WPIL - WPIL Ltd Share Price

Management expressed a positive outlook for WPIL Limited, bolstered by strong financial performance in Q2 and H1 FY26. Consolidated revenue from operations reached INR 426 crores for the quarter and INR 805 crores for the first half, reflecting growth. EBITDA was INR 80 crores with margins at 18.87%, while profit after tax stood at INR 52 crores, translating to a PAT margin of 12.16%. The robust order book soared to a record INR 422 crores, leading to expectations of sustained growth throughout the year.

Key forward-looking points include:

1. International Revenues: These surged to INR 456 crores in H1 FY26, compared to INR 288 crores the previous year, with margins expected to normalize through the year. International order books remain strong, with ongoing projects in various sectors including oil and gas.

2. Domestic Project Business: The company anticipates an uptick in the domestic project segment as they focus on completing existing projects, especially in the Jal Jeevan Mission (JJM). Management expects projects to be commissioned by March 2026, pending a resolution to funding issues from the Center and State.

3. Operational Improvements: The domestic product division saw a revenue increase to INR 151 crores in H1 FY26 from INR 138 crores in H1 FY25, with growth expected to continue. O&M revenue from projects, anticipated at INR 70-100 crores, should begin to flow in FY26 as projects transition into operational phases.

4. Strategic Acquisitions: Management is exploring larger inorganic growth opportunities, given a healthy cash balance, hinting at potential future acquisitions to enhance market presence, particularly in underpenetrated regions like the US.

5. Earnings Stability: Despite the challenges faced in project execution, management aims to match last year's profitability numbers by leveraging improved execution rates and operational efficiencies.

Overall, the management remains optimistic about capitalizing on growth opportunities and enhancing operational efficiencies across domestic and international sectors.

Major Questions and Answers from the Q&A Section:

Question 1:

"How has the domestic project front shaped up, particularly regarding JJM, and what is the execution outlook for H2 FY26?"

Answer: I believe our project business is gaining control. Most JJM projects are over 60% complete, nearing commissioning. We're expecting positive progress once funding issues between the Centre and State are resolved. Currently, our exposure in the JJM is about INR 1,100 crores, primarily in West Bengal and MP. We anticipate cash flow improvements as funds are released, allowing us to activate remaining project completions and enhance our bid pipeline.

Question 2:

"What is the order book exposure towards the JJM project, especially in UP, and how should we view execution for H2?"

Answer: We don't have any projects in UP; our focus is primarily in WB and MP. The exposure of INR 1,100 crores is nearing completion. We've effectively reduced our financial liabilities, and with funding clearing, we expect to engage more in invoicing and project activities in the second half, depending on policy movement.

Question 3:

"Could you provide insight on the CAPEX plans for this year?"

Answer: We are not planning significant CAPEX as our existing facilities have sufficient capacity to handle increased demand. Our focus is on maintaining operational efficiency while gearing up for the anticipated surge in product demand without any substantial new investments.

Question 4:

"Can you elaborate on the opportunities in the river linking projects and how we position ourselves?"

Answer: We are strategically positioned for river linking and irrigation projects, which are expected to accelerate in FY26. Our current focus remains on product supply for these initiatives, although the pace has been slower than anticipated.

Question 5:

"How much revenue should we expect from O&M in FY26 and FY27?"

Answer: We have an order backlog of approximately INR 600 crores in O&M, with revenues expected to grow as projects transition into this phase. We project around INR 70 to 100 crores in O&M revenue by the end of FY27.

Question 6:

"Given cash reserves, is the company pursuing any inorganic growth opportunities?"

Answer: Yes, we are exploring larger acquisitions and looking at various inorganic opportunities that could complement our existing capabilities and expand our market presence.

Question 7:

"What expectations do you have for the margins moving forward?"

Answer: I expect our EBITDA margins will sustain between 16% to 20%. The recent quarter's blip was due to acquisitions; however, margins are recovering and should continue to normalize moving forward.

Question 8:

"Are you seeing inquiries from sectors like naval and power, and what order inflow can be anticipated?"

Answer: Yes, we are witnessing strong inquiries across various segments. The naval sector, in particular, is expanding with promising prospects. We anticipate enhanced order inflow, especially in the second half of the fiscal year.