Markolines Pavem — Q4 FY25 earnings call

Call held 20 May 2025

Management summary

Markolines Pavement Technologies Limited reported a mixed FY25, with revenue declining due to monsoon impacts but profitability significantly improving, driven by specialized construction. The company's PAT grew over 30% and EPS by 11%. A major corporate action, the merger with Markolines Infra, was announced, and the company is pursuing migration to the BSE Main Board. The order book stands at INR 357 crores as of March 31, 2025, with a strong pipeline and recent wins.

Highlights

  • PAT grew 30.4% YoY to INR 22.56 crores from INR 17.3 crores in the previous year.

  • EPS increased 11.1% YoY to INR 10 from INR 9 in the previous year.

  • PAT margins increased by 381 basis points, reflecting improved operational efficiency.

  • Order book stood at INR 357 crores as of March 31, 2025, with an additional INR 75 crores secured post-quarter.

  • Announced merger with Markolines Infra, valued at INR 263 crores, expected to consolidate operations and improve market representation.

Concerns

  • Revenue dropped 12.28% YoY to INR 307 crores from INR 350 crores, primarily due to the wettest monsoon impacting H1 performance.

  • Receivable cycle increased to over 200 days as of March 31, 2025, though INR 50-60 crores have been recovered post-quarter.

  • The potential acquisition of ILFS engineering asset remains stalled with no progress due to ongoing NCLT processes.

Key financials

  1. Revenue ₹307 Cr -12.3%YoY
  2. PAT ₹22.56 Cr +30.4%YoY
  3. EPS ₹10 +11.1%YoY

What they filed

Q1 FY27: revenue down 15.3%, net profit up 15.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue56 80 115 73 78 +40%80 +0%93 −19%62 −15%
EBITDA6 8 19 7 7 +20%10 +33%16 −15%7 −5%
Net profit2 6 12 4 4 +66%7 +13%11 −8%4 +15%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentShare of Business DoneOperating Margin
Road Maintenance70%12%
Specialized Construction30%18%

Order book

high confidence

Total value

₹357 Cr

as of 2025-03-31 quantified

Execution

Maintenance projects (under INR 75-80 crores) 6-8 months; larger maintenance projects 12-15 months; specialized/tunnelling projects 2-4 years.

Composition

Mix 2 segments
  • Specialized Construction 75%
  • Road Maintenance 25%

Share of order book by segment

Pipeline

other

Pipeline of projects

The order book stood at INR 357 crores as of March 31, 2025. Post-quarter, the company has added approximately INR 75 crores in new orders (INR 50 crores in the last 1-1.5 months and INR 25 crores on the call date). The order book is currently 75-80% specialized construction, with a target to reach 50-50 split this year. The company also has a pipeline of over INR 500 crores.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Markolines Infra Merger · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    Consolidation, optimization and the size consolidation for Markolines and better size or the representation in the market.

    Markolines Infra FY25 PAT was INR 12.29 crores, representing 11.64% of turnover. The merger is expected to give better results in terms of the capital market.

    we have announced the merger of Markoline Infra with Markoline Pavement. And that is also been filed. We are in the process of completing the documentation as per the BSE and SEBI requirements. ... As far as the tentative, why tentative I can give, the numbers of the Markolines Infra, we did a revenue of about INR133 crores there with a bottom line of INR12.29 crore as PAT. Basically, this company is purely into the providing services. As far as percentage is concerned, it is about 11.64% that is the PAT percentage to the turnover. ... And currently when we are amalgamating, how much is the value we are giving? About INR263 crores.

Guidance & targets

Revenue

  • Total Revenue Revenue · in another 3-4 years · Medium confidence INR 1,000 crores
    in another 3-4 years, we should be crossing the INR1,000 crore mark.

    — Vijay Oswal

Business Mix

  • Revenue Split (Specialized Construction vs. Road Maintenance) Business Mix · in a year's time from now · Medium confidence 50-50

    From 30-70 today

    Between the two verticals, if you see, let's say this year it is, you know, 70%, 30% percentage wise if I could talk in terms of the business done. But going forward, I see we could be about 50%, 50% in this particular or maybe in a year's time from now.

    — Vijay Oswal

Order Book

  • Order Book Split (Specialized Construction vs. Road Maintenance) Order Book · this year · Medium confidence 50-50

    From 75-25 today

    But we are hoping that this year we should be close to 50-50.

