Key highlights of the 1QFY27 Result Growth impacted by project billing delays; underlying execution remains strong:
Revenue and EBITDA grew 15% and 19% YoY while profit declined by 18% YoY. Management attributed the relatively slower growth to timing differences in billing and revenue recognition on large CPP projects rather than any slowdown in execution or demand. The company maintained its growth outlook, supported by a CPP order book of nearly Rs 5,000 cr.
IPP portfolio entering monetization phase, but near-term earnings remain pressured:
IPP generation grew nearly 4x YoY to 27.9 cr units while 1QFY27 power generation already exceeded 65% of FY26. However, newly commissioned projects are currently absorbing higher depreciation and interest costs, resulting in pressure on PAT. Management expects the full benefit of these assets to reflect gradually through FY27 and more meaningfully from FY28 onwards.
Strong order book provides healthy long-term visibility:
KPI Green continues to maintain a robust execution pipeline with a CPP order book of nearly Rs 5,000 cr (3.2 GW) and IPP unexecuted order book of 1.6 GW. While CPP to be executed over next 18-24 months, IPP will get fully executed by FY28. The total renewable portfolio stood at 6.94 GW (including operational capacities). The company is simultaneously expanding across IPP, CPP, battery storage, wind, floating solar and international projects, providing multi-year revenue visibility.
Growth guidance lowered; We cut our projections across revenue and profitability:
Management indicated that near-term growth could be lower than earlier expectations due to geopolitical disruptions, higher input costs and project execution timing. The company is now targeting 30-40% revenue growth versus its earlier expectation of 40-50%, while expecting profitability to improve gradually as newly commissioned IPP assets stabilize. Given the weaker-than-expected performance in 1QFY27 and the seasonally weak 2QFY27, we have reduced our FY27E/FY28E revenue estimates by 14-16% and earnings estimates by 20-25%. While the longterm growth opportunity remains intact, we would prefer to closely monitor execution progress, project commissioning and IPP stabilization over the next few quarters.
Valuation attractive; Maintain BUY with a reduced Target Price of Rs 426
At the current market price of Rs 312, the stock trades at FY27E/FY28E P/E multiples of 12.7x/8.8x, based on estimated EPS of Rs 24.6/Rs 35.5, respectively. Despite lowering our revenue and earnings estimates to reflect weaker-than-expected execution, elevated depreciation and finance costs, and a more conservative growth outlook, we believe the current valuation adequately discounts these near-term challenges. The company continues to enjoy strong revenue visibility backed by a Rs 5,000+ cr CPP order book, a rapidly expanding IPP portfolio and growing annuity income streams. Further, opportunities in BESS, energy trading and international markets provide additional growth levers over the medium term. We therefore maintain our BUY rating while reducing our target price to Rs 426 (valuing 12x of FY28E EPS of Rs 35.5) to reflect the revised earnings trajectory thus providing an upside potential of 36.6%.
