Power Mech Projects Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Power Mech Projects reported a strong Q3 FY26 with 6% YoY revenue growth and 15% YoY PAT growth, driven by robust execution and new order wins. The company secured significant BOP EPC and BESS projects, contributing to a healthy order book of INR 17,300 crore (ex-MDO). While FY26 revenue guidance was revised down due to delays in UP Water Division projects, management remains confident in achieving its INR 10,000 crore order inflow target and expects 20-25% revenue growth in FY27.

Highlights

  • Q3 FY26 revenue of INR 1,433 crore, up 6% YoY, driven by sustained execution across power, O&M, and emerging segments.

  • Q3 FY26 PAT increased 15% YoY to INR 100 crore, with PAT margins improving to 7.02% from 6.47% in Q3 FY25.

  • 9M FY26 revenue grew 17% YoY to INR 3,987 crore, with EBITDA up 23% to INR 513 crore and margins at 12.88%.

  • Order inflow YTD FY26 reached INR 6,761 crore, progressing towards a full-year target of INR 10,000 crore.

  • Order backlog (excluding MDO) stands at INR 17,300 crore, providing multi-year revenue visibility.

Concerns

  • FY26 revenue guidance revised downwards from INR 6,500 crore to INR 6,000 crore due to an INR 700 crore shortfall from UP Water Division projects.

  • JJM UP projects worth ~INR 1,000 crore are facing execution delays due to fund allocation and certification issues.

  • EBITDA margins in Q3 FY26 saw a slight dip to 12.08% due to provisions created for compliance with the new Labor Code.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹1,433 Cr
    YoY +6%
  • EBITDA
    ₹173 Cr
    YoY +8%
  • EBITDA Margin
    12.1%
  • PAT
    ₹100 Cr
    YoY +15%
  • PAT Margin
    7%

9M FY26

  • Revenue
    ₹3,987 Cr
    YoY +17%
  • EBITDA
    ₹513 Cr
    YoY +23%
  • EBITDA Margin
    12.9%
  • PAT
    ₹258 Cr
    YoY +19%

What they filed

Q1 FY27: revenue up 25.6%, net profit up 9.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,035 1,338 1,853 1,293 1,238 +20%1,420 +6%2,111 +14%1,624 +26%
EBITDA123 151 214 170 146 +19%160 +6%226 +6%167 −2%
Net profit70 87 130 81 78 +11%100 +15%153 +18%89 +10%
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.

Order book

high confidence

Total value

₹17,300 Cr

as of 2025-12-31 quantified

10% QoQ

Execution

executable order book, no long-pending order book

Composition

Mix 6 segments
  • Mechanical Power, ETC ₹3,000 Cr 17.3%
  • Civil (Water, Sand Mines, Mining) ₹9,100 Cr 52.5%
  • O&M ₹2,500 Cr 14.4%
  • Electrical ₹1,000 Cr 5.8%
  • Solar ₹159 Cr 0.9%
  • BESS ₹1,560 Cr 9%

Share of order book by segment, derived from disclosed amounts

Pipeline

deal pipeline tcv

Mapped opportunities of INR 1,30,000-1,40,000 crore, with INR 3,500-4,500 crore actively followed in next two months.

Cancellations & deferrals

  • deferred: New orders received during the last year experienced delays in commencement due to extended monsoons (Q2 and Q3) and environmental clearance issues (Mirzapur project).
The company has a strong and executable order book, with new orders experiencing some delays but no fundamental execution challenges.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹380 Cr
    • Tasra Washery construction ₹280 Cr
    • Regular CAPEX (cranes and vehicles) ₹100 Cr
    Right now, the regular CAPEX in the Power Mech is only INR 100 - INR 120, depends on the order inflow, regular CAPEX. And washery for TASRA constructed by PMPL, so around INR 280 crore this year will come. Approximately INR 280 crore we will incur this year... So, together capex of INR 380 crore, we will incur for the current year
  • Debt Gross ₹833 Cr · Net ₹233 Cr · 0.3× EBITDA Cost 8.3%
    • New borrowing Term loan for KBP Mine, not yet drawn, at 9.5% interest rate. ₹256 Cr
    • New borrowing Loan for washery at 9.5% interest rate. ₹350 Cr
    As on 31st December 2025, the gross debt was around INR 833 crore, and the net debt was INR 233 crore. The average debt-equity ratio, as on the same date, was 0.35x. ... Weighted average cost of the working capital is 8.5%, and our equipment loans, we are borrowing at 7.8%. So, blending cost of around 8.2% - 8.3%.
  • M&A PM Green (for BESS project) Acquisition · Announced

    Entry into utility scale storage assets with long-term contracted revenue structure, part of energy transition.

    Anticipating 16-18% IRR on equity investments for BESS project.

