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Sattva Engineering Construction Limited — Q4 FY26 earnings call

Call held 28 May 2026

Management summary

Sattva Engineering Construction Limited delivered strong financial results for FY26, with revenue growing 32% and PAT increasing 43%. The company expanded its order book to ₹447 crores and significantly improved its net debt-equity ratio. Strategic re-entry into new business verticals and geographic expansion are key growth drivers. While EBITDA margins saw a temporary moderation due to new project gestation and working capital days increased, management is focused on margin stability and efficient receivable collection, targeting 50-60% revenue growth for FY27-FY28.

Highlights

  • FY26 Revenue grew 32% YoY to ₹143.2 crores, up from ₹108.6 crores in FY25.

  • FY26 Profit After Tax (PAT) increased 43% YoY to ₹13.1 crores, compared to ₹9.1 crores in FY25.

  • Order book expanded to ₹447 crores as of May 15, 2026, providing 24-30 months of revenue visibility.

  • Net debt-equity ratio significantly improved from 0.8 in FY25 to 0.2 in FY26, reflecting disciplined capital management.

  • Successfully re-entered the Odour Control System segment and the Industrial & Utility Building Vertical, expanding addressable market.

Concerns

  • EBITDA margins moderated to 15.4% in FY26 from 17.1% in FY25, primarily due to initial ramp-up costs in the WTP segment.

  • Trade receivables stood at an elevated ₹49.5 crores as of March 2026, though 33% was collected by May 2026.

  • Working capital days increased from 118 to 139, indicating a longer cash conversion cycle.

  • Change in government in Tamil Nadu is expected to cause delays in new tendering processes.

Key financials

2 periods

H2

  • FY26 Revenue
    ₹78.2 Cr
    YoY +8%
  • FY26 EBITDA
    ₹13.7 Cr
  • FY26 EBITDA Margin
    17.5%
  • FY26 PAT
    ₹8.6 Cr
    YoY +18%

FY26

  • Revenue
    ₹143.2 Cr
    YoY +32%
  • EBITDA
    ₹22.1 Cr
  • EBITDA Margin
    15.4%
  • PAT
    ₹13.1 Cr
    YoY +43%
  • Basic EPS
    ₹8.4
  • Net Worth
    ₹88.1 Cr
  • Net Debt-Equity Ratio
    0.2
  • Current Ratio
    1.9
  • Trade Receivables
    ₹49.5 Cr
  • Short-term Borrowings
    ₹29.9 Cr

What they filed

₹ Cr · quarterly
Line itemQ2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue25 72 51 78
EBITDA5 13 8 14
Net profit2 7 4 9
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

₹447 Cr

as of 2026-05-15 quantified

Inflow this quarter

₹124 Cr

Execution

visibility over the next 24 to 30 months

Composition

Mix 2 geographies
  • Karnataka 28.4%
  • Tamil Nadu 71.6%

Share of order book by geography

Pipeline

other

tenders in pipeline

Quality order book continues to improve with larger ticket projects, recurring O&M components, and increasing participation across water and wastewater infrastructure.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Enhanced software and acquisition of office space (4th and 5th floor) ₹2 Cr
    This capital work in progress, now we are going for an enhanced software. For that we are spending and another, see the building where we are, our registered office, above that we are at fourth floor and fifth floor we are planning to acquire and of course we have made payments to that and all.
  • Debt 0.2× EBITDA
    Our net debt-equity ratio has improved significantly from 0.8 in FY25 to approximately 0.2 as of FY26, reflecting disciplined working capital management and a deliberate reduction in dependence on borrowed funds.
  • Liquidity Liquidity disclosed Growth is expected to be funded primarily through internal accruals, existing working capital facilities, and routine working capital optimization mechanisms such as bill discounting. The company is also eligible for government schemes like emergency credit line scheme.
    We expect this growth to be funded primarily through internal accruals, existing working capital facilities, and routine working capital optimization mechanisms such as bill discounting, while continuing to maintain balance sheet discipline. ... And of course, as an MSME, we are eligible for some government schemes, emergency credit line scheme. Maybe we may tap to take that, avail that. With that, we are trying to manage.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 and FY28 · High confidence 50% to 60%
    Based on our current order book, execution pipeline, and opportunities across existing and new business verticals, we are targeting revenue growth of approximately 50% to 60% over FY27 and FY28, while maintaining margin discipline and improving working capital efficiency.

