Denta Water — Q3 FY26 earnings call

Call held 20 Feb 2026

Management summary

Denta Water reported strong 9M FY26 performance with over 30% revenue and EBITDA growth, driven by execution capability and a healthy order book. However, Q3 FY26 saw moderated revenue growth due to project delays and climatic factors. The company is focused on improving working capital efficiency and selectively bidding for profitable water infrastructure projects, projecting continued growth in the coming years.

Highlights

  • Nine-month revenue (9M FY26) increased by 30.8% year-on-year to ₹195.07 crores.

  • EBITDA for 9M FY26 grew by 34.02% year-on-year to ₹70.85 crores, indicating margin expansion.

  • EBITDA margin improved to 36.32% for 9M FY26 due to better project mix and execution efficiency.

  • Healthy order book of ₹841.48 crores as of December 31, 2025, providing revenue visibility for 2-2.5 years.

  • Company remains almost debt-free for fund-based facilities and secured non-fund-based credit limits for new projects.

Concerns

  • Q3 FY26 revenue growth moderated to 4.22% YoY (₹53.52 crores) due to project-based timing, delayed billing, and climatic reasons.

  • Working capital days almost doubled by December 31, 2025, with work completed lying in inventory due to slow billing and collection.

  • A significant ₹400 crore project (Karnataka Mining Environment Restoration Fund) is still awaiting committee clearance and tender notification, impacting order book accretion.

Key financials

3 periods

Headline

  • Order Book
    ₹841.48 Cr

Q3 FY26

  • Revenue
    ₹53.52 Cr
    YoY +4.2%

9M FY26

  • Revenue
    ₹195.067 Cr
    YoY +30.8%
  • EBITDA
    ₹70.847 Cr
    YoY +34%
  • EBITDA Margin
    36.3%

What they filed

Q1 FY27: revenue down 11.9%, net profit down 42.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue48 51 54 67 74 +54%54 +6%55 +2%59 −12%
EBITDA15 18 17 22 24 +60%17 −6%11 −35%13 −41%
Net profit11 15 14 19 19 +73%14 −7%9 −36%11 −42%
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

₹841.48 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹20.8 Cr

Execution

Most projects won are within Rs.100 crores, having a 12-month execution timeline. Larger projects have 24-36 month timelines.

Pipeline

other

Searching for projects between Rs.100 crores to Rs.300 crores (Rs.1,000 million to Rs.3,000 million).

The order book is healthy and provides visibility for the next two to two and a half years, with a focus on selective bidding for profitable projects.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed
    We are almost debt-free company except for some non-fund-based bank facilities, which we have obtained in our execution of the work
  • Liquidity Cash ₹8.5 Cr Cash reserves are almost on the same line as Q2 (Rs.85 crores). The company has received credit limit sanctions for non-fund based facilities (bank guarantees) from Kotak Bank and SBI.
    Yes. In cash reserves, it is almost on the same line. We have not seen any significant change in the cash reserve position. ... We have got credit limit sanctions. We will utilize mainly first non-fund based financial instrument like bank guarantee.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 · High confidence 30%
    Yes. Since our order book is healthy, around Rs.843 crores, we expect 30% increase in revenue when compared to '25-26.

    — C. Mruthyunjaya Swamy

  • Revenue Growth Revenue · FY26 · Medium confidence 20-25%

    Previously ₹300 crores → 20-25%

    No, probably we may not achieve Rs.300 crores for this year. When compared to last year revenue earnings, we may see 20-25% increase in revenue.

    — C. Mruthyunjaya Swamy

  • Revenue Growth Revenue · after 3 years · High confidence 15%
    After two to three years, we are anticipating 15% increase in growth. Since base amount has got increased substantially in the next two to three years, we hope to strive for 15% increase when compared to the previous year, after three years.

    — C. Mruthyunjaya Swamy

  • Q4 FY26 Revenue Growth Revenue · Q4 FY26 · High confidence 20%
    We are expecting 20% growth when compared to last year fourth quarter.

    — Management

  • Q4 FY26 Revenue Revenue · Q4 FY26 · High confidence ₹65 crores
    So, 20% growth on a YoY basis, right? So, last year, fourth quarter was close to about Rs.54 crores. So, 20%, around Rs.65 crores we might be looking at, right? Yes. That is the projections we are having.

    — C. Mruthyunjaya Swamy

Working Capital

  • Working Capital Cycle Period Working Capital · Q4 FY26 · High confidence 95-120 days
    It will be 95-to-120-days with our working cycle period. And our working cycle situation will improve in Q4 of FY25-26 further.

    — C. Mruthyunjaya Swamy

What to watch in Q4 FY26

Q4 FY26 Revenue Growth

next quarter (Q4 FY26 results)
Current 4.22% YoY in Q3 FY26
Target 20% YoY growth for Q4 FY26 (approx. ₹65 crores)

Why it matters

To assess if the company can recover from Q3's underperformance and meet its short-term revenue targets.

We are expecting 20% growth when compared to last year fourth quarter.

Risks & concerns

  • Project Delays and Billing Variations

    medium

    Q3 FY26 revenue moderation was primarily due to project-based timing and delayed billing in certain government projects, exacerbated by climatic conditions (monsoon).

    Management acknowledged

  • Working Capital Management and Collection Efficiency

    medium

    Working capital days almost doubled, and work completed is held in inventory due to slow billing and collection processes, impacting cash flow.

