Power Mech Projects Limited (POWERMECH) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Power Mech Projects Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [ Rahul Kundnani ] from Nirmal Bang Equities. Thank you, and over to you, sir.

Thank you, Ikra. Good morning. On behalf of Nirmal Bang Institutional Equities, I welcome you all to the 3Q FY '26 Earnings Call of Power Mech. The management is represented by Mr. S. Kodandaramaiah, Director, Non--board; Mr. N. Nani Arvind, CFO. Now I will hand over to the management for their opening remarks, which will be followed by the Q&A.

Good morning, everyone. I'm Aravind, CFO of the company. I have with me Mr. S.K. Ramaiah, Director of Business Development. I would like to extend a warm welcome to all of you joining us the quarter 3 and 9 months financial year '26 earnings call today. I take this opportunity to welcome you all to our Q3 FY '26 earnings call. As we reflect on our performance during the third quarter of FY '26, I am pleased to report that the company has continued to execute on its growth plans with strong results across all key segments. This quarter has demonstrated the consistency and scalability of our business model with our core segments contributing to the positive momentum. For quarter 3 financial year '26, the company recorded total revenue of INR 1,433 crores, reflecting 6% growth compared to the INR 1,347 crores in Q3 FY '25. This increase was driven by sustained execution across power, O&M and emerging segments such as mining and civil works. The O&M business, in particular, performed well, supported by new order inflows and strong execution of ongoing contracts. EBITDA for the quarter was INR 173 crores, up 8% year--on--year with EBITDA margins at 12.08%. The margin remained stable compared to the previous quarter with a slight dip due to provisions created for compliance with the new labor code. The underlying operational performance, however, remains strong. Profit after tax for the quarter was INR 100 crores, marking a 15% increase from INR 87 crores in quarter 3 FY '25 with PAT margins improving to 7.02% from 6.47% in quarter 3 FY '25. For the 9 months ended December '25, the company achieved a total revenue of INR 3,987 crores, reflecting a 17% increase compared to the INR 3,409 crores in the same period last year. The strong 9 months performance was largely driven by the ramp--up in our key verticals, particularly in O&M and industrial power construction projects. EBITDA for the 9 months period was INR 513 crores, a 23% increase over the previous year, with EBITDA margins improving to 12.88% from 12.2%. PAT for 9 months was INR 258 crores, a 19% increase over INR 218 crores in the same period last year. The geographical mix for the quarter was 95% domestic and 5% international, while power sector contribution remained at 70% with non--power sector accounting for the remaining 30%. And revenue mix for 9 months -- the geographical mix for 9 months was 95% domestic and 5% international, while power sector contribution remained at 67% with non--power sector accounting for the remaining 33%. From an order inflow perspective, order wins during the year--to--date have reached about INR 6,761 crores. We are progressing towards achieving INR 10,000 crore order intake in FY '26. During the quarter, we secured several large and strategic orders across EPC, O&M and new energy infrastructure. A key award includes a large BOP EPC package for the 800--megawatt Singareni [indiscernible] projects from BHEL, which expands our scope from execution packages to integrated EPC delivery and BOP systems. We also received a grid--scale battery energy storage system project under build--to--own operate model from state utility, which marks our entry into the utility scale storage assets with long--term contracted revenue structure. The total order backlog, including MDO projects is about INR 56,800 crores, INR 17,300 crores, excluding MDO orders. The executable order book provides multiyear revenue visibility across power, civil, EPC and O&M segments. The order pipeline remains active across thermal, balance of plant, civil infrastructure, railways and energy transition projects. So, the company's operating cash flow has improved, reducing from minus INR 253 crores in 9 months FY '25 to INR 113 crores in 9 months FY '26, primarily due to realization of receivables during the period. This is further expected to improve operating cash flow and reduce reliance on working capital limits. Gross and net debt levels remain well controlled despite delays in certification of order bills and realization of receivables. As on 31st December 2025, the gross debt was around INR 833 crores and the net debt was INR 233 crores. The average debt equity ratio as of the same date was 0.35x. In summary, we are pleased with the progress we have made during Q3 and the first 9 months of FY '26. The company's diversified order book, strong execution across segments and strategic focus on high--value projects continue to position us for sustained growth. With a solid pipeline of orders and ongoing project execution, we are confident in achieving our full year targets and driving long--term value for our stakeholders. With this, I now request Mr. [indiscernible] to update on the key business development initiatives and future outlook.

