Kalpataru Projects International is a beneficiary of the governments continued focus on the infrastructure sector and Indias buoyant economic growth prospects

Kalpataru Projects has already yielded 100% return but any growth left? Here's what analysts say Should you buy this stock?

Construction engineering company Kalpataru Projects International reported a healthy operating performance in the September 2024 quarter with a 7.6% and 17% increase in revenue and net earnings on a year-on-year basis. While decent execution supported revenue growth, a lower effective tax rate aided PAT growth. Segment-wise, T&D (domestic and international), Building and Factories, and Oil and Gas continue to do well whereas Railways and Water segments are seeing persistent challenges.

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The company has a global footprint in 75 countries and a diversified presence in high-growth sectors. Its order book is robust at Rs.60,631 crore (at the end of the September quarter), which provides strong revenue visibility. It is a beneficiary of the government’s continued focus on the infrastructure sector and India’s buoyant economic growth prospects. Expanding global population, urbanisation, escalating demand for electricity, a rising shift towards cleaner and more sustainable energy sources and electrification of transport are some of the factors that are supporting the ordering momentum in domestic and global T&D segments. Government programs to enhance connectivity (roads, railways, metro, airports) and upgrade urban infrastructure are generating opportunities in the construction sector.

Strong investments by oil PSUs in exploration, refineries and expansion of pipelines have improved the demand outlook in the Oil and Gas segments. Government programs for providing drinking water and safe sanitation to urban and rural households are driving the Water segment. The Building and Factories segment is seeing strong traction due to the rising demand for residential, commercial and institutional properties and the government’s focus on affordable housing. The management continues to focus on strengthening its core business by augmenting its manufacturing expertise. A large and strategic fleet of construction equipment and machinery, in-house design and engineering, end-to-end project management capabilities to serve global markets and long-term relationships with clients are some of the key strongholds of the company.

The recent fundraise of Rs.1,000 crore through QIP will strengthen its balance sheet and will help the company in capacity expansion or exploring inorganic growth opportunities. In addition, the divestment from Vindhyachal Expressway and Indore real estate projects will create cash flows of Rs.650 crore in the future. Such cashflows will be used for partial debt reduction.

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A recent Emkay report says that the company is set to benefit from sectoral tailwinds given its disciplined approach in order picking and impeccable execution track-record. The stock has significantly outperformed the market benchmark in the last one year with 100.9% returns compared to BSE Sensex with 10% returns.

Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.

This story originally appeared on: India Times - Author:Faqs of Insurances