Markolines Pavement Technologies Limited — Q4 FY25 earnings call

Call held 20 May 2025

Management summary

Markolines Pavement Technologies Limited reported a strong FY25 with PAT growing to INR22.56 crores and EPS increasing by 11% to INR10, despite a revenue drop to INR307 crores primarily due to H1 monsoon impact. The company is pursuing strategic initiatives including migration to the BSE Main Board and a merger with Markoline Infra, aiming for enhanced market presence and profitability. A robust order book of INR432 crores and a pipeline exceeding INR500 crores provide strong future visibility, though the receivable cycle saw a temporary increase.

Highlights

  • PAT grew from INR17.3 crore to INR22.56 crore, a 30.4% increase.

  • EPS increased from INR9 to INR10, an 11% year-on-year hike.

  • Net PAT margins increased by 381 basis points, reflecting improved profitability.

  • Current order book of INR432 crores, bolstered by recent wins of INR75 crores, and a pipeline of over INR500 crores provide strong future visibility.

  • The company is actively pursuing migration to the BSE Main Board and a merger with Markoline Infra to enhance market presence and operational efficiency.

Concerns

  • Revenue dropped from INR350 crores to INR307 crores in FY25, primarily due to the wet monsoon impacting H1 performance.

  • The receivable cycle increased to over 200 days, up from a normal 90-120 days, due to high execution in Q4 FY25.

Key financials

  1. Revenue ₹307 Cr -12.3%YoY
  2. PAT ₹22.56 Cr +30.4%YoY
  3. EPS ₹10 +11%YoY
  4. Net PAT Margin 7.3%

What they filed

Q1 FY27: revenue down 15.3%, net profit up 15.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue56 80 115 73 78 +40%80 +0%93 −19%62 −15%
EBITDA6 8 19 7 7 +20%10 +33%16 −15%7 −5%
Net profit2 6 12 4 4 +66%7 +13%11 −8%4 +15%
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.

Segment breakdown

SegmentRevenue ShareMargin
Specialized Construction70%18%
Major Maintenance30%12%

Order book

high confidence

Total value

₹432 Cr

as of 2025-05-20 quantified

Inflow this quarter

₹75 Cr

Execution

Maintenance projects 6-8 months (up to 15 months for larger ones), specialized/tunnelling projects 2-4 years.

Pipeline

other

Pipeline of projects

Order book is dynamic, with major maintenance orders continuously rotating and specialized construction projects adding larger, longer-term contracts.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Markoline Infra Merger · Announced · Consideration ₹[object Object] (undisclosed)

    Consolidation, optimization, and size consolidation for Markolines and better market representation.

    Markolines Infra reported INR133 crores revenue and INR12.29 crore PAT for FY25, with a PAT margin of 11.64%.

    Apart from that, there is one more major corporate action that we have announced, that is the amalgamation. As Markolines, we had two divisions. One was into the typical civil contracting and other was providing services. By after doing the various deliberations, we came to conclusion that if we merge these two portfolios, we can have the consolidation, optimization and the size consolidation for Markolines and better size or the representation in the market. So that is how we have announced the merger of Markoline Infra with Markoline Pavement. ... As far as the tentative, why tentative I can give, the numbers of the Markolines Infra, we did a revenue of about INR133 crores there with a bottom line of INR12.29 crore as PAT. Basically, this company is purely into the providing services. As far as percentage is concerned, it is about 11.64% that is the PAT percentage to the turnover. ... And currently when we are amalgamating, how much is the value we are giving? About INR263 crores.
  • Liquidity Liquidity disclosed The receivable cycle increased to over 200 days due to high Q4 execution, but INR50-60 crores of outstandings as of March have already been recovered.
    receivable cycle increased more than 200 days. What is the average receivable cycle in a normal scenario? So, generally 90 to 120 days is what we say. ... And now when you see as we are talking, the majority or major portion of the receivable has been received in the past one and a half month. We have already recovered more than INR50 crore, INR60 crore out of the outstandings as of March.

Guidance & targets

Corporate Action

  • Migration to BSE Main Board Corporate Action · very soon · Medium confidence Approval and move to Main Board
    Our application has been submitted to the BSE. We have complied with all their requirements and documentation and we are awaiting their response or the approval. We are expecting it very soon. And as soon as we receive the approval, we shall move to the BSE Main Board.

    — Vijay Oswal

  • Merger Completion Corporate Action · 6 to 9 months / before this year end · Medium confidence Completion of merger with Markoline Infra
    So approximately we are expecting about 6 to 9 months of time frame for completing the merger. We would be always hoping for the shortest possible time but since it is subject to the approvals from the authorities that is the timeline we are looking at. So before this year end, we should be the merged entity.

