A profit decline, slower guidance and rising borrowing have intensified scrutiny of KPI Green Energy’s shift from EPC projects to capital-heavy power generation.
KPI Green Energy’s slide to a fresh 52-week low in September has turned the stock into a test case for how investors are pricing renewable energy companies that are moving from faster, lighter EPC work into more capital-heavy power generation. The company’s latest quarterly results showed revenue growth slowing to 16% year on year in the first quarter of FY27, but the main disappointment was a 14% fall in profit after tax to Rs 95 crore, even as EBITDA margins improved and new projects were commissioned. That combination has left shareholders weighing whether the recent weakness is a warning sign or a chance to buy into a longer-term growth story.
The pressure is not unique to KPI Green Energy. Waaree Renewable Technologies also hit a new low recently after margins came under strain from higher costs and interest expenses, a reminder that renewable EPC players are facing a tougher operating backdrop. For KPI Green Energy, the problem is magnified by the company’s transition towards independent power producer, or IPP, assets, which typically deliver stronger operating margins but require far more borrowing and take longer to translate into earnings.
That shift helps explain why the market reacted so sharply to the quarterly numbers. Management cut its FY27 revenue growth guidance to 30% to 40% from 40% to 50%, citing billing timing and a more uncertain macroeconomic backdrop. Outgoing chief financial officer Salim Yahoo told investors during the earnings call that geopolitical conditions were repeatedly disrupting execution. At the same time, the company is adding to its debt load as it funds new IPP projects, and higher interest and depreciation charges have weighed heavily on profits.
The balance-sheet pressure matters because the market has largely been valuing KPI Green Energy on net earnings rather than on EBITDA, which rose more quickly. The company has already commissioned 0.97 gigawatts of IPP capacity, with another 1.6 gigawatts under execution, and it plans to spend Rs 5,000 crore to Rs 6,000 crore on IPP assets over the next two years. It is also moving into wind power through the acquisition of Alfanar Energy and Netra Wind, a deal that adds 507.9 megawatts of operational capacity. Management has said debt is a little more than twice equity and could rise further as the expansion programme continues.
There have been some offsets. The stock recovered sharply in the second half of September after new chief financial officer Kapil Kriplani addressed governance concerns, including promoter share pledges and royalty payments linked to chairman Faruk Patel. The company said the pledge on promoter shares would be removed by March 2027, and it introduced a cap on royalty payments. Longer term, KPI Green Energy is still talking about scale: it has a power trading licence, is exploring battery energy storage systems, and has set out a far larger target for both IPP and EPC capacity by 2032. For now, though, investors appear to be focused on a more immediate question: whether earnings can keep pace with the debt being taken on to build the next phase of growth.
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