Patel Engineering Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Patel Engineering reported a mixed Q3 FY26, with consolidated revenue for 9 months growing 5.7% to INR 3,681 crores and PAT increasing 6.5% to INR 223 crores. The company significantly reduced its debt by INR 200 crores to INR 1,433 crores, achieving a healthy debt-to-equity ratio of 0.33x. While the order book remains strong at INR 15,123 crores, order inflow for the 9-month period was lower than anticipated, and margins saw slight moderation due to project mix.

Highlights

  • Consolidated revenue for 9 months FY26 increased to INR 3,681 crores, up 5.7% from corresponding previous last year.

  • PAT for 9 months FY26 increased to INR 223 crores, up 6.5% from corresponding previous last year.

  • Total debt reduced by INR 200 crores to INR 1,433 crores as of Dec 31, 2025, achieving a healthy debt-to-equity ratio of 0.33x.

  • Strong order book of INR 15,123 crores as of Dec 31, 2025, providing multiyear visibility.

  • Successful completion of INR 400 crores rights issue, subscribed 1.1x, primarily aimed at debt reduction.

  • Monetized non-core assets for approximately INR 185 crores during the quarter.

Concerns

  • Margins moderated slightly compared to the previous period, primarily due to project mix and execution phasing, with Q3 FY26 EBITDA margin at 11.7% compared to 9M FY26 at 12.7%.

  • Order inflow for 9 months FY26 was around INR 3,000 crores, lower than the initial expectation of INR 8,000-10,000 crores for the full year.

  • High expenses of INR 50 crores were incurred for the INR 400 crores rights issue, questioned by analysts.

Key financials

2 periods

Headline

  • Total Debt (as of Dec 31, 2025)
    ₹1,433 Cr
  • Debt to Equity (as of Dec 31, 2025)
    0.33×

9M FY26

  • Consolidated Revenue
    ₹3,681 Cr
    YoY +5.7%
  • Consolidated EBITDA
    ₹469 Cr
  • Consolidated PAT
    ₹223 Cr
    YoY +6.5%
  • Consolidated EBITDA Margin
    12.7%

What they filed

Q1 FY27: revenue up 3.9%, net profit up 21.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,174 1,206 1,612 1,233 1,208 +3%1,239 +3%1,421 −12%1,281 +4%
EBITDA162 184 218 165 159 −2%145 −21%215 −1%180 +9%
Net profit73 82 38 81 73 +0%72 −12%44 +16%98 +21%
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

  • Hydro (Q3 FY26 Revenue)
    57% Share of Revenue
  • Irrigation (Q3 FY26 Revenue)
    22% Share of Revenue
  • Tunnelling (Q3 FY26 Revenue)
    13% Share of Revenue
  • Roads and Others (Q3 FY26 Revenue)
    8% Share of Revenue

Order book

high confidence

Total value

₹15,123 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹3,000 Cr

Execution

Hydro projects generally have 5-year tenure, with first year being mobilization.

Pipeline

qualified rfp

Bids worth INR 12,000 crores under evaluation and identified pipeline of over INR 50,000 crores for next 1 year.

Management maintains a disciplined approach to bidding, focusing on quality and margin rather than volume-led growth, especially for technically complex hydro and underground projects.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹100 Cr
    Yes, INR100, INR150 crores capex will be required for all the current coming up EPC projects. ... So per year, would it be INR50 crores to INR70 crores per year for '27 and '28? ... This is for the next year.
  • Debt Gross ₹1,433 Cr
    • Repayment Total debt reduced by INR 200 crores during the 9-month period from INR 1,603 crores in March 2025. ₹200 Cr
    • Repayment Unutilized funds from rights issue (INR 250 crores) to be partly utilized for term loan repayment by March. ₹250 Cr
    Our total debt as of 31st December 2025 stands at INR 1,433 crores, reduced from INR 1,603 crores in March 2025. Overall serviceable debt has reduced by INR 200 crores during the 9-month period. Debt to equity stands at 0.33x, and finance costs have declined year-on-year.
  • M&A Gongri Hydropower Project Acquisition · Signed · Consideration ₹[object Object] (undisclosed)

    Strengthening long-term asset portfolio under a BOOT model, expecting INR 300 crores per annum revenue after completion.

    Expected to get a revenue of around INR300 crores per annum after completing the project.

    We signed the MOA for the 144-megawatt Gongri Hydropower Project under a BOOT model, strengthening our long-term asset portfolio.
  • Liquidity Liquidity disclosed Unutilized funds from the rights issue, approximately INR 250 crores, are available.
    So that is why right now, unutilized funds remains around INR250-odd crores.

Guidance & targets

Order Inflow

  • New Order Inflow Order Inflow · next year · Medium confidence INR 8,000 - 10,000 crores
    So next year next 1 year, we expect to around addition of around INR 8,000 crores to INR 10,000 crores of new orders.

