Concall AI

Pace Digitek Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Pace Digitek reported strong top-line growth in Q3 FY26, driven by improved project execution in both telecom and energy sectors. While margins saw some compression due to project mix, the company is aggressively expanding its BESS manufacturing capacity and order book, particularly in the energy segment. Strategic initiatives like the TransGreenX Energy subsidiary for BOO projects and backward integration are aimed at long-term value creation and cost control.

Highlights

Consolidated revenue from operations stood at ₹644.0 crores, up 13.5% YoY and 20.7% QoQ.
Profit After Tax (PAT) was ₹78.8 crores, representing an 11.3% YoY growth and a PAT margin of 12.2%.
EBITDA for Q3 FY26 was ₹117.9 crores, with an 18.3% margin, down from 21.4% in Q3 FY25.
Energy Segment order book stands at ₹6,000 crores, with a target to reach ₹10,000 crores by March 2026.
Telecom Segment order book is ₹2,400 crores.
Delivered 400 MWh of BESS systems, with 200 MWh already commissioned.
BESS manufacturing capacity is expanding to 5 GWh by March 2026 and further to 10 GWh by September 2026.
Q3 gross profit was ₹169.2 crores, translating to a gross margin of 26.3%.

Key financials

01 Revenue from Operations ₹644 Cr +13.5%YoY
02 Revenue (9 months) ₹1,544.5 Cr
03 Gross Profit ₹169.2 Cr
04 Gross Margin 26.3%
05 EBITDA ₹117.9 Cr
06 EBITDA Margin 18.3%
07 Profit After Tax ₹78.8 Cr +11.3%YoY
08 PAT Margin 12.2%

What they filed

Q1 FY27: revenue up 51.2%, net profit up 12.7% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	846	567	683	367	533 −37%	644 +14%	1,097 +61%	555 +51%
Expenses	659	446	607	287	439	526	934	469
EBITDA	187	121	76	80	94 −50%	118 −2%	163 +114%	86 +8%
Margin	22%	21%	11%	22%	18%	18%	15%	16%
Other income	0	0	7	6	10	10	20	28
Interest	41	22	7	10	7	9	34	28
Depreciation	2	1	2	2	2	5	3	4
Profit before tax	145	98	75	74	96 −34%	114 +16%	146 +95%	82 +11%
Tax rate	29%	28%	25%	26%	29%	31%	27%	23%
Net profit	102	71	56	55	68 −33%	79 +11%	106 +89%	62 +13%
EPS	170.68	24.08	3.21	3.03	3.59	3.51	4.59	2.84

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.

Guidance & targets

Order Book

Energy Segment Order Book Order Book · by March 2026 · High confidence ₹10,000 crores

our Energy order book stands at Rs. 6,000 crores plus and we aim to touch Rs. 10,000 crores by March 2026.

— Venugopal Rao Maddisetty, Chairman & Managing Director
Energy Segment Order Book Increase Order Book · next three months · High confidence ₹10,000 crores

Previously ₹6,000 crores → ₹10,000 crores

We expect this Rs. 6,000 crores to run up to Rs.10,000 crores in the next three months down the line.

— Rajavendhan P, Chief Financial Officer

Capacity

BESS Manufacturing Capacity Capacity · by March 2026 · High confidence 5 GWh

On the manufacturing facility for the BESS, we will reach 5 GWh by March 2026.

— Venugopal Rao Maddisetty, Chairman & Managing Director
BESS Manufacturing Capacity Expansion Capacity · by September 2026 · High confidence 10 GWh

Previously 5 GWh → 10 GWh

Also, we are constructing a new facility to expand this capacity from 5 GWh to 10 GWh. It would take about six months and by September 2026 is we are targeting to make this facility ready.

— Venugopal Rao Maddisetty, Chairman & Managing Director
Container Fabrication Facility Readiness Capacity · Mid-April · High confidence Mid-April

That facility also will be ready by mid-April, so that we will have good control over the input supply for the BESS as well as the cost control.

