MARKOLINES

Markolines Pavement Technologies, established in 2002, has evolved into a comprehensive provider of highway maintenance products and services across India. The company's operations are segmented into highway maintenance (including major and rigid pavement maintenance), specialized maintenance services (micro-surfacing and Cold In Place Recycling), and specialized construction services (soil stabilization and tunneling). Markolines holds the distinction of being the first and largest O&M company to be listed, with a strong pan-India presence, excluding the Northeast region for now. The company's leadership emphasizes its proven track record, experienced team, and robust business model, which incorporates new technologies for road maintenance.

Markolines reported a strong Q3 FY26, with revenue, EBITDA, and PAT growing by 16%, 16%, and 11% respectively year-on-year. For the nine months ended December 31, 2025, the company achieved a 30% YoY increase in revenue, a 29% rise in EBITDA, and a 42% growth in PAT. The current unexecuted order book stands at ₹695 crores, which includes ₹439 crores of recently secured orders. Management indicated that approximately ₹500 crores of work from this order book is planned for execution in the next financial year, providing significant revenue visibility.

The company has set ambitious growth targets, aiming for ₹375-400 crores in sales for the full FY26 and projecting 40-50% revenue growth in FY27. Markolines aspires to achieve ₹1000 crores in revenue within the next 3-4 years. A key strategic initiative is to leverage its enhanced eligibility (₹500 crores for a single tender) to bid directly for larger projects from NHAI, which is expected to result in better margins and longer project visibility. The robust growth of the Indian road infrastructure sector, with 34 kilometers of national highway added daily, serves as a significant market tailwind.

The Indian road infrastructure sector is experiencing rapid growth, driven by government focus and increasing monetization of assets through PPP models. Markolines mitigates key operational risks, such as raw material cost escalation (fuel, bitumen), through the inclusion of escalation clauses in its contracts and a strategy of selective bidding. The business is inherently cyclical, with the monsoon season (June-September) significantly impacting execution, leading to reduced activity in Q1 and Q2, while Q4 typically accounts for 30-40% of the annual turnover.

The amalgamation of Markolines Infra and Markolines (micro pavement) is underway, with an effective date of January 1, 2026. Following a resubmission due to technical reasons, the company anticipates the merger to be completed within 6-9 months. The valuation for Markolines Infra is based on SEBI-approved DCF methods and market pricing, ensuring a transparent and regulated process. While no specific capital expenditure or debt figures were discussed, management noted that working capital requirements are proportional to the order book, reflecting the short project cycles and payment terms typical in the sector.