Despite achieving record revenue and order intake, KEC International faces ongoing concerns over profit margins, debt levels, and cash conversion, raising questions about the sustainability of its growth story.
KEC International’s latest numbers show a company growing larger without yet proving that growth is translating into cleaner profits or cash. Revenue hit a record ₹23,506 crore in the year ended 31 March 2026, and order intake also reached an all-time high at ₹25,280 crore, but the market has remained sceptical because margins, debt and working capital have yet to show a durable repair, according to the company’s own year-end disclosure and recent broker notes.
That caution is understandable. Value Research says KEC’s top line has almost doubled since FY20, yet profit after tax has barely moved over the period, while interest costs have climbed sharply and eroded much of the operating gain. The company’s net debt, including acceptances, rose to ₹6,722 crore in FY26 even after a small quarterly reduction, and EBITDA margin slipped to 7.5% from 10.1% in FY20.
The strain is rooted in how KEC does business. As a large engineering, procurement and construction group within the RPG Group, it still relies heavily on transmission and distribution work, but it has also expanded into railways, civil projects, water, metros, pipelines and cables. According to Value Research, the non-T&D businesses have added scale without adding much profit, while some legacy railway and metro projects have tied up capital and dragged on cash generation.
Cash conversion has been the most troubling part of the story. Value Research calculates that between FY20 and FY26 the company converted only 17% of cumulative EBITDA into operating cash, with working capital consuming most of the rest. In FY26, even a record revenue year produced negative operating cash flow of ₹414 crore. Recent company updates also show working capital still stretched: ICICI Direct reported net working capital of 138 days at the end of September 2025, above 130 days a year earlier.
Receivables remain a major issue. Value Research says billed receivables, unbilled revenue and retention money together amounted to ₹18,602 crore at the end of FY26, with about nine months of sales effectively parked with customers. Yet there are signs of repair. The company has cut back on lower-margin non-T&D work, its order book stood at ₹36,267 crore at the end of March 2026, and management has pointed to a further pipeline above ₹40,000 crore including the L1 position. KEC has also said it expects proceeds from overdue receivables, retentions and arbitration awards to help reduce debt.
The investment case now turns on whether that repair can outpace the structural demands of the business. KEC’s first quarter of FY27 showed debt down by ₹154 crore and revenue broadly flat, which suggests management is prioritising cash collection over aggressive growth. But with large contracts, long billing cycles and retention-heavy projects still dominating the mix, the company must prove that stronger order inflows can finally be converted into steady cash and better returns. Until then, the stock’s lower valuation may reflect not pessimism about demand, but doubt about execution.
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