PATELENG - Patel Engineering Ltd Share Price

During the Q4 FY'26 earnings call for Patel Engineering Limited, management provided an optimistic outlook for the company and discussed key forward-looking points.

Key highlights include securing new orders worth approximately INR 4,400 crores across various segments including hydropower, urban infrastructure, and irrigation. Notable projects include the INR 1,300 crore Kondhane Dam project, INR 700 crore HEO hydropower project from NEEPCO, and the INR 900 crore for a package of the Renuka Ji Dam project. As of March 31, 2026, the order book stood at INR 15,119 crores, with a diversified composition: hydropower (63%), irrigation (16%), tunnelling (5%), urban infrastructure (10%), and others (6%).

For FY'27, management is optimistic about revenue growth, projecting a 10% increase from FY'26, with target new order inflows of INR 8,000 crores. The company has already been declared L1 for orders worth INR 1,600 crore, indicating a positive revenue momentum heading into the new financial year.

Management further emphasized pipeline strength, with INR 6,000 crore in tenders currently under evaluation and an identified INR 20,000 crore in immediate opportunities, alongside a potential INR 40,000 crore worth of projects expected to come up for bidding in the next year.

Additionally, they highlighted capital expenditure plans in the Union Budget 2026-27 and government focus on high-speed rail corridors and urban metro projects, which are expected to drive future opportunities. The management expects the revenue growth momentum to strengthen from the second half of FY'27 onwards as a result of these developments.

Question 1: Sir, what was the market share that you had in the hydropower order wins that you have which is INR 4,400 minus INR 800, so about INR 3,600 crores of inflows. So, what was the market share?

Answer: Our market share in hydropower was around 25-30% if we exclude one large project worth approximately INR 16,000-17,000 crores. Including that project, it drops to about 12-13%. This indicates significant competition, as a new player won the bid for that large project at a much lower value.

Question 2: What kind of inflows are expected this year? What kind of order finalizations are expected this year? And you had given revenue guidance last year about not growing, which happened the same. How do you see FY'27 panning out?

Answer: For FY'27, we expect around 10% revenue growth. We have already started positively with L1 status on an INR 1,600 crore job and anticipate securing around INR 8,000 crore in new orders this year.

Question 3: On the exceptional items, is there anything remaining to be written off or is this the end of it?

Answer: We have no remaining items to write off. Last year included a settlement under Vivad Se Vishwas, plus some provisions for our hydro subsidiary investments. This quarter, we wrote off certain investments and made provisions for them, ensuring that essentially everything is accounted for.

Question 4: What is driving the high free cash flow of INR 450 crores in FY'26 and will it continue going forward?

Answer: Our high free cash flow is a result of efficient project management and non-core asset monetization. We believe this strong cash flow generation will continue, providing us with ample opportunity for growth and debt reduction.

Question 5: Can you provide an update on the promoter pledge? Has the management any percentage in mind for reduction?

Answer: After our March results, we plan to contact lenders regarding the promoter pledge. The aim is to reduce the pledge by approximately 15-20%, but we will provide a clearer timeline after our upcoming discussions.

Question 6: Regarding debt and interest costs, how do you foresee that changing in FY'27?

Answer: We expect our interest cost to remain stable and not drastically increase. We are focused on debt repayment through our generated cash flow and planned project advancements, maintaining our interest costs between 11% to 12%.

Question 7: What about upcoming large projects in Arunachal related to INR 20,000 crores?

Answer: Key projects like Kamala and Lower Subansiri in Arunachal are expected to open for bidding in the next six months. We are preparing to strategically position ourselves for these opportunities.

Question 8: What is the expected timeline and recovery outlook for the balance of the arbitration awards?

Answer: Out of the INR 700 crores in arbitration, more than INR 400 crores is currently with the high court, and the expected recovery timeline can take around five to six years. However, we actively look for earlier cash flow through withdrawals against bank guarantees.