Detailed Narrative
Q3 FY26 Performance Overview and Seasonality Impact
EPACKPEB reported a 22% YoY revenue growth for Q3 FY26, with the prefab division growing 31% YoY. For the nine months of FY26, overall revenue increased by 41% YoY and EBITDA by 57% YoY, aligning with the company's IPO guidance. Despite this strong nine-month performance, Q3 experienced a QoQ revenue dip, which management attributed to seasonal factors like the monsoon season and Christmas holidays, alongside customer-side delays that prevented billing of ₹35-40 crores of finished goods. The company emphasized that YoY comparison is more relevant due to these seasonal fluctuations.
Robust Order Book and Sectoral Diversification
The company's order book remains strong at ₹1,215 crores as of January 1, 2026, providing a revenue visibility of 7-8 months. A significant portion of this order book, 25-28%, comes from the renewable energy sector, with another 18% from electronics, semiconductor, and electrical segments. Management highlighted their capability to execute complex, high-speed projects for these sectors, positioning them as a preferred vendor. The order book is primarily composed of PEB projects (around ₹1,000 crores) and sandwich panels/prefab structures (around ₹215 crores).
Strategic Capacity Expansion and CAPEX Plans
EPACKPEB is actively pursuing capacity expansion, funded by IPO proceeds. The structural steel fabrication capacity at Mumbattu (Unit-4) with a CAPEX of ₹56-57 crores is on track for commercialization in Q4 FY26. A new sandwich panels line at Ghiloth, involving ₹101 crores CAPEX and adding 8 lakh square meters capacity, is progressing but faces delays due to the NGT ban in Delhi NCR, pushing commercialization to Q3 FY27. Additionally, the company has invested ₹40 crores for land in Gujarat and plans an additional ₹55-60 crores CAPEX in FY27 for a 50,000-ton capacity plant there.
Margin Management and Cost Control
EBITDA margins for Q3 FY26 stood at 10.1%, with the nine-month average at 10.8%. Management reiterated its guidance of 10.5%-11.5% margins for both the current and next fiscal years. The company employs a natural hedging strategy against raw material price volatility, utilizing inventory, pre-booked vendor orders, and weekly order intake at current prices. While employee expenses saw a nearly 100% YoY jump in Q3, reaching 12% of revenue, this was attributed to rapid growth and hiring for future ambition, with a long-term target of 9% of revenue. Finance costs are expected to reduce from 2.2% (9M FY26) to 1.9% by year-end, following a ₹70 crore term loan repayment from IPO funds.
Working Capital and Debt Management
Working capital days increased from 23 days in Q2 to 38 days in Q3, primarily due to a temporary stretch in receivables, including ₹30-40 crores of unbilled ready material. Management expects recovery in January and maintains a long-term guidance of 35 working capital days. The company successfully repaid ₹70 crores of term loan using IPO proceeds, bringing the total debt down to ₹125-127 crores (comprising ₹45 crores term loan and ₹80 crores working capital loans). IPO funds not used for CAPEX or debt repayment are deployed in scheduled commercial banks, generating other income.
Future Outlook and Return Ratios
EPACKPEB aims for a minimum 20% revenue growth over FY26 for FY27, targeting around ₹1,800 crores. The company's long-term endeavor is to achieve a 30-35% CAGR over the next three years, driven by technology adoption and market growth. Management is optimistic about return ratios, targeting a steady-state ROE of close to 18% and ROC of 22-25% over the next few years, acknowledging a potential blip in ROE in FY27 due to ongoing CAPEX.