Power Mech Projects Ltd Q1 FY26 Earnings Analysis

- Targeting an order booking of INR10,000 crores for the current year, supported by over INR30,000 crores of identified opportunities. - Expecting 20%-25% revenue growth in FY27, with execution around INR7,800-8,000 crores. - New initiatives in township construction with an INR972 crores order in Telangana. - Strong focus on expanding O&M infrastructure business and Balance of Plants (BOP) projects, leveraging in-house execution strengths. - Growth driven by new power sector installations including thermal, solar, and battery energy storage projects. - Anticipating international infrastructure opportunities in the Middle East and Africa through local JVs. - Mining segment showing progress with projected revenue of INR272 crores from MDO projects in FY26, contributing to overall sales. - Water division expected to normalize post-certification and fund allocation delays, improving revenue and cash flow.

- Targeting 20%-25% revenue growth for FY26 and FY27 with execution expected around INR7,800-8,000 crores in FY27. - INR10,000 crores order inflow targeted for the current year, supported by strong pipeline of more than INR30,000 crores in opportunities. - EBITDA margins likely to be stable in FY26 due to initial establishment costs for new power sector orders and MDO business ramp-up, with margin improvement expected post peak capacity. - PAT margins improved in FY25 to 6.2%; operating margins expected to normalize with better receivables realization. - Return on equity improved to 16.26% in FY25; return on capital employed expected to improve with resolution in water division receivables. - New initiatives in township construction, power sector BOP, and Middle East infrastructure investments provide additional growth pathways. - Battery energy storage and solar power investments targeted for new energy business growth. - Overall profitable growth momentum expected with stable or improving margins as new projects mature.

- Planned capex for FY26 is around INR 500 crores, including washery and regular capexes. - Investment of INR 500 crores targeted during the current year for completion of the washery by September 2026. - Washery equipment orders worth INR 120 crores placed, with completion expected by September 2026. - Term loan of around INR 450 crores planned over the next couple of years, with INR 150 crores debt addition expected this year. - QIP funds of INR 240 crores raised earmarked for equity infusion into the washery project. - Regular capex expected to be INR 80-100 crores annually for normal business activities going forward. - Strategic investment includes INR 972 crores order received from Telangana Generation Company related to township construction. - Company is also expanding in O&M infrastructure and new power sector opportunities, leveraging in-house execution strengths.

- The company plans to raise around INR450 crores as term loan debt over the next couple of years, primarily for specific activities including the washery project. - For FY26, INR150 crores of additional debt is expected to be added. - They have already raised INR240 crores through QIP (Qualified Institutional Placement) earmarked for equity to fund the washery capex. - The company intends to maintain stable net debt levels from FY25 to FY26 by focusing on receivables realization and reducing working capital utilization. - Majority of the debt addition is planned for the next year, while current year capex will be funded partly by QIP funds and limited debt.

- As of March 31, 2025, the total order backlog stands at around INR58,258 crores. - After excluding non-moving FGD orders worth INR4,264 crores, the backlog is INR53,994 crores. - Further excluding two MDO projects, the executable order book is INR14,387 crores. - Additional INR972 crores worth of orders secured during Q1 FY26, totaling approx. INR15,359 crores executable orders. - MDO order book is substantial with a long execution period of 25-28 years. - Targeting INR10,000 crores of new order inflow in FY26, driven mainly by power sector orders. - Expected conversion rate: around 40% of opening order book executed annually. - Some specific adjustments: non-moving FGD orders of INR4,264 crores excluded. - Temporary delay in water division orders due to funding issues, with INR425 crores of works executed but pending certification. - Overall, the order book is considered comfortable with steady growth prospects.