    — R. Sekar, Whole-Time Director

Margin

  • EBITDA Margin Margin · Sustainable · High confidence 15% to 16%

    Previously 21% → 15% to 16%

    As WTP operations stabilizes and scale up, we believe the EBITDA margins in the 15% to 16% range remains sustainable.

    — G. Sujatha, Whole-Time Director and CFO

  • OCS Business Profit Margin Increase Margin · High confidence 1% to 1.50%
    To continue that, the OCS business will have increase in profit margin by 1% to 1.50% comparing to other segment, which is also an emerging business.

    — R. Sekar, Whole-Time Director

Working Capital

  • Receivable Days Working Capital · Medium confidence below 100

    From 139 today

    Okay. So you are targeting receivable days below 100, right?

    — G. Sujatha, Whole-Time Director and CFO

What to watch in Q1 FY27

EBITDA Margin Stabilization

next quarter
Current 15.4% in FY26
Target 15-16% sustainable range

Why it matters

To confirm the stabilization of margins as the WTP segment scales up and initial costs subside.

As WTP operations stabilizes and scale up, we believe the EBITDA margins in the 15% to 16% range remains sustainable.

Risks & concerns

  • EBITDA Margin Moderation

    medium

    EBITDA margins moderated to 15.4% in FY26 from 17.1% in FY25 due to initial ramp-up and project commencement costs in the WTP segment.

    Management acknowledged

  • Elevated Trade Receivables

    medium

    Trade receivables stood at ₹49.5 crores as of March 2026, which is elevated due to billing concentrated towards year-end, though 33% has been collected post year-end.

    Management acknowledged

  • Increased Working Capital Days

    medium

    Working capital days increased from 118 to 139, which management is actively working to bring down, targeting below 100 days.

    Analyst acknowledged

  • Delay in New Tendering Process

    medium

    Change in government in Tamil Nadu is expected to cause delays in floating new tenders, though existing projects are unaffected.

    Analyst acknowledged

Q&A highlights

6 direct
EBITDA Margin vs. Guidance Direct
But during the current financial year, the WTP was in the very gestation period, we have just commenced our operation in that segment. So, for that we have to make some initial costs related to commencement and other costs and all, which has impacted our profitability.

Analyst questioned the significant deviation from prior EBITDA margin guidance (21% vs. 15-16%), leading to management's explanation of project-specific initial costs.

Asked by Nishita Shanklesha

Achievability of 60% CAGR Partial
Sir, see, the orders, which we have in hand, we are supposed to complete about INR250 crores or whatever the number we mentioned, the 50% to 60% growth. Contractually, we are bound to complete by FY27.

Analyst challenged the ambitious 60% CAGR guidance given the lower H2 FY26 growth, prompting management to reiterate commitment based on existing order book and contractual obligations.

Asked by Sudhir Bheda

Slowdown in Water Segment Direct
No, we don't see any slowdown because we have intention to move geographically. Government will keep definitely spending in pan-India. We are also getting into new venture like OCS, the Odor Control System, which is also an emerging business pan-India, allied with the sewage treatment plant.

Analyst inquired about potential slowdowns in the water segment, a concern for many companies, to which management responded by highlighting geographic expansion and new business verticals as growth drivers.

Asked by Sudhir Bheda

Odor Control System (OCS) Explanation Direct
The gas generated in the sewage pumping station well is covered and it is being neutralized by adding a scrubber and an ionizer and various material into it, so that the livelihood of the neighboring, places are very well maintained and they are not affected by this odor control smell. Nowadays in tenders, STP itself it is being, amended.

Analyst sought clarification on the newly re-entered Odor Control System segment, providing insight into its function, market need, and mandatory nature.

Asked by Sudhir Bheda

Impact of Tamil Nadu Government Change Direct
Sir, the change in government does not affect any of our system which are ongoing projects. The new tenders to be floated will take some time, maybe till the dust settles down. Otherwise, all our projects are ongoing, already signed. More than 20%, 30%, 50% projects are already being executed. So we don't find any change other than expecting the delay in new tendering process.

