Detailed Narrative
Robust Q4 and FY25 Financial Performance
Power Mech Projects delivered strong financial results for Q4 and full-year FY25. In Q4 FY25, total income surged 43% YoY to ₹1,870 crores, with EBITDA growing 46% to ₹233 crores, and PAT increasing 39% to ₹117 crores. For the full year, total income reached ₹5,279 crores, a 25% increase over FY24, while PAT grew 32% to ₹327 crores. EBITDA margins remained stable at 12.5% for Q4 and 12.3% for FY25, despite initial establishment costs for new projects.
Working Capital Challenges from Water Division Receivables
The company faced working capital challenges, with Net Current Assets Days increasing to 128 days in FY25 from 121 days in FY24. This was primarily due to delays in certification and realization of receivables from Jal Jeevan Mission projects in Uttar Pradesh. Approximately ₹415 crores (₹210 crores receivables and ₹215 crores uncertified WIP) are pending, attributed to fund allocation delays by both central and state governments. Management expects recovery of these funds in the upcoming quarter.
Order Book Dynamics and Strategic Adjustments
The order backlog as of March 31, 2025, stood at ₹53,994 crores, after excluding ₹4,264 crores worth of FGD orders. These FGD orders were removed due to revised government timelines, delayed regulatory approvals, and non-movement of projects. The executable order book (excluding MDO projects) is ₹14,387 crores. The O&M backlog significantly increased to ₹2,749 crores, and the civil backlog improved to ₹8,472 crores. The company secured ₹6,437 crores in orders during FY25 and ₹972 crores in Q1 FY26.
Focus on Power Sector, MDO, and Infrastructure Opportunities
Power Mech is strategically positioned to capitalize on significant opportunities in the power sector, MDO business, and national infrastructure pipeline. The power sector is expected to see ₹4.5 lakh crores in new investments, with annual capacity additions of 8,000-10,000 MW. The company is actively pursuing tenders, targeting ₹10,000 crores in new orders for FY26. The MDO business, particularly KBP Mining, is progressing well, with coal production expected to commence from Q2 FY26, and the washery targeted for completion by September 2026.
Capital Allocation and Debt Management
The company's gross debt as of March 31, 2025, was ₹641 crores, with net debt at ₹48 crores, resulting in a healthy debt-equity ratio of 0.33 times. For FY26, the company plans a capex of approximately ₹500 crores, primarily for the washery and regular expenditures. This capex will be funded partly by the ₹240 crores QIP proceeds and a term loan of ₹450 crores over the next couple of years. Management aims to maintain net debt stability by focusing on receivables realization and efficient working capital management.
Outlook and Growth Drivers
Power Mech projects a 25% year-on-year revenue growth for FY26, targeting ₹6,500 crores, with EBITDA margins expected to remain consistent with FY25 levels, potentially benefiting from increased mining contribution. The company anticipates converting 40% of its opening order book annually into revenue. Beyond traditional segments, the company is exploring new energy businesses like battery energy storage and solar power, and international opportunities in the Middle East and West Africa.
Strengthening Management Bandwidth and Succession
To support its growth trajectory, Power Mech is actively strengthening its organizational structure and management bandwidth. Mr. Rohit, son of the MD, is taking a lead role in operations, business development, and HR, with plans for his induction into the board this year. The company has also hired senior-level personnel and increased its overall manpower headcount by 8.6% (from 34,335 to 37,295), with a significant 30% increase in O&M headcount to meet growing business demands.