KP Energy - Lotus in muddy water

Few interesting observations / questions:

  1. What is work contract income in ‘Revenue from Operations’ breakup? Which part of business does it fall under?

  2. The company has provided great details in some footnotes. For example, just look at notes of Security Deposits, Short-term loans and advances and many more.

    However not much information is provided for Inventories. Why is that so? Someone who is so happy to provide breakup of loans should be much more happy to provide breakup of inventories? Also can someone help what would these inventories be?

  3. Trade Receivables / Revenues are increasing continuously from 7% in FY15 to 38% in FY18. What’s the explanation?

  4. Can we please get revenue breakup from customers? Like how much percentage does Suzlon contribute and how much does Gamesa contribute and so on. Want to ensure there is no customer concentration risk.

  5. Do auditors own 1.16% of the company? Look at the tenth shareholder name “Sanjay M Sanghavi”. If yes, it is a good sign. Auditors are “K A Sanghavi”.

Disclosure: Not invested. Not a buy / sell recommendation. Not a SEBI registered analyst.


Very Poor Q3 results from KP Energy.

Is anyone still following this company? Can anyone explain the recent development of the result of Gujarat High court for petition filled against the company.

1 Like

As Wind sector went into turmoil due to policy issues like FEED in Tariff to Reverse bidding auction way, so now as agencies are thinking to scrap reverse bidding and bring something new --can this sector revive
Currently my understanding is yes
It will improve the bidding rates to realistic level ( as compared to unsustainable low levels)
It will improve bidding in states apart from Gujarat and Tamil Nadu
It will improve margins of players
New biddings coming for offshore projects can revive this and confirm this

Started reading and went through full thread and company presentations from last three years.
Watching this space with curiosity and may take some quantity


windpowerpolicy2022.pdf (1.5 MB)
Reverse bidding of projects in wind power.pdf (2.8 MB)

1 Like


According to the CEA, wind and solar energy are the most prevalent renewable energy sources, aside from large hydroelectric power plants (more than 25 MW). At the end of January 2022, wind energy contributed 38% to India’s total renewable energy capacity.

Wind energy capacity increased at a CAGR of 8.4% from FY14 to FY22.

India’s wind energy sector is led by the country’s own Wind Turbine Generators (WTG) manufacturing industry, which has made steady progress over the years. A robust ecosystem, project operation capabilities, and a manufacturing base capable of producing approximately 10,000 MW per year have emerged from the rise of the wind sector. As a result, it achieved a cumulative capacity of around 40 GW in January 2022.

The pandemic, and most recently the second wave in India, had undoubtedly impacted the Indian wind energy industry’s performance. Production of wind towers, among other fabrication work, was de-prioritised as oxygen supply for industrial processes was diverted to medical requirements during this phase. However, since the second half of 2021, manufacturing and installation activities have slowly picked up. As a result, over 1.4 GW of wind energy assets are estimated to have been installed (by GWEC), surpassing the 1.1 GW installations from FY21.


India aims to achieve an installation of 450 gigawatts (GW) of renewable energy capacity by 2030 to decarbonise its energy sector while pursuing its commitment to becoming a net-zero country by 2070. Currently, India’s installed renewable energy capacity is 111.39 GW. According to the latest data, India (2021-22), added 15.5 GW of renewable energy capacity with $14.5 billion (Rs11,338.8 crore) investment pouring into the sector.

30 GW of the committed capacity is to be achieved exclusively through offshore wind capacity, adding mileage to this sector.

India’s 7,600 KM long coastline, which is one of the longest in the world, provides vast potential for offshore wind power asset development in the nation.

Beginning from FY23, offshore wind bids to the tune of 4 GW per year (for a period of three years) are expected to be rolled out off the coast of Tamil Nadu and Gujarat for the sale of power through open access, captive, bi-lateral third-party sale, or merchant sale route.

KP Energy - A major player in the wind energy industry

KP Energy Limited is a leading name in the wind energy industry, providing Balance of Plant (BoP) solutions to its clientele.

Its presence is across the entire wind farm development value chain, right from the conceptualisation stage to the commissioning of a project, and thereafter operation and maintenance of the project.

KP Energy also plays a critical role in coordinating a wide range of activities related to utility-scale wind farm development.

Providing the turnkey balance of plant solutions for the project, including wind site locations, obtaining necessary approvals and development permits, wind data management, etc.

