Detailed Narrative
Robust Q3 FY26 Performance and 9M Growth
Power Mech Projects reported a strong Q3 FY26 with total revenue of INR 1,433 crore, reflecting a 6% year-on-year growth. EBITDA for the quarter stood at INR 173 crore, up 8% YoY, with margins at 12.08%. Profit after tax increased by 15% to INR 100 crore, improving PAT margins to 7.02%. For the nine months ended December '25, the company achieved a total revenue of INR 3,987 crore, a 17% increase over the previous year, with EBITDA growing 23% to INR 513 crore and margins at 12.88%.
Strategic Order Inflow and Diversified Backlog
The company's year-to-date order inflow reached INR 6,761 crore, with a full-year target of INR 10,000 crore. The total order backlog, excluding MDO projects, is INR 17,300 crore, providing multi-year revenue visibility. Key wins include a large BOP EPC package for the 800 MW Singareni thermal project (INR 2,550 crore) and a grid-scale battery energy storage system (BESS) project under a build-own-operate model, marking entry into utility-scale storage assets. The backlog composition is diversified, with approximately INR 9,100 crore in Civil, INR 3,000 crore in Mechanical Power/ETC, INR 2,500 crore in O&M, INR 1,000 crore in Electrical, INR 159 crore in Solar, and INR 1,560 crore in BESS.
Revised FY26 Revenue Guidance and MDO Segment Outlook
Power Mech revised its FY26 revenue guidance downwards from INR 6,500 crore to approximately INR 6,000 crore. This revision is primarily due to an INR 700 crore shortfall from UP Water Division projects under the Jal Jeevan Mission, where central government funds were not allocated, and bills were uncertified. However, the company aims to mitigate this shortfall by accelerating execution on new orders. The MDO segment is expected to contribute INR 250-260 crore in FY26, with significant ramp-up projected to INR 600-700 crore in FY27 and INR 1,800-1,900 crore in FY28, targeting 13.5-14% EBITDA margins by FY29 onwards.
Capital Expenditure and Debt Profile
The company's total CAPEX for FY26 is projected at INR 380 crore, comprising INR 280 crore for the Tasra washery and INR 100-120 crore for regular CAPEX. For FY27, total CAPEX is estimated at INR 520 crore. As of December 31, 2025, gross debt stood at INR 833 crore and net debt at INR 233 crore, with an average debt-equity ratio of 0.35x. The blended cost of debt is between 8.2-8.3%, with specific project loans for MDO segments (KBP Mine and washery) at 9.5% interest.
Impact of New Labor Laws and Operational Efficiency
Management addressed concerns regarding the impact of new labor laws, stating that most contracts include price variation clauses and 'change in law' provisions, which should cover potential cost increases. A one-time📎 provision of INR 4.4 crore was made in Q3 for company employees. The company emphasized its in-house capabilities, strong engineering team, and focused supply chain management as key strengths for executing complex projects like the Singareni BOP EPC contract, which includes favorable payment terms with a 10% advance and 5% retention.
Future Growth Drivers and Market Opportunities
Power Mech anticipates continued growth driven by the power sector, with significant opportunities from players like Adani and NTPC. The company is also actively pursuing opportunities in infrastructure, railways, roads, mining, and mineral sectors, with a mapped pipeline of INR 1,30,000-1,40,000 crore. The government's bullish stance on energy transition, including nuclear power, battery storage (targeting 47 GW by FY31-32), and pumped storage, presents new avenues for growth, with O&M add-on opportunities of INR 1,200-1,500 crore annually.