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DEE Development Engineers Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

DEE Development reported robust Q2 FY26 results with strong revenue and EBITDA growth, driven by improved operational execution and capacity expansion. The company maintains a healthy order book and has suspended its proposed equity fund raise due to strengthened liquidity. While power tariff issues impact current margin potential, the company is exploring new avenues like green hydrogen and biomass, and anticipates strong order inflows in the coming fiscal year.

Highlights

Q2 FY26 Revenue from operations grew 39.2% YoY to ₹270 crores.
Operating EBITDA increased 47.9% YoY to ₹44.1 crores, with margins expanding to 16.3%.
Commissioned 15,000 metric tons process piping solutions capacity at Anjar, doubling total capacity to 30,000 MTPA.
Secured ₹170 crores of new orders from a leading thermal power player.
Order book of ₹1,308 crores as of September 30, 2025, providing strong visibility.
Suspended proposed equity fund raise due to strengthened cash inflows and new sanctioned credit limits.

Concerns

PAT for Q2 FY26 was ₹17.9 crores, lower than Q2 FY25 due to exceptionally high non-recurring income in the prior year.
EBITDA margin potential of 18-20% is currently impacted by a downward trend in power tariffs, leading to a revised FY26 guidance of 16-18%.
Order inflow for the oil & gas segment is expected to be modest at ₹100 crores for the next 5 months of FY26, with significant traction anticipated only in FY27.

Key financials

3 periods

Headline

Return on Net Worth
7.7%
Return on Capital Employed
9.4%
Cash Conversion Cycle
243 days
Receivable Days
104 days
Inventory Days
223 days

Q2 FY26

Revenue from Operations
₹270 Cr
YoY +39.2%
Operating EBITDA
₹44.1 Cr
YoY +47.9%
EBITDA Margin
16.3%
PAT
₹17.9 Cr

H1 FY26

Revenue from Operations
₹493.8 Cr
YoY +30.3%
Operating EBITDA
₹79.9 Cr
YoY +46.4%
EBITDA Margin
16.2%
PAT
₹31.1 Cr
YoY +22.1%

What they filed

Q1 FY27: revenue up 31.3%, net profit up 23.1% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	194	162	286	224	270 +39%	287 +77%	362 +27%	294 +31%
Expenses	164	156	223	188	226	239	298	245
EBITDA	30	6	64	36	44 +47%	48 +700%	64 +0%	50 +39%
Margin	15%	4%	22%	16%	16%	17%	18%	17%
Other income	16	-1	3	4	5	1	4	2
Interest	7	10	12	11	14	15	16	17
Depreciation	13	12	12	13	13	14	14	15
Profit before tax	26	-17	42	16	22 −15%	20 +218%	38 −10%	20 +25%
Tax rate	15%	-24%	26%	17%	20%	8%	27%	20%
Net profit	22	-13	32	13	18 −18%	19 +246%	28 −12%	16 +23%
EPS	3.22	-1.93	4.56	1.91	2.58	2.64	4.04	2.33

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

high confidence

Total value

₹1,308 Cr

as of 2025-09-30 quantified

Inflow this quarter

₹170 Cr

Execution

At least 9 months, (three quarters) are fully secured.

Pipeline

deal pipeline tcv

Expected order inflows for power and oil & gas sectors for H2 FY26 and FY27, plus overall pipeline for 2026-2027.

The company's order book provides strong visibility, with significant new orders expected from both power and oil & gas sectors in the coming periods, ensuring execution for at least 9 months.

Source: Prepared remarks

Capital allocation

high confidence

Capex Capex disclosed
- Commissioning of process piping solutions capacity at Anjar
- Seamless pipeline project
The company successfully commissioned the balanced 15,000 metric tons of process piping solutions capacity at our Anjar facility in September, 2025. This brings the total installed capacity at Anjar to 30,000 metric tons per annum, effectively doubling our production capabilities in a short period. ... Additionally, our 7,000 metric ton seamless pipeline is progressing as planned and is expected to commence commercial production by January, 2026.
Debt Debt disclosed

In spite of the increased finance costs resulting from commissioning of enhanced capacity, PAT grew at a healthy 22.1% year-on-year to Rs. 311 million. ... With the Anjar facility now fully operational and the seamless pipeline made completion, the company expects stronger internal accruals, gradual deleveraging and improved cash generation in the periods ahead, supported by enhanced capacity, greater cost efficiency and a robust order book.
M&A Green Hydrogen Plant (JV) Joint venture · Announced

To set up a complete hydrogen plant, leveraging Molsieve Designs' proprietary purification system.
Expected to be a lucrative business, with potential for more CAPEX.