    — Kavita Shirvaikar

  • New Order Inflow Order Inflow · next 6 months · Medium confidence INR 7,000 - 8,000 crores
    See, we cannot exactly tell you, what time new projects will come up for bidding and what time it will get open, but we say another next 6 months, we expect to get around INR7,000 crores to INR 8,000 crores order.

    — Kavita Shirvaikar

Revenue Growth

  • Revenue Growth Revenue Growth · FY27 · Medium confidence 10%
    And however, with the new orders of around INR 3,000 crores already received and a few more expected in the coming few months, we expect FY '27 to see around 10% growth in the revenue, and considering -- yes.

    — Kavita Shirvaikar

Revenue

  • Consolidated Revenue Revenue · this year (FY26) · High confidence INR 5,000 crores
    So see, revenue as guided earlier, we expect to cross INR 5,000 crores this year.

    — Kavita Shirvaikar

Margins

  • EBITDA Margin Margins · FY27 · Medium confidence 13%
    Margins around 13%. Correct.

    — Kavita Shirvaikar

  • EBITDA Margin Margins · next few quarters · Medium confidence 13%
    Our EBITDA is around 13%, I mean, on an average for the full year. So that we can expect to continue in the next few quarters.

    — Rahul Agarwal

Non-core Asset Realization

  • Asset Monetization Non-core Asset Realization · next 1 year · Medium confidence INR 100 - 200 crores
    Next 1 year, another INR 100 crores, INR 150 crores, INR 200 crores.

    — Rahul Agarwal

Debt

  • Term Loan Repayment Debt · by March · Medium confidence INR 250 crores
    Yes. So we will utilize it, partly by March but some may go beyond March.

    — Rahul Agarwal

  • Net Cash Position Debt · by FY27 · Medium confidence Net cash company
    So hopefully, we are a net cash company by FY '27. Is that your internal projection?

    — Viraj Mahadevia

Capex

  • Capex Spend Capex · next year (FY27) · Medium confidence INR 100 - 150 crores
    Yes, INR100, INR150 crores capex will be required for all the current coming up EPC projects. ... This is for the next year.

    — Rahul Agarwal

What to watch in Q4 FY26

Order Inflow for next 6 months

next 6 months
Current INR 3,000 crores (9M FY26)
Target INR 7,000 - 8,000 crores

Why it matters

To assess if the company can accelerate order wins and meet its annual targets, crucial for future revenue visibility.

See, we cannot exactly tell you, what time new projects will come up for bidding and what time it will get open, but we say another next 6 months, we expect to get around INR7,000 crores to INR 8,000 crores order.

Risks & concerns

  • Margin Moderation

    medium

    Margins moderated slightly compared to the previous period due to project mix and execution phasing.

    Management acknowledged

  • Competitive Intensity in Bidding

    medium

    Aggressive bidding by private companies in large projects is leading to a disciplined approach where the company may forgo orders to maintain margins.

    Both acknowledged

  • Promoter Share Pledge

    medium

    High percentage of promoter shares are pledged, with management indicating plans to address it post-March results.

    Analyst acknowledged

  • High Rights Issue Expenses

    low

    INR 50 crores expenses for a INR 400 crores rights issue were questioned as unusually high.

    Analyst deflected

Q&A highlights

4 direct, 1 evasive
Order Inflow Slowdown and Margin Discipline Direct
So let me tell you during the year, we've maintained a disciplined approach for bidding. See, in a few large tenders, pricing turned very aggressive, at we choose not to compromise on margin for this standard, particularly and technically complex hydro and underground projects.

Analyst questioned the slowdown in order inflow despite high targets, and management clarified their strategic focus on margin discipline over volume, even if it means missing some aggressive bids.

Asked by Disha

Achievement of Order Inflow Target for FY26 Partial
So considering everything we are still hopeful that we will reach there, but we cannot identify exact time line.

Analyst pressed on whether the previously guided INR 8,000 crores order inflow target for FY26 is still achievable given current inflow. Management expressed hope but acknowledged uncertainty on exact timelines for new orders.

Asked by Aashka Trivedi

Loss of Dibang Project Direct
Yes. So we were not L1 in that project. That project, it has been bided by someone else and had a very aggressive bidding. So we will probably not take that project.

Management confirmed losing a significant project (Dibang) due to aggressive bidding by a competitor, reinforcing their stance on not compromising margins.

Asked by Viraj Mahadevia

High Rights Issue Expenses Evasive
So it is because there were consultants appointed, the base is considering that around 10% is what we knew that it is. Yes, 10% cost is there, plus GST. ... Yes. Only what you want to just put it on record here is that it was already disclosed in the offer document.

Analyst challenged the unusually high 10% expense (INR 50 crores) for the INR 400 crores rights issue, suggesting it's excessive compared to industry norms. Management's response focused on disclosure rather than justification of the high cost.

Asked by Abhijit Tare

Comfort with BOOT Model for Gongri Project Direct
So Gongri Project is one project where everything is completed, and that is why government wanted to revive the project. And based on discussions with the government, we revived that project. ... And considering our strong balance sheet right now we are into, we feel Gongri is a good project.

