DEE Development

DEE Development reported a robust Q4 FY25, with revenue from operations increasing by 17.7% year-on-year and 76.8% quarter-on-quarter to INR 286.4 crores. Operating EBITDA for the quarter stood at INR 63.5 crores, marking an 84% YoY and over 1,000% QoQ increase, with the EBITDA margin expanding significantly to 22.2%. For the full fiscal year FY25, operating income reached INR 827.4 crores, a 4.9% increase YoY, and full-year operating EBITDA was INR 123 crores with a 15% margin.

The company's expansion at the Anjar facility is progressing as planned, with an additional 15,000 metric tons per annum capacity expected to be commissioned by October 2025, bringing the total Anjar capacity (excluding heavy fabrication) to 30,000 metric tons per annum. Concurrently, the high-wall seamless pipe plant is on track for commercial production by January 2026. These initiatives are part of a backward integration strategy aimed at improving supply chain efficiency and cost competitiveness, with INR 100 crores capex allocated for Anjar in FY25/26.

As of April 30, 2025, DEE Development's order book stood at a healthy INR 1,275 crores, providing strong revenue visibility. Management anticipates booking INR 1,600-1,700 crores in new orders for FY26. The current order book is composed of approximately 73% from the oil & gas sector and 20% from the power sector. Key orders include a $50 million Dow chemical order (75-80% to be aggregated this year) and an 18-month rate contract with ExxonMobil USA, expected to generate INR 40-50 crores in FY26.

A significant concern is the recent downward revision of the tariff order for the company's two biomass power plants by the Punjab State Electricity Regulatory Commission (PSERC). Tariffs for the Muktsar plant were reduced from INR 8.59/unit to INR 3.50/unit, and for the Abohar plant from INR 7.47/unit to INR 5.42/unit. This revision is estimated to result in an annual revenue impact of approximately INR 38.5 crores. The company views this decision as legally untenable and has filed a review petition, exploring all legal avenues to protect its rights, noting the decision undermines rural empowerment and environmental protection efforts.

For FY26, the company has guided for a top-line revenue of approximately INR 1,300 crores, representing over 50% growth compared to the FY25 base. The EBITDA margin is targeted to be in the range of 19% to 20%, though this is subject to the resolution of the biomass tariff issue. Management expects significant operational efficiencies from the dedicated Anjar facility for oil & gas projects, which will reduce complexity and improve resource utilization. Additionally, a projected 50% increase in turnover is expected to drastically reduce overhead allocation, contributing a direct 4-5% positive impact on margins.