KEC International's Quarter: A Record Order Book, a 5.0% Margin and 155 Days of Working Capital

KEC International says its order book is the highest it has had, ₹39,946 crore, at 30 September 2026. In the same quarter consolidated revenue was ₹5,468 crore against ₹6,092 crore a year earlier, EBITDA margin was 5.0% against 7.1%, profit after tax was ₹30 crore against ₹161 crore, and net working capital stood at 155 days. The company attributes the quarter to Middle East disruption, right-of-way and land-acquisition delays in India and calibrated supplies on some projects, and says it is confident of an improved performance in coming quarters. The filings give no margin for the order book and no earlier figure for the 155 days, so they show how much work KEC has won, not what that work will earn or when it will turn into cash.

MoatSCORE: not yet scored (Moat Screener, 3 Nov 2026)

The idea in one sentence

An order book is revenue that has been promised, and what it is worth depends on two things it does not contain: the margin at which the work converts, and the cash it ties up on the way.

The fact that breaks the assumption

A record backlog suggests a business in demand. The same filings show something else. Order intake for the year to date was ₹13,528 crore against H1 revenue of ₹10,491.25 crore, 1.29 times (our arithmetic), and the order book of ₹39,946 crore is 7.3 times the quarter's revenue (our arithmetic). Yet consolidated EBITDA in the quarter was ₹271.28 crore against ₹430.41 crore a year earlier, down 37.0% (our arithmetic), on revenue that fell 10.2% (our arithmetic: ₹5,467.71 crore against ₹6,091.56 crore). The company's release says "Highest ever Order Book of Rs. 39,946 crore"; the same release gives EBITDA margin as "5.0% against 7.1%" ([PR]).

Of the ₹159 crore fall in EBITDA, about ₹115 crore comes from the lower margin and about ₹44 crore from the lower revenue (our arithmetic: the year-ago margin of 7.07% applied to this quarter's revenue would have given ₹386 crore). So most of the fall is not a volume story. It is what each rupee of work left behind.

Where the 210 basis points went

Rebuilt from the consolidated statement of [RS] (our arithmetic; revenue from operations of ₹5,467.71 crore, ₹5,023.54 crore in Q1 FY27 and ₹6,091.56 crore in Q2 FY26):

Against a year ago, materials fell as a share of revenue, but erection and sub-contracting rose by 3.8 points and employee benefits by 1.4 points. In rupees, revenue fell 10.2% while erection and sub-contracting rose 1.7% (₹1,749.34 crore against ₹1,719.86 crore) and employee benefits rose 7.1% (₹456.22 crore against ₹425.83 crore) (our arithmetic). The costs that carry sites and people did not shrink with the revenue. The filings do not say why; the company names disruption and supply issues ([PR]). Our reading is that this is what a stalled project looks like in a contractor's accounts, where the crews and overheads are there and the billing is not; the filings do not confirm it, and the mix between supply-heavy and service-heavy work also moves the table from quarter to quarter (materials were 41.7% of revenue in Q1).

By segment ([RS], note 4, before inter-segment elimination; our arithmetic), the EPC business earned ₹237.64 crore on ₹4,941.44 crore, 4.8%, against 7.0% a year earlier; the cables business ("Others") earned ₹33.64 crore on ₹613.30 crore, 5.5%, against 6.1%. The press release does not split EPC margin by business, so the filings cannot say whether transmission and distribution (T&D) margin fell more than civil or transportation margin.

What the company says caused it. The Managing Director and CEO, Mr. Vimal Kejriwal: "We navigated a challenging operating environment during the quarter on account of continued geopolitical and supply chain disruptions in the Middle East, Right of Way (RoW) & land acquisition related challenges in India T&D and calibrated supplies of select projects amidst the elevated global cost environment" ([PR]). The outlook slide lists "Revenue and margin timing impact" among the headwinds and says it will be offset in the coming quarters ([IP], slide 20). That is a forecast by the company; the filings carry no number against it.

What the book is made of

The deck's order book slide ([IP], slide 19) shows the ₹39,946 crore book as: T&D 65% (of which KEC's own T&D 56% and the SAE Towers business 9%), Civil 23%, Transportation 5%, Cables and Conductors 3%, Renewables 3%, Oil and Gas 1%; and 58% domestic, 42% international. Applied to the book, T&D is about ₹26,000 crore and international about ₹16,800 crore (our arithmetic, off rounded percentages). The year-to-date intake of ₹13,528 crore is 70% T&D and 71% domestic ([IP], slide 19): about ₹9,500 crore of it from T&D ([PR]). The company also quotes "Order Book + L1" of about ₹43,500 crore, which is about ₹3,550 crore above the order book (our arithmetic); the deck does not define L1, and in tendering it usually means the lowest bidder, not yet awarded (our reading).

