KEC International reported a challenging second quarter for FY27 on November 2, 2026, as revenue, operating profit and net earnings declined sharply from the previous year. However, strong order inflows and a record order book highlighted the company’s substantial project pipeline.

The RPG Group infrastructure engineering, procurement and construction company reported consolidated revenue of ₹5,468 crore for the quarter ended September 30, 2026. This represented a decline of approximately 10.2% from ₹6,092 crore in the corresponding quarter last year.

Despite the year-on-year decline, management indicated that revenue improved sequentially, supported by its transmission and distribution business. This suggests that project execution gained some momentum compared with the immediately preceding quarter.

Consolidated EBITDA fell to ₹271 crore from ₹430 crore a year earlier, representing a decline of approximately 37%. The reduction in operating earnings was considerably sharper than the contraction in revenue.

EBITDA margin narrowed to 5.0% from 7.1% in Q2 FY26, a deterioration of 210 basis points. This indicates that operating costs absorbed a larger proportion of revenue during the quarter.

Profit before tax declined to ₹41 crore from ₹213 crore in the year-ago period. The corresponding PBT margin contracted to 0.7% from 3.5%, reflecting significant pressure on profitability.

Consolidated profit after tax stood at ₹30 crore, compared with ₹161 crore in Q2 FY26. This represented a decline of approximately 81.4%, while the reported PAT margin narrowed from 2.6% to 0.5%.

Financing costs remained another area of concern. Interest expense as a percentage of consolidated revenue increased to 3.5% from 2.8%, placing additional pressure on earnings after operating expenses.

The standalone business also experienced weaker financial performance. Revenue declined to ₹4,161 crore from ₹4,949 crore, while EBITDA decreased to ₹170 crore from ₹308 crore in the corresponding quarter.

Standalone EBITDA margin contracted to 4.1% from 6.2%. However, standalone PAT declined more moderately to ₹80 crore from ₹106 crore, indicating a different earnings pattern from the consolidated business.

For the first half of FY27, consolidated revenue stood at ₹10,491 crore against ₹11,114 crore a year earlier. This represented a decline of approximately 5.6%, reflecting weaker revenue recognition during the six-month period.

Half-year consolidated EBITDA decreased to ₹562 crore from ₹781 crore, while the EBITDA margin fell to 5.4% from 7.0%. These figures demonstrate that operating pressure extended beyond a single quarter.

Consolidated profit after tax for H1 FY27 declined to ₹102 crore from ₹285 crore in H1 FY26. The approximately 64% reduction highlights the cumulative impact of weaker margins and higher financing costs.

In contrast to the earnings decline, KEC International continued to secure substantial new business. Year-to-date order intake exceeded ₹13,500 crore, including approximately ₹9,500 crore from transmission and distribution projects.

The company’s consolidated order book reached a record ₹39,946 crore at the end of September 2026. This provides visibility into potential future project execution, although order-book value does not translate directly into immediate revenue or profit.

Including projects where KEC holds the lowest-bidder position, the combined order book and L1 pipeline stood at approximately ₹43,500 crore. These prospective opportunities remain subject to the relevant award and execution processes.

The transmission and distribution business continued to be an important contributor to order inflows. Its strong performance helped offset concerns arising from delays and disruptions affecting other project activities.

Management attributed the difficult operating environment partly to geopolitical and supply-chain disruptions in the Middle East. These challenges affected project execution and contributed to uncertainty surrounding costs and delivery schedules.

Domestic transmission projects also faced right-of-way and land acquisition challenges. Additionally, management referred to calibrated supplies on selected projects amid elevated global costs, affecting the pace of revenue recognition.

KEC reported consolidated net debt, including acceptances, of approximately ₹7,793 crore as of September 30, 2026. Net working capital stood at 155 days, making cash conversion and financing requirements important indicators to monitor.

Managing Director and CEO Vimal Kejriwal expressed confidence in improved performance during the coming quarters. Management highlighted the approximately ₹43,500 crore order book and L1 position, alongside a tender pipeline exceeding ₹2 lakh crore, while acknowledging near-term execution challenges.

For investors, KEC International presents a contrast between strong order visibility and weak current profitability. Future performance will depend on execution efficiency, margin recovery, working-capital management and the conversion of orders into profitable revenue. The results warrant balanced assessment rather than assuming that a record order book guarantees an earnings recovery.