motilal Oswal expects KPIL to report a revenue CAGR of 17 per cent and a PAT CAGR of 30 per cent over FY25-28, with margins improving by 90 basis points to 9.3 per cent. “We reiterate our ‘Buy’ rating on KPIL with a SoTP-based target price of ₹1,450, valuing the core business at 18x P/E,” the brokerage said.
Beyond transmission, KPIL is also scaling up in building and factories (B&F), oil and gas projects in the Middle East, and metro and corridor infrastructure, supported by marquee clients such as Prestige, Purvankara and DLF.
KEC: Sustained T&D momentum
KEC International’s transmission segment also remains its primary growth driver, with inflows of ₹9,000 crore, ₹10,100 crore and ₹15,600 crore in FY23, FY24 and FY25. The contribution of T&D revenue has risen from 50 per cent in FY23 to 59 per cent in FY25.
“We expect KEC to deliver a revenue CAGR of 18 per cent and PAT CAGR of 36 per cent over FY25-28, with margin expansion of 120 bps to 8.1 per cent,” analysts at Motilal Oswal said. They added that the company’s plans to expand its civil business into B&F could aid diversification, though railways and water will remain lower-priority areas.
Despite healthy growth prospects, analysts maintained a ‘Neutral’ rating on KEC with a target price of ₹950, valuing the stock at 21x Sep’27E EPS.
Risks
The brokerage flagged key risks including slowdown in execution, weaker-than-expected inflows, a sharp rise in commodity prices, higher receivables and working capital needs, as well as promoter pledge increases.
“Overall, we maintain our positive stance on the T&D opportunity in India. With a strong order pipeline, favourable commodity trends and sustained domestic and international traction, the sector is well positioned for healthy growth over the next few years,” analysts said.