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    DEE Development

    DEEDEV
    Capital Goods·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

    6
    • 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

    3
    • 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.

    What Changed2

    vs Q3 FY26

    Guidance items7 → 13 (+6)Risks discussed2 → 4 (+2)
    Key financials

    Metrics

    13

    Periods

    3

    Headline

    5
    • 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

    4
    • 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

    4
    • 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%

    Order Book

    high confidence

    Total Value

    ₹ 1,308 crores

    as of 2025-09-30

    quantified

    Inflow this qtr

    ₹ 170 crores

    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

    4
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Debt disclosed

    M&A

    Green Hydrogen Plant (JV)

    joint venture · announced

    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.

    Guidance & targets

    13
    CategoryTargetPriority
    Revenue
    Revenue Growth
    40% to 45%
    High
    Margin
    Operating EBITDA Margin
    16% to 18%
    High
    Margin
    Operating EBITDA Margin (Potential)
    18% to 20%
    Medium
    Margin
    Operating EBITDA Margin
    18% to 20%
    High
    Order Inflow
    Power Sector Order Inflow
    ~500 Cr
    Medium
    Order Inflow
    Power Sector Order Inflow
    ~650-700 crores
    Medium
    Order Inflow
    Oil & Gas Order Inflow
    ~100 Cr
    Medium
    Order Inflow
    Oil & Gas Order Inflow
    ~700 crores
    Medium
    Order Book
    Order Book Value
    1100-1250 Cr
    High
    Order Book
    Order Book Value
    ~1600 crores
    Medium
    Pipeline
    Order Pipeline
    1,800 crores
    Medium
    Capacity
    Seamless Pipeline Commercial Production
    Commercial Production
    High
    New Business
    Hydrogen Pilot Plant Commissioning
    Commissioned
    Medium

    Seamless Pipeline Commercial Production

    January 2026
    CurrentProgressing as planned
    TargetCommercial 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.

    How to verify

    detailed_narrative[title='Strategic Capacity Expansion & Backward Integration']

    Risks & concerns

    4
    RiskSeverity

    Downward trend in power tariffs

    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

    medium

    Geopolitical situations affecting raw material sourcing

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

    medium

    Delays in government machinery for power sector projects

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

    medium

    Uncertainty and slow conversion in Green Hydrogen sector

    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

    medium

    Q&A highlights

    7

    “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

    3 min read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.