DEE Development Engineers Limited — Q4 FY25 earnings call

Call held 30 May 2025

Management summary

DEE Development reported a strong Q4 FY25 with significant revenue and margin expansion, driven by robust execution and a healthy order book of INR 1,275 crores. The company is progressing with its Anjar facility expansion and seamless pipe plant, targeting increased capacity and operational efficiencies. However, a recent downward revision in biomass power plant tariffs poses a concern, with an estimated annual revenue impact of INR 38.5 crores, potentially affecting future profitability if legal challenges are unsuccessful.

Highlights

  • Q4 FY25 Revenue from operations of INR 286.4 crores, up 17.7% YoY and 76.8% QoQ.

  • Q4 FY25 Operating EBITDA of INR 63.5 crores, up 84% YoY and over 1,000% QoQ.

  • Q4 FY25 Operating EBITDA margin of 22.2%, expanded 797 bps YoY and 1,868 bps QoQ.

  • Q4 FY25 Profit after tax of INR 31.5 crores, up 166% YoY.

  • Order book of INR 1,275 crores as of April 30, 2025, ensuring strong visibility for future growth.

Concerns

  • Downward revision of tariff for biomass power plants by PSERC (Muktsar: INR 8.59/unit to INR 3.50/unit; Abohar: INR 7.47/unit to INR 5.42/unit).

  • Annual revenue impact of approximately INR 38.5 crores (INR 26 crores for Muktsar, INR 12.5 crores for Abohar) due to revised biomass tariffs.

  • Potential impact on FY26 EBITDA margin guidance (19-20%) if biomass tariff revision is not reversed or revised upwards.

Key financials

2 periods

Q4 FY25

  • Revenue from Operations
    ₹286.4 Cr
    YoY +17.7% QoQ +76.8%
  • Operating EBITDA
    ₹63.5 Cr
    YoY +84% QoQ +1,000%
  • Operating EBITDA Margin
    22.2%
  • Profit After Tax
    ₹31.5 Cr
    YoY +166%
  • PAT Margin
    10.9%

FY25

  • Revenue from Operations
    ₹827.4 Cr
    YoY +4.9%
  • Operating EBITDA
    ₹123 Cr
    YoY +20.7%
  • Operating EBITDA Margin
    15%

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.

Order book

high confidence

Total value

₹1,275 Cr

as of 2025-04-30 quantified

Execution

Orders on hand are to be executed in the next 12 months, with average execution time ranging from 6 to 18 months.

Composition

Mix 2 segments
  • Oil & Gas 73%
  • Power 20%

Share of order book by segment· partial disclosure (93% of the book)

Pipeline

L1 awaiting loa

L1 bids for BHEL critical piping, ExxonMobil rate contract, and discussions for large volume oil & gas orders.

Cancellations & deferrals

  • deferred: INR 10-15 crores of GAIL order still pending closure, expected in July.
Management expects a good order book for the financial year, with a worst-case booking of INR 1,600-1,700 crores, and strong pipeline visibility, limited mainly by capacity constraints.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Anjar facility expansion for additional capacity ₹100 Cr
    • Maintenance capex for overall group ₹10 Cr
    So as far as the new capex is concerned, we are already undergoing expansion of our new Anjar facility, of which we shall be doing another INR100 crores of capex in FY '25, '26. And as far as our maintenance capex is concerned, that shall be always in the range of INR10 crores to INR15 crores on overall group level.

Guidance & targets

Revenue

  • Top line revenue Revenue · FY26 · High confidence INR 1,300 crores
    As mentioned during our last earnings call, we are on track to achieve a top line revenue of around INR1,300 crores in FY '26, reflecting over 50% growth compared to the FY '25 base.

    — Sameer Agarwal

Margin

  • EBITDA margin Margin · FY26 · Medium confidence 19% to 20%
    While we are confident of delivering an EBITDA margin in the range of 19% to 20%, the recent downward revision in tariff for our biomass power plant may impact profitability and margins at the same is not reversed or revised upwards.

    — Sameer Agarwal

Capacity

  • Anjar facility capacity (excluding heavy fabrication) Capacity · October 2025 · High confidence 30,000 metric tons per annum
    We expect to commission an additional 15,000 metric ton per annum capacity by October 2025, bringing the total capacity at Anjar, excluding heavy fabrication to 30,000 metric tons per annum.

    — Krishan Lalit Bansal

  • High-wall seamless pipe plant commercial production Capacity · January 2026 · High confidence Commercial production
    Simultaneously, the development of our high-wall seamless pipe plant is advancing on schedule. We remain on track to commence commercial production by January 2026.

    — Krishan Lalit Bansal

Order Inflow

  • Order booking (worst case hit rate) Order Inflow · FY26 · Medium confidence INR 1,600-1,700 crores
    See, we are expecting a good order book in this financial year. The worst scenario, what I consider the hit rate will be around like INR1,600 crores to INR1,700 crores, we should be booking the orders.