Two things follow. First, the new orders are weighted to India, while 42% of the book still sits abroad, and the Middle East is the first cause the company gives for the quarter's performance ([PR]). Second, the segments that fell hardest in revenue are small in the book: Transportation revenue was ₹224 crore against ₹425 crore and Renewables ₹13 crore against ₹190 crore ([IP], slide 17), together ₹378 crore of the ₹624 crore fall in revenue (our arithmetic, off the deck's rounded figures), while they are 5% and 3% of the book. So the book is rich in T&D, whose revenue fell 10% from a year earlier (₹3,686 crore against ₹4,080 crore, [IP] slide 17) but which the company says led the rise in revenue from Q1 ([PR]), and thin in the two businesses that fell most. The filings do not say which of these carries the lower margin.

The cash side: 155 days

The press release says "Net Working Capital (NWC) stands at 155 days as on 30 Sept’26" ([PR]), and the deck lists "Elevated working capital and debt levels" among the headwinds ([IP], slide 20). Net debt including acceptances was ₹7,793 crore, against ₹6,722 crore at 31 March 2026 and ₹6,480 crore at 30 September 2025 ([IP], slide 18), up ₹1,071 crore over the half. The company's explanation, from the same slide: "Spillover of collections of ~Rs. 600 Cr, primarily in the Middle East and Afghanistan which have been realized in Oct’26"; extra strategic inventory of about ₹150 crore (slide 18) or ₹160 crore (slide 11) built "to manage commodity price volatility"; and "Lower than expected realization in Water & Metro projects". It adds: "Net Debt expected to come down to ~Rs. 6,000 Cr by the end of the year".

The balance sheet and cash flow ([RS], consolidated) show what happened underneath (our arithmetic, 30 Sep 2026 against 31 Mar 2026):

• Trade receivables fell ₹864.66 crore, to ₹5,609.55 crore, and contract assets, the unbilled work, rose ₹112.67 crore to ₹12,240.23 crore, 2.2 times the quarter's revenue.
• Trade payables (both lines) fell ₹1,132.51 crore, to ₹7,570.74 crore. Our reading: the company collected from customers and paid suppliers by more, which leaves it carrying the work on its own borrowings; the filings do not say whether suppliers shortened their terms.
• Inventories rose ₹160.49 crore, and other current assets ₹328.20 crore.
• Current borrowings rose ₹908.79 crore, to ₹5,350.65 crore.
• Net cash used in operating activities in H1 was ₹400.37 crore, against ₹917.09 crore used in H1 FY26. The financing section shows a net ₹916.97 crore increase in short-term borrowings, against ₹146.12 crore of dividend paid and ₹340.81 crore of finance costs paid; investing outflow was ₹91.73 crore.

Note the fair reading: the operating outflow in H1 was smaller than a year earlier, and the company's note on cash is that ₹600 crore of collections slipped into October. The company's own ratios in note 3 of [RS] tell the same story as the table: debtors turnover 94 days against 82 a year earlier (109 in Q1) and inventory 50 days against 36 (56 in Q1); debt-equity 1.04 against 0.94; interest service coverage 1.44 against 2.24; debt service coverage 0.90 against 1.63 (the company's definitions, in the note). Finance costs were ₹190.66 crore against ₹171.49 crore, up 11.2% (our arithmetic), 3.5% of revenue against 2.8%; EBITDA covered finance costs 1.4 times against 2.5 times (our arithmetic).

For the net debt target: the deck says only "Net Debt expected to come down to ~Rs. 6,000 Cr"; reading it as the measure including acceptances (the narrower "Net Debt" line is ₹5,614 crore), from ₹7,793 crore to about ₹6,000 crore is a fall of about ₹1,793 crore (our arithmetic). The ₹600 crore of delayed collections is a third of that. The filings do not say where the rest comes from.

From EBITDA to profit

Profit before tax was ₹40.88 crore against ₹212.98 crore, and profit after tax ₹29.74 crore against ₹160.75 crore, down 81.5% (our arithmetic; the deck shows 82%); earnings per share were ₹1.12 against ₹6.04. Between EBITDA and profit before tax, the fall in EBITDA of ₹159.13 crore, a rise in finance cost of ₹19.17 crore and a ₹8.64 crore rise in other income account for the ₹172.10 crore fall (our arithmetic, with depreciation up ₹2.44 crore). Total tax was ₹11.14 crore, 27.3% of profit before tax (our arithmetic), made up of a current tax credit of ₹34.19 crore and deferred tax of ₹45.33 crore; the filings do not explain the current tax credit. For the half year, profit after tax was ₹102.37 crore against ₹285.34 crore ([RS]).

Standalone profit after tax of ₹80.41 crore is higher than the consolidated ₹29.74 crore. The standalone statement carries other income of ₹98.60 crore against ₹9.45 crore a year earlier and a tax credit of ₹4.90 crore, while the consolidated other income is ₹13.27 crore. The filings do not say what the standalone other income is. The consolidated figures are the ones used here.