— Venugopal Rao Maddisetty, Chairman & Managing Director
Manufacturing Target (Next Financial Year) Capacity · Next Financial Year · High confidence 7.5 GWh

Our manufacturing target for the next financial year is 7.5 GWh.

— Venugopal Rao Maddisetty, Chairman & Managing Director

Revenue

Consolidated Top Line from Order Book Revenue · FY27 · High confidence ₹3,200 crores

FY 27, as we estimated, we are estimating about Rs. 3,200 crores of consolidated top line from this order book and beyond this, the asset-owned projects under the Built-Own-Operate model also will get executed.

— Rajavendhan P, Chief Financial Officer

Capex

Asset Creation (BOO model) Capex · next financial year · High confidence ₹2,200 crores

We estimate that this Capex built-up asset creation for this BOO model will touch about another Rs. 2,200 crores for the next financial year.

— Rajavendhan P, Chief Financial Officer
Capex for 5 GWh to 10 GWh expansion Capex · next financial year · High confidence ₹80-100 crores

This will again have a capital outlay of about Rs. 80 crore to Rs. 100 crore because we have all other infrastructures in place and plus the land which is available with us.

— Rajavendhan P, Chief Financial Officer
Capex for Container Fabrication Capex · next financial year · High confidence ₹30-40 crores

Plus, the container fabrication which we have already undertaken has a Capex outlay of Rs. 30 crore to Rs. 40 crore excluding the land again.

— Rajavendhan P, Chief Financial Officer

Order Book Execution

BESS Order Book Execution Order Book Execution · FY27 · High confidence 40%

Around 40%. This includes both EPC plus asset-owned business put together. Execution will be about 40% of it.

— Venugopal Rao Maddisetty, Chairman & Managing Director
BOO Model Order Book Execution Order Book Execution · next two years · High confidence ₹3,250 crores

Rs. 3,250 crores of the order book that we have in BOO model is expected to be executed in the next two years, in terms of the commissioning.

— Rajavendhan P, Chief Financial Officer

Margin

BESS Product Margin Margin · Ongoing · Medium confidence 13% to 15%

Previously 12% to 14% → 13% to 15%

The battery energy storage system as a product has a margin of about 13% to 15%... We are estimating that this margin of 13% will go up to 15% based on the, operational efficiency.

— Rajavendhan P, Chief Financial Officer
EPC Margin (Energy Segment) Margin · Ongoing · High confidence 8% to 10%

the EPC margin is about 8% to 10%. These are the margins for the energy segment.

— Rajavendhan P, Chief Financial Officer
Telecom Product Margin Margin · Ongoing · High confidence 18% plus

good product margin of about 18% plus the project margin of 13% to 15%.

— Rajavendhan P, Chief Financial Officer
Telecom Project Margin Margin · Ongoing · High confidence 13% to 15%

— Rajavendhan P, Chief Financial Officer
EBITDA Margins (stabilized) Margin · Going forward · High confidence 13% to 15%

As we explained, the EBITDA margins are expected of about 13% to 15%.

— Rajavendhan P, Chief Financial Officer
Project Margins (stabilized) Margin · Going forward · High confidence 8% to 10%

The project margins are expected to be about 8% to 10%.

— Rajavendhan P, Chief Financial Officer

Profitability

BOO Model IRR (SPV basis) Profitability · Ongoing · High confidence 13% to 14%

IRR of the BOO model on a SPV basis, stands at about 13% to 14%.

— Rajavendhan P, Chief Financial Officer
Equity IRR (BOO projects) Profitability · Ongoing · High confidence about 14%

With this interest rate, we are earning an Equity IRR of about 14%.

— Rajavendhan P, Chief Financial Officer
Project IRR (BOO projects) Profitability · Ongoing · High confidence 10% to 11.5%

The project IRR will be anywhere between 10% to 11.5%.

