💰 Financial Performance

Revenue Growth by Segment

Revenue from operations grew 21.73% YoY from INR 7,693.07 Lacs in FY24 to INR 9,365.04 Lacs in FY25. Segmental contribution in FY25 was dominated by Water Supply Schemes (WSS) at 63.61% (INR 5,957.41 Lacs), followed by Under Ground Sewerage Systems (UGSS) at 26.04% (INR 2,439.44 Lacs), and Sewage Treatment Plants (STP) at 2.95% (INR 276.30 Lacs).

Geographic Revenue Split

Revenue is currently concentrated 100% in Tamil Nadu, with major projects completed in Chennai, Namakkal, and Pallavaram. The company plans to expand into other Indian states to reduce geographic concentration risk.

Profitability Margins

Gross margin for FY25 was approximately 31.6% (Revenue of INR 9,365.04 Lacs minus direct contract expenses and materials of INR 6,401.51 Lacs). Net Profit After Tax (PAT) margin improved significantly from 5.89% in FY24 to 9.64% in FY25, with PAT growing 100.2% YoY to INR 913.91 Lacs.

EBITDA Margin

EBITDA margin improved from 15.79% in FY24 to 20.84% in FY25. Core profitability increased by 61.6% YoY, reaching INR 1,976.19 Lacs in FY25 compared to INR 1,222.71 Lacs in FY24.

Capital Expenditure

Property, Plant, and Equipment (PPE) stood at INR 4.32 Cr as of HY26, up from INR 4.10 Cr in FY25. The company intends to utilize IPO proceeds to finance long-term working capital for larger infrastructure projects.

Credit Rating & Borrowing

Not disclosed in available documents. However, finance costs were INR 6.79 Cr in FY25 on total borrowings of INR 36.17 Cr, implying an average borrowing cost of approximately 18.8%.

⚙️ Operational Drivers

Raw Materials

Specific materials include DI Transmission mains (pipes), consumables, and spare parts. Cost of materials consumed represented 54.6% of total revenue in FY25 (INR 5,115.16 Lacs).

Key Suppliers

Not disclosed in available documents, though the company negotiates favorable payment terms with suppliers to manage working capital.

Capacity Expansion

The company has executed projects ranging from 12.5 MLD to 60 MLD. It aims to bid for higher-capacity projects (>50 MLD) to leverage economies of scale and reduce competition.

Raw Material Costs

Raw material costs were INR 5,115.16 Lacs in FY25, representing 54.6% of revenue. This was a 33.2% increase from FY24's INR 3,839.45 Lacs, slightly outpacing revenue growth.

Manufacturing Efficiency

The company has completed 50+ projects since inception and currently manages 14 ongoing projects with an order book value of INR 30,809.45 Lacs.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

The company will achieve growth by bidding for larger-scale projects (>50 MLD) which offer better margins and less competition, expanding geographically beyond Tamil Nadu, and capitalizing on government initiatives like Jal Jeevan Mission and AMRUT 2.0.

Products & Services

Water Supply Schemes (WSS), Under Ground Sewerage Systems (UGSS), Sewage Treatment Plants (STP), and Water Treatment Plants (WTP).

Brand Portfolio

Sattva Engineering Construction Limited.

New Products/Services

Focusing on high-capacity STPs and WTPs on an EPC basis, with expected revenue contribution from long-term Operation and Maintenance (O&M) services (typically 10-year contracts).

Market Expansion

Gradual expansion into other Indian states beyond the current Tamil Nadu base to diversify the revenue stream.

Strategic Alliances

Pursuing larger projects both independently and through partnerships/JVs with other industry players to meet pre-qualification criteria.

🌍 External Factors

Industry Trends

The Indian water EPC market is growing due to stringent effluent treatment regulations and government missions (JJM, AMRUT). The industry is shifting toward IoT-based management and high-capacity treatment plants.

Competitive Landscape

High competition in small-scale projects; significantly lower competition in high-capacity (>50 MLD) projects where technical track record is required.

Competitive Moat

The moat is built on 20 years of execution experience and technical pre-qualification for large MLD projects, which acts as a barrier to entry for smaller players. Sustainability is driven by long-term O&M contracts providing recurring revenue.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and policy initiatives like the National Rural Drinking Water Programme.

Consumer Behavior

Not applicable as the business model is primarily B2G (Business to Government).

⚖️ Regulatory & Governance

Industry Regulations

Compliance with stringent effluent treatment standards and government manufacturing standards for water infrastructure.

Environmental Compliance

ISO 14001:2015 certified for environmental management; SCADA systems are connected to pollution control boards for real-time compliance monitoring.

Taxation Policy Impact

Effective tax rate for FY25 was approximately 27.6% (Tax expense of INR 348.08 Lacs on PBT of INR 1,261.34 Lacs).

⚠️ Risk Analysis

Key Uncertainties

Concentration of resources in a single geographic region (Tamil Nadu) and potential project delays due to local factors.

Geographic Concentration Risk

100% of current projects and revenue are concentrated in Tamil Nadu.

Third Party Dependencies

Dependency on subcontractors for site operations and project execution coordination.

Technology Obsolescence Risk

Risk is mitigated by the adoption of SCADA and SAP B1 ERP systems for digital transformation.

Credit & Counterparty Risk

Receivables are primarily from government bodies; trade receivables stood at INR 3,235.26 Lacs in FY25 (34.5% of revenue).