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.