    — Pankaj Agarwal

What to watch in Q1 FY26

Resolution of Biomass Tariff Revision

next quarter
Current Review petition filed, legal options explored
Target Favorable resolution or clarity on final tariff impact

Why it matters

The tariff revision has a material revenue impact (INR 38.5 crores annually) and could affect FY26 EBITDA margins, making its resolution critical for profitability.

The company has filed a review petition against PSERC's tariff revision and is exploring all legal options to protect its rights.

Risks & concerns

  • Downward revision of biomass power plant tariffs

    high

    Punjab State Electricity Regulatory Commission (PSERC) revised tariffs downwards for Muktsar and Abohar plants, leading to an estimated annual revenue impact of INR 38.5 crores and potential impact on FY26 EBITDA margins. The company has filed a review petition and is exploring all legal options.

    Management acknowledged

Q&A highlights

4 direct
Biomass Tariff Revision Impact on FY26 Margins Partial
So I told the EBITDA margins shall be in the range of 19% to 20%. And we need to take the impact of the biomass tariff revision by the commission. So it is to be learned post the revision petition or the final order in this regard.

Highlights the uncertainty around the FY26 margin guidance due to the ongoing biomass tariff dispute, which could materially impact profitability.

Asked by Agastya Dave

Capex for Anjar Expansion and Maintenance Direct
So as far as the new capex is concerned, we are already undergoing expansion of our new Anjar facility, of which we shall be doing another INR100 crores of capex in FY '25, '26. And as far as our maintenance capex is concerned, that shall be always in the range of INR10 crores to INR15 crores on overall group level.

Provides specific capex figures for capacity expansion and ongoing maintenance, crucial for understanding future growth investments.

Asked by Agastya Dave

Order Book Composition and Realization per Kg Partial
And coming to the breakup of the oil and gas and power, we still have good orders from oil and gas. It's around 73% of the total value, what we have as of today. And from power, we have around 20%. So per kg rates are really good for power sector, what we have. It's very difficult to answer your question to say that what is the per kg number of the oil and gas and power as on date because I calculate it that way.

Offers insight into the current segment mix of the order book and explains the complexity in providing a uniform 'per kg realization' metric due to varying metallurgy.

Asked by Dhavan Shah

BHEL Critical Piping Order Status and Competition Direct
So for the first time, we have released the tender for 3 units, 3 boilers package. So we have bidded to them. It's under technical evaluation so far. ... Looks like as for the receipt bids, this is what is our internal calculation. This is what we are thinking.

Reveals the company's active bidding for significant BHEL critical piping orders and management's perception of limited competition in this segment, indicating potential for large wins.

Asked by Gautam Rajesh

Efficiencies from Anjar Facility and Overhead Reduction Direct
Yes, sir. So as we are coming up a dedicated facility for oil and gas sector at Anjar, the complexity which we used to face during executing 2 sector jobs in 1 facility at Palwal, that will go away and the proper efficiency will be there in terms of optimal utilization of resources as well as the proficiency of the facility. ... And moreover, sir, since the turnover is going to increase by almost 50%, the allocation of overhead is going to reduce drastically. So that itself is going to give a direct impact of 4%, 5%.

Explains how the new Anjar facility will drive operational efficiencies by dedicating production to oil & gas, and how increased turnover will reduce overheads, directly impacting margins positively.

Asked by Kamlesh Bagmar

Revenue Mix between Palwal and Anjar in the Future Partial
It will majorly depend upon the power order, sir, but we still anticipate that the turnover from Palwal will be much higher than our Anjar facility.

Clarifies that while Anjar is expanding, Palwal (focused on power) is expected to remain the larger contributor to turnover, indicating the continued importance of the power sector.

Asked by Kamlesh Bagmar

Impact of Anjar Facility on Logistics Costs and Productivity Direct
Yes, definitely. And going forward, since 50% of our raw material we used to import and 50% of our overall revenue, we are exporting. Therefore, since the volumes of oil and gas sector jobs are quite higher, therefore, the logistics cost in -- particularly in oil and gas sector is a major cost factor, which decides the EBITDA margin. So we are going to save a lot of expenses on account of logistics cost. ... Yes, sir. We have done as much automation as we could perceive, and it's showing very good results, and we are quite upbeat on that.

Highlights the strategic benefit of the Anjar facility in reducing logistics costs, especially for the high-volume oil & gas sector, and confirms successful automation for productivity gains.

Asked by Jignesh

2 min read 5 chapters

Detailed narrative

Strong Q4 FY25 Performance and FY25 Overview

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.

Capacity Expansion and Backward Integration

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.

Order Book and Future Visibility

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.

Biomass Power Plant Tariff Revision Challenge

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.

FY26 Guidance and Operational Efficiencies

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.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls