Denta Water — Q4 FY25 earnings call

Call held 3 Jun 2025

Management summary

Denta Water reported a significant decline in Q4 FY25 revenue and profit, primarily attributed to a billing cycle postponement of INR 550-600 million to Q1 FY26. Despite this, the company maintained a robust order book of INR 6143.78 million as of March 31, 2025, with a strong focus on water management projects. Management emphasized its asset-light, debt-free model and high EBITDA margins, driven by operational efficiencies and expertise, while outlining aggressive bidding plans for new projects worth INR 12000-15000 million in the coming quarters.

Highlights

  • Robust order book of INR 6143.78 million as of March 31, 2025.

  • FY25 EBITDA margin improved to 35.63% from 34.53% in FY24.

  • Company maintains a debt-free and asset-light model, contributing to high margins.

  • Aggressive bidding target of INR 12000-15000 million for new orders in Q1/Q2 FY26 with a high win ratio of 70-75%.

  • Expected realization of INR 550-600 million from deferred Q4 FY25 billing in Q1 FY26, indicating revenue recovery.

Concerns

  • Q4 FY25 revenue from operations declined by 47.96% YoY to INR 541.52 million.

  • Q4 FY25 Profit After Tax (PAT) declined by 49.26% YoY to INR 137.2 million.

  • FY25 revenue from operations declined by 14.76% YoY to INR 2032.85 million.

Key financials

2 periods

Headline

  • Revenue from Operations (FY)
    2,032.85 Mn
    YoY -14.8%
  • EBITDA (FY)
    724.32 Mn
    YoY -12.1%
  • EBITDA Margin (FY)
    35.6%
    YoY +3.2%
  • PAT (FY)
    528.85 Mn
    YoY -12.5%
  • EPS (FY)
    ₹25.83
    YoY -17.8%

Q4

  • Revenue from Operations
    541.52 Mn
    YoY -48%
  • EBITDA
    185.77 Mn
    YoY -50.9%
  • EBITDA Margin
    36.1%
    YoY -0.61%
  • PAT
    137.2 Mn
    YoY -49.3%
  • EPS
    ₹6.7
    YoY -52.3%

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

₹6,143.78 Mn

as of 2025-03-31 quantified

Execution

40% of the order book to be completed in FY26, remaining 60% in FY27.

Composition

Mix 3 segments
  • Water Management Projects 95.6%
  • Railway Contracts 4%
  • Road Projects 0.4%

Share of order book by segment

Pipeline

qualified rfp

Board target to bid for work worth INR 12000-15000 million.

Cancellations & deferrals

  • deferred: Billing of Rs.55-60 crores postponed from Q4 FY25 to Q1 FY26 due to billing cycle delay.
The company has a robust order book with clear execution timelines, and is aggressively bidding for new projects, particularly in the water sector.

Source: Prepared remarks

Capital allocation

high confidence
  • Liquidity Cash ₹2,000 Mn Received IPO funds of INR 2200 million, spent INR 880 million by March 2025, with the balance of INR 1320 million to be utilized in Q1 and Q2 FY26.
    we are sitting on a very large amount of cash of almost Rs.200 crores. Obviously from the IPO procedure as well... We have received funds to the tune of Rs.220 crores out of IPO. We have spent around Rs. 88 crores as on March 2025. Balance funds we are utilizing in first quarter and in second quarter of 25-26.

Guidance & targets

Order Book

  • Bidding for new work Order Book · Q1 and Q2 FY26 · High confidence INR 12000-15000 million
    Our board target is that we should compete for work around 1200 crores to 1500 crores. That we want to bid within first quarter and second quarter of 25-26.

    — C.M. Swamy

Order Book Execution

  • Completion of current order book Order Book Execution · FY26 · High confidence 40%
    We will complete 40% of the work within financial year 25-26

    — C.M. Swamy

  • Completion of current order book Order Book Execution · FY27 · High confidence 60%
    the remaining 60%, i.e Rs.360 crore will be spent in 2026-27.

    — C.M. Swamy

Revenue

  • Revenue from existing order book Revenue · FY26 · High confidence INR 2000-2400 million
    We are expecting revenue of around Rs.300 crores out of which Rs.200 to 240 crore will be of existing order book.

    — C.M. Swamy

  • Total Revenue Revenue · FY26 · High confidence INR 3000 million
    On conservative side, we are anticipating the revenue of around Rs.300 crore.

    — C.M. Swamy

Bidding

  • Win Ratio Bidding · High confidence 70-75%
    Ours is 70 to 75%.

    — C.M. Swamy

Profitability

  • PAT Margin Profitability · FY26 · High confidence 25-26%
    Yes, we hope to sustain the same margin.

    — Sujith T R

Performance

  • H2 Performance Performance · FY26 · Medium confidence higher
    H2 will be higher in this year.

    — C.M. Swamy

What to watch in Q1 FY26

Q1 FY26 Revenue Realization from Deferred Billing

next quarter (Q1 FY26 results)
Current INR 550-600 million deferred from Q4 FY25
Target Realization of INR 550-600 million in Q1 FY26 revenue

Why it matters

Verifies management's explanation for Q4 dip and confirms revenue recovery.

whatever dip in revenue we are observing in quarter four of financial 2025, we have realized in quarter one of 2025-26. In fact, we have received the funds and we will report shortly in our quarter 1 financial of 2025-26.

Risks & concerns

  • Government Payment Delays / Billing Cycle Impact on Revenue Recognition

    medium

    Q4 FY25 revenue dip was due to billing cycle postponement, with INR 550-600 million of billing deferred to Q1 FY26, but expected to normalize.

    Management acknowledged

  • Revenue Volatility due to Milestone-Driven Project Execution

    low

    Revenue recognition depends on physical execution and billing certification, leading to quarter-on-quarter variations, which is inherent to the business model.

    Management acknowledged

Q&A highlights

8 direct
Groundwater Recharge Project Scope & Subcontracting Model Direct
All the works are done by us. In order to have better workability, we entrust some of the work, like employing of our earth moving equipment and the treatment of pipeline, laying of pipelines we entered on subcontract basis to locally available subcontractor.

Clarifies the company's operational model, indicating they perform core work but subcontract specific tasks, contributing to their asset-light model.

Asked by Dixit Doshi

Raw Material Procurement Strategy Direct
We procure from our head office and we give it to project site.

Highlights centralized procurement, which management links to cost efficiency and higher margins.

Asked by Dixit Doshi

Sustainability of High EBITDA Margins in EPC Direct
Margins are usually better with Denta as compared to the peers because so, the kind of projects we bid for are low risk and high margin projects and the efficiencies that we have put in place. So, because of the expertise that we have; our core competencies is water management and water revitalization. We are at low debt and asset light model. One more reason we have higher margins is because of our cost efficiencies and cost optimization for our projects

Addresses a key investor concern about the sustainability of high margins in a typically low-margin sector, attributing it to expertise, asset-light model, and cost efficiency.

Asked by Dixit Doshi

Annuity Component in DBOT Project Model Direct
It is basically EPC contact, but on DBOT model, Design-Build-Operate-Transfer model... We have to operate with the long-term maintenance of five years and at the end of fifth year, we have to transfer the projects since we have got five years maintenance contract... It is on DBOT model, no annuities involved.

Clarifies that while projects include a 5-year O&M phase, there's no recurring annuity income, just maintenance cost recovery.

Asked by Manan Shah

Increase in Receivables and Billing Cycle Impact Direct
our quarter 4 earnings are just the billing cycle has got postponed to first quarter of FY25-26... whatever billings we had done in the first last quarter of 24-25 has got realized in the first quarter of 25-26.

Explains the dip in Q4 revenue and profit as a timing issue related to billing and realization, rather than a fundamental operational problem, with funds expected in Q1 FY26.

Asked by Manan Shah

Utilization of IPO Funds Direct
IPO proceeds Rs.220 crore we have received out of which Rs.25 crore has been marked for issue expenses. Rs.150 crore has been year marked for working capital requirements Rs.45.34 crore for general corporate expenses. And utilization is Rs.49.47 crores out of working capital Rs.24.42 issue expenses, Rs.14.14 for general corporate expenses. Total expenditure is 88.03 crores. And the amount which we have to utilize in the year 25-26 is 132.47 crore.

Provides transparency on the use of IPO funds, detailing allocations for working capital, issue expenses, and general corporate purposes.

Asked by Amit Agicha

Reason for Stock Price Decline Direct
As I mentioned, our results were out March 2025, soon after the results, so the investors did not understand the reason behind the dip in the so profit. As I already mentioned, for our esteemed investor before, it is the issue with the billing cycle. And whatever the leftover revenue will be build the subsequent quarter in Q1 of 26, so hope this answers the question.

Directly addresses investor sentiment and links the stock price movement to the misunderstanding of the Q4 financial dip being a billing cycle issue rather than an operational one.

Asked by Yash Kumar Bhalla

Karnataka Mineral Exploitation Fund (KMEF) Opportunity Direct
We have got one more fund under government of Karnataka. This KMEF Karnataka Mineral Exploitation Fund that we are going to be aggressive and once the projects are one, we can disclose it since we are also bound by regulatory authorities' regulation... They do collect some royalty out of the iron ore minerals, which is extracted in some specific districts. And that will be kept as a sub fund. It has to be used for the [inaudible 39.20]. In that we are aiming to bid 1 project of sandur Town where we are providing water supply, sanitary and also end use of recycled treated water.

Reveals a new, significant potential revenue stream from a government fund, indicating future growth opportunities beyond current projects.

Asked by Darshil Jhaveri

2 min read 5 chapters

Detailed narrative

Q4 & FY25 Financial Performance Overview

Denta Water reported a significant decline in Q4 FY25, with revenue from operations falling by 47.96% YoY to INR 541.52 million and PAT decreasing by 49.26% YoY to INR 137.2 million. For the full fiscal year 2025, revenue from operations stood at INR 2032.85 million, a 14.76% decrease from FY24's INR 2385.98 million. Despite the revenue dip, the company's FY25 EBITDA margin improved to 35.63% from 34.53% in FY24, indicating better operational efficiency. The Q4 decline was primarily attributed to a billing cycle postponement, with INR 550-600 million expected to be realized in Q1 FY26.

Robust Order Book and Future Execution Strategy

As of March 31, 2025, Denta Water maintained a robust order book of INR 6143.78 million. This order book is predominantly composed of water management projects (INR 5872.56 million), with smaller contributions from railway contracts (INR 247.22 million) and road projects (INR 24.01 million). The company plans to execute 40% of this order book within FY26 and the remaining 60% in FY27, demonstrating clear visibility for future revenue streams. Management indicated that projects over INR 3000 million typically have a 3-year execution timeline.

Strategic Focus on Water Management and High Margins

Denta Water emphasizes its core competency in water management, particularly groundwater recharge projects, which are unique in India. The company's high EBITDA margins (36.15% in Q4 FY25 and 35.63% in FY25) are attributed to its asset-light model, debt-free status, efficient procurement from reputed vendors, and strong design capabilities. This operational model allows for cost optimization and higher profitability compared to typical EPC companies, with a focus on low-risk, high-margin projects.

IPO Fund Utilization and Strong Liquidity Position

The company successfully completed its IPO, raising INR 2200 million. By March 2025, INR 880 million of these funds were utilized for working capital (INR 494.7 million), issue expenses (INR 244.2 million), and general corporate expenses (INR 141.4 million). The balance of INR 1320 million is earmarked for utilization in Q1 and Q2 FY26. Denta Water highlights its strong cash position of approximately INR 2000 million and its debt-free status, providing ample liquidity for operations and future growth initiatives.

Aggressive Bidding and Growth Opportunities

Denta Water is actively pursuing new growth opportunities, targeting bids for projects worth INR 12000-15000 million in Q1 and Q2 FY26. The company focuses on water sector projects under government schemes like Jal Jeevan Mission and AMRUT, as well as opportunities from the Karnataka Mineral Exploitation Fund. With a high win ratio of 70-75% and a strong technical competency, management is confident in securing new orders and achieving a total revenue of approximately INR 3000 million in FY26, with H2 FY26 expected to be stronger.

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