Thanks, Aravind, for your initial numbers and all the [indiscernible] activities of the company. And I also thank our investor community here. And to carry forward what Aravind has said, particularly on the business side, I think we continue to drive on the investment -- bullish investment profile in the country across [indiscernible] sectors. And as a company which is strongly embedded in the power sector business, we continue to drive [indiscernible] and then having diversified to infra and man power sector and [indiscernible] also there is a continuous opportunity available in various sectors. And that is how the order booking has been consistent with our expectation. And overall increase in the order backlog has gone up by 10% from INR 14, 387 crores to end of the quarter to INR 15,764 crores. And the key aspect of the driving of this increase in the order backlog is due to the order [ key ] order we have received for the first time a comprehensive EPC order, that too in a native state in Telangana, which drives the business better for us because of the customer interaction and all [indiscernible] and all. And that has helped the company to grow in many sectors, that INR 2,550 crores. And balance about INR 300 crores orders are mainly in the [indiscernible] domestic and international market. The mechanical side of the business has grown from -- the backlog has increased from INR 2,303 crores to INR 2,959 crores, an increase of 28.3%. Civil has grown up from INR 8,472 crores to INR 9,102 crores, a growth of 7.5%. And then O&M, the last year order backlog was INR [indiscernible] crores. Now it is INR 2,522 crores, a small dip of 8.2%. And electrical also has seen an upside mainly because of the electrical portion of the business we got in the EPC that contributes about INR 280 crores, which has increased the electrical backlog to 18.3%. And the domestic business continues to drive the market because of the opportunities and international, we are focusing mainly on the O&M and short--term contracts with high margins. That is in line with the company's goal of improving our margins. And these are the [indiscernible] numbers as far as the business profile is concerned. Now for this year's target of INR 10,000 crores what we discussed with the team [indiscernible] and what we have got opportunities round INR 5,162 crores, mainly driven by Adani, they are investing continuously and they are taking the decisions in ordering. And then O&M, there is a strong profile of opportunities with Vedanta Group. And these 2 groups should enable us to reach the targets reasonably. And what has been recently a great breakthrough has been in the business of energy storage. In fact, energy storage is going to drive the business substantially with the first breakthrough of what we received for a 250--megawatt energy storage [indiscernible] investment [indiscernible]. That gives a [indiscernible] availability of 10,000 megawatt hours. In fact, energy storage, both in the form of battery storage and the [ pumped ] storage are going to be the future growth engines for a company like us, and it brings a synergy into the system based on our expertise in execution and also engineering expertise we are gaining it and these energy stores both in the battery storage and the pumper storage is required to balance the power grid stability, and we will be contributing in a little way our contribution to that. This project [indiscernible] with a 1,000 megawatt hour [indiscernible] and the expected revenue of nearly INR 150 crores per year over 15 years, that will give overall revenue of INR [ 15, 650 ] crores. And involves a CapEx of about INR 800 crores and that we have got a consortium of partners led by Power Mech, 51%. And this one has a short duration project, 18 months and facilities are available, land is not a problem. There is a proper contract with West Bengal Power Development Corporation, and then the agreement is in place and we have to get going on this project. And the battery is the main part of this investment, and the balance of systems is mainly the electrical systems and balancing facilities and all. And that is a key breakthrough. And then Singareni as we said, INR 2,550 crores. It has got the 3 components of the business. And of course, engineering integration has to be done. There are a lot of outsourcing and integration of in--house expertise in construction and engineering [indiscernible] project managements we have to take it up. And out of INR 2,550 crores, the breakup is mechanically is INR 1,550 crores. Civil is about INR 720 crores, electrical is INR 280 crores. Therefore, that drives the business in all these segments and the schedule is about 38 months and there is a fair payment terms available from BHEL. This has been taken from BHEL and with a 10% advance and then [indiscernible] 5% only. And now we are aggressively driving that business. And we have taken up on the board some of the experts in the balance of [indiscernible] business in the country and they are leading the team. And already a lot of engineering work has been taken, October is the [indiscernible] date. And in fact, out of 38 months schedule, we would like to do it in a shorter cycle time based on the drive and the inputs we can drive it. Already a lot of initial action has been taken, engineering and also some ordering has been done in the key packages in coal handling, ash handling and cranes. And most of the balance ordering should be completed by April, May, key major orders. That should help us [indiscernible] have already taken up. Therefore, this is the main aspect of the 2 businesses we have recently taken. And now coming back to the major business segments, power sector continues to drive the business. And as we have seen, almost 56% of the business is the power sector driven and now looking at the investments coming in the way, Adani Group is a major player in terms of the capacity addition and ordering. And if you look at the last 2 years and plus where the continuous flow of investments are coming up and then the key players like BHEL [indiscernible] getting the order, they are major players in this segment are the Adani, which has got a profile of 24,520 megawatts of ordering and substantial ordering they have done. And then NTPC is about 12,380 megawatts. Other key players are Damodar Valley Corporation and then [indiscernible], then