Dilip Buildcon

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.

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.

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.

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.

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.

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.