    — Vijay Oswal

Margin

  • Major Maintenance Operating Margin Margin · ongoing · High confidence 12%
    12% in terms of the major maintenance

    — Vijay Oswal

  • Specialized Construction Operating Margin Margin · ongoing · High confidence 18-20%
    about close to 18% to 20% in the specialized construction.

    — Vijay Oswal

Tunnelling Projects

  • New Tunnelling Project Wins Tunnelling Projects · this year · Medium confidence at least one more project
    And we are doing tunnelling across the India and we see a very good prospect in terms of business and adding at least one more project this year. We are hoping for that.

    — Vijay Oswal

What to watch in Q1 FY26

Markolines Infra merger completion

Next 6-9 months
Current Pending regulatory approvals (BSE, NCLT)
Target Merger completed

Why it matters

Completion of this major corporate action will consolidate financials and enhance market position.

So approximately we are expecting about 6 to 9 months of time frame for completing the merger.

Risks & concerns

  • Revenue impact from monsoon

    medium

    Revenue dropped from INR 350 crores to INR 307 crores in FY25, mainly due to the wettest monsoon impacting H1 performance and extending into Q3.

    Management acknowledged

  • Increased receivable cycle

    medium

    The receivable cycle increased to over 200 days as of March 31, 2025, compared to a normal 90-120 days, though INR 50-60 crores have been recovered post-quarter.

    Management acknowledged

  • Delay in ILFS engineering asset acquisition

    low

    The bidding process for the ILFS engineering asset is stalled, with no progress due to NCLT involvement and pending board approvals.

    Management acknowledged

Q&A highlights

7 direct
Current and future business mix between specialized construction and road maintenance Direct
Between the two verticals, if you see, let's say this year it is, you know, 70%, 30% percentage wise if I could talk in terms of the business done. But going forward, I see we could be about 50%, 50% in this particular or maybe in a year's time from now. ... But we are hoping that this year we should be close to 50-50.

Clarifies the company's strategic pivot towards specialized construction and its expected impact on revenue and order book composition.

Asked by Raghav Agarwal

Margin and working capital profiles for specialized construction vs. road maintenance Direct
So as far as the margins perspective, as I said, margins are definitely better in the specialized constructions. And working capital wise, if you look at the larger projects would also require more working capital. But if you compare it to the turnover and over the period spread out, percentage wise it will be a bit lesser than the MMR because major maintenance programs, the projects are spread over only six months of project with an average 90 days of billing cycle if I consider. We generally require about 25% of the working capital of the order size.

Provides insight into the profitability and cash flow dynamics of the company's two main business segments.

Asked by Raghav Agarwal

Timeline and financials of the Markolines Infra merger Direct
So approximately we are expecting about 6 to 9 months of time frame for completing the merger. ... As far as the tentative, why tentative I can give, the numbers of the Markolines Infra, we did a revenue of about INR133 crores there with a bottom line of INR12.29 crore as PAT. Basically, this company is purely into the providing services. As far as percentage is concerned, it is about 11.64% that is the PAT percentage to the turnover.

Details a significant corporate action, including its expected timeline and the financial contribution of the merging entity.

Asked by Nitin Verma

Ambition to become an INR 1,000 crore company Direct
in another 3-4 years, we should be crossing the INR1,000 crore mark. And we will put in our best to achieve that mark at the earliest, if we can even pre-pone it by one year, we will be greatly happy with that.

Outlines management's long-term revenue growth aspiration and confidence in achieving it.

Asked by Prakash B

Comparison of Markolines Infra's business with IRB Infra (toll collection, revenue) Partial
So, partly yes and partly no, because IRB is also the asset owner and they do lot of activities in-house. ... We are, as of now, we are providing the services for the maintenance of the once road, once completed as Markolines Pavement. And in Markolines Infra, we provide them the services like operating their toll projects, surveillance of the roads, providing the emergency services on the highways, then the routine maintenance that also involves right from cleaning to the horticulture services. So in a way, we could be similar to the one of the section or part of the IRB.

Clarifies the specific nature of Markolines Infra's services, distinguishing it from an asset owner like IRB but highlighting operational similarities in road management.

Asked by Prakash B

Update on the ILFS engineering asset bidding and tunnelling business prospects Direct
So Abhishek, just before this question, I answered that since it has to follow a lot of process because we have gone through the IDC-like process, the NCLT is involved, and there is no progress as of now in terms of the deal or it is still not being approved by the boards there. It is still at the same stage where it was. ... As far as business prospects are concerned, the tunnelling is one of the very much growing potential because to increase the average speed, the tunnelling is a very good solution. And we are doing tunnelling across the India and we see a very good prospect in terms of business and adding at least one more project this year. We are hoping for that.