Analyst questioned the company's comfort with owning an asset under a BOOT model, given past issues. Management expressed confidence due to the project's completion status, government support, and their strengthened balance sheet.

Asked by Nirmam

Competition between PSP and BESS Projects Direct
No, PSP projects and BESS projects, there is no competition between them. PSP project, there are some PSP projects, which are coming up along with a BESS. ... So see, it depends upon the quantum of power also. So BESS projects, it comes generally it comes with solar or wind where the power generated could be low and when it comes to PSP projects, the projects are long life and so considering the overall capital cost and all, it makes more sense.

Analyst inquired about potential competition between Pumped Storage Projects (PSP) and Battery Energy Storage Systems (BESS). Management clarified that they serve different purposes and scales, with PSPs being more suitable for large-scale, long-life power storage.

Asked by Jay Bharat Trivedi

Promoter Share Pledge and De-pledging Timeline Partial
No sothe pledge was done by promoters for the company as well as borrowings done by the promoters on the individual level to put in funds in the company in the past. And we are expecting the pledges to start coming down in the near future. ... Time line-wise, post this March results, we are we'll start talking to the lenders.

Analyst raised concerns about the high promoter share pledge and its purpose. Management explained it was for both company and individual needs and indicated that discussions for de-pledging would commence after the March results, providing a potential timeline.

Asked by Jatin

3 min read 7 chapters

Detailed narrative

Industry Outlook and Government Focus

The government's strong focus on infrastructure continues, with the Union Budget 2026 increasing capital expenditures to INR 12.2 lakh crores. Hydropower and pump storage remain key priorities, aligning with India's 500 gigawatt clean energy target by 2030. Project approvals have accelerated, creating a healthy pipeline of opportunities, exemplified by projects like Sawalkote Hydro Electric Project with 1,856 megawatts capacity. Enhanced funding from Power Finance Corporation and Rural Electrification Corporation further supports hydro and transmission projects.

Operational Performance and Milestones

Patel Engineering achieved significant milestones in Q3 FY26 across complex hydro and underground projects. Key achievements include the commissioning of Unit 2 and 3 of Subansiri Hydropower Project in Arunachal Pradesh, adding 500 megawatts of clean energy. Other milestones include the completion of Surge Gallery-2 excavation at Kwar, 10 lakh cubic meters of concrete pouring at Kiru, breakthrough in the 9.2 km Head Race Tunnel at Parnai Hydropower Project, and completion of NATM tunneling at PGRW underground water tunnel in Mumbai. These achievements underscore the company's technical depth and execution credibility.

Financial Strengthening and Debt Reduction

The company demonstrated significant financial strengthening, reducing its total debt by INR 200 crores to INR 1,433 crores as of December 31, 2025, from INR 1,603 crores in March 2025. This resulted in a healthy debt-to-equity ratio of 0.33x. Finance costs for Q3 FY26 also declined to INR 68 crores from INR 80 crores in the prior year. The successful INR 400 crores rights issue, subscribed 1.1x, was primarily aimed at debt reduction, with INR 250 crores of unutilized funds expected to be used for term loan repayment by March.

Order Book and Growth Visibility

As of December 31, 2025, Patel Engineering's order book stood at INR 15,123 crores, providing strong multiyear revenue visibility. The company has bids worth INR 12,000 crores under evaluation and an identified pipeline of over INR 50,000 crores for bidding in the next year. Management is confident of securing INR 8,000-10,000 crores in new orders next year, while maintaining strict margin discipline. For Q3 FY26, consolidated revenue was INR 1,239 crores, with 9-month revenue at INR 3,681 crores, up 5.7% YoY.

Rights Issue and Asset Monetization

The company successfully completed a INR 400 crores rights issue, which was oversubscribed by 1.1 times, primarily to reduce debt. Approximately INR 185 crores were realized during the quarter through the monetization of non-core assets. The company expects to continue non-core asset monetization, targeting INR 100-200 crores in the next year, further contributing to financial flexibility and debt reduction efforts.

BOOT Model and Project Strategy

Patel Engineering signed a Memorandum of Agreement (MOA) for the 144-megawatt Gongri Hydropower Project under a Build-Own-Operate-Transfer (BOOT) model. This strategic move strengthens the company's long-term asset portfolio, with the project expected to generate around INR 300 crores per annum in revenue after its 4-year construction and 40-year operational period. Management expressed confidence in this BOOT project due to its completed status and government support, despite past challenges with such models.

Competitive Landscape and Margins

Management acknowledged increased competitive intensity in the sector, particularly from aggressive bidding by private companies on large projects. Despite this, Patel Engineering maintains a disciplined approach, prioritizing margin sustainability over volume-led growth. While margins moderated slightly in Q3 FY26 due to project mix, the company aims to maintain EBITDA margins around 13% in the coming quarters, leveraging its technical expertise, experienced workforce, and existing equipment base of INR 1,200 crores to manage costs and improve efficiency.

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