PATELENG - Patel Engineering Ltd Share Price

Management provided an optimistic outlook for Patel Engineering Limited, projecting a strong growth trajectory driven by their recently expanded order book and ongoing government infrastructure initiatives. The company achieved a consolidated revenue of INR 1,233 crores for Q1 FY '26, representing a 12% increase year-over-year, with net profit rising significantly by 56% to INR 75 crores.

Key forward-looking points include the receipt of Letters of Award (LoAs) for several major projects, totaling approximately INR 2,250 crores. Notably, this includes the 240-MW HEO hydropower project valued at INR 711 crores, the INR 1,319 crores Kondhane Dam project, and the Nira Deoghar irrigation project valued at around INR 200 crores. The current order book stands at INR 16,285 crores (excluding the Teesta V project valued at INR 240 crores), with expectations to augment it to between INR 20,000 and INR 25,000 crores by year-end.

Management highlighted the strong order pipeline, indicating that around INR 40,000 to INR 50,000 crores in projects are anticipated to be tendered, with 61% of their order book focusing on hydropower projects. They have consistent plans to reduce debt by INR 150 crores to 200 crores within the fiscal year, having already achieved a reduction of INR 75 crores in Q1.

For FY '26, the company aims to maintain an EBITDA margin of 13% to 14%, while expressing confidence in surpassing their previous revenue guidance of INR 5,000 crores. They also anticipate a robust continuation of growth in line with governmental support for the infrastructure sector. Overall, management maintains a confident stance on increasing execution capability and optimizing financial performance.

Questions and Answers from the Q&A Section of Patel Engineering Limited's Q1 FY '26 Earnings Conference Call:

Question 1:

Sucrit Patil: As Patel Engineering looks to grow over the next few years, especially with its presence in hydro, what will be your plan of action for expanding into newer infrastructure segments?

Kavita Shirvaikar: Our current order book stands at around INR16,500 crores. We plan to maintain our focus on hydro, given the government's emphasis due to recent treaty changes. We aim to grow our order book to around INR25,000 crores by year-end, targeting an additional INR8,000 to INR10,000 crores. Our financial position is stronger due to reduced debt, and we have sufficient bank guarantee lines for projects. We are optimistic about achieving our goals.

Question 2:

Dhananjay Mishra: Given this quarter's growth of 12%, any change in guidance, especially since last year you indicated 5% for the full year?

Kavita Shirvaikar: We initially targeted INR5,000 crores for the year, and we've achieved INR1,240 crores already this quarter. We're confident in meeting our target. As for margins, while they are expected to vary quarterly, we maintain our guidance that EBITDA margin will stay within the 13% to 14% range.

Question 3:

Chirag Shah: With the current order book being lower than previously, do you foresee a ramp-up?

Kavita Shirvaikar: Yes, after the recent changes in the Indus Water Treaty, there is renewed government focus on hydropower. We expect to submit bids for INR40,000 to INR50,000 crores worth of projects in this fiscal year. We anticipate major projects will come up in the next two quarters.

Question 4:

Viraj Mahadevia: With the recent debt paid down, can we assume that by FY '27, the term loan will be gone?

Rahul Agarwal: We target a reduction of INR150 crores to INR200 crores in debt this year, thus greatly reducing our term debt by next fiscal year. We expect significant cash inflows from claims and monetization efforts as well.

Question 5:

Amnish: Regarding the PSP projects, what is the proportion in your order book and future bidding plans?

Rahul Agarwal: Currently, we have one PSP project in hand, but with around 10% to 15% of our bidding pipeline focused on PSP. We are actively looking to expand this segment in our order book.

Question 6:

Janish Shah: What is your target for order inflow and improvements in your financials over the next few years?

Rahul Agarwal: Our internal goal is to double revenue in the next 4"“5 years. We believe an improvement in efficiency and project execution will enhance our return ratios. We expect overall improvements in ROE as current claims are resolved.

Please note, the answers are condensed and align closely with the 500-character limit constraint.