SRM Contractors Ltd Q4 FY26 Earnings Analysis

- For MIPL, revenue is expected to grow conservatively; FY27 target is INR400-500 crores with a potential increase to around INR600 crores, but not doubling rapidly due to the nature and size of slope works (INR20-230 crores projects). - SRM standalone FY26 revenue guidance is INR800-900 crores; consolidated revenue expected to exceed INR1,000 crores. - FY27 consolidated revenue anticipated to cross INR1,500 crores, reflecting a growth rate of 70-90%. - Order book expected to rise from INR2,000 crores by end of FY26 to INR3,000 crores by June 2026. - MIPL turnover anticipated around INR250-350 crores in FY26, with 9-month billing at INR90 crores and a strong Q4. - Bid pipeline remains strong at INR4,000 crores with a minimum expected order conversion of INR1,500 crores. - Growth in slope and niche segments (slope stabilization, tunnels) is moderate but margins are higher; road projects continue contributing significant revenue with good margins.

- FY27 revenue guidance: INR1,500 crores+ consolidated, exhibiting 70%-90% growth pace conservatively (Page 14). - EBITDA margins expected to sustain or improve, with PAT margins around 10%-11% anticipated for FY27 (Pages 7 and 22). - Higher-margin segments like slope stabilization expected to grow steadily but not double rapidly; e.g., MIPL slope business projected to grow from INR400 crores in FY27 to around INR600 crores (Page 22). - Margins improved partly due to capex infusion (INR70-75 crores this year, targeting INR100 crores next year), supporting operational efficiency and profitability (Pages 8 and 13). - International expansion in GCC (Abu Dhabi, Oman, Saudi Arabia) targeting better-than-India margins, though no specific numbers shared yet (Page 8). - EPS grew 51% YoY to INR10.5 per share in Q3 FY26, reflecting strong earnings momentum (Page 6). - Focus on selective, high-margin projects to sustain earnings quality (Pages 7,16).

- In the current financial year (FY26), SRM Contractors has already infused approximately INR 70-75 crores in capex and plans to increase it to around INR 90-100 crores. - The company intends to further infuse capex of about INR 100 crores in the next financial year (FY27). - The capex investments are aimed at supporting growth and improving operational efficiency, contributing to EBITDA margin expansion. - Post-March FY26, SRM Contractors plans to raise equity capital between INR 100-130 crores, likely through preferential allotment, to fund growth for approximately one year. - Strategic investment includes acquiring a 51% stake in Maccaferri's subsidiary (MIPL), enhancing technical capabilities, especially in slope stabilization and geotechnical solutions, supporting expansion domestically and internationally (GCC region). - The company has set up an office in Abu Dhabi to pursue international projects in specialized slope stabilization works.

- SRM Contractors Limited plans to raise funds through equity, specifically via a preferential issue. - The fundraise amount is expected to be between INR 100 crores to INR 130 crores, planned post-March 2026. - The raised amount is intended to support growth for about one year. - No current plans were mentioned for raising debt as part of this fundraising. - This equity infusion will help support order book expansion and capex needs going forward.

- Current order book as of Q3 FY26: - SRM Contractors standalone: Approximately INR1,100 crores. - MIPL (subsidiary): INR282 crores. - Total combined order book exceeds INR1,300 crores. - Future order book guidance: - Expectation to cross INR2,000 crores by end of FY26. - Projected order book of around INR3,000 crores by June 2026. - Bid pipeline: - Actively bidding on projects worth over INR4,000 crores. - Results of bids expected before March 2026. - Order finalizations for projects under consideration expected before June 2026. - Note: - SRM is selectively bidding, focusing on projects with good margins. - No international order book included yet; currently in exploratory phase in Abu Dhabi, Saudi, Oman.