What the filings say about quality

The limited review by Price Waterhouse Chartered Accountants LLP is on both the consolidated and standalone statements and carries the standard negative assurance: "nothing has come to our attention that causes us to believe" that the statement has not been prepared in accordance with Ind AS 34 or misstates it ([RS], review report, paragraph 5). Both reports then draw attention to a matter: the consolidated report says the possible impact of an investigation by a government agency on the consolidated results "is currently not determinable", and that the conclusion is not modified ([RS], paragraph 6). Note 6 says the matter involves "one Public Sector Undertaking ("PSU") official and an employee of the Company" in connection with a transmission project, that "the Chargesheet has been filed and the Court has taken cognizance of the same", and that the Company is "of the view that the case will not have any material impact on the operations and financial results of the Company". The filings give no amount.

A large part of the revenue was reviewed by other auditors: the review report lists revenue from operations for the quarter of ₹1,684.58 crore for 37 branches and 34 jointly controlled operations, ₹508.46 crore for 11 subsidiaries and ₹649.25 crore for 2 branches and 4 foreign subsidiaries, together ₹2,842.29 crore or 52% of consolidated revenue (our arithmetic; the report's figures are before consolidation adjustments, our reading). The results are unaudited.

What an order book is worth

An order book becomes a profit only after it is executed at a margin and collected. A sensitivity, not a forecast: at this quarter's EBITDA margin of 4.96%, ₹39,946 crore of orders would carry about ₹1,982 crore of EBITDA; at the year-ago quarter's 7.07%, about ₹2,822 crore; the gap is about ₹841 crore (our arithmetic). That ignores timing, mix, finance cost and the fact that the filings give no margin for this book. It shows the order of magnitude of what a two-point margin change does to a book this size. Finance cost alone was 3.5% of revenue in the quarter.

In our reading, the order book cannot show pricing power until it converts. The filings do not say how much of the book is fixed-price or carries escalation, so how far the margin is set at award and how far it is earned afterwards in execution is not known. Q2 is the quarter in which the order book and the margin moved in opposite directions, and the company attributes the quarter's performance to disruption, delays and supply issues during the period ([PR]). If that is the whole story, the margin was lost in execution rather than repriced, and a bigger backlog gives the same risk more work to run on. If it is not, and the book was won on thinner terms, the filings cannot tell the difference.

Where this breaks

• We cannot see the margin on the book. No margin, no fixed-price or escalation split, and no earlier order book figure appear in the filings. "Record" is the company's word ([PR], [IP] slide 11).
• The company's explanation is a forecast. It says the effect will be offset in the coming quarters and the CEO is "confident of an improved performance in the coming quarters". That is the company's view; the filings carry no number and no date.
• Cash may not follow when the ₹600 crore arrives. The company says it was realised in October; the filings do not show it. Receivables are down, payables are down by more, and current borrowings are up ₹908.79 crore over the half. Debt service coverage of 0.90 is below 1 on the company's own definition.
• Disputes are acknowledged, not sized. The deck lists "Resolution of legal claims/ disputes in Transportation and Metro projects getting prolonged" and "Delay in payments in Water projects" as headwinds ([IP], slide 20). Contract assets of ₹12,240.23 crore are 2.2 times the quarter's revenue and the filings give no ageing.
• Strongest case against our reading. The same deck shows revenue up 9% from Q1 ([IP], slide 11), which the CEO says was "led by our T&D business" ([PR]); orders and L1 positions from PGCIL of over ₹3,000 crore that the company says include, in the deck's words, the "largest-ever order in India T&D from PGCIL" ([IP], slide 12); and cables revenue up 17% ([IP], slide 12). Our reading: if Middle East shipments and right-of-way approvals normalise, the margin could recover without any change in the way orders are priced. One quarter cannot tell the two cases apart.
• A review, not an audit. A limited review does not test why margins moved.

What to watch

1. EBITDA margin in the December quarter against 5.0% (Q2) and 5.8% (Q1, our arithmetic: ₹290.81 crore on ₹5,023.54 crore), and whether the company gives the cost of the disruption in rupees.
2. Net debt including acceptances against ₹7,793 crore and the stated aim of about ₹6,000 crore by year end, and net working capital against 155 days with a definition.
3. Operating cash flow for the full year against EBITDA, and receivables and contract assets against ₹5,609.55 crore and ₹12,240.23 crore.
4. Any figure for the margin of the order book and the share of it that carries price escalation.
5. The call transcript, when filed, and any further disclosure on the government-agency investigation of note 6.

The concrete thing, again

The number to hold from the filings is not the ₹39,946 crore. It is the pair under it: EBITDA of ₹271.28 crore on revenue of ₹5,467.71 crore, and 155 days. A backlog 7.3 times the quarter's revenue is the right to do a great deal of work; what the work earns and when the cash arrives are the two things this quarter's filings show moving the wrong way.

Sources

• [RS] KEC International, results for the quarter and half year ended 30 Sep 2026, notes and review reports (NSE)
• [PR] KEC International, press release on the results (NSE)
• [IP] KEC International, investor presentation Q2 FY27 (NSE)

Educational research, not investment advice. Every figure above is drawn from KEC International's own filings of 2 November 2026, read from the primary documents; derived figures are our arithmetic, labelled as such. MoatSCORE: not yet scored (Moat Screener, 3 Nov 2026). No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.