    We also received a grid-scale battery energy storage system project under build-own-operate model from State Utility, which marks our entry into the utility scale storage assets with a long-term contracted revenue structure. ... So, investment of around 16% to 18% IRR we are anticipating on these projects on equity investments.
  • Liquidity Liquidity disclosed Operating cash flow improved from INR (253) crore in 9M FY25 to INR 113 crore in 9M FY26, primarily due to realization of receivables. Expected to further improve and reduce reliance on working capital limits.
    So, the company's operating cash flow has improved, reducing from INR (253) crore in nine months FY '25 to INR 113 crore in nine months FY '26, primarily due to realization of receivables during the period. This is further expected to improve operating cash flow and reduce reliance on working capital limits.

Guidance & targets

Revenue

  • FY26 Revenue Growth Revenue · FY26 · High confidence 17-18%, targeting 20%
    Revenue growth this year may be at 17% to 18%. we will touch 20%, growth sir. We are targeting 20%

    — N. Nani Aravind

  • FY26 Total Revenue Revenue · FY26 · High confidence INR 6,000 crore

    Previously INR 6,500 crore → INR 6,000 crore

    Yes, out of INR 6,500 crore, we projected INR 700 crore from the UP Water Division revenue, but we revised this guidance to INR 6,100 to 6,200. And now, based on the till nine months of growth trajectory, 17% growth, we may touch around INR 6,000 crore now

    — N. Nani Aravind

  • FY27 Revenue Growth Revenue · FY27 · High confidence 20-25%
    But based on the order book, so far, we are on the course to achieve at least 20% to 25% growth.

    — N. Nani Aravind

Order Inflow

  • FY26 Order Inflow Order Inflow · FY26 · High confidence INR 10,000 crore
    From an order inflow perspective, order wins during the year-to-date have reached about INR 6,761 crore. We are progressing towards achieving INR 10,000 crore order intake in FY '26.

    — N. Nani Aravind

  • FY27 Order Inflow Order Inflow · FY27 · Medium confidence INR 10,000 crore
    So, it is fair to assume INR 10,000 crore in normal in your business, we may expect this kind of opportunity as an order inflow for the FY27. That is bare minimum level.

    — N. Nani Aravind

MDO Turnover

  • FY27 MDO Turnover MDO Turnover · FY27 · High confidence INR 600-700 crore
    FY27, we will touch around INR 600 to 700 crore between, depends on the scale up of operation, KBP, and the likely uptake of client.

    — N. Nani Aravind

  • FY28 MDO Turnover MDO Turnover · FY28 · High confidence INR 1,800-1,900 crore
    And FY28, we may touch around INR 1,800 to 1,900 crore with escalation value.

    — N. Nani Aravind

EBITDA Margin

  • MDO EBITDA Margins EBITDA Margin · FY29 onwards · High confidence 13.5-14%
    By FY29 onwards, you will get peak of 13.5%-14% EBITDA margins.

    — N. Nani Aravind

Capex

  • FY26 Total Capex Capex · FY26 · High confidence INR 380 crore
    So, together capex of INR 380 crore, we will incur for the current year

    — N. Nani Aravind

  • FY27 Total Capex Capex · FY27 · High confidence INR 520 crore
    Total INR 680 to INR 690 crore of CAPEX we will incur on the washery itself. So, together capex of INR 380 crore, we will incur for the current year and INR 520 crore next year.

    — N. Nani Aravind

Debt

  • Gross Debt Increase Debt · Next year (FY27) · High confidence INR 400 crore
    It is INR 833 crore gross debt as of December. This will go up another INR 400 crore by next year.

    — N. Nani Aravind

What to watch in Q4 FY26

JJM UP Project Execution

next quarter
Current INR 1,000 crore pending, execution slowed due to funding/certification issues
Target Clarity on fund allocation and certification, commencement of building activities from Q4 onwards

Why it matters

Resolution of these issues is crucial for unlocking revenue from a significant portion of the order book and achieving revenue targets.

The pending order book is approximately INR 1,000 crore, sir. We are not executing because of the fund issue, certification issue. ... The existing pending works, we will continue execution at moderate pace untill the clarity from the government on the allocation of fund, and bill certification.

Risks & concerns

  • JJM UP project funding and certification issues

    high

    Approximately INR 1,000 crore of the JJM UP order book is not being executed due to central government fund allocation issues and uncertified bills, leading to a downward revision of FY26 revenue guidance.

    Management acknowledged

  • Execution delays on new orders

    medium

    New orders received last year experienced delays due to extended monsoons (Q2/Q3) and environmental clearance issues (Mirzapur project).

    Management acknowledged

  • Impact of new labor laws on costs

    low

    While analysts raised concerns about 8-12% cost increases, management stated that price variation clauses in contracts and 'change in law' provisions cover such statutory variations, with a one-time provision of INR 4.4 crore made in Q3 for company employees.