So, just wanted to let you know that we have made an understanding with an international player for the supply of the entire hydrogen unit. ... Molsieve Designs Limited, in which we have a proprietary of manufacturing of hydrogen purification unit, which can purify hydrogen to an extent of 99.9999%... ... If it doesn't have to happen, we have the plan B in place. Then again I am saying if absolutely government says that no, we are not interested in your power. We will go for our hydrogen plant in the same location. Some more CAPEX, but it is equally lucrative business in that.
Liquidity Liquidity disclosed Company decided to suspend proposed equity fund raise due to strengthened cash inflows and new sanctioned credit limits from banking partners, indicating sufficient liquidity for working capital needs.

As you are aware, we had passed an enabling resolution in September, 2025 for a potential equity fund raise aimed at meeting working capital requirements arising from earlier than anticipated orders in the thermal power sector. These orders are now progressing largely in line with our original expectations, with only minor delays. Our cash inflows have strengthened and with new sanctioned credit limits from our banking partners, we do not anticipate any challenges in meeting our working capital needs in the short to medium term. Accordingly, we have decided to suspend the proposed equity fund raise for the time being.

Guidance & targets

Revenue

Revenue Growth Revenue · FY26 · High confidence 40% to 45%

Meanwhile, we continue to witness strong momentum in the oil and gas sector, as well as in thermal power projects for export markets. Keeping us well on track to deliver against our overall guidance although the revised tariff for biomass power plants have had some impact on our revenue and profitability margin, we remain confident of achieving revenue growth of 40% to 45% over the fiscal 25 base, with an operating EBITDA margin in the range of 16% to 18%.

— Sameer Agarwal

Margin

Operating EBITDA Margin Margin · FY26 · High confidence 16% to 18%

Meanwhile, we continue to witness strong momentum in the oil and gas sector, as well as in thermal power projects for export markets. Keeping us well on track to deliver against our overall guidance although the revised tariff for biomass power plants have had some impact on our revenue and profitability margin, we remain confident of achieving revenue growth of 40% to 45% over the fiscal 25 base, with an operating EBITDA margin in the range of 16% to 18%.

— Sameer Agarwal
Operating EBITDA Margin (Potential) Margin · Long-term · Medium confidence 18% to 20%

Anmolji, as far as our true potential of the business in terms of earning EBITDA margin, that lies somewhere between 18% to 20%.

— Sameer Agarwal
Operating EBITDA Margin Margin · FY27 · High confidence 18% to 20%

18% to 20%.

— Krishan Lalit Bansal

Order Inflow

Power Sector Order Inflow Order Inflow · H2 FY26 (next 5 months) · Medium confidence ~500 Cr

On a broader perspective, we are expecting around 500 Cr from power sector in this coming 5 months' time till March.

— Pankaj Agarwal
Power Sector Order Inflow Order Inflow · FY26-27 · Medium confidence ~650-700 crores

And then subsequently we are expecting around 650-700 crores order again in FY26-27 from power sector.

— Pankaj Agarwal
Oil & Gas Order Inflow Order Inflow · H2 FY26 (next 5 months) · Medium confidence ~100 Cr

And as far as oil and gas is concerned, we are expecting around 100 Cr in next 5 months' time.

— Pankaj Agarwal
Oil & Gas Order Inflow Order Inflow · Next Financial Year · Medium confidence ~700 crores

And then next financial year, we are having a very good hope from various oil and gas companies from India and abroad, maybe around to the tune of around 700 crores.

— Pankaj Agarwal

Order Book

Order Book Value Order Book · as of 1st April 2026 · High confidence 1100-1250 Cr

1100-1250 Cr order book will be there on 1st April, 2026.

— Pankaj Agarwal
Order Book Value Order Book · as of 1st April 2027 · Medium confidence ~1600 crores

Yes. So, if you see 2026-2027 and 1st April 2027, if you see 1.5 years after that, we shall be having the order book of around 1,600 crores. This is what we are targeting.

— Pankaj Agarwal

Pipeline

Order Pipeline Pipeline · 2026-2027 · Medium confidence 1,800 crores

Our expectation to book order to the tune of around 1,800 crores further

— Pankaj Agarwal

Capacity

Seamless Pipeline Commercial Production Capacity · January 2026 · High confidence Commercial Production

Additionally, our 7,000 metric ton seamless pipeline is progressing as planned and is expected to commence commercial production by January, 2026.