— Rajavendhan P, Chief Financial Officer

Cost

Cost of Borrowing (BOO projects) Cost · Ongoing · High confidence around 9% +/- 0.2%

The cost of borrowing we see around 9%, plus or minus 0.2%.

— Rajavendhan P, Chief Financial Officer

Payback Period

BESS Product Payback Period Payback Period · Ongoing · High confidence 1.5 to 2 years

If you want me to talk in terms of the margins, which is built from this product, the payback period is around 1.5 to 2 years.

— Rajavendhan P, Chief Financial Officer

Market Size

BESS Industry Requirement Market Size · by 2030 · High confidence 236 GWh

By 2030, that is the government document says it is 236 GWh is required for the country.

— Venugopal Rao Maddisetty, Chairman & Managing Director

Revenue Potential

BESS Revenue Potential (per MWh, project level) Revenue Potential · Ongoing · High confidence ₹1.2 crores to ₹1.3 crores

It is about Rs. 1.2 crores to Rs.1.3 crores per megawatt-hour is at the project level, EPC level, which will have about INR 70 lakhs of the product, in-house product that we have.

— Rajavendhan P, Chief Financial Officer
BESS In-house Product Revenue Potential (per MWh) Revenue Potential · Ongoing · High confidence ₹70 lakhs

— Rajavendhan P, Chief Financial Officer

Working Capital

Telecom Net Working Capital Days Working Capital · Ongoing · High confidence 120 to 150 days

The telecom remains at about 120 to 150 days of net working capital.

— Rajavendhan P, Chief Financial Officer
BESS EPC Working Capital Days Working Capital · Ongoing · High confidence 90 to 120 days

For the BESS project specifically, we again, for the EPC, for the product specifically, the working capital we see is about 90 days. For the EPCs, we see about 90 to 120 days.

— Rajavendhan P, Chief Financial Officer
BESS Product Working Capital Days Working Capital · Ongoing · High confidence about 90 days

For the BESS project specifically, we again, for the EPC, for the product specifically, the working capital we see is about 90 days.

— Rajavendhan P, Chief Financial Officer

Risks & concerns

Aggressive bidding/competition in BESS sector
medium

Management noted aggressive bidding in the last three months but expects correction as competitors face execution difficulties, and the company is focusing on less competitive applications.

Both acknowledged
Cell price strengthening impacting BOO project IRR
low

Management stated that they book orders with suppliers by paying advances, and backward integration helps optimize costs, ensuring project IRR remains within range. Future projects are being bid at higher levels.

Analyst downplayed

Q&A highlights

3 direct

BESS project margins (EPC vs BOO) and comparison with telecom margins Direct

Energy margins are bit different in our business model because we operate with a backward integration... IRR of the BOO model on a SPV basis, stands at about 13% to 14%. The product margin is about 12% to 14% and the EPC margin is about 8% to 10%. These are the margins for the energy segment. And telecom, because of the nature of the project margins have been bit higher and again, these were EPC projects with a backward integration of our product, which has yielded us a good product margin of about 18% plus the project margin of 13% to 15%.

Provides detailed margin breakdown for different business models and segments, crucial for understanding profitability drivers and the impact of backward integration.

Asked by Paras Chheda

Competition and pricing aggression in BESS tenders Direct

There was a very aggression in the last three months. But whatever the orders that we have won, they are in a better situation... Now, talking about this competition. It is obvious that in any new sector when the demand starts increasing, generally the people think that there are huge margins available in the business, people start to bidding aggressively. I am hoping that the correction will happen soon because they are not able to execute on the ground whoever has won.

Addresses a key industry risk (pricing pressure) and management's strategy to mitigate it, including expectations for market stabilization and focusing on less competitive applications.