    Analyst downplayed

Q&A highlights

7 direct
Execution pace of the INR 17,000 crore order backlog and challenges faced. Direct
Yes, out of the INR 17,000 crore of order, we are not facing execution challenges. However, some of the new orders we received during the last year, experienced delays in commencement of the project because of the extended monsoons during Q2 and Q3. And some of the projects like Kaiga and Yadadri, where extended monsoons, and Mirzapur is one project where environmental clearance issues are there. So, there are delays in starting the projects.

Addresses concerns about execution bottlenecks despite a large order book, clarifying that delays are project-specific and not systemic.

Asked by Pritesh

Inclusion of FGD orders in the INR 17,000 crore backlog and margin profile of new BOP EPC and BESS projects. Direct
Sir, we have removed nonmoving FGD order during last financial year itself for INR 4,260 crore. INR 17,000 order backlog is without FGD order. Only INR 936 crore of Udupi project only running in the FGD. ... In BESS, actually, we, Power Mech has been in the forefront for India's energy growth story, and we do not want to miss the energy transition phase as well. So, we have incorporated a 100% subsidiary as a PM Green for this, and this is a small attempt we to see where the renewable segment fits into the Power Mech's vision of sustained growth and margins. We are cautiously optimistic about this segment. So, investment of around 16% to 18% IRR we are anticipating on these projects on equity investments.

Clarifies the composition of the order book and provides specific IRR expectations for the new BESS venture, indicating potential profitability.

Asked by Pritesh

Revision of FY26 revenue guidance from INR 6,500 crore to INR 6,000 crore. Direct
INR 700 crore of revenue we projected from the UP Water division, under Jal Jeevan Mission, where the central government funds were not allocated and bills were uncertified during the year because of that, we have not recognized any turnover during the current year. That impacted the guidance of FY26, which we are mitigating with the increase in the revenues from new orders and other alternatives. So, even though there is INR 700 crore shortfall, but we are managing INR 200 crore, INR 300 crore extra by accelerated execution from the new orders.

Explains the specific reason for the downward revision in revenue guidance, attributing it to external factors (JJM funding) and outlining mitigation strategies.

Asked by Mohit Kumar

Impact of new labor laws on costs and EBITDA margins. Direct
Yes., it is an important point what you have raised. You see, minimum wages is a government prerogative and a policy review, but most of our contracts are also tied up with the minimum wages as part of the price variation. And that should reasonably offset the, in terms of covering up any increase of cost and all. And any such type of statutory variation, the government notification, if the provision is not there, it becomes a matter of variation issue. ... No, I think some of the labor contractors are demanding some other additional benefits and all in, so for that purpose, they are fighting, and if any changes are there, it will have no impact on our financials. It will impact the employer's financials.

Addresses a key industry-wide concern, with management asserting that contract clauses and one-time provisions will largely mitigate financial impact on the company.

Asked by Rajesh Kumar Rathi

Status of the INR 1,000 crore pending order book for Jal Jeevan Mission (JJM) in UP and its execution. Direct
The pending order book is approximately INR 1,000 crore, sir. We are not executing because of the fund issue, certification issue. Execution of these projects has been slowed due to funding constraints and certificate. We are executing only the O&M projects where 100% completed projects we are bringing these projects into the O&M phase. So, 250 schemes, which we have converted so far, and we were going to start building this from Q4 onwards.

Highlights a significant portion of the order book facing execution delays due to external funding and certification issues, impacting current revenue recognition.

Asked by Mudit Bhandari

Expected peak borrowing and corresponding interest rates, especially for the MDO segment. Direct
Our major borrowing is only the working capital limit so far, and we have equipment loan of INR 98 crore, and INR 700 crore is working capital limits Weighted average cost of the working capital is 8.5%, and our equipment loans, we are borrowing at 7.8%. So, blending cost of around 8.2% - 8.3%. With reference to MDO segment, the KBP Mine, we are raising term loan of INR 256 crore. We have not drawn down the loan., we are raising at 9.5% interest rate n. And washery also we are raising loan of INR 350 Cr at 9.5%.

Provides detailed insight into the company's debt structure, cost of borrowing, and specific project-related financing for the MDO segment.

Asked by Bhagwat

Consolidated corporate tax rate and its increase due to LLP entities. Direct
the effective income tax rate is 25% for the main company, and the increase in the consolidated corporate tax is mainly due to sand mines are executing under LLP entities, where the income tax rate is 35%, when we are consolidate the financials, average cost is increasing.

Explains the reason for a higher consolidated tax rate, which can impact net profitability, due to the structure of certain business segments.

Asked by Bhagwat

3 min read 6 chapters

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.

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