DEEDEV - DEE DEVELOPMENT ENGINEERS LIMITED Share Price

Management's outlook for Dee Development Engineers Limited emphasizes a solid operational trajectory and strong demand visibility for their core business. Key highlights from the management include:

1. Core Business Performance: For the first nine months of FY26, core business EBITDA reached Rs. 129.8 crore, signifying a year-on-year growth of 175.5%. This growth reflects enhanced execution and improved capacity utilization.

2. Revenue Growth: In Q3 FY26, revenue from operations stood at Rs. 286.7 crore, marking a 77% year-on-year increase. For the nine months ending December 2025, total revenue amounted to Rs. 780.4 crore, a 44.3% growth compared to the previous year.

3. EBITDA Margins: The operating EBITDA for Q3 was Rs. 43.4 crore, translating to an EBITDA margin of 15.2%, up from 3.5% in the same quarter last year. For the nine months, the operating EBITDA margin improved to 15.8%, up from 11.1% year-on-year.

4. Future Demand and CAPEX: Management is optimistic about demand from the power sector, oil and gas, and process industries, supported by a healthy order pipeline. FY27 capital expenditures are expected to grow by approximately 11% to 12% as per the union budget, facilitating infrastructure and industrial growth.

5. Facility Utilization: The newly operational Anjar facility is contributing positively, with a seamless pipe plant nearing commissioning at a CAPEX of Rs. 90 crore, expected to generate peak annual revenue of around Rs. 450 crore with an IRR of 30%-35%.

6. Profitability Guidance: Management anticipates maintaining EBITDA margins in the range of 18% to 20% in the coming fiscal year, supported by ongoing CAPEX completion and operational improvements.

Overall, the company is positioned for profitable growth, aiming for strong cash generation and reduced debt levels, laying a solid foundation for sustainable long-term value creation.

Q&A Section from Earnings Transcript

1. Kamlesh Bagmar: "What is the impact of the EBITDA loss from the power business due to tariff revision?"

   Krishan Lalit Bansal: The loss primarily results from a significant drop in the operational rate from Rs. 8.57 to Rs. 3.5 per unit. This change has led to a monthly revenue loss of about Rs. 2.5 crore, translating into an overall impact of approximately Rs. 14.3 crore on our EBITDA. This loss directly affects our profitability since all our other expenses continue.

2. Kamlesh Bagmar: "Considering the core business margins, do we include the Labor Code impact in EBITDA?"

   Brham Yadav: Yes, the Operating EBITDA of Rs. 45.8 crore includes the Labor Code impact of Rs. 4.2 crore. If we exclude this, the core operating EBITDA would actually be Rs. 49 crore. So, this will make comparisons more meaningful, and we acknowledge the need to clarify this in our disclosures.

3. Kamlesh Bagmar: "What is your margin guidance for FY'27?"

   Krishan Lalit Bansal: We expect core business margins to range between 18% to 20%. Although we've faced setbacks in our power segment, we are on track to achieve this guidance with improved execution and upcoming changes in our operational setup.

4. Kamlesh Bagmar: "What size of orders is the company seeing this quarter?"

   Krishan Lalit Bansal: We are well on track to secure several orders, with estimated sizes between Rs. 300 to 400 crore. Many bids have been won, and we anticipate final confirmations soon.

5. Utkarsh Chanana: "Why is the tax rate so low this quarter, and what should we expect for future estimates?"

   Brham Yadav: We experienced a lower tax charge due to deferred tax impacts. For future projections, a normalized tax rate would be around 25.17% including cess and surcharges.

6. Daksh: "Can you clarify the EBITDA neutrality of the pellet plant going forward?"

   Krishan Lalit Bansal: Yes, the pellet plant is expected to be EBITDA neutral upon commissioning. We may begin sales in March, with full capacity operations operational by April, alleviating losses from the power division.

7. Prisha Shah: "What operational efficiencies support the 3x revenue growth target over the next few years?"

   Krishan Lalit Bansal: Our Anjar expansion, coupled with lean manufacturing principles, will drive significant revenue growth and operational efficiencies, leading to higher asset turns and improved margins.

8. Ripunjay Aggarwal: "What is the reasoning behind the inventory levels compared to sales and order books?"

   Krishan Lalit Bansal: As a project-driven company, we must hold inventory based on current orders, which often involves custom-made products. Though this results in higher inventory levels, it's necessary to meet project specifications efficiently.

9. Ram Modi: "What are the prospects for your power plants given the substantial reported losses?"

   Krishan Lalit Bansal: We expect improvements from tariff negotiations in our power plants, aiming to move towards cash-neutral operations. We are also transitioning to biomass pellet production, which will curtail losses moving forward.

10. Sanket Thakkar: "How do you plan to meet additional working capital needs as your order book grows?"

    Krishan Lalit Bansal: We anticipate funding through improved cash flows and do not foresee the need for new debt if order increases happen progressively. This should maintain liquidity and support growth objectives.

These responses encompass significant insights shared during the earnings call, highlighting both current challenges and future strategic directions.