    — Vijay Oswal

Revenue

  • Revenue Target Revenue · in another 3-4 years · Medium confidence INR1,000 crore
    in another 3-4 years, we should be crossing the INR1,000 crore mark. And we will put in our best to achieve that mark at the earliest, if we can even pre-pone it by one year, we will be greatly happy with that.

    — Vijay Oswal

Business Mix

  • Specialized Construction vs. Highway Maintenance Split Business Mix · in a year's time · Medium confidence 50% : 50%

    From 70% : 30% today

    Between the two verticals, if you see, let's say this year it is, you know, 70%, 30% percentage wise if I could talk in terms of the business done. But going forward, I see we could be about 50%, 50% in this particular or maybe in a year's time from now.

    — Vijay Oswal

Order Inflow

  • New Tunnelling Projects Order Inflow · this year · Medium confidence at least one more project
    And we are doing tunnelling across the India and we see a very good prospect in terms of business and adding at least one more project this year. We are hoping for that.

    — Vijay Oswal

What to watch in Q1 FY26

Merger completion with Markoline Infra

Within 6-9 months / before this year end
Current Announced, documentation filed, pending BSE/NCLT approval
Target Merger completed

Why it matters

Will consolidate operations, optimize size, and potentially improve market representation and financial results.

So approximately we are expecting about 6 to 9 months of time frame for completing the merger. We would be always hoping for the shortest possible time but since it is subject to the approvals from the authorities that is the timeline we are looking at. So before this year end, we should be the merged entity.

Risks & concerns

  • Revenue drop due to H1 monsoon

    medium

    Revenue dropped from INR350 crores to INR307 crores in FY25, mainly due to the wettest monsoon impacting H1 performance, though H2 saw good recovery.

    Management acknowledged

  • Increased receivable cycle

    medium

    The receivable cycle increased to over 200 days from a normal 90-120 days, attributed to high execution in Q4 FY25, but INR50-60 crores have already been recovered post-March.

    Analyst acknowledged

  • Delays in ILFS engineering acquisition

    low

    The acquisition of ILFS engineering is not yet concluded, pending NCLT approval, with no clear update on the process.

    Analyst acknowledged

Q&A highlights

8 direct
Segmental split and profitability of specialized construction vs road maintenance Direct
See, the highway maintenance as I said is a recurring activity which runs in a periodic basis. ... But definitely going forward if we compare, it would always be the major, the specialized construction number would be more in size, because the projects because of the project size. And definitely we will be doing that also.

Clarifies the strategic shift towards specialized construction for larger projects and better profitability, while maintaining core maintenance.

Asked by Raghav Agarwal

Margin and working capital profiles of specialized construction vs road maintenance Direct
So as far as the margins perspective, as I said, margins are definitely better in the specialized constructions. And working capital wise, if you look at the larger projects would also require more working capital. But if you compare it to the turnover and over the period spread out, percentage wise it will be a bit lesser than the MMR because major maintenance programs, the projects are spread over only six months of project with an average 90 days of billing cycle if I consider.

Provides insight into the financial characteristics of each business segment, explaining why specialized construction is preferred for profitability despite higher working capital needs.

Asked by Raghav Agarwal

Markolines Infra merger timeline and financials Direct
So approximately we are expecting about 6 to 9 months of time frame for completing the merger. ... As far as the tentative, why tentative I can give, the numbers of the Markolines Infra, we did a revenue of about INR133 crores there with a bottom line of INR12.29 crore as PAT. Basically, this company is purely into the providing services. As far as percentage is concerned, it is about 11.64% that is the PAT percentage to the turnover.

Gives concrete timeline and financial details of the merging entity, crucial for understanding the combined business.

Asked by Nitin Verma

Roadmap to INR1,000 crore company Direct
in another 3-4 years, we should be crossing the INR1,000 crore mark. And we will put in our best to achieve that mark at the earliest, if we can even pre-pone it by one year, we will be greatly happy with that.

Sets a clear, ambitious revenue target for the medium term, indicating management's growth aspirations.

Asked by Prakash B

Comparison of Markolines Infra business model to IRB Infra Direct
Okay. So, partly yes and partly no, because IRB is also the asset owner and they do lot of activities in-house. ... We are, as of now, we are providing the services for the maintenance of the once road, once completed as Markolines Pavement. And in Markolines Infra, we provide them the services like operating their toll projects, surveillance of the roads, providing the emergency services on the highways, then the routine maintenance that also involves right from cleaning to the horticulture services. So in a way, we could be similar to the one of the section or part of the IRB.

Clarifies the nature of Markolines Infra's business, distinguishing it from asset ownership while highlighting its service-oriented role in infrastructure.