— Krishan Lalit Bansal

New Business

Hydrogen Pilot Plant Commissioning New Business · within next 3 months · Medium confidence Commissioned

And we hope to commission our pilot plant very shortly within the next 3 months' time and based upon its success and again based upon the tariff order, which comes from the government, we shall take a further call on hydrogen plant to be commissioned in Malwa.

— Krishan Lalit Bansal

What to watch in Q3 FY26

Seamless Pipeline Commercial Production

January 2026

Current Progressing as planned

Target Commercial production commenced

Why it matters

This will strengthen backward integration, enhance cost efficiency, and expand product mix, contributing to future profitability.

Additionally, our 7,000 metric ton seamless pipeline is progressing as planned and is expected to commence commercial production by January, 2026.

Risks & concerns

Downward trend in power tariffs
medium

Impacts overall top line and bottom line, leading to a slight dip in EBITDA margins from potential 18-20% to 16-18% for FY26. Company has alternative plans like Biomass Pellets Plant or Hydrogen plant.

Management acknowledged
Geopolitical situations affecting raw material sourcing
medium

Difficulty in securing material from outside India, particularly China. Management is hopeful for import allowances.

Management acknowledged
Delays in government machinery for power sector projects
medium

Acknowledged 'leg pulling' and delays in government processes, but management remains hopeful for traction.

Management acknowledged
Uncertainty and slow conversion in Green Hydrogen sector
medium

The sector is new, with elementary enquiries not converting yet due to lack of clarity among players. Management expects traction in 6 months.

Management acknowledged

Q&A highlights

6 direct

Power Sector Order Pipeline for FY26 and FY27 Direct

What I was telling that we have a good pipeline available with us from power sector. We are under advanced discussion with many customers and good order book will be there from power sector in FY26-27 and same will be continued for years together.

Analyst sought clarity on future growth drivers, and management provided specific order inflow expectations for the power sector for the current and next fiscal years.

Asked by Vaibhav Shah

Order Inflows for Power and Oil & Gas segments Direct

On a broader perspective, we are expecting around 500 Cr from power sector in this coming 5 months' time till March. And then subsequently we are expecting around 650-700 crores order again in FY26-27 from power sector. And as far as oil and gas is concerned, we are expecting around 100 Cr in next 5 months' time. And then next financial year, we are having a very good hope from various oil and gas companies from India and abroad, maybe around to the tune of around 700 crores.

Analyst questioned the segment-wise order inflow expectations, and management provided a detailed breakdown for both power and oil & gas for the short and medium term.

Asked by Tanay Bheda

EBITDA Margin Outlook and Impact of Power Tariff Direct

Anmolji, as far as our true potential of the business in terms of earning EBITDA margin, that lies somewhere between 18% to 20%. Since there is some downwards trend in power tariffs, therefore there is a slight dip in terms of EBITDA margins. So, this year we shall be keeping a range of 16% to 18% EBITDA margin from the overall revenue of the organization.

Analyst probed on the impact of power tariff changes on profitability, and management clarified the revised margin guidance for FY26 and the long-term potential.

Asked by Anmol Mittal

Hydrogen Pilot Plant Location and Commissioning Direct

Just to add to Sameer's explanation, let me make some correction as a matter of fact. You were saying that we had said that we shall be putting up this plant in Anjar. Actually, we had said in our last call that this is an alternative available to us for putting this hydrogen plant in our Malwa plant where the tariff has been downgraded drastically as an alternative measure. But at the same time, we also told that we are going to have a pilot plant over there that will be our first preference. And this will be our second preference. So, we are just moving ahead as per that. And we hope to commission our pilot plant very shortly within the next 3 months' time and based upon its success and again based upon the tariff order, which comes from the government, we shall take a further call on hydrogen plant to be commissioned in Malwa.

Management corrected a previous statement about the hydrogen plant location and provided a clear timeline for the pilot plant commissioning, linking it to government policy.

Asked by Yash

Heavy Fabrication Margin Volatility and Product Mix Direct

Actually, in that heavy fabrication unit sometimes the product mix is getting some shift in that. Earlier, most of the times you are usually doing purely fabrication job. Now, we are doing fabrication with some supplies involved into that, which is giving us some reasonably good numbers. And in the coming quarters also, there may be still more shift that we may be asked to supply raw material also. So, it may add to the top line as well as a little bit on the bottom line also.

