Dilip Buildcon Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

Dilip Buildcon reported a mixed Q1 FY26, with consolidated PAT and EBITDA showing strong YoY growth driven by HAM and coal operations, despite a decline in consolidated revenue. Stand-alone performance, however, saw revenue and EBITDA contraction. The company faced challenges in order inflow due to market slowdown and competition but anticipates a significant pickup in new orders for the remainder of FY26, targeting INR12,000-15,000 crores. Strategic initiatives like InvIT formation and debt reduction remain on track, with a focus on profitable growth over aggressive order acquisition.

Highlights

  • Consolidated PAT increased by 93.7% to INR271 crores YoY.

  • Consolidated EBITDA increased by 9% to INR520 crores YoY, with margin improving to 19.85% due to HAM and coal business performance.

  • Siarmal MDO achieved 5.4 MMT production in Q1 FY26, on track for 25 MMT FY26 target.

  • Pachhwara MDO achieved 2.9 MMT production in Q1 FY26, on track for 7 MMT FY26 target.

  • InvIT formation nearing completion with in-principle approvals from NSE, BSE, SEBI, anticipated launch within this quarter.

Concerns

  • Stand-alone Revenue decreased by 14.7% to INR2,010 crores YoY.

  • Stand-alone EBITDA decreased by 22.5% to INR203 crores YoY.

  • Muted order activity in Q1 FY26 and heightened competition led to a temporary decline in order book.

  • Stand-alone debt increased by INR85 crores in Q1 FY26.

  • Inventory levels increased from 75 days to 84 days.

Key financials

  1. Consolidated Revenue ₹2,620 Cr -16.4%YoY
  2. Consolidated EBITDA ₹520 Cr +8.8%YoY
  3. Consolidated EBITDA Margin 19.9%
  4. Consolidated PAT ₹271 Cr +93.6%YoY
  5. Stand-alone Revenue ₹2,010 Cr -14.7%YoY
  6. Stand-alone PAT ₹123 Cr +61%YoY

What they filed

Q1 FY27: revenue down 9.2%, net profit down 52.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,497 2,590 3,096 2,620 1,926 −23%2,138 −17%2,300 −26%2,378 −9%
EBITDA535 477 661 521 471 −12%382 −20%392 −41%429 −18%
Net profit266 158 277 271 214 −20%789 +399%124 −55%128 −53%
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.

Order book

medium confidence

Pipeline

L1 awaiting loa

Projects DBL has bid for across different sectors

Muted order activity in Q1 FY26 due to slowdown and heightened competition, but expecting significant increase in orders for the remainder of the year.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹40 Cr
    • Replacement capex for stand-alone EPC business ₹40 Cr
    • Balance capex for Siarmal Coal Handling Plant (CHP) ₹900 Cr
    Rohan Suryavanshi: "And capex on the stand-alone would not be anything for this year? It should be very negligible if only some replacement capex has to be done. So I don't expect to be more than -- if at all, because we are expecting it not to go, but let's -- for assumption sake, let's assume between INR 40 to 50 crores." and Sanjay Bansal: "the major capex in Siarmal will come from or will be done for the CHP. And CHP out of the total balance capex is around INR900 crores."
  • Debt Net ₹8,266 Cr
    • Repayment Prepaid CPPIB debt from DIAPL ₹312 Cr
    • New borrowing Quarterly increase in stand-alone debt ₹85 Cr
    Sanjay Bansal: "So let me tell you on quarter 1 ending, my net debt is INR8,266 crores. Basically, out of that, around INR3,850 crores debt will move out of these 9 assets. So 8 assets INR3,850 crores." and "So basically, our target for 31st March 2026, the reduction of debt by INR500 crores remains intact, number one. Number two, it is a quarterly increase by INR85 crores, which we will address in 9 months."
  • M&A Alpha Alternatives fund Divestment · Closed · Consideration ₹[object Object] (cash)

    Partial divestment of HAM projects

    Rohan Suryavanshi: "In the last quarter, we have completed partial divestment in 3 projects to the Alpha Alternatives fund for a consideration of INR125 crores."
  • M&A Alpha Alternatives fund Divestment · Closed · Consideration ₹[object Object] (cash)

    Sale of 24.99% stake and unit sale

    Profit on sale of 24.99% stake to Alpha and profit of INR23 crores on unit sale, contributing to INR98 crores one-off.