Singareni recently we have taken the BOP job and then various electricity boards, altogether, the capacity order which has been done in the last 2 years, it has gone up to 54,740 megawatts. And these 2 players are the main beneficiaries in terms of the EPC and the ordering aspects and both is of interest to us. Only the BHEL with a total ordering of about 37,140 megawatts, they have got nearly 2 lakh crores of orders over the last 2 -- plus 2 years. And L&T has come back into the play as we have brought out earlier also, apart from the Nabinagar and Gadarwara where they have taken from the NTPC 2 key [indiscernible] plant orders, Adani has diversified the ordering apart from BHEL to L&T also in 4 projects in Assam, [ Corbo ] and the new projects, which have to be identified. And that is helping the L&T profile for about 12,800 megawatts with an order booking of INR 42,523 crores. And therefore, these 2 players are going to play a major role and BHEL is a key customer for us and our excellent relationship from the point of view of performance, consistent ordering on us, we continue to expect orders from them. Adani has been an important part of our business growth and substantial ordering also is there. And the current status is that as on today out of this 49,940 aspect of [indiscernible] megawattage, nearly about 12,900 megawatt has been completed by BHEL and balance tendering is of 24,000 megawatts and then tendering balance by Adani is about 18,400 megawatt. And that transfers [indiscernible] there is a plus INR 60,000 crores in various [indiscernible] that is in the contract in the terms of civil, structural, mechanical and then associated [indiscernible]. And that should help us to continue the growth profile in the power sector business in next 2 to 3 years. Now one more aspect [indiscernible] addition of what is going to -- [indiscernible] is that these opportunities also drive the O&M which are expected 8,000 megawatts to 10,000 megawatts of commissioning every year. Of course, last 1 or 2 years, there has not been much of progress. This year, about plus 4,000 megawatts have been added to the grid. Even though the Central Electricity Authority has kept a target of 16,000 megawatts, there can be some shortfall. But our expectation is about 8,000 to 10,000 megawatts in average should be added. That should help us to get a O&M profile of roughly INR 10,000 crores in the next 5 to 7 years. That means apart from the existing O&M profile, these are the new ordering which will happen and that will increase our O&M presence in the market. Now the key sectors of this business as I told you, apart from the this one, there are opportunities in the infrastructure, railways, road. And then another aspect we are trying to look at is the mining and material side. NMDC [indiscernible] investment of -- for a 50 million tonne extra additional iron ore capacity. Then Steel Authority is having investment [indiscernible] of more than INR 1 lakh crores. And we have already started participating in these tenders, NMDC for their 2 mining projects out of the 5 tenders for about 30 million tonnes of capacity addition in the iron ore, in that 20 million tonnes tenders we are participating. And then the IISCO Burnpur part of the Steel Authority of India has got an investment of about INR 45,000 crores and therefore 2 jobs we at present we [indiscernible] for about INR 2,200 crores and there are other opportunities also expected. Therefore, mining side, steel side. And then O&M side, we continue to expect the opportunities, as I said, on the power sector itself, there will be INR 1,200 additional opportunities, crores every year apart from the renewal of the projects which will take place that should substantially increase the O&M profile. Then the organization is also quite geared up in terms of resource management, in terms of capacity building and then training of the people and then handling the higher market size of the O&M business. And we have the manpower strength has gone up based on the business requirements from 40,000 in the beginning of January '25 to by December '25 has reached about 48,000. And O&M continues to play a key role in terms of about 18,000 skilled engineers, supervisors, technicians and operators with very high skill base control room operation, field operation, field management. These aspects have been taken up. And the important thing of the O&M is that we are a leading player with a -- have reached a profile of about 75,000 megawatts. And recently, about 4,000--plus megawatts also the additional jobs we have taken from Vedanta Group that will add to the profile. And the key aspect in this is our consistent performance with reference to the availability guarantees, 90% to 95% auxiliary power capacity meeting the parameters and then special fuel consumption. These are the most important things for driving the higher margins for the owner. The better these parameters are maintained, better is the availability and also generation. And that is how the renewal of the O&M also comes [indiscernible] the O&M sector. Therefore, as the balance immediate opportunities, we are targeting about INR 4,500 crores to see that how much we can meet our target of INR 10,000 crores in the current year mainly from Adani, BHEL and possibly a few other [indiscernible] orders. Then continued investment -- I think recently, we have seen government of India is planning a capital investment of INR 12.5 lakh crores in infrastructure and other sector up from more than INR 10 lakh crores. And that should open up a lot more opportunities in the coming year also. And we continue to depend on these type of new investments from EPC players like BHEL and then customers like Adani and then all our valued customers in the power sector and also infrastructure, in railways also renewed investment is there, but the competition seems to be pretty high and same is the road sector. Therefore, that is based on what we would like to take it based on our capacity to handle it and also our interest in how much margin we should [indiscernible]. And then the metros are also going up. Therefore, company having diversified long back from the power sector to non--power sector with about 35%, 36% in the non--power sector, that growth remains consistent and we continue to drive on these new capacities and also opportunities, Thank you very much.