Analyst raised a critical political risk regarding the change in government in Tamil Nadu, and management clarified that while new tenders might be delayed, existing projects remain unaffected.

Asked by Darshan Chandra

Working Capital Days Increase Direct
Yes, that only we are working on to the working capital cycle we are trying to bring down. Because of that in since many of our billing happens in the month of March, due to that elevated trade receivables it is happening and we are trying to work on that. And of course, whatever receivables are there in March, we have received majorly within this 60 to 70 days and all.

Analyst questioned the increase in working capital days, a key efficiency metric, and management acknowledged the issue, attributing it to year-end billing and outlining efforts to improve collection.

Asked by Darshan Chandra

Other Current Assets Composition Direct
Yes, other current asset majorly it comprises of the unbilled revenue and the retention money receivable, sir

Analyst sought clarification on the significant jump in other current assets, revealing that unbilled revenue and retention money are major components, which are important for understanding future cash flows.

Asked by Nehal Shah

3 min read 6 chapters

Detailed narrative

Robust FY26 Financial Performance and Balance Sheet Strengthening

Sattva Engineering Construction Limited reported a strong FY26, with revenue from operations growing 32% year-on-year to ₹143.2 crores, up from ₹108.6 crores in FY25. Profit After Tax (PAT) saw an even more significant increase of 43% year-on-year, reaching ₹13.1 crores compared to ₹9.1 crores in the previous fiscal year. The company's balance sheet also strengthened considerably, with the net debt-equity ratio improving from 0.8 in FY25 to a healthy 0.2 in FY26, driven by strong retained earnings and disciplined working capital management.

Expanding Order Book and Geographic Footprint

The company's order book stood at ₹323 crores as of March 31, 2026, further growing to ₹447 crores by May 15, 2026. This includes securing two projects from BWSSB Bangalore worth ₹124 crores, marking the company's first execution footprint outside Tamil Nadu. Management highlighted a healthy revenue visibility of 24 to 30 months from the current order book. The company is actively pursuing geographic expansion into states like Uttar Pradesh, Rajasthan, and Haryana, leveraging ongoing water and wastewater infrastructure spending.

Strategic Re-entry into New Business Verticals

FY26 saw Sattva Engineering re-enter two strategic business verticals: Odour Control System (OCS) and Industrial & Utility Building. The OCS segment is driven by increasing environmental compliance requirements in wastewater infrastructure, with the company securing a ₹40.5 crore contract for an Odour Control System in Chennai. This segment is expected to offer 1% to 1.50% higher profit margins compared to other segments. The Industrial & Utility Building Vertical will focus on commercial, institutional, and factory segments across South India, leveraging existing project execution experience.

Margin Dynamics and Working Capital Focus

EBITDA margins moderated to 15.4% in FY26 from 17.1% in FY25, primarily due to the Water Treatment Plant (WTP) segment being in a gestation phase, incurring initial ramp-up and project commencement costs. However, management expects margins to stabilize in the 15-16% range as WTP operations scale up. Working capital efficiency remains a key focus, with trade receivables at ₹49.5 crores as of March 2026. While working capital days increased from 118 to 139, management is actively working to reduce this, targeting receivable days below 100, with 33% of March receivables already collected by May.

Ambitious Growth Outlook and Funding Strategy

Sattva Engineering is targeting an aggressive revenue growth of approximately 50% to 60% over FY27 and FY28, supported by execution ramp-up, continued order inflows, and expansion into new markets and verticals. This growth is planned to be funded primarily through internal accruals, existing working capital facilities, and routine working capital optimization mechanisms such as bill discounting. The company also noted its eligibility for government schemes like the emergency credit line, which could be tapped if needed, while maintaining balance sheet discipline.

Government Contracts and Political Landscape

The company primarily focuses on government and municipal contracts, which are considered secure in terms of funding. While a change in government in Tamil Nadu is anticipated to delay new tendering processes, management assured that all existing and signed projects remain unaffected and payments are continuing. This approach minimizes risks associated with private sector projects and ensures stable revenue streams from public infrastructure development.

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