    Analyst acknowledged

  • Order Book Accretion and Tender Delays

    medium

    A significant ₹400 crore project is still awaiting committee clearance and tender notification, indicating delays in converting pipeline into firm orders and potentially impacting future revenue.

    Analyst acknowledged

Q&A highlights

4 direct, 1 evasive
Reasons for Q3 FY26 Revenue Underperformance Partial
No. Actually, our State of Karnataka is having different climatic season and we received very good healthy monsoon from the month of June to end of October. So, whatever progress we can achieve, it will be in just one or two months in this quarter.

Explains the moderation in Q3 revenue, attributing it to project-based timing, delayed billing in government projects, and adverse climatic conditions.

Asked by Deepak Poddar

Revision of FY26 Revenue Guidance Partial
Yes, as I explained earlier, our projects are all in water-based infra solutions, and we have got a fixed project milestone where timings are fixed. We have to achieve certain kind of progress and we can expect the revenue accordingly to the progress which we have achieved.

Clarifies the reasons for the downward revision of the full-year revenue guidance from ₹300 crores, citing project milestone dependencies and billing cycles.

Asked by Utkarsh Somaiya

Discrepancy in Order Book Guidance Partial
Actually, as on December, we have got outstanding order book of Rs.841 crores. And yes, we are also bidding aggressively in projects. But, we are waiting for good projects to come in our way so that our order book should be healthy.

Addresses the gap between previous order book targets (₹1000-1100 crores) and the current figure, indicating selective bidding for profitable projects.

Asked by Utkarsh Somaiya

Increase in Working Capital Days Direct
Yes, we are trying to get the working capital cycle reduced so that we can have good efficiency in our project execution and also earning in revenue projection, we will try to reduce it in the coming quarter.

Acknowledges the significant increase in working capital days and commits to efforts for improvement in the coming quarter.

Asked by Shabat Hussain

Status of Karnataka Mining Environment Restoration Fund Project (₹400 crores) Evasive
It is before some committees which has to clear the projects and we are continuously following it up. Tender notification is yet to be issued. We hope to get the tender notification issued early.

Highlights the ongoing delay of a substantial project, indicating uncertainty in its contribution to future order book and revenue.

Asked by Shabat Hussain

Cash Position and Debt Funding for Growth Direct
Yes. In cash reserves, it is almost on the same line. We have not seen any significant change in the cash reserve position. And as far as debts are concerned, since we are bidding for new projects, we may need non-fund based in the form of bank guarantee...

Clarifies that cash reserves are stable and new project funding will primarily be through non-fund based bank guarantees, not increasing fund-based debt.

Asked by Anil Shenoy

Competitive Landscape and M&A Strategy Direct
Right now, in the State of Karnataka, there are not many in the listed space... And since our expertise is on groundwater recharging and end-to-end water-based solutions, we do not foresee much competition in our key focus area of groundwater recharging.

Provides insight into the competitive environment in Karnataka and the company's unique positioning, while also stating no current M&A plans.

Asked by Yashwanti

Maximum Project Size for Independent Execution Direct
Rs.150 crores to Rs.200 crores worth of project we can do individually. More than Rs.200 crores, we enter into strategic joint venture partnership.

Defines the company's operational capacity for independent projects and its strategy for forming joint ventures for larger contracts.

Asked by Yashwanti

2 min read 5 chapters

Detailed narrative

Q3 FY26 Performance and 9M FY26 Growth Overview

Denta Water reported a moderated Q3 FY26 revenue of ₹53.52 crores, reflecting a 4.22% year-on-year increase from ₹51.353 crores in Q3 FY25. This slowdown was attributed to project-based timing, delayed billing in government projects, and the monsoon season in Karnataka. Despite the quarterly moderation, the nine-month period (9M FY26) demonstrated strong performance, with revenue growing by 30.8% year-on-year to ₹195.07 crores, up from ₹149.133 crores in 9M FY25.

EBITDA Expansion and Healthy Order Book

The company's EBITDA for 9M FY26 reached ₹70.85 crores, marking a 34.02% increase compared to ₹52.86 crores in 9M FY25. This led to an improved EBITDA margin of 36.32% for 9M FY26, driven by a favorable project mix, enhanced execution, and effective cost control. As of December 31, 2025, Denta Water maintained a robust order book of ₹841.48 crores, which management believes provides revenue visibility for the next two to two and a half years.

Strategic Focus on Water Infrastructure and Project Wins

Denta Water continues to focus on end-to-end water sustainability solutions, including irrigation, drinking water, and wastewater management. The company recently secured new orders for sewage treatment plants and one water supply project valued at approximately ₹20.8 crores. Management emphasized a selective bidding strategy for high-quality projects with attractive margins, particularly in its core expertise of groundwater recharging and water-based infrastructure.

Working Capital Management and Funding Strategy

A significant concern highlighted was the near-doubling of working capital days by December 31, 2025, compared to March 31, 2025, with inventory accumulation due to slow billing and collections. Management acknowledged this and committed to improving the working capital cycle to 95-120 days in Q4 FY26. The company remains almost debt-free for fund-based facilities, relying on internal accruals and non-fund-based bank guarantees from Kotak Bank and SBI for collateral in new project bids.

Future Growth Outlook and Project Pipeline

Denta Water projects a 20% year-on-year revenue growth for Q4 FY26, targeting approximately ₹65 crores. For FY27, the company anticipates a 30% increase in revenue, with a projected 15% annual growth rate after three years due to a larger base. The company is actively seeking new projects in the ₹100-300 crore range, with individual execution capacity up to ₹150-200 crores before considering joint ventures for larger projects.

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