We study the amplitude modulation of nonlinear kinetic Alfvén waves (KAWs) in an intermediate low-beta magnetoplasma. Starting from a set of fluid equations coupled to the Maxwell's equations, we derive a coupled set of nonlinear partial differential equations (PDEs) which govern the evolution of KAW envelopes in the plasma. The modulational instability (MI) of such KAW envelopes is then studied by a nonlinear Schrödinger (NLS) equation derived from the coupled PDEs. It is shown that the KAWs can evolve into bright envelope solitons, or can undergo damping depending on whether the characteristic ratio (α) of the Alfvén to ion-acoustic (IA) speeds remains above or below a critical value. The parameter α is also found to shift the MI domains around the kxkz plane, where kx (kz) is the KAW number perpendicular (parallel) to the external magnetic field. The growth rate of MI, as well as the frequency shift and the energy transfer rate, are obtained and analyzed. The results can be useful for understanding the existence and formation of bright and dark envelope solitons, or damping of KAW envelopes in space plasmas, e.g., interplanetary space, solar winds etc.