Patel Engineering Limited — Q4 FY25 earnings call

Call held 13 May 2025

Management summary

Patel Engineering reported a strong operational performance in Q4 FY25, driving full-year revenue past the Rs. 5,000 crore mark for the first time. While net profit was impacted by a one-time exceptional loss related to the 'Vivad Se Vishwas' scheme, underlying profitability and debt reduction were positive. The company anticipates stable revenue in FY26 due to subdued order inflows in FY25 but expects accelerated growth from FY27, supported by a robust pipeline in hydropower, pumped storage, and other infrastructure sectors.

Highlights

  • Full year FY25 consolidated revenue reached a record Rs. 5,093 crores, up 12.09% YoY from Rs. 4,544 crores in FY24.

  • Q4 FY25 consolidated revenue was Rs. 1,612 crores, marking a 20% increase YoY.

  • Full year FY25 consolidated PAT was Rs. 242.1 crores, lower than FY24's Rs. 264.1 crores due to a Rs. 150 crore exceptional loss from the 'Vivad Se Vishwas' scheme.

  • Consolidated gross debt reduced to Rs. 1,600 crores at FY25 end from Rs. 1,886 crores in FY24, improving the debt-to-equity ratio to 0.42 from 0.6.

  • Order book as of March 31, 2025, stands at Rs. 15,217 crores (excluding L1), with an additional Rs. 2,500 crores in L1/LOA received in Q1 FY26.

  • Management guides for stable revenues in FY26, with 10-15% growth expected from FY27 onwards.

  • Targeting Rs. 10,000 crores in order inflow for FY26, from a bidding pipeline of Rs. 40,000-50,000 crores in hydro and pumped storage projects.

  • The company aims to monetize Rs. 800-1,000 crores of land bank over the next 2-3 years and realize Rs. 200 crores year-on-year from non-core assets including arbitration awards.

Key financials

3 periods

Q4 FY25

  • Consolidated Revenue
    ₹1,612 Cr
    YoY +20%
  • Consolidated Operating EBITDA
    ₹218 Cr
  • Consolidated EBITDA Margin
    13.6%
  • Consolidated PAT
    ₹32.8 Cr

FY25

  • Consolidated Revenue
    ₹5,093 Cr
    YoY +12.1%
  • Consolidated Operating EBITDA
    ₹733 Cr
  • Consolidated EBITDA Margin
    14.4%
  • Consolidated PAT
    ₹242.1 Cr

FY25 end

  • Consolidated Gross Debt
    ₹1,600 Cr
  • Debt to Equity Ratio
    0.42
  • Net Working Capital Days
    110 days

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

  • Q4 FY25 Revenue Breakup
    48% Hydro37% Irrigation11% Tunneling4% Roads & Others

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · Medium confidence stable
    So we are saying considering our current order book we expect FY'26, there will be a stable growth...

    — Kavita Shirvaikar, Managing Director

  • Revenue Growth Revenue · from FY27 onwards · High confidence 10% to 15%
    ...and from FY'27 onwards, we expect around 10% to 15% growth.

    — Kavita Shirvaikar, Managing Director

Order Inflow

  • Order Inflow Target Order Inflow · FY26 · High confidence Rs. 10,000 crores
    We are first targeting Rs. 10,000 crores order inflow.

    — Rahul Agarwal

  • Bidding Pipeline Target Order Inflow · FY26 · High confidence Rs. 40,000- Rs. 50,000 crores
    Our target is to bid for around Rs. 40,000- Rs. 50,000 crores and our success ratio is generally between 15%-20%.

    — Rahul Agarwal

  • PSP Projects for Bidding Order Inflow · next 1 to 2 years · High confidence at least around 30,000 megawatts
    We expect at least around 30,000 megawatts of PSP projects to come up for bidding in the next 1 to 2 years between public and private sectors.

    — Kavita Shirvaikar, Managing Director

Margin

  • EBITDA Margin Margin · Yearly basis · High confidence 13% to 14%
    So 13% to 14% kind of margin we will be maintaining on yearly basis...

    — Rahul Agarwal

Debt

  • Term Debt Reduction Debt · current financial year (FY26) · Medium confidence around Rs. 200 crores
    The term debt we see going down by around Rs. 200 crores...

    — Rahul Agarwal

Other

  • Land Bank Monetization Timeline Other · next 2-3 years · Medium confidence next 2-3 years
    Out of all the land banks, we are identifying few land parcels which we want to sell first which we will target to sell in the next 2-3 years.

    — Rahul Agarwal

  • Land Bank Total Value Other · as of today · High confidence Rs. 800 to Rs. 1000 crores
    It's between Rs. 800 to Rs. 1000 crores.

    — Rahul Agarwal

  • Non-Core Asset Realization (Land Bank + Awards) Other · year-on-year · High confidence around Rs. 200 crores
    That's why we have kept a target of non-core assets between land bank and awards we get around Rs. 200 crores year-on-year.

    — Rahul Agarwal

Capacity

  • Installed Capacity (PSPs) Capacity · by 2032 · High confidence 50 gigawatt
    ...and is targeting an installed capacity of 50 gigawatt by 2032.

    — Kavita Shirvaikar, Managing Director

Risks & concerns

  • Geopolitical situation / Border volatility impacting labor availability

    medium

    Potential impact on project execution if border tensions in northern India persist for a longer period.