    Devendra Jain: "So out of the total INR98 crores, basically INR68-odd crores received from Shrem against the deferred consideration. And the balance is basically profit on sale of 24.99% stake to Alpha and profit of INR23 crores on unit sale." and Sanjay Bansal: "So we sold INR263 crore worth units this quarter and we now around INR300 crore unit is pending."
  • Liquidity Cash ₹80 Cr Stand-alone cash balance restated from INR292 crores to INR80 crores for FY25. Net INR61 crores invested in operating activities for Q1 FY26.
    Sanjay Bansal: "Okay. And lastly, sir, the cash number as on FY '25 has been restated from INR292 crores to INR80-odd crores for stand-alone." and "So basically, net-net, only adjustment is INR61 crores."

Guidance & targets

Order Inflow

  • New Order Inflow Order Inflow · FY26 · High confidence INR12,000-15,000 crores
    So let me start with order inflow. At least we are expecting INR12,000 crores to INR15,000 crores of new order inflow.

    — Rohan Suryavanshi

Revenue

  • Stand-alone Revenue Revenue · FY26 · High confidence INR8,000-8,500 crores
    The guidance, what we expect should be in the range of INR8,000 crores to INR8,500 crores of revenue and this is for the full year.

    — Rohan Suryavanshi

Profitability

  • Stand-alone EBITDA Margin Profitability · FY26 · High confidence 11%
    And the EBITDA margin should be in the range of 11% or so.

    — Rohan Suryavanshi

  • EBITDA Margin Improvement Profitability · ideal scenario · Medium confidence 300-400 bps
    It should be at least a 300 to 400 basis point improvement in an ideal scenario, where I will also look at early completion and all of those things as well.

    — Rohan Suryavanshi

Capex

  • Stand-alone Capex Capex · FY26 · High confidence INR40-50 crores
    So I don't expect to be more than -- if at all, because we are expecting it not to go, but let's -- for assumption sake, let's assume between INR 40 to 50 crores.

    — Rohan Suryavanshi

Debt

  • Stand-alone Debt Reduction Debt · by March 31, 2026 · High confidence INR500 crores
    So basically, our target for 31st March 2026, the reduction of debt by INR500 crores remains intact, number one.

    — Sanjay Bansal

  • Net Debt Free Status Debt · by FY27 · High confidence Net debt free
    Okay. And net debt free by FY '27, that also intact? Yes. Net debt free by FY '27 is intact.

    — Sanjay Bansal

Coal Production

  • Siarmal MDO Production Coal Production · FY26 · High confidence 25 MMT
    In our Siarmal MDO, we have achieved a production volume of 5.4 million metric tons in quarter 1 FY '26, and we are on-track to meet our full year target of 25 million metric tons for FY '26.

    — Rohan Suryavanshi

  • Pachhwara MDO Production Coal Production · FY26 · High confidence 7 MMT
    Similarly, our Pachhwara MDO achieved 2.9 million metric tons in quarter 1 of FY '26, positioning us well to reach our full year target of 7 million metric tons for FY '26.

    — Rohan Suryavanshi

InvIT

  • InvIT Listing InvIT · this quarter · High confidence September
    We are basically updating our offer document. So we believe this will be somewhere in September. So September month, the InvIT listing will happen.

    — Sanjay Bansal

HAM Projects

  • HAM Project Completion HAM Projects · this financial year · High confidence 4 projects
    We anticipate completing and partially divesting 4 of them within this financial year, followed by the remaining 3 in the next financial year.

    — Rohan Suryavanshi

  • HAM Project Transfer to InvIT HAM Projects · FY27 entirely · High confidence 10 assets
    So these 10 assets, I have said, we will transfer in FY '27 entirely.

    — Sanjay Bansal

Cash Flow

  • JJM Unbilled Revenue Realization Cash Flow · Q3 · High confidence INR450 crores
    So once hydro test is done, I can receive the 10% out of these 3 projects, which is primarily INR450 crores, number one. ... So when can we expect that cash flow to come in? Q3.

