SATTVAENGG

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.

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.

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.

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.

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.

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.