Asked by Prakash B

Order winning rates vs execution rates and future order intake Direct
So Raghav, that's what I explained to you before also in one of the questions that the major maintenance activities or the orders keep coming and rotating. So as far as the order book is not a very static, what do you say, the number. If you have just seen our announcement, I think, just to let you know, we have won another -- today only, we have got a confirmation for about INR25 crore, close to INR25 crore of an order. And in this last 1, 1.5 month, we have already closed the orders worth INR50 plus crores. So they will keep moving up and down. So it is not generally we would have about INR300 crore, to INR400 crore of orders in hand.

Addresses concerns about execution pace and provides an update on recent order wins, indicating dynamic order book management.

Asked by Raghav Agarwal

Tunnelling business prospects and project size Direct
As far as business prospects are concerned, the tunnelling is one of the very much growing potential because to increase the average speed, the tunnelling is a very good solution. And we are doing tunnelling across the India and we see a very good prospect in terms of business and adding at least one more project this year. We are hoping for that. ... So, tunnelling project by and large would minimum would vary from at least INR200 crore to INR400 crore depending upon the size of the tunnel, the length or that is length.

Highlights a key growth vertical (tunnelling), its market potential, and typical project sizes, which are significantly larger than maintenance projects.

Asked by Abhishek Agarwal

Receivable cycle and non-recoveries Direct
So, generally 90 to 120 days is what we say. If we average it out over the year, like if you look at I think last year we were close to 100 days. And now when you see as we are talking, the majority or major portion of the receivable has been received in the past one and a half month. We have already recovered more than INR50 crore, INR60 crore out of the outstandings as of March. ... No, we don't see -- and few of them which we have already said the earlier ones, we are only in the court of law and we have already recovered few and we will be recovering everything.

Addresses a key working capital concern, providing context on the normal cycle, current status, and confidence in recoveries.

Asked by Sandeep Biyani

3 min read 7 chapters

Detailed narrative

Company Overview and Core Services

Markolines Pavement Technologies Limited is a leading highway maintenance company, operating across three core verticals: highway maintenance, specialty maintenance services, and specialized construction services. The company was the first in the infra segment to be listed on BSE, providing services to infrastructure in India. Originating from road marking in 2002, Markolines has evolved into a comprehensive maintenance service provider, recognized as a preferred vendor by asset owners across India.

Financial Performance FY25

For FY25, Markolines reported a revenue of INR307 crores, a decrease from INR350 crores in the previous year, primarily due to the impact of a wet monsoon in H1. Despite the revenue drop, PAT grew significantly by 30.4% to INR22.56 crores from INR17.3 crores, and EPS increased by 11% year-on-year to INR10 from INR9. This improved profitability was driven by a strategic focus on the bottom line, enhanced operational efficiency, and a growing contribution from higher-margin specialized construction, resulting in a 381 basis point increase in net PAT margins.

Order Book and Pipeline

The company currently holds a robust order book of INR432 crores, which includes recent wins of approximately INR50 crores in the last 1.5 months and an additional INR25 crores confirmed on the call date. This strong order book is further supported by a pipeline of over INR500 crores, indicating healthy future revenue visibility. Management noted that the order book is dynamic, with major maintenance orders continuously rotating and specialized construction projects contributing larger, longer-term contracts.

Strategic Initiatives: Merger & Main Board Migration

Markolines announced the merger of Markoline Infra with Markolines Pavement, a strategic move aimed at consolidating operations, optimizing size, and enhancing market representation. This merger, announced in April 2025, is projected to be completed within 6-9 months, ideally before the current financial year-end, subject to BSE and NCLT approvals. Concurrently, the company has applied for migration to the BSE Main Board, anticipating approval soon to further boost its visibility and access to capital markets.

Business Verticals and Margins

The company's business currently comprises approximately 70% from specialized construction and 30% from highway maintenance. Management aims to achieve a 50-50 split between these two verticals within a year, driven by the higher profitability of specialized construction, which yields margins of around 18%. In contrast, major maintenance projects typically have thinner margins of about 12%. While specialized construction projects require more working capital, they offer better returns and larger contract sizes, aligning with the company's strategy for increased profitability.

Tunnelling Business Outlook

Tunnelling is identified as a key growth vertical with significant potential, crucial for improving average road speeds across India. Markolines is currently engaged in two tunnelling projects: one in Maharashtra, valued at INR300-350 crores (with INR172-180 crores completed), and a long-term project in Jammu-Kashmir. The company aims to secure at least one more tunnelling project this year, with typical project sizes ranging from INR200-400 crores, which are substantially larger than traditional maintenance projects.

Working Capital Management

The company's receivable cycle temporarily increased to over 200 days, exceeding the normal range of 90-120 days, primarily due to significant execution in Q4 FY25. However, management reported a proactive approach to recovery, having already collected INR50-60 crores from outstanding receivables as of March in the subsequent one and a half months. The company expressed confidence in recovering all dues, including those currently in legal processes, indicating a focus on normalizing working capital.

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