Detailed Narrative
Strong Q1 FY26 Performance Driven by Exceptional Item
Power Mech Projects reported a robust Q1 FY26 with total income growing 28% YoY to ₹1,304 crores and PAT increasing 31% YoY to ₹81 crores. This performance was significantly boosted by an exceptional one-off📎 revenue of ₹288.53 crores from the Uttarakhand Riverbed Mineral project, which contributed ₹55 crores to PAT. EBITDA margin expanded to 13.95% from 12.1% in Q1 FY25, and Return on Capital Employed improved from 4.7% to 5.69%.
Robust Order Book and Strategic Inflow Focus
The company secured fresh orders worth ₹1,270 crores in Q1 FY26, contributing to a total order backlog of ₹53,972 crores as of June 30, 2025. The executable order book, excluding two MDO projects, stands at ₹14,391 crores. Management reiterated its FY26 new order target of ₹10,000 crores and expects to convert approximately 40% of its opening order book annually, supporting the FY26 revenue target of ₹6,500 crores.
MDO Business Ramping Up with Near-Term Constraints
The MDO business is progressing, with the Kotre Basantpur project commencing mining operations in April 2025 and coal production expected from September 2025. However, revenue from the Tasra mine is currently limited to 50,000-60,000 tons/month due to external washery capacity constraints, with the company's own washery expected by December 2026. Management projects ₹30-40 crores from KBP and ₹150-200 crores from Tasra in FY27, aiming for a total MDO revenue of ₹300-350 crores in FY27.
Working Capital Pressures from Water Division Receivables
Operating cash flow remained neutral due to pending receivables in the Water division, particularly from the Jal Jeevan Mission projects in Uttar Pradesh. The company has ₹330 crores in total outstanding from water works (₹230 crores receivables plus ₹100 crores uncertified revenue). Delays are attributed to central fund allocation issues and held-up bill certifications, with management expecting some fund allocation in Q2 and Q3 FY26.
Power Sector Opportunities and FGD Project Reclassification
The power sector continues to be a key opportunity, representing 57.5% of the business, with significant ordering expected from Adani and NTPC. However, ₹4,264 crores worth of FGD packages were reclassified as non-moving and removed from the order book due to prolonged inactivity and regulatory delays, leaving only ₹936 crores (UDIPI project) under execution, expected to be completed this year.
Capital Structure and Cost of Debt
As of June 30, 2025, the company's gross debt stood at ₹753 crores and net debt at ₹239 crores, resulting in a debt-equity ratio of 0.34x. The working capital limit is ₹600 crores, with ₹543 crores utilized. The cost of debt for equipment loans ranges from 8-8.5%, while working capital facilities carry an average interest rate of 9.2%.