    Analyst acknowledged

  • Competition in immense opportunity sectors

    medium

    While opportunities are vast, the construction sector is subject to competition amongst peers, which could affect margins or success rates.

    Management acknowledged

Areas of evasion (2)

  • Specific reasons for Q4 employee cost spike beyond general hiring
  • Specific reasons for not selling the entire land bank immediately beyond value enhancement

Q&A highlights

3 direct
FY26 Revenue Growth and Order Inflow Direct
Yes, that is correct because order inflow was subdued due to election. 2025, if you see our order inflow was around Rs. 500 crores. But FY'26 started with a positive note and we got Rs. 2000 crore of orders where Rs. 1300 crore we already got the LOA and around Rs. 700 crores we are L1. So we are saying considering our current order book we expect FY'26, there will be a stable growth and from FY'27 onwards, we expect around 10% to 15% growth.

Clarifies the impact of FY25's low order inflow on FY26 revenue guidance and sets expectations for future growth.

Asked by Pritesh Chheda

Indus Water Treaty Abeyance and Hydropower/Pumped Storage Opportunities Direct
See, basically the projects were always there. What we are saying is, with this Indus Water Treaty, you know, being suspended, now the projects will be expedited. So the project launch will be faster. ... So in terms of value, hydropower civil construction works is almost Rs. 5 crores per megawatt and for pumped storage, it is between Rs. 3 to Rs. 4 crores per megawatt.

Explains how geopolitical developments could accelerate project clearances and provides a valuation framework for the massive hydropower and pumped storage pipeline.

Asked by Pritesh Chheda

Land Bank Monetization and Arbitration Claims Realization Direct
Out of all the land banks, we are identifying few land parcels which we want to sell first which we will target to sell in the next 2-3 years. ... It's between Rs. 800 to Rs. 1000 crores. ... That's why we have kept a target of non-core assets between land bank and awards we get around Rs. 200 crores year-on-year.

Provides specific timelines and value estimates for non-core asset monetization, which is crucial for debt reduction and cash flow.

Asked by Rajiv Rupani

3 min read 7 chapters

Detailed narrative

Record FY25 Revenue Driven by Strong Q4 Execution

Patel Engineering achieved a significant milestone in FY25, with consolidated revenue crossing Rs. 5,000 crores for the first time, reaching Rs. 5,093 crores. This represents a 12.09% increase over FY24's Rs. 4,544 crores. The growth was particularly strong in Q4 FY25, where consolidated revenue surged by 20% year-on-year to Rs. 1,612 crores, demonstrating robust project execution across various sites.

Net Profit Impacted by One-Time Exceptional Loss

Despite strong operational performance, consolidated net profit for FY25 was Rs. 242.1 crores, a decrease from Rs. 264.1 crores in FY24. This was primarily due to a one-time exceptional loss of approximately Rs. 150 crores related to the 'Vivad Se Vishwas' scheme. Management clarified that the scheme concluded in FY25, and no similar exceptional items are anticipated in FY26, suggesting a cleaner profit outlook going forward.

Improved Financial Health and Debt Reduction

The company demonstrated improved financial health, with consolidated gross debt reducing to Rs. 1,600 crores at the end of FY25 from Rs. 1,886 crores in FY24. This led to a significant improvement in the debt-to-equity ratio, which fell to 0.42 from 0.6 in the previous year. Management also noted a reduction of approximately Rs. 378 crores in total debt plus client advances during the year, alongside maintaining net working capital days at around 110 days.

FY26 Revenue Stability with Strong Future Growth Outlook

Patel Engineering's order book stood at Rs. 15,217 crores (excluding L1 projects) as of March 31, 2025, with an additional Rs. 2,500 crores in L1/LOA received in Q1 FY26. Due to subdued order inflows of Rs. 550 crores in FY25 (attributed to elections), management expects stable revenues in FY26. However, they project a robust 10-15% revenue growth from FY27 onwards, driven by an anticipated increase in order inflows.

Massive Opportunities in Hydropower and Pumped Storage

The company is highly optimistic about future opportunities, particularly in the hydropower and pumped storage sectors. A pipeline of over 30 gigawatts from central PSUs is identified, with an additional 30,000 MW of pumped storage projects expected for bidding in the next 1-2 years. Management estimates the civil construction value at Rs. 5 crores per MW for hydropower and Rs. 3-4 crores per MW for pumped storage, indicating a substantial market potential. The suspension of the Indus Water Treaty is expected to accelerate project clearances in the region.

Aggressive Order Inflow Targets and Margin Maintenance

For FY26, Patel Engineering is targeting Rs. 10,000 crores in order inflow, aiming to bid for projects worth Rs. 40,000-50,000 crores with a historical success ratio of 15-20%. The company expects to maintain its consolidated EBITDA margins within the 13-14% range on a yearly basis, attributing any quarterly fluctuations to the mix of projects executed. Management also confirmed that cost escalations are typically pass-through, minimizing their impact on margins.

Strategic Non-Core Asset Monetization and Arbitration Claims Realization

The company plans to monetize identified land parcels, valued between Rs. 800-1,000 crores, over the next 2-3 years, with proceeds primarily earmarked for term loan reduction. Additionally, Patel Engineering targets an annual realization of approximately Rs. 200 crores from non-core assets, which includes both land bank sales and arbitration awards. As of FY25, Rs. 750 crores in claims have been awarded, with another Rs. 2,250 crores currently under arbitration.

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