[Operator Instructions] The first question is from the line of Pritesh from Lucky Investments.

Just a couple of questions. One on this INR 17,000 crores of backlog, you always have a fairly strong backlog and addition of orders. How much of this is where the execution is slow and what are the challenges there? And if you look at your executions for the first 9 months vis--a--vis the accretion in backlog, the execution is slightly weaker. So maybe you want to call out some comments on these 2 areas, please?

Yes. Out of the INR 17,000 crores of order, so the execution challenges are not there. Mainly some of the new orders we received during the last year, there are delays in the starting of the project because of the excellent monsoons during the last Q2 and Q3. And some of the projects like Kaiga where extended monsoons and Mirzapur project where environment issues are there. So there are delays in starting the projects. And we expected [indiscernible] township project also expected some major revenue in Q2, but due to the initial delays in the starting of the projects impacted the projected revenue. Apart from there are no challenges, all the order book what existing INR 17,000 crore order book is executable order book. There is no long pending order book in this.

Does this still include the FGD order or this now the FGD order in the INR 17,000 crores?

We have removed this last financial year itself INR 4,260 crores of FGD order. Without FGD order only INR 936 crores of [indiscernible] project all is running in the FGD.

Okay. And on the new areas that you've taken that is balance of plant order or a BESS order or these new areas now, here what is the margin profile and have you compromised any margins?

So the BOP EPC is new line where we were planning to enter into to scale up our operations, to expand our scope of execution from a [ under--construction ] activity to the EPC delivery and BOP system. In BESS actually, Power Mech has been in forefront for India's energy growth story, and we do not want to miss the energy transition phase as well. So, we have found 100% subsidiary as PM Green for this. And this is a small attempt to see where the renewable segment fits into the Power Mech vision of sustained growth and margins. We are cautiously optimistic about this segment, and we will -- so we are -- investment of around 16% to 18% IRR we are anticipating on these projects on equity investments.

Ramaiah here. Regarding the Singareni, I think what we have to also look into is that the synergy the company brings about in the execution of a backward integration basis. As we said, we have strengthened with a very strong engineering team -- engineering and project management team. And more in--house value addition is substantial compared to other BOP players where they have to outsource everything, because of our capacity in different segments and site execution. Civil constitutes almost 25% of the total segment and then installation work services job. And then some of the other local sourcing, all the supply chain management, all we'll be able to do. And more importantly, there is a provision of advance which has a working capital management. And the retention is only 5%, which can translate into better cash flows. And then escalation provision also which compensates for any variation in the prices. Therefore -- and then the nearness of the site for better access and execution, therefore, the basic spend, as I said, is an in--house capability substantially in execution and outsourcing. And that should help us to see this project is done properly and also reasonable margins.

And sir, my last question is on the revenue side. So, what growth do you expect now on the full year number? And the MDO business, what is the profit now expected next year? Don't give us for this year, but next year, what is the profit expected out of MDO? And what is the revenue growth on the contracting side expected?

Revenue growth this year may be at 17% to 18%, we may try to touch 20% we are targeting 20%, but we touch at 17% to 18%. And the margins of MDO is concerned, the second mine KBP mines just started the revenue generation, and we touched INR 41 crores for 1.5 months of revenue in the Q4 -- Q3. And Q4, we are projecting around INR 100 crores from this KBP alone. And overall, we may touch around 15%, 16% during the current year. And next year, the production ramp up will happen in the KBP mining and our [indiscernible] will be ready by December. So only 1 quarter only we'll operate with full capacity. So, the ramp--up will happen from '28 onwards, the major ramp -- up in the margins. But next year, we may touch around 16% to 17% range of average EBITDA we can expect from the MDOs.