Provides an update on a pending acquisition and details the growth potential and current status of the high-margin tunnelling vertical.

Asked by Abhishek Agarwal

Increased receivable cycle and recovery efforts Direct
So, generally 90 to 120 days is what we say. If we average it out over the year, like if you look at I think last year we were close to 100 days. And now when you see as we are talking, the majority or major portion of the receivable has been received in the past one and a half month. We have already recovered more than INR50 crore, INR60 crore out of the outstandings as of March.

Addresses concerns about working capital management and provides reassurance regarding recent recovery of outstanding dues.

Asked by Sandeep Biyani

Reasons for promoter shareholding decrease Direct
So sorry, the promoter share percentage has decreased because of one is because of the addition of the preferential issue that we did in the month of September. So if you look at really the number of shares that the promoters have, there's hardly any change.

Explains the dilution in promoter shareholding due to a preferential issue, clarifying it's not a divestment.

Asked by Nitin Verma

3 min read 8 chapters

Detailed narrative

FY25 Financial Performance Overview

Markolines Pavement Technologies Limited reported a revenue of INR 307 crores for FY25, a decrease from INR 350 crores in FY24, primarily attributed to the wettest monsoon impacting H1 performance. Despite the revenue drop, the company achieved significant profitability improvements, with PAT growing 30.4% YoY to INR 22.56 crores from INR 17.3 crores. EPS also increased by 11.1% YoY to INR 10, and net PAT margins expanded by 381 basis points, reflecting enhanced operational efficiency.

Strategic Shift and Business Mix

The company is strategically pivoting towards specialized construction, which currently constitutes 30% of the business done, with road maintenance at 70%. Management aims to achieve a 50-50 split in business done within approximately one year. For the order book, specialized construction currently accounts for 75-80%, with a target to reach a 50-50 split this year. Specialized construction projects offer better margins (18-20%) compared to major maintenance (12%).

Order Book and Bidding Pipeline

As of March 31, 2025, the company's order book stood at INR 357 crores. Post-quarter, an additional INR 75 crores in orders have been secured, including INR 50 crores in the last 1-1.5 months and INR 25 crores on the call date. The company maintains a robust bidding pipeline of over INR 500 crores. Execution timelines vary, with smaller maintenance projects completed in 6-8 months, larger ones in 12-15 months, and specialized/tunnelling projects spanning 2-4 years.

Markolines Infra Merger

Markolines Pavement Technologies Limited announced the merger with Markolines Infra, a significant corporate action approved by the board on April 22nd. The merger, valued at INR 263 crores for Markolines Infra, is expected to be completed within 6-9 months, pending approvals from BSE and NCLT. Markolines Infra reported FY25 revenue of INR 133 crores and PAT of INR 12.29 crores, with a PAT margin of 11.64%, and is anticipated to enhance the consolidated entity's scale and market representation.

Industry Outlook and Growth Drivers

The infrastructure sector in India is experiencing rapid growth, driven by government focus and monetization efforts. The company highlights its leadership in highway maintenance and its role in introducing new technologies like micro-surfacing and full-depth reclamation. The outsourcing trend by international players acquiring road assets further creates opportunities. The company aims to cross the INR 1,000 crore revenue mark within the next 3-4 years, leveraging the expanding infrastructure network.

Tunnelling Business Expansion

The tunnelling vertical, entered two years ago, is a key growth area offering larger contracts and better profitability. The company is currently executing two tunnelling projects, one in Maharashtra (INR 300-350 crores, with INR 172-180 crores completed) and a long-term project in Jammu-Kashmir. Management sees strong prospects in this segment and aims to secure at least one more tunnelling project this year, with typical project sizes ranging from INR 200-400 crores.

Working Capital Management and Receivables

The company experienced an increase in its receivable cycle to over 200 days as of March 31, 2025, compared to a normal range of 90-120 days. This was largely due to a significant portion of work (INR 150+ crores) being completed in Q4. However, management confirmed that INR 50-60 crores of these outstanding receivables have already been recovered in the past one and a half months, indicating active management of working capital.

BSE Main Board Migration

Markolines Pavement Technologies Limited has applied for migration to the BSE Main Board in March. The company has complied with all requirements and is awaiting approval, which is expected very soon. This move is anticipated to enhance the company's visibility and accessibility for investors in the capital market.

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