KEC International · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
RO issues persist in transmission line completion despite Ministry of Power's revised higher compensation guidelines (voluntary for states). Gujarat and Rajasthan solar corridors particularly affected. MD acknowledged 'not good' situation despite some state adoption improving.
~$30 million ADB payment from Afghanistan projects delayed from Q2/Q3 to Q4 FY26 despite ADB written confirmation. World Bank and US Aid portions already received (Rs 450 crore recovered); total receivables at risk if further delays occur.
Water segment dues remain elevated at Rs 875 crore (flat vs March 2025) with payments on cash-and-carry basis. Madhya Pradesh improving but Odisha remains slow. Management adopted calibrated execution approach, directly impacting civil revenue growth.
NWC elevated at 138 days vs industry peers. Drivers: 20% retention in Saudi projects being released now, steel inventory buildup (Rs 250-300 crore conscious decision due to benign prices), AR overflow from September to October (Rs 400 crore), and Q4 payables reduction due to high Q4 revenues.
Non-T&D segments (civil, railways, cables, renewables, oil & gas) collectively delivering only ~1.5% EBITDA margin in H1 despite management's stated goal of reaching 8-9% EBITDA. Railways specifically underperformed with flattish/declining trajectory for 3-4 years.
MD admitted 'wrong calls' and execution delays in railways; expects flattish or downward trajectory next year with full recovery in FY27+. Competition from road players entering rail, lower order intake, and focus on technology segments (ETCS, signaling) yet to offset legacy project losses.