    — Sanjay Bansal

What to watch in Q2 FY26

New Order Inflow for FY26

remainder of FY26 (Q2-Q4)
Current Muted in Q1 FY26
Target INR12,000-15,000 crores

Why it matters

Order inflow is crucial for future revenue visibility and execution pace, especially after a challenging Q1.

Rohan Suryavanshi: "At least we are expecting INR12,000 crores to INR15,000 crores of new order inflow."

Risks & concerns

  • Muted Order Activity and Heightened Competition

    medium

    Q1 FY26 saw a slowdown in ordering activity and increased competition, leading to a temporary decline in DBL's order book.

    Management acknowledged

  • Temporary De-growth

    medium

    The company expects a period of de-growth as a consequence of the current order book situation, viewing it as an opportunity for strategic refinement.

    Management acknowledged

  • Quality Compromise in Competitive Bidding

    medium

    Relaxed qualification criteria have led to competitors bidding at unsustainably low margins (-35%), raising concerns about project quality, which DBL refuses to match.

    Management acknowledged

  • Increased Inventory Days

    low

    Inventory days increased from 75 to 84 days, primarily due to a 15% decline in sales, though absolute inventory decreased marginally.

    Analyst acknowledged

Q&A highlights

7 direct
Tightening Qualification Norms for EPC/HAM Projects Direct
Mainly, Ashish ji whatever has changed in the qualification criteria, that is a net worth criteria. Earlier, the size of the project should have a 20% net worth. But now they have driven an assessed net worth. ... this is a major change.

Management clarified specific changes in qualification criteria (net worth, project sizing) that are expected to reduce competition from smaller, unrecognized players, impacting future order inflow dynamics.

Asked by Ashish Shah

Order Inflow Momentum and Future Outlook Direct
Now since NHAI changed the qualification criteria in EPC and HAM project recently. So now we expect lesser competition from unrecognized players. So we expect good amount of order flow between quarter 2 to quarter 4, and we expect like INR12,000 crores to INR15,000 crores worth projects in the remaining period of this financial year.

Management provided specific order inflow guidance for FY26 and linked it to recent policy changes, offering clarity on the expected revival of the bidding process.

Asked by Ishita Lodha

Debt Reduction Plan vs. Q1 Debt Increase Direct
So basically, our target for 31st March 2026, the reduction of debt by INR500 crores remains intact, number one. Number two, it is a quarterly increase by INR85 crores, which we will address in 9 months. So there are activities quarters. So the plan is intact.

Management reaffirmed its debt reduction target despite a temporary Q1 increase, explaining it as part of quarterly activities and maintaining confidence in the long-term deleveraging plan.

Asked by Shravan Shah

Shrem InvIT Distribution and CPPIB Debt Repayment Direct
So, Shravan ji, the distribution -- the projected distribution decreased to INR44 crores because management has decided to repay part of CPPIB debt. So this quarter, basically, we have prepaid INR312 crores or CPPIB debt from DIAPL. We basically paid this out of sale of units.

Management clarified the reason for reduced InvIT distribution and the decision to forgo FY27 distribution, linking it directly to strategic debt prepayment using asset sales, which impacts cash flow and debt metrics.

Asked by Shravan Shah

Consolidated Net Debt Free by FY27 Partial
No, 0 debt. I said consol basis, there will be 2 types of debt. One, stand-alone debt. So FY '26, we are reducing INR500 crores further. So you can say around INR1,000-odd crores debt will remain in stand-alone. The balance debt from the coal segment will remain and coal will remain basis the project requirement.

Management clarified that the company will not be entirely net debt-free on a consolidated basis by FY27, distinguishing between stand-alone, coal, and new project debt, which is crucial for understanding future leverage.

Asked by Deepak

EBITDA Margin Outlook and Sustainability Direct
Our anticipation, at least when we hope once things are on a regular kind of basis and the order book is fine, full, and we are targeting what we're doing, we're able to fully utilize all our assets. It should be at least a 300 to 400 basis point improvement in an ideal scenario... this you should definitely consider that this 10%, 11% is a bottom level of the margin profile.

Management provided a clear outlook on EBITDA margins, indicating that current levels are the bottom and expecting significant improvement with better order book and asset utilization, which is a key profitability driver.

