DEE Development Engineers Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

DEE Development delivered strong Q3 and 9M FY26 results, marked by robust revenue and EBITDA growth in its core business. The Anjar facility is fully operational, and the seamless pipe plant is nearing commissioning, promising significant future revenue. While the company boasts a strong order book and clear debt reduction plans, the non-core power segment continues to be a drag on profitability due to tariff revisions, though mitigation efforts are underway.

Highlights

  • Q3 FY26 Revenue from operations at ₹286.7 crores, up 77% YoY, and 9M FY26 Revenue at ₹780.4 crores, up 44.3% YoY.

  • Q3 FY26 Operating EBITDA at ₹43.4 crores, up 666.4% YoY, and 9M FY26 Operating EBITDA at ₹123.4 crores, up 104.8% YoY.

  • Core business EBITDA for 9M FY26 stood at ₹129.8 crores, representing a 175.5% YoY growth, driven by better execution and improved utilization.

  • Anjar facility is now fully operational and contributing to revenue growth and operating leverage.

  • Seamless pipe plant is progressing well and nearing commissioning, expected to generate peak annual revenue of ₹450 crores with an IRR of 30-35%.

Concerns

  • Non-core power segment incurred an operating EBITDA loss of ₹6.4 crores for 9M FY26, impacting consolidated profitability.

  • Tariff revision in the power business led to a loss of approximately ₹2.5-3 crores per month, totaling ₹14.3 crores for 9M FY26.

  • A one-time impact of ₹4.2 crores due to Labor Code was adjusted in the 9M operating EBITDA.

Key financials

2 periods

Q3 FY26

  • Revenue from Operations
    ₹286.7 Cr
    YoY +77%
  • Operating EBITDA
    ₹43.4 Cr
    YoY +666.4%
  • Operating EBITDA Margin
    15.2%
  • PAT
    ₹18.6 Cr

9M FY26

  • Revenue from Operations
    ₹780.4 Cr
    YoY +44.3%
  • Operating EBITDA
    ₹123.4 Cr
    YoY +104.8%
  • Operating EBITDA Margin
    15.8%
  • PAT
    ₹49.5 Cr
    YoY +308.2%

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue194 162 286 224 270 +39%287 +77%362 +27%294 +31%
EBITDA30 6 64 36 44 +47%48 +700%64 +0%50 +39%
Net profit22 -13 32 13 18 −18%19 +246%28 −12%16 +23%
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.

Segment breakdown

  • Core Business (Piping & Fabrication)
    ₹129.8 Cr EBITDA (9M FY26)17.4% EBITDA Margin (9M FY26)
  • Non-Core Business (Power Generation)
    ₹6.4 Cr Operating EBITDA Loss (9M FY26)
  • Adjusted Operating EBITDA (9M FY26)
    ₹134 Cr EBITDA18% EBITDA Margin

Order book

high confidence

Total value

₹1,303 Cr

as of 2025-12-31 quantified

Execution

robust order book indicates strong multi-year revenue visibility

Composition

  • Domestic PSU (client type)
  • Export Private Players (client type)

Pipeline

L1 awaiting loa

L1 bids for new orders

The company has a robust order book providing strong multi-year revenue visibility and is L1 on several new bids, with a pipeline of Rs. 300-400 crores.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed Rs. 22.5 crore of seamless pipe plant CAPEX will be funded through internal accruals.
    • Seamless pipe plant ₹90 Cr
    In parallel our seamless pipe plant is progressing well and is nearing commissioning as approved by the board this facility will have an annual capacity of 7,000 tonnes with a CAPEX of about Rs. 90 crore of which Rs. 22.5 crore will be funded through internal accruals.
  • Debt Debt disclosed
    • Repayment Annual repayment of debt ₹40 Cr
    Yes sir. Definitely. Let me again answer that question. Sir, as I just said in my opening remarks that our CAPEX cycle is almost at the finish line stage. So, whatever CAPEX needs to be done, I will say 95% to 98% CAPEX that will happen within March of this financial year and in the coming years whatever new CAPEX will be there it will be primarily for maintenance purposes only which may range between Rs. 10 crore to Rs. 15 crore or something like that.
  • Liquidity Liquidity disclosed Future order appetite will be met from improved cash flow and internal accruals without new debt.
    It will come from our improved cash flow only. We do not anticipate any new debt if all of a sudden let us say orders worth Rs. 1,000 crore come or something like that then we may have to but otherwise if the orders come progressively throughout the year then you know we will not require anything because of our internal cash accruals only.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Going forward · High confidence 18-20%
    18% to 20% sir. As we have been telling, it will be 18% to 20% in that range, there is absolutely no doubt on that.