The next question is from the line of Mohit Kumar from ICICI Securities.

My first question on the revenue guidance, I think we had given a revenue guidance of INR 6,500 crores, if I'm not wrong. Are we on track to achieve that? Or is it -- are you guiding a lower number now?

Yes. Out of INR 6,500 crores, we projected almost INR 700 crores from the UP water division revenue. But in last quarter, we revised this guidance to INR 6,100 crores to INR 6,200 level. And now based on the till 9 months of growth trajectory of 17% growth, we may touch around INR 6,000 crores because Singareni now has also started billing. Now we are hoping now that top line may surge by another INR 100 crores from Singareni and we will -- and again, the mining also ramp--up happened. So we are expecting around INR 6,000 crores we may touch this year.

Understood. And what was the mining revenue for the last 9 months?

Sorry?

What was the mining revenue for the last 9 months? And how do you think it will shape up in FY '27 -- '28?.

Last -- this quarter, we touched almost INR 41 crores we [indiscernible] from KBP and INR 29 crores from [indiscernible] and expecting maybe by next quarter, INR 100 crores from KBP and INR 30 crores from [indiscernible]. So INR 130 crores -- we may touch around INR 250 crores to INR 260 crores this year overall.

And how do you think about F '27, '28 given the progress?

'27, we touch around INR 600 crores to INR 700 crores depends on the scale up of operation KBP and the likely uptake of client. And FY '28, we touch around INR 1,800 crores to INR 1,900 with [ escalation mandate ].

And if I remember correctly, I think there was some washery or something was, I think, pending for Tasra, right?

Yes. As per the timeline, we have to complete this by this December end. So, we are on the track now, all the activities at the washeries are undergoing under process. And so, we are hoping that by September, we are targeting to complete the washery. And by December, we'll be ready with our washery.

Understood. My last question is on the prospect list, especially for the coal EPC. Of course, there are a number of coal projects, which are -- which I think construction has started. Do you think that, compared to the fiscal when it started in April '25, are you seeing the prospect is getting bigger? And are we getting more confident for F '27 order inflow from this coal EPC/BOP?

Yes. I think BOP is going to be an opportunity. 3 more projects are expected because actually BHEL has got a lot of in capacities filled up. And they are also trying to see that outsourcing is a better option and with a very capable parties like Power Mech and all who are strong on execution because BHEL's problem is in execution. And then that is how they would like to balance it. We are expecting 3 more opportunities, maybe another -- maybe INR 7,500 crores to INR 10,000 crores of opportunities. But it is a question of call, we have to take it on that BOP. But what is expected is that in other sectors also, similar opportunities are expected to come in EPC and mining and mineral sector also. As I said about NMDC [indiscernible] basis and then the steel business also, it is there and then infrastructure. Therefore, this company [indiscernible] based on the [indiscernible] developed, we are quite confident a couple of projects we can handle it because of the in--house [indiscernible].

The private thermal EPC, do you think do we have a chance to take those opportunity?

Yes. That is -- again, it is a competition. That depends on how do we position ourselves based on our interest and also the margins we have to keep it. And more than that, the number of players or competition can also be less in the segment for BHEL, maybe 2 to 3 players. Of course, recently, Thyssenkrupp has entered in a big way. They have taken a couple of jobs in Koradi, Raghunathpur et cetera. Because of [indiscernible] every organization they are bucketing for BOP, they have their inbuilt Thyssenkrupp on the core handling. That is how they entered and that is a qualification for them also. And for us, our execution capabilities, that is how that can be. But it can be maybe 3, 4 players maximum.

So, my question was more of the likes of Adani, Torrent Power, JSW, Adani, of course, the pipeline has only ballooned. And I think we are working with Adani in a number of projects. So, does that part of piece, do you think that will -- that is a very large prospect and we can get some meaningful order inflow in the next 12 to 18 months?