Asked by Parikshit Kandpal

Order Acquisition Strategy and Quality Focus Direct
We don't want to take new orders at the cost of our profitability, at the cost of hitting our return ratios or just for the sake of taking orders. We are happy with what we are currently executing. ... I'm sure you would have noticed there has been a spate and high incidences of people posting videos and pictures on social media of roads getting and public infrastructure assets getting washed out after rains, and these are even like good national highways and expressways, which are facing those troubles of poor quality issues.

Management articulated its disciplined approach to order acquisition, prioritizing profitability and quality over volume, and highlighted the risks associated with aggressive low-bidding by competitors, reinforcing DBL's strategic positioning.

Asked by Naysar Parikh

Working Capital Investment and JJM Cash Flow Direct
So there are 2, 3 items. One item is, you rightly said unbilled revenue, unbilled revenue specifically for the JJM projects, where basically the last the milestone is hydro testing, wherein we should receive 10%. And that 10% is already due once hydro testing is done because I already invested. There is no expense to be done. ... I can receive the 10% out of these 3 projects, which is primarily INR450 crores, number one.

Management provided a detailed breakdown of the working capital investment, specifically identifying a significant portion tied to unbilled JJM revenue and giving a timeline for its realization, which impacts short-term liquidity.

Asked by Bhavin Modi

3 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Dilip Buildcon reported a mixed Q1 FY26. Consolidated revenue decreased by 16.4% YoY to INR2,620 crores, while consolidated EBITDA increased by 9% to INR520 crores, resulting in an improved margin of 19.85%. Consolidated PAT saw a significant 93.7% increase to INR271 crores. In contrast, stand-alone revenue declined by 14.7% to INR2,010 crores, and stand-alone EBITDA decreased by 22.5% to INR203 crores, primarily due to reduced contributions from road and water supply projects.

Order Inflow and Market Outlook

The company faced challenges in securing new orders during Q1 FY26 due to a market slowdown and heightened competition. However, management expressed optimism for a significant increase in order inflow for the remainder of the fiscal year, targeting INR12,000-15,000 crores for FY26. This positive outlook is supported by recent changes in NHAI qualification criteria, which are expected to reduce competition from smaller, unrecognized players, and a broader government focus on infrastructure development, including INR3.4 lakh crores in road projects and INR20,000 crores in metro rail for Andhra Pradesh.

Debt Management and Asset Monetization

Dilip Buildcon's consolidated net debt stood at INR8,266 crores as of June 30, 2025, with a stand-alone net debt of INR1,661 crores. The company remains committed to its target of reducing stand-alone debt by INR500 crores by March 31, 2026, and achieving net debt-free status by FY27. Strategic asset monetization efforts include the partial divestment of 3 HAM projects for INR125 crores to Alpha Alternatives and the ongoing InvIT formation, which is nearing completion with an anticipated launch in September, expected to facilitate a net debt reduction of approximately INR2,850 crores from completed HAM assets.

Coal Mining Operations (MDO) Performance

The company's coal MDO operations demonstrated strong performance in Q1 FY26. Siarmal MDO achieved a production volume of 5.4 million metric tons (MMT), staying on track for its full-year FY26 target of 25 MMT. Similarly, Pachhwara MDO produced 2.9 MMT, positioning it well to meet its 7 MMT full-year target. To support future growth, DBL plans to commence approximately INR900 crores in capex for the Siarmal Coal Handling Plant within the next 1-2 quarters, aiming for a total production of 32 MMT in FY26 and 35 MMT in FY27.

Margin Outlook and Operational Efficiency

Management views the current stand-alone EBITDA margin of 10-11% as the lower end of its profile. They anticipate a 300-400 basis points improvement in margins under an ideal scenario with a robust order book and full asset utilization. To enhance operational efficiency, DBL has paused capital expenditure plans in its EPC business and implemented targeted workforce adjustments. The company emphasized its commitment to maintaining quality and profitable growth, refusing to engage in aggressive low-margin bidding seen from some competitors.

Working Capital and Liquidity Management

Inventory days increased from 75 days in March to 84 days in Q1 FY26, primarily due to a 15% decline in sales, despite a marginal decrease in absolute inventory. The company reported a net INR61 crores invested in operating activities for the quarter. A significant portion of working capital, approximately INR450 crores, is tied to unbilled revenue from Jal Jeevan Mission projects, which is expected to be realized in Q3 FY26 upon completion of hydro testing milestones.

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