Asked by Rohan Baranwal

Structure of BOO projects, TransGreenX Energy, and potential de-merger Direct

TransGreenX Energy Private Limited, which is a wholly owned subsidiary of Pace Digitek and moving all these assets under that... As of right now, it is 100% owned by Pace Digitek and at a later date, when we need money for the equity portion, we will be hiving off some portion based on the business needs... Absolutely. We will be doing that at an appropriate time once we create some value in this platform... At some point of time, de-merger also is possible to get the full benefits on this business.

Clarifies the strategic intent behind the new subsidiary for BOO assets and hints at future value unlocking through potential de-merger, impacting long-term shareholder value and capital structure.

Asked by Chintan Mehta

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Pace Digitek Limited reported a consolidated revenue from operations of ₹644.0 crores for Q3 FY26, marking a 13.5% YoY and 20.7% QoQ growth. Profit After Tax (PAT) stood at ₹78.8 crores, representing an 11.3% YoY growth and a PAT margin of 12.2%. The gross profit for the quarter was ₹169.2 crores, translating to a gross margin of 26.3%, a decrease from 32.9% in Q3 FY25 due to project mix. EBITDA for Q3 FY26 was ₹117.9 crores, with an 18.3% margin, down from 21.4% in Q3 FY25.

Robust Order Book and BESS Deliveries

The company secured significant orders, with the Energy Segment order book currently at ₹6,000 crores and the Telecom Segment order book at ₹2,400 crores. Management aims to increase the Energy order book to ₹10,000 crores by March 2026. A significant milestone was the delivery of 400 MWh of BESS systems, with approximately 200 MWh already commissioned and operating satisfactorily in the field, positioning the company as a leader in this new segment.

Aggressive Capacity Expansion in BESS Manufacturing

Pace Digitek is rapidly expanding its BESS manufacturing capabilities. The current facility is set to reach 5 GWh capacity by March 2026. A new facility is under construction to further expand this capacity from 5 GWh to 10 GWh by September 2026, which would make the company the first in India at this scale. Additionally, a backward integration initiative involves manufacturing BESS containers in-house, with this facility expected to be ready by mid-April to control input supply and costs.

Strategic Business Model and Profitability Margins

The company operates with a backward integration model, providing a structural advantage. For the energy segment, product margins are 12-14% (expected to improve to 13-15%), and EPC margins are 8-10%. The Built-Own-Operate (BOO) model yields an IRR of 13-14% on an SPV basis, with an Equity IRR of about 14%. When internal profits from backward integration are netted off, the overall IRR for BOO projects can reach 19-20%. Telecom EPC projects with backward integration have yielded higher product margins of 18% plus and project margins of 13-15%.

TransGreenX Energy and Future Value Creation Strategy

Pace Digitek has incorporated TransGreenX Energy Private Limited as a wholly-owned subsidiary to manage all Built-Own-Operate (BOO) model projects under a HoldCo structure. This structure aims to raise project funding at the platform level and effectively manage assets. Management indicated that at a later date, once value is created, a de-merger of this entity is possible to unlock full benefits for the business and shareholders, signaling a clear strategy for long-term value creation.

Capex and Funding Strategy for Growth

The company plans a capital outlay of ₹80-100 crores for the 5 GWh to 10 GWh capacity expansion in the next financial year, primarily for plant and machinery. An additional ₹30-40 crores is allocated for the container fabrication unit. These immediate Capex requirements for the next financial year are expected to be funded entirely by internal accruals. For BOO projects, 70-75% of the capital expenditure is financed through debt from financial institutions, with a cost of borrowing around 9% +/- 0.2%.

Competitive Landscape and Market Outlook for BESS

Management acknowledged aggressive bidding in the BESS sector in recent months but expects prices to stabilize from April onwards as competitors face execution challenges. They highlighted the company's competitive advantage through local manufacturing, which offers local support and spare parts, making them comparable to Chinese prices on an apple-to-apple basis, aided by duty benefits. The BESS industry is projected to require 236 GWh by 2030, with 25+ GWh already awarded, indicating significant market potential.

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

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