The company is a part of KP group which has an established track record of more than two decades in the infrastructure industry. KP Group is engaged in businesses of utility-scale renewable energy projects, microgrid solar projects, construction projects, fabrication & galvanizing and telecom infrastructure (telecom tower & OFC network) through its group companies. Promoted by Faruk Patel and Ashish A Mithani, KPEL is currently managed by Faruk Patel who possesses more than two decades of experience in various industries and around a decade in the wind energy segment. He is ably supported by his son Affan Patel and a team of experienced professionals, forming a strong second line of management for the execution of projects.


KP Energy to develop wind projects worth ₹222 Cr for Aditya Birla Group:

KP Energy has bagged an order worth ₹222 crs to develop wind energy projects for Aditya Birla Group with the scheduled commissioning in March 2023.

KP Energy stated that it has aligned with Aditya Birla Group to develop the wind power project at Bhungar and Fulsar Site at Mahuva, Bhavnagar, Gujarat, under the Gujarat hybrid power policy 2018.

KP Energy will be responsible for providing the turnkey balance of plant solutions for the project, including wind site locations, obtaining necessary approvals and development permits, wind data management, windfarm development works, electrical line network and complete power evacuation capacity from pooling substation to GETCO (Gujarat Energy Transmission Corporation).


In this project, the implementation of the contract provisions, deliverables and pending tasks have been completed and the company has also received the work completion certificate. As per the agreed-upon timelines and conditions, precedents are in progress, and they expect to complete the project in Q1FY23. Moreover, this will help the Company to optimise its liabilities and focus on its growth avenues.


KP Energy has commissioned this 15.3 MW project for a captive power consumer at the Mahuva Site well within the timelines. Despite a slight delay in WTG delivery, they were still able to commission this project in the shortest record time of four months due to their preparedness in the Balance of Plant activities which included area development, making access roads, laying foundations and a 33kv internal line network.

KP Energy Developed 251 MW Wind Project in Gujarat for CLP India:

KP Energy Limited had tied up with CLP India, one of the largest foreign investors in the Indian power sector to develop a 250.8 MV wind project in Dwarka in Gujarat.

KP Energy will be responsible for providing the turnkey balance of plant solutions for the project, including wind site locations, obtaining necessary approvals and development permits, wind data management and windfarm development works.

The company will also take responsibility to complete the power evacuation infrastructure comprising 220 kV dedicated lines and a pooling substation at Sidhpur in Dwarka.


A well-balanced combination of three business segments; namely

1. Project Based Revenue Engineering, Procurement, Construction and Commissioning (EPCC):

Their competence in the sector is because of:

  • SITE IDENTIFICATION & ACQUISITIONTheir key competence is identifying and acquiring good windy sites for utility-scale wind farms.
  • SITE PREPARATIONThey construct access roads and fetch ROWs in tough and challenging situations.
  • CONSTRUCTION & ERECTIONWTG civil foundation, 33kv USS & internal network as well as logistics, installation & erection of WTG.
  • POWER EVACUATIONThey undertake EPCC of 33/66 & 33/220 KV wind farm pooling substation and EHV lines.
  • PERMITS & APPROVALSThey obtain all requisite permits & approvals from government authorities for the project execution and its operational life.
2. Operations and Maintenance (O&M):

KPEL undertakes O&M services for the BOP portion of its projects so that its clients don’t have to engage in the same. Energized wind assets are maintained for smooth functioning over their lifecycle.

3. Independent Power Producers (IPP):

KP Energy has its own power generation assets of 8.4 MW (4*2.1 MW) capacity at its own wind farms which is a recurring, annuity revenue stream for the company. It provides stability of cash flows in periods with lower capacity additions.

Growth Strategy of the Company:

Being dependent on one revenue stream is certainly not good. Thus, in this regard, the company is contemplating expanding their supplementary business verticals, O&M and IPP (mentioned in the annual report of 2021-22).

To build on their annuity income, they are also in the midst of evaluating projects to expand their power generation assets. Currently, they operate 8.4 MW of wind generation assets, but in their second phase, they are also looking to add wind-solar hybrid capacity. The plan is to sell the energy generated from this project to the C&I (Commercial and Industrial) customer base through the third-party sale mechanism under Open Access.

They have executed a Business Transfer Agreement with their wholly-owned subsidiary, which will independently operate and maintain its conceived projects. This subsidiary will also tap into different geographies and assets under its OMS umbrella by leveraging its long-standing exposure and position in the market.

