💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, Erection works grew 90% YoY to INR 435 Cr (35% of revenue), O&M grew 10.3% to INR 439 Cr (36% of revenue), and MDO grew 933% to INR 31 Cr (3% of revenue). Civil works declined 21.8% to INR 309 Cr (25% of revenue) due to seasonal rains and water division delays. Electrical works grew 144% to INR 22 Cr (2% of revenue).

Geographic Revenue Split

Not disclosed in available documents, though the company operates globally across the power and infrastructure sectors.

Profitability Margins

Gross margins are influenced by a mix of construction (10% EBITDA) and O&M (15-16% EBITDA). PAT margin was slightly softer in Q2 FY26 due to higher finance costs. Return on Equity (ROE) was 16.26% in FY25, while Return on Capital Employed (ROCE) stood at 23.10% for the same period.

EBITDA Margin

EBITDA margin for Q2 FY26 was 12.65%, a marginal dip of 14 bps YoY from 12.79%. However, H1 FY26 EBITDA margin improved to 13.33% from 12.45% (up 88 bps YoY), driven by a higher contribution from the O&M segment and execution efficiency.

Capital Expenditure

The company is undergoing continuous capex for its MDO projects (SAIL and CCL mines). While specific total INR Cr for FY26 is not stated, MDO projects are expected to entail significant investment throughout their concession periods to reach peak rated capacity.

Credit Rating & Borrowing

The company holds a CARE A+; Stable rating for long-term bank facilities (INR 738.48 Cr) and CARE A1 for short-term facilities (INR 80 Cr). Finance costs increased to INR 28.4 Cr in Q2 FY26 from INR 18.92 Cr in Q2 FY25, a 50% increase impacting net profitability.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include steel, cement, and structural components for EPC and mechanical works. Material consumed in Q2 FY26 was INR 222.51 Cr, representing 18% of total revenue.

Import Sources

Not disclosed in available documents; however, sourcing is primarily domestic for Indian infrastructure projects.

Key Suppliers

Not disclosed in available documents, though the company works closely with BHEL, Adani Power, and NTPC for project execution.

Capacity Expansion

MDO business is expanding to reach Peak Rated Capacity (PRC) of 5 million metric tons per annum for the CCL mine by FY28 and reaching PRC for the SAIL mine by FY27. Total order book capacity stands at INR 56,000 Cr+.

Raw Material Costs

Material consumption costs were INR 222.51 Cr in Q2 FY26, up 31.7% from INR 168.97 Cr in Q2 FY25. Procurement is managed through project-specific vendor contracts to mitigate price volatility.

Manufacturing Efficiency

The company targets a 40% annual conversion/execution rate of its opening order book. Execution in the mechanical segment spiked to INR 435 Cr in Q2 FY26 due to accelerated government directives for FGD projects.

📈 Strategic Growth

Expected Growth Rate

25%

Growth Strategy

Growth will be achieved through the ramp-up of the MDO business (targeting INR 2,000 Cr peak revenue), execution of the INR 56,000 Cr+ order book, and expansion into the steel and railway sectors. The company is also capitalizing on the FGD (Flue Gas Desulphurisation) directive for thermal plants.

Products & Services

Erection, Testing and Commissioning (ETC) of power plants, Operations & Maintenance (O&M) services, Civil works for railways and water projects, and Mine Developer and Operator (MDO) services.

Brand Portfolio

Power Mech Projects Limited.

New Products/Services

Expansion into the steel sector and increased focus on FGD projects. MDO revenue from the KBP mine is expected to begin contributing from Q3 FY26.

Market Expansion

Targeting a revenue of INR 6,500 Cr for FY26. Exploring opportunities in the steel sector and expanding the O&M portfolio with long-tenure annuity contracts like the SJVN 2x660 MW project.

Market Share & Ranking

Not disclosed in available documents, but recognized as a market leader in power plant ETC and O&M services.

Strategic Alliances

Strategic execution partner within the Adani ecosystem; MDO contracts with SAIL and CCL (Central Coalfields Limited).

🌍 External Factors

Industry Trends

The industry is shifting toward renewable energy (228 GW non-fossil capacity as of 2025), but thermal power remains critical with new capacity additions planned. O&M demand is rising due to aging infrastructure assets.

Competitive Landscape

Competes with other diversified EPC players in civil, water, and power sectors. Key advantage is the specialized niche in power O&M and MDO.

Competitive Moat

Durable advantages include a 25-year track record, a massive INR 56,000 Cr order book (4.47x book-to-bill ratio), and deep integration into the Adani and BHEL ecosystems. These are sustainable due to high entry barriers in complex power EPC work.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and power sector regulations. The FGD directive is a major driver for the current order book.

Consumer Behavior

Not applicable as the company is a B2B/B2G service provider.

Geopolitical Risks

International operations are exposed to political instability and currency fluctuations in foreign countries.

⚖️ Regulatory & Governance

Industry Regulations

Strict government regulations in environmental and safety areas can slow project execution. Mining operations are subject to specific coal mining plans and environmental clearances.

Environmental Compliance

FGD (Flue Gas Desulphurisation) projects are driven by environmental compliance norms for thermal power plants to reduce emissions.

Taxation Policy Impact

Effective tax costs impacted PAT in FY26. The company noted a marginal reduction in ROE to 3.37% partly due to higher tax outlays.

⚠️ Risk Analysis

Key Uncertainties

Execution risk in the MDO segment as a new entrant; potential for higher-than-envisaged support to MDO SPVs impacting consolidated liquidity.

Geographic Concentration Risk

Significant concentration in India, with specific project clusters in mining regions (CCL/SAIL mines) and power hubs.

Third Party Dependencies

High dependency on government-linked entities (NTPC, SAIL, CCL) and large private developers (Adani Group) for order inflows.

Technology Obsolescence Risk

Risk of shift away from coal-based power; mitigated by diversifying into renewables, desalination, and infrastructure (railways/metro).

Credit & Counterparty Risk

Receivables quality is generally strong due to high-quality counterparties like PSU and large corporate clients, though water division receivables are currently delayed.