Power Mech Proj.

Power Mech Projects reported a robust Q4 FY26, with total revenue reaching INR 2,121 crores, marking a 13% year-on-year growth. Profit After Tax (PAT) for the quarter increased by 18% to INR 153 crores, with PAT margins improving to 7.27% from 7% in Q4 FY25. For the full fiscal year FY26, the company achieved a total revenue of INR 6,107 crores, representing a 16% YoY growth, and PAT stood at INR 412 crores, an 18% increase over FY25. EBITDA for Q4 FY26 grew only 2% YoY to INR 237 crores, with margins at 11.17%, lower than Q4 FY25, primarily due to increased operating costs and lower other income.

The company secured orders worth approximately INR 7,210 crores during FY26, falling short of its INR 10,000 crores target, mainly due to the cancellation of a INR 1,563 crores battery energy storage system order. Despite this, the total order backlog, including MDO contracts, stands at INR 55,151 crores, with an executable book of INR 15,899 crores, providing strong multi-year revenue visibility. For FY27, Power Mech is targeting an order inflow of INR 12,000 crores, focusing strategically on expanding its BOP EPC portfolio and securing new O&M contracts. The order backlog's composition is 70% from the power sector and 30% from non-power sectors.

The MDO business is a key growth driver, with the KBP mine starting production in November and the Tasra washery expected to be commissioned by mid-Q4 FY27. The company projects MDO revenue of INR 500 crores for FY27 (KBP: INR 350 crores, SAIL: INR 150 crores) and INR 1,250 crores for FY28 (KBP: INR 500 crores, Tasra: INR 750 crores). MDO is expected to contribute 7% to overall revenue in FY27, increasing to 13% in FY28. EBITDA margins for MDO are currently around 15%, with a projected 1% YoY increase, aiming for 20-21% at peak capacity by 2030.

Power Mech's operating cash flow significantly improved in FY26, rising from INR 74 lakhs in FY25 to INR 430 crores, driven by better realization of receivables. This improvement is expected to reduce dependence on working capital borrowings. As of March 31, 2026, gross debt stood at INR 622 crores and net debt at INR 163 crores, maintaining a comfortable debt-equity ratio of 0.32x. The company plans a capex of INR 400 crores for FY27, primarily for completing the washery and adding to the TASRA SPV for the Coal Handling Plant and railway siding.

The company faced challenges including delays in certification of bills under the Water division, which impacted standalone margins. Management expects central government funds to be released, rectifying this issue. An incremental gratuity increase of INR 4.5 crores was provisioned in Q4 FY26 due to changes in Labor Code provisions. Despite global macroeconomic volatility and raw material inflation, the company's international O&M contracts are largely unaffected, and domestic EPC contracts include escalation clauses for material costs like PVC, ensuring reimbursement from clients.

Power Mech is expanding its capabilities, notably securing a large BOP EPC package for the 800 MW Singareni Thermal project. The company also entered the metro rail O&M space with a INR 279 crores contract for Mumbai Monorail. New opportunities are being tracked in the mining sector (e.g., NMDC's INR 70,000 crores expansion plan), steel plants (JSW, ArcelorMittal), and potential coal gasification projects (government's INR 37,500 crores investment). The company aims to leverage its civil, structural, mechanical, and commissioning expertise for these new ventures.