Accomplishments of the company:

Gujarat’s number 1 Balance of Plant (BoP) solution provider for Wind Farms

Commissioned a 15.3 MW Wind Power Project for Captive Customers in a record time of 4 months

Emerged as the winner of the India Wind Energy Forum 2021 Awards in the category of Business Excellence Award – “Company of the Year: Developer > 1000 MW”

Greater than 200 MW Cumulative wind energy capacity energised by the Company since inception

Around 300 MW of additional capacity energised with the company’s scope of work completed

Around 514 MW Capacity of Power Evacuation Infrastructure

Around 1081 MW order book and business pipeline for the coming 2.5 years

Around 500 MW of additional power evacuation capacity is under development



This industry is a segment of the renewable energy industry. The renewable energy industry is eminently a regulated space, wherein any changes in Government and regulatory policies may impact the company’s performance. Any adverse changes in the wind energy policy or amendments

in policies related to power evacuation facilities can significantly impact the operations of the industry and the Company.


The company’s revenue streams are derived from capital expenditure in the wind energy space by either Independent Power Producer (IPP) or Captive Power Producers (CPP).

Therefore, depending upon the capital expenditure scenario and cycle, a reduction caused by either of them could adversely affect the financial performance of the company.

The company’s revenues come predominantly from one geographical location of Gujarat which could be a negative in the long run.


The project development process has several risks such as - building permits, land acquisitions and logistics which can lead to delays, cancellations and write-offs of projects. This may have a severe impact on the profitability of the business. In addition, project delays also lead to cost overruns which may impact profitability.



Solar Energy Industry

KPI Global Infrastructure, the solar energy arm of the KP Group, is a multi-dimensional solar energy company with interests in power generation both as an Independent Power Producer (IPP) and as a service provider to Captive Power Producers (CPP). Operating under its brand name ‘Solarism’, it engages in providing turnkey solutions to its clients.


Galvanisation and Fabrication

KP Group’s flagship company, KP Buildcon Private Limited, is one of India’s largest Telecom Infrastructure providers since 2009. Its clientele includes the World’s Largest Telecom Towers Company.


Non-Profit Organisation

The KP Human Development Foundation is one of the entities of KP Group, established as a Non-Profit organisation in 2015. Over the years, the NPO has embarked on its journey towards facilitating quality education, helping the underprivileged, and improving the quality of healthcare in its communities.


Screener link

The company has seen the ups and downs of the wind energy industry. Till a few years back the main reason wind energy plants were being set up was to get tax and accelerated depreciation benefits.

Even in a severe pandemic year like 2020, the company managed to remain profitable.

With an increased focus on green energy and renewables, KP Energy has shown robust growth in recent quarters.

It has a ROCE of 30% and a debt-to-equity (D/E) of 0.21.


  • This is for EDUCATIONAL purposes only.
  • I regularly study interesting businesses and keep profiling them. The idea is to keep learning and expanding our knowledge base.
  • It does NOT construe a BUY or SELL recommendation on the stock.

It was clearly evident from
the mapni sheet certified after carrying out the mapni of the
impugned land as per the order of the District Collector, Bhuj,
that the towers and EHV lines are in the revenue land and not
in the land of the petitioner as alleged by the petitioner.

1 Like

What makes me worry is that the promoter holding has declined from 69.45% in June 2020 to 44.8% in March 2023.

I think one of the co promoters left. Just check

We should not be worried as long as Faruk Patel is there as a promoter. He is a reliable person. He walks the talk.
He recently increased his own stake from 44.51 to 44.80


K P Energy - Turning High Roce business to low Roce.
Industry Overview
The total installed power generation capacity is the sum of utility capacity, captive power capacity, and other non-utilities which is 482.232 GW.
India’s total installed renewable energy capacity is around 168.96 GW.
Renewable energy is 12% of total power generation.
Wind energy(42.8GW) accounts for 25% of total renewable energy.

Sale of Energy Segment
Through Analysis we get to know that there can be 3-5Cr investment needed to setup 1MW wind power plant and same as solar plant.

And company total plant and machinery in FY17 was 45 which was increased to 132 in FY22 has they had setup their own wind energy and solar energy asset to distribute the energy.

