Detailed Narrative
Q2 FY26 Performance Overview
Power Mech Projects reported a robust Q2 FY26, with total income reaching ₹1,249 crores, a 19% increase year-over-year. EBITDA stood at ₹158 crores, up 18%, while profit after tax grew 12% to ₹78 crores. For the first half of FY26, total income was ₹2,554 crores (up 24%) and EBITDA ₹340 crores (up 33%), demonstrating consistent operational momentum. However, PAT margin slightly declined from 6.7% to 6.3% in Q2, primarily due to increased finance and depreciation costs.
Segmental Revenue Dynamics
The mechanical business was a key growth driver, surging 90% YoY to ₹435 crores, primarily from industrial power construction projects, including the ₹936 crore Udupi project. O&M revenue also increased 12% to ₹440 crores, supported by new orders. In contrast, the civil segment saw a 22% decline to ₹309 crores due to extended rains and delayed bill certifications in the water division. Electrical and mining businesses showed significant growth of 138% and 164% respectively, contributing ₹22 crores and ₹31 crores to revenue.
Order Book and Future Outlook
The company secured new orders worth ₹1,042 crores in Q2 FY26, bringing the total order backlog to ₹53,776 crores as of September 30, 2025, with an executable portion of ₹14,226 crores (excluding MDO projects). Including Q3 inflows, the total order book stands at ₹56,353 crores, with an executable book of ₹16,804 crores. Management targets ₹10,000 crores in new orders by March 2026, anticipating significant opportunities in power, steel, and infrastructure sectors, with an annual execution rate of approximately 40% of the opening order book.
Working Capital and Liquidity Challenges
Net current asset days increased from 128 to 151 days in H1 FY26, primarily due to delays in certification and realization of receivables from water works, including ₹446 crores from Jal Jeevan Mission projects. Despite this, negative operating cash flow improved from ₹166 crores in H1 FY25 to ₹63 crores negative in H1 FY26. Gross debt stood at ₹839 crores and net debt at ₹360 crores, with a healthy debt-equity ratio of 0.37x, as of September 30, 2025. The company is actively pursuing clients to expedite collections and reduce working capital reliance.
MDO Project Progress and Margin Profile
MDO projects are gaining traction, with KBP mining operations commenced and coal production expected from November 2025, targeting 1-1.2 million tons by March '26. The Tasra washery construction is targeted for completion by September 2026, aiming for 360-400k tons by March '26. Current MDO EBITDA margins are 15-16%, projected to reach 23-25% at peak capacity by FY28, contributing significantly to overall profitability. Combined MDO top line is expected to reach ₹550-600 crores in FY27 and ₹2,000 crores at peak.
Strategic Diversification and Growth Drivers
Power Mech is actively pursuing diversification beyond thermal power into steel, railways, and water infrastructure, leveraging its construction and O&M expertise. The company is also cautiously exploring renewable energy (solar and battery storage BOOT projects), while being mindful of irrational bidding. Management anticipates a bullish phase in the power sector, with substantial balance ordering from new capacities and significant investments in the steel sector (SAIL, NMDC), which could open up opportunities worth ₹8,000-10,000 crores in the next 3-5 months.