DEE Development

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.

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.

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%.

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.

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.

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.