A ban on the electricity grid may not have a major impact on KECIL

ET Intelligence Group: Power Grid Corporation of India’s (PGCIL) decision to ban KEC International (KECIL) from participating in tenders for the next nine months for non-compliance with contractual provisions is likely to result in loss of over ₹1,500 crore worth of orders for the latter. According to PL Capital, this could reduce FY27 earnings per share (EPS) by 2%. The company’s order pipeline for FY26 stands at ₹17,066 crore, up 17% year-on-year, with PGCIL contributing only about 4%. “PGCIL’s order inflow was estimated at around ₹1,500 crore in FY26, of which around ₹750 crore has been secured so far. Consequently, the company is likely to miss out on around ₹750 crore of potential orders in the remaining four months of FY26,” PL Capital said in a note. The brokerage firm estimates that KECIL will lose about another ₹700 crore worth of orders in the first five months of FY27. Moreover, its counterpart Kalpataru Projects International can benefit from PGCIL’s move in the short term.

On Tuesday, the company told the stock exchanges that it has been barred from participating in PGCIL tenders and awarding contracts for a period of nine months for alleged violation of contractual provisions.

However, the company on Wednesday clarified that the exclusion will not impact KECIL’s ongoing PGCIL projects, which constitute 15% (about ₹5,900 crore) of its total order book of ₹39,325 crore.

“The communication from PGCIL will not affect the implementation of the existing PGCIL projects,” KECIL said in a statement to the stock exchanges. The shares fell 9.1% to end Wednesday’s trading session at ₹710.2 on the BSE.

The company is exploring options including legal action or approaching PGCIL to reconsider the decision. Furthermore, the company does not anticipate any material impact on its ongoing operations or financial position. It is confident of meeting its annual order intake target as it has a strong tender pipeline of over ₹1.8 lakh crore and an L1 (lowest bidder) position of over ₹4,000 crore.