“KP Energy has its own wind energy assets of 8.4 MW (4*2.1 MW) capacity
The Company has recently commissioned a 10 MWdc solar power project”

Lets estimate the total cost for this capex would be near to 80-90 Cr and the revenue in FY23 is 10CR from only wind energy because solar commenced in last quarter of FY23.
" The company is planning to achieve installation of 100MW of own power generating assets under
IPP segment by calendar year 2025."
PBT Margin in Energy distribution can be near to 60%.
Revenue was 10Cr we assume it was fully utilise and the future projection is near to 100MW compare to todays 8.4
So when the capacity of 100mw will commence we can expect 120-150 Cr(At minimum Level) of Revenue from this with 60% of PBT.

O&M( Operation & Management)
As of date, KP Energy has over 530 MW under its O&M purview being the projects executed and being developed by KP Energy.
This Segment demand is fully depend on epcc business the growth in epcc will directly create more demand in O&M.
Current Revenue is around 4 Cr, so we can assume 75Lakh of revenue will generate from 100MW.
So 100 MW increase in O&M we can expect 75lakh to 1Cr increase in revenue with a PBT margins of 55-60%.

EPCC (Engineering, Procurement, Construction and Commissioning)
1,182.8 MW Business Pipeline of 830 MW and Projects Under Execution totaling 352.8 MW at various sites
Lets assume 352.8 MW is under execution and the company get around 424Cr of revenue for this 352.8MW of execution which is equal to 1.21Cr per MW.
and if we expect 830 Cr of pipeline excute in next two year it can generate 1000Cr of revenue from this pipeline which means 500 Cr each year.

Revenue in FY25
EPPC= 500-600 Cr

IPP =100-150Cr

O&M (If we see in FY22 this segment having 230 MW and in FY23 it is 530 jump of 300 MW which can be because of their project execution in Epcc, further we can expect additon of 600 to 700 MW in this segment)

Their are 3 main companies, Kp energy, KPI, energy and Kp buildcon.
Kp energy is in wind energy and also provide hybrid like wind + solar.
Kpi energy is mainly in solar energy where they provide services like IPP & EPC.
Kp Buildcon is in manufacturing of fabrication and Hot-Dip Galvanising of Transmission Line Structure, Substation & Switchyard Structures, and Windmill Structures. which are need to setup plants like in the sector of wind energy, solar energy, telecom sector, oil & gas, railways.
The Co. has incorporated a wholly-owned subsidiary - KP Energy OMS Limited, and executed a business transfer agreement with it, to facilitate the O&M via the subsidiary.

Now lets see how we can relate this business.
If we see from the perspective of Kp energy they first take the projects regarding wind or solar, and plans the execution of setup like construction of road, switch yard, Energy station, HV lines etc.
They do not manufacture the wind turbines or solar panel , the main product they buy from authorized supplier same with KPI energy, but rest of this like, electricals, switch yard, hv line, discounter, are done by the company.

So they may undertake the projects with partnership of some authorised supplier or wind mills manufacturer like Suzon
We can see that the company and the group of companies of KP following the asset light model because of that we can see the high ROCE compared to other wind energy players.

In their 3 business segment Epcc, Sale of Energy, O&M majorly they get revenue from Epcc in FY 23 it was 96% so we can see this segment has less margins compared to other but has highest turnover further the company is expected to increase their sale of energy reaching upto 100 MW compared to 18.4MW now this is the segment which will provide the high margins to the business as it have PBT margin of near to 60%.
In FY25 we can expect their Sale of energy segment will contribute around 20%.

If we see on their capital allocation or capital employed a major part of capital is used in execution of balance of plant, and very less capital is used in independent power producing it only occurs one time investments and maintenance.
Operation & Maintenance are get by the company when they completed the order through Epcc.

Over all the business is good but in FY25 their revenue from Epcc (High Roce business)will decrease and revenue from Sale of energy (low Roce business) will decrease. It can be biggest threat also, but if profitability will grow much faster than the decrease in Roce, then the business will not get that much affected.

Disclaimer : This is for Educational purpose only, it is not any kind of stock recommendation.


Anyone have any further information on their order book. Because as far as I know their 352.8 MW order book is completely executed in Q1 and the order that were in pipeline, they haven’t been able to convert those so far, so they don’t have any orders to execute as of now. Only thing they are working on is the IPP part which is not going to generate any revenue till installation is complete.


below transcript from the investor presentation released today.

Expecting large orders

"Company is expected to receive new large-scale order for development of
project in state of Gujarat which shall further support to achieve continuous
growth in revenue from EPC activities "


Commissioning of 21MW (Phase-IV) ISTS connected Wind Power Project at Sidhpur site in
Devbhoomi Dwarka (Project).