Analyst questioned the reasons for margin changes in heavy fabrication, and management explained it's due to a strategic shift in product mix towards value-added offerings and potential raw material supply.

Asked by Kashish Anjani

Order Book Opening for FY27 and Potential Shortfall Partial

1100-1250 Cr order book will be there on 1st April, 2026. So, we are purely secured from the execution point. At least 9 months, (three quarters) are fully secured. And again, as I said that we have a good pipeline available for 2026-2027. Our expectation to book order to the tune of around 1,800 crores further

Analyst challenged the order inflow guidance versus the current order book, prompting management to provide updated, slightly adjusted, but still strong order book targets for the next two fiscal years.

Asked by Binod Modi

Long-term FY27 EBITDA Margin Outlook Direct

18% to 20%.

Analyst sought clarity on the long-term margin potential once new capacities and power projects are fully operational, and management provided a specific target range.

Asked by Kamlesh Bagmar

3 min read 7 chapters

Detailed narrative

Robust Q2 FY26 Performance and H1 Growth

DEE Development reported strong Q2 FY26 results with revenue from operations growing 39.2% year-on-year to ₹270 crores. Operating EBITDA increased by 47.9% year-on-year to ₹44.1 crores, achieving a margin of 16.3%, which expanded by 96 basis points over Q2 FY25. For the first half of FY26, revenue from operations rose 30.3% year-on-year to ₹493.8 crores, and operating EBITDA increased by 46.4% to ₹79.9 crores, with margins improving by 179 basis points to 16.2%. PAT for H1 FY26 grew 22.1% year-on-year to ₹31.1 crores.

Strategic Capacity Expansion and Backward Integration

The company successfully commissioned 15,000 metric tons of process piping solutions capacity at its Anjar facility in September 2025, effectively doubling its total installed capacity at Anjar to 30,000 metric tons per annum. This expansion aims to enhance the company's ability to cater to both domestic and international clients with greater efficiency. Additionally, the 7,000 metric ton seamless pipeline project is progressing as planned and is expected to commence commercial production by January 2026, which will further strengthen backward integration, enhance cost efficiency, and expand the product mix.

Healthy Order Book and Strong Pipeline Visibility

DEE Development maintains a healthy order book of ₹1,308 crores as of September 30, 2025, supported by robust traction across power, oil and gas, and process industries. During the quarter, the company secured ₹170 crores of new orders from a leading thermal power player. Management anticipates significant order inflows, projecting approximately ₹500 crores from the power sector and ₹100 crores from oil & gas in the remaining 5 months of FY26. For the next financial year (FY27), the company expects ₹650-700 crores from power and ₹700 crores from oil & gas, with an overall pipeline of ₹1,800 crores for 2026-2027.

EBITDA Margin Outlook and Power Tariff Impact

While the company's true potential for EBITDA margins lies between 18% to 20%, the FY26 guidance has been set at 16% to 18% due to a downward trend in power tariffs. Management noted that if tariffs are revised, margins could return to the 18-20% range. To mitigate potential impacts, the company has alternative plans, including a Biomass Pellets Plant or a Hydrogen plant, which are expected to offer similar lucrative returns if the power tariff situation remains unfavorable.

Suspension of Equity Fund Raise and Improved Liquidity

The company announced the suspension of its proposed equity fund raise, for which an enabling resolution was passed in September 2025. This decision was driven by strengthened cash inflows and new sanctioned credit limits from banking partners, which are expected to meet the company's working capital needs in the short to medium term. This indicates improved liquidity and confidence in internal accruals for future growth.

Green Hydrogen Initiative and Future Prospects

DEE Development is actively pursuing opportunities in the green hydrogen sector through a joint venture with an international cleantech partner. The company's subsidiary, Molsieve Designs, possesses proprietary technology for hydrogen purification (up to 99.9999%). A pilot plant is expected to be commissioned within the next three months, primarily in Malwa, with Anjar as a second preference. While the sector is new and currently sees elementary enquiries, management anticipates good traction within the next six months, positioning the company for future growth in this segment.

Working Capital Management and Efficiency Gains

The company's cash conversion cycle improved slightly to 243 days from 247 days in the previous quarter, with receivable days at 104 and inventory days at 223. Management emphasized that the relatively high conversion cycle is inherent to the project-based nature of their business. Efficiency gains and better fixed cost absorption, particularly following the ramp-up at Anjar, contributed to the improved operational execution and profitability.

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