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    Konstelec Engineers Q4 FY26 earnings call

    KONSTELEC
    Construction·27 May 2026
    Management Summary

    Konstelec Engineers reported a strong financial year 2026, with PAT surging 53.5% YoY to ₹7.29 crores on an 8.61% increase in revenue to ₹210 crores. H2 FY26 also saw a remarkable 465% YoY PAT growth to ₹5.75 crores, despite a slight revenue dip. The company maintains a robust order book of ₹550 crores, including a significant L1 defense project, but faces challenges with negative operating cash flow, high working capital absorption due to client payment terms, and rising raw material and logistics costs.

    Highlights

    6

    • FY26 Revenue from operations grew 8.61% YOY to 210 crores.

    • FY26 PAT grew at 53.5% YOY to 7.29 crores as against 4.75 crores in financial year 2025.

    • H2 FY26 PAT surged 465% YOY to 5.75 crores as against 1.04 crore in the corresponding period of last year.

    • H2 FY26 PAT margins improved significantly to 5.45% compared to 0.95% in the corresponding period of last year.

    • Konstelec order book stands at a healthy value of 550 crores.

    • Secured an L1 lowest bidder in a defense project worth around 74-75 crore.

    Concerns

    5

    • H2 FY26 Revenue from operations stood at 105.57 crores, a slight decline from 109.26 crore in H2 2025.

    • Increased borrowings despite revenue being relatively flat.

    • Continuing negative operating cash flow in several years despite reporting accounting profit.

    • High working capital absorption in the business due to client payment terms.

    • Impact of geopolitical scenario leading to higher raw material costs and increased logistics expenses.

    Key financials

    Metrics

    9

    Periods

    2

    Headline

    6
    • H2 FY26 Revenue
      ₹105.57 Cr
      YoY-3.4%
    • H2 FY26 PAT
      ₹5.75 Cr
      YoY+4.5%
    • H2 FY26 PAT Margin
      5.5%
    • H2 FY26 EBITDA
      ₹12.41 Cr
    • Debt-Equity Ratio
      0.85 ratio

    FY26

    3
    • Revenue
      ₹210 Cr
      YoY+8.6%
    • PAT
      ₹7.29 Cr
      YoY+53.5%
    • PAT Margin
      3.6%

    Order Book

    high confidence

    Total Value

    ₹ 550 crores

    as of 2026-05-27

    quantified

    Composition

    Mix5 segments
    • Refineries53.0%
    • Defense15.0%
    • Transmission Distribution12.5%
    • Steel6.8%
    • Mining6.7%

    Share of order book by segment · partial disclosure (94.0% of book)

    Pipeline

    L1 awaiting loa

    L1 bid for a defense project in Kanpur

    "The company has a strong order book providing good visibility and is actively pursuing new opportunities in defense and data centers."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    Liquidity

    Liquidity disclosed

    The company experiences negative operating cash flow and high working capital absorption (163 days) due to client payment terms where 40% of project value is stuck until completion, necessitating increased borrowings.

    Guidance & targets

    6
    CategoryTargetPriority
    Profitability
    PAT Margins
    Double the margins
    		High
    Profitability
    Bottom Line Growth
    Definite growth
    		High
    Revenue
    Top Line Growth
    Definite growth
    		High
    Capital Efficiency
    ROCE and ROE
    Increment
    		High
    Debt
    Finance Cost Reduction
    Lower finance costs
    		Medium
    Liquidity
    Cash Flow Positive
    Positive cash flow
    		High

    What to watch in Q1 FY27

    5

    PAT Margin Improvement

    Next quarter (as part of 2-3 year goal)
    Current3.56% (FY26)
    TargetProgress towards doubling PAT margins (~7%)

    Why it matters

    Key indicator of operational efficiency and profitability improvement, central to management's strategic goals.

    we are looking to maybe double the margins in the next two to three years time.

    Risks & concerns

    4
    RiskSeverity

    High Working Capital Absorption / Negative Operating Cash Flow

    Client payment terms (60-70% upfront, 30% on completion) tie up significant working capital, leading to negative operating cash flow despite accounting profits and increased borrowings. — Management acknowledged

    high

    Raw Material Price Escalation

    Geopolitical scenario and global changes have led to higher raw material prices (copper, steel, aluminum), impacting profitability, with the company taking a cautious stand. — Management acknowledged

    medium

    Logistics Costs & Supply Chain Disruptions

    Increased logistics costs and petrol/diesel shortages (especially in tier 2/3 cities) indirectly impact project execution and overall profitability. — Management acknowledged

    medium

    Limited Ability to Pass on Cost Increases

    Ability to pass on cost increases (e.g., petrol prices) depends on contract terms; some contracts have escalation clauses but with limits, requiring careful management. — Management acknowledged

    medium

    Q&A highlights

    8

    “we are trying to focus on some high-valued projects, you know, because of our PQ improvement, so our bottom lines are going to become healthier. When the bottom lines become healthier, you know, the cash flow generation from this is better in the entire scenario.”

    Addresses the company's strategy to fund growth through improved profitability from higher-value projects, rather than external capital.

    asked by Aditya Dwivedi

    2 min read5 chapters

    Detailed Narrative

    01

    Financial Performance and Profitability Surge

    Konstelec Engineers delivered a strong FY26, with revenue from operations growing 8.61% YoY to ₹210 crores. Net Profit (PAT) saw a significant 53.5% YoY increase to ₹7.29 crores, improving the PAT margin to 3.56% from 2.21% in FY25. The second half of FY26 was particularly robust, with PAT surging 465% YoY to ₹5.75 crores, and PAT margins expanding to 5.45% from 0.95% in H2 FY25, reflecting improved operational efficiency.

    02

    Robust Order Book and New Growth Avenues

    The company maintains a healthy order book of ₹550 crores, providing strong revenue visibility. This order book is diversified, with 53% from refineries, 15% from defense, 12.5% from transmission distribution, 6.8% from steel, and 6.7% from mining. Konstelec is actively expanding into high-growth sectors like defense and data centers, having already secured an L1 bid for a defense project worth ₹74-75 crores, with healthier margins expected from these new segments.

    03

    Working Capital Challenges and Liquidity Management

    Despite strong profitability, the company faces challenges with high working capital absorption, reflected in 163 working capital days and negative operating cash flow. This is primarily attributed to client payment terms, where a significant portion (up to 40%) of project value is realized only upon completion. Management is focusing on higher-value projects to improve cash flow generation and aims to turn cash flow positive within two to three years.

    04

    Strategic Focus on Margin Expansion and Capital Efficiency

    Konstelec is strategically shifting towards higher-value projects with better margins to enhance profitability. The goal is to double PAT margins within the next two to three years and achieve a definite growth in both top and bottom lines. Management also expects an increment in ROCE and ROE within the same timeframe, aiming to improve capital efficiency and reduce the debt-equity ratio, which currently stands at 0.85.

    05

    Navigating Industry Headwinds

    The company acknowledges external pressures🌐 such as rising raw material costs due to geopolitical scenarios and increased logistics expenses, including petrol and diesel shortages. While some contracts allow for cost escalation, these are often capped. Konstelec is adopting a cautious approach, especially in new segments, to mitigate these impacts and protect its bottom line.

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