Yes. Adani's basic philosophy of our sourcing and supply chain management is that they are trying to in--house manage their engineering and supply chain orders. Now unless like BHEL, which has come to the stage of ordering more on the balance of plant on a turnkey basis, Adani still keeps those engineering in--house, and they have got a strong support system consultants. And then key supply orders, they have got a very strong supply chain in major equipment like in coal handling, ash handling, water systems, electrical and [indiscernible] systems. And they would like to outsource it to the extent possible on the execution side strongly. And that is where we are the preferred vendor for them. And we have got a strong relationship with them, mainly depending on performance only. In fact, our presence in Adani is substantial. As I said, it is -- coming to Adani is about more than INR 2,500 crores, about 7,500 megawatts we are working. And in the case of BHEL also, it is a similar thing. Therefore, as I explained earlier, Adani's ordering backlog is there. We continue to work with them. And recently also, we have given some more quotes for some of the jobs in [indiscernible] Stage 3 and then [indiscernible] contract, et cetera. Same thing with the JSW also.

The next question is from the line of [ Rishab ] from [ Nexa Securities ].

Actually, I just wanted to ask about the revenue guidance for FY '27 and why you revised the guidance for FY '26 from INR 6,500 crores to [indiscernible].

So FY '27 guidance revenues will come with the guidance after the full year. But based on the order book so far, we are on the course to achieve at least 20% to 25% growth and also improvement in the margin profile depends on the mix of O&M and the increase in the MDO order. So we are confident of getting on the last -- the financial March number on that 20%, 25% growth we can project for the '27. And '26 guidance, we projected INR 6,500 crores. Earlier I explained to Mohit also. INR 700 crores of revenue we projected from the UP Water division where because of Jal Jeevan Mission where central government funds were not allocated and these were uncertified, because of that, we have not received any -- recognized any turnover during the current year. That impacted the guidance of '26. So, which we are mitigating with the increase in the new orders and other alternatives. So even there is INR 700 crores shortfall, but we are managing INR 200 crores, INR 300 crores extra by way of doing extra revenue from other new orders.

Now coming back to the -- what Arvind said, with the present backlog of INR 17,326 crores, if you take the normal conversion margin of about 40%, it should reach reasonably INR 6,000 crores to INR 7,000 crores. That is a fair game plus what we expect to get in the first 2 quarters of the next year. That is how the revenue gets -- picks up. That's why there can be growth also like this year we had a growth from INR 5,200 crores to INR [ 6,500 ] crores plus. The same growth is also expected in the coming year also.

The next question is from the line of [ Amar Ahel ] from [ Radiance Capital ].

Can you help me with the geographical mix of the order book [indiscernible] ?

Yes. I think coming to domestic and international, it is 95% domestic and 5% international. And let us look at the investments where they are taking place. They are taking place in North and East and to some extent, South and West also. Therefore, I don't have the exact figure for the breakup, but our substantial power plant works are mostly going in the Eastern side and Northern side and to some extent on the Western side also. Whether the infrastructure is spread out all over the country, it's a question of where we are going to take the call. Railways and then roads, we are working in, for example, in Chhattisgarh, we are working, in Andhra we are working, in Telangana we are working, then Maharashtra also we are working. And then UP, for example, Jal Jeevan Mission, we are working in UP. That is an opportunity wherever it is available based on the selection of the projects and our interest on that. We are taking -- as far as geography is concerned, Power Mech has got one unique strength. We are capable of executing the job even in the Eastern sector also. That is how we have seen a strong presence in Eastern sector recently. Now we are trying to look at the opportunity in Assam also. We have got an experience working in Assam also. It's not a challenge for us to say West Bengal is there or Odisha is there or Bihar is there. And all these places, we have got a substantial presence working.

Okay. And could you help me with the breakup INR 17,000--odd crores across erection works, O&M, civil works, electrical?

Roughly around INR 3,000 crores for the mechanical power, EPC business. Civil is around INR 9,100 crores. That includes all water, sand mines and mining. O&M business of around INR 2,500 crores, electrical INR 1,000 crores and solar INR 159 crores and BESS INR 1,560 crores.

The next question is from the line of [ Devang Shah ] from [ Allwest Investment Managers ].

I just want to know the way you are anticipating next year, what kind of order inflow we can expect in general and also on our MDO business also, if there is anything for the FY '27?

No, looking at the opportunity side, as of today, we have mapped the opportunity of about INR 130,000 crores to INR 140,000 crores. Of course, the balance opportunities we are probably looking about INR 3,500 crores to INR 4,000 crores in these 2 months, and we are vigorously following that. That is spread across different sectors. Different sectors it is spread across. And therefore, power sector will continue to be a major role and then railways and roads and then O&M also, there should be more opportunities coming up with more plants getting commissioned. And then also in the EPC business, we have seen -- as I told you, the total opportunity size in the contracts on power sector itself is plus INR 60,000 crores. We hope a substantial portion will be