    — Krishan Lalit Bansal

  • Power Segment EBITDA Profitability · Coming year (FY27) · High confidence EBITDA neutral
    It will be absolutely EBITDA neutral. Our pellet plant is about to get commissioned, and the trials are going on and we may make some sale in the month of March, but the full capacity sales will start maybe in the month of April and it will be definitely EBITDA neutral there will not be much gain.

    — Krishan Lalit Bansal

Revenue

  • Seamless Pipe Plant Peak Annual Revenue Revenue · At optimal utilization · High confidence Rs. 450 crore
    At optimal utilization we expect this plant to generate peak annual revenue of around Rs. 450 crore with an IRR of approximately 30% to 35% given

    — Krishan Lalit Bansal

  • Revenue Growth Target Revenue · Over three to five years · Medium confidence 3x
    First being with the 3x revenue growth target which you have given for over three to five years.

    — Prisha Shah (referencing management)

  • Optimal Utilization Revenue (Existing Capacity) Revenue · With present facilities · High confidence Rs 2300 to 2500 crore
    Rs 2300 to 2500 crore with the present facilities.

    — Krishan Lalit Bansal

Taxation

  • Normalized Tax Rate Taxation · Future estimates · High confidence 25.17%
    22% plus cess and surcharge. It is 25.17%.

    — Brham Yadav

Capex

  • Future Maintenance CAPEX Capex · Coming years · High confidence Rs. 10-15 crore
    and in the coming years whatever new CAPEX will be there it will be primarily for maintenance purposes only which may range between Rs. 10 crore to Rs. 15 crore or something like that.

    — Krishan Lalit Bansal

What to watch in Q4 FY26

Power Segment Profitability (EBITDA Neutrality)

Q4 FY26 (March) for pellet plant sale, Q1 FY27 (April) for full capacity sales.
Current Operating EBITDA loss of ₹6.4 crores for 9M FY26, monthly loss of ₹2.5-3 crores.
Target EBITDA neutral.

Why it matters

Cessation of losses from the non-core segment is crucial for consolidated profitability and overall margin improvement.

It will be absolutely EBITDA neutral. Our pellet plant is about to get commissioned, and the trials are going on and we may make some sale in the month of March, but the full capacity sales will start maybe in the month of April and it will be definitely EBITDA neutral there will not be much gain.

Risks & concerns

  • Non-core power segment losses due to tariff revisions

    high

    The power plant is operating at a loss of approximately ₹5 per unit, leading to a monthly loss of ₹2.5-3 crores (₹14.3 crores for 9M FY26), directly impacting consolidated profitability.

    Management acknowledged

  • High working capital intensity due to project-driven, custom manufacturing

    medium

    The business model requires holding significant inventory (₹500-600 crores for a ₹1300 crore order book) due to custom specifications, long procurement cycles, and import dependence for raw materials.

    Analyst acknowledged

Q&A highlights

5 direct
Impact of power business losses on EBITDA and reconciliation of figures. Partial
So, that means around Rs. 2.5 crore loss is coming every month which will directly impact the EBITDA and the PAT only because all expenses we are incurring on that except for the very little on the fuel saving because we are running it at slightly lower capacity otherwise you know all other expenses everything is going on and hence it is a direct impact of almost around Rs. 3 crore or Rs. 2.5 crore every month which is around Rs. 22.5 crore in terms of this thing...

Highlights the ongoing drag from the non-core power segment and the complexity in reconciling reported EBITDA with management's explanations of losses, leading to a data presentation issue.

Asked by Kamlesh Bagmar

Inclusion of Labor Code impact in core operating EBITDA and its effect on margin comparison. Partial
Yes, let me explain Rs. 4.2 crore is already included in the operating EBITDA that we have taken. ... So, that is why the whole comparison becomes non-meaningful because when we compare with the EBITDA because overall EBITDA does not have the impact of Labor Code while your core operating EBITDA has the impact of this Rs. 4.2 crore.

Clarifies how a specific one-time expense (Labor Code impact) is accounted for within the core business EBITDA, which was causing confusion for the analyst regarding margin comparison.

Asked by Kamlesh Bagmar

Timeline and expectation for the power segment to become EBITDA neutral. Direct
It will be absolutely EBITDA neutral. Our pellet plant is about to get commissioned, and the trials are going on and we may make some sale in the month of March, but the full capacity sales will start maybe in the month of April and it will be definitely EBITDA neutral there will not be much gain.

Provides a clear timeline and expectation for the problematic non-core power segment to cease being a drag on profitability, which is a key concern for investors.

Asked by Daksh

Reasons for high inventory holding and its relation to working capital. Direct
Since we are a project driven company, so we have to do everything as per the requirement of the projects. They are all 100% tailor-made items which we are making, and they are made as per the customer specs... Our order booking is let us say today is around Rs. 1300 crore, so we have to have an inventory of almost Rs 600 or 500 crore above worth just for raw material and other things only.

Explains the structural reason for high inventory levels in a project-driven, custom-manufacturing business, linking it directly to the order book and customer specifications, which is crucial for understanding working capital dynamics.

Asked by Ripunjay Aggarwal

Management's strategy for debt reduction and future funding. Direct
our CAPEX cycle is almost at the finish line stage... every year we shall be paying almost around Rs. 40 crore towards repayment of the debt which is definitely going to reduce our burden on this interest cost and other things plus we anticipate that there will be huge improvement in interest costs because of positive cash flows which we are expecting in H1 of FY'27.

Outlines a clear path to debt reduction driven by the completion of the CAPEX cycle and annual repayments, signaling improved financial health and reduced interest burden.

Asked by Ripunjay Aggarwal

Strategic diversification into nuclear, semiconductors, and pharma sectors. Direct
We are already in advanced stage of discussions with NPCIL and some private players also who are setting up the plant right now and that is our next focus on business growth. ... we are having lot of focus on diversifying ourselves into nuclear business into semiconductors business and pharma business. That is going to be our next major line of diversification.

Reveals strategic intent to diversify beyond traditional power and oil & gas into high-growth, high-tech sectors, which could open new revenue streams and reduce concentration risk.

Asked by Prisha Shah

Funding strategy for future order appetite without incurring new debt. Direct
It will come from our improved cash flow only. We do not anticipate any new debt if all of a sudden let us say orders worth Rs. 1,000 crore come or something like that then we may have to but otherwise if the orders come progressively throughout the year then you know we will not require anything because of our internal cash accruals only.

Reassures investors that the company can fund its growth and increasing order book through internal accruals, minimizing reliance on new debt and maintaining financial prudence.

Asked by Sanket Thakkar

3 min read 6 chapters

Detailed narrative

Q3 & 9M FY26 Performance Overview

DEE Development reported strong financial performance for Q3 and 9M FY26. Revenue from operations for Q3 stood at ₹286.7 crores, marking a 77% year-on-year growth, while 9M revenue reached ₹780.4 crores, up 44.3% YoY. Operating EBITDA for Q3 was ₹43.4 crores, a substantial 666.4% increase YoY, and for 9M, it was ₹123.4 crores, up 104.8% YoY. The operating EBITDA margin improved significantly to 15.2% in Q3 FY26 and 15.8% for 9M FY26, compared to 3.5% and 11.1% in the corresponding periods last year, respectively.

Strategic Focus: Core Business & Diversification

The company has sharpened its focus by segregating core and non-core segments. The core business, comprising process piping manufacturing solutions, heavy fabrication, and the Molsieve acquisition, delivered a 9M FY26 EBITDA of ₹129.8 crores, growing 175.5% YoY. Management is actively pursuing diversification into nuclear, semiconductors, and pharma businesses, which are identified as the next major lines of growth. This strategy aims to leverage existing capabilities in critical applications while expanding into new high-growth sectors.

Capex & Capacity Expansion

DEE Development's CAPEX cycle is nearing completion, with 95-98% of planned investments expected by March of the current financial year. The Anjar facility is now fully operational, contributing to revenue growth and improved utilization. The seamless pipe plant is progressing well and is nearing commissioning, with an estimated CAPEX of ₹90 crores, of which ₹22.5 crores will be funded through internal accruals. This plant is projected to generate peak annual revenue of ₹450 crores at optimal utilization, with an IRR of 30-35%.

Non-Core Power Segment Challenges & Mitigation

The non-core power generation division continues to face challenges, recording an operating EBITDA loss of ₹6.4 crores for 9M FY26. This is primarily due to tariff revisions, resulting in a loss of approximately ₹2.5-3 crores per month. To mitigate these losses, the company is pivoting towards biomass pellet manufacturing, with a pellet plant under commissioning. Management expects the power segment to become EBITDA neutral in FY27, with full capacity sales from the pellet plant starting in April 2026.

Order Book & Demand Outlook

As of December 31, 2025, the company's order book stood at a robust ₹1303 crores, providing strong multi-year revenue visibility. Management indicated being L1 on new orders worth approximately ₹300-400 crores, which are expected to convert into firm orders soon. The demand outlook remains positive, driven by sustained government focus on capital expenditure in infrastructure, transport, energy, and industrial corridors, complemented by growing international demand in energy and process industries.

Working Capital Management & Debt Strategy

The company's project-driven nature necessitates significant inventory holding, with approximately ₹500-600 crores of inventory required for the current ₹1300 crore order book, primarily due to custom specifications and long procurement cycles. Management is committed to debt reduction, with annual repayments of around ₹40 crores planned. With the CAPEX cycle concluding and anticipated positive cash flows in H1 FY27, the company expects a significant improvement in interest costs and aims to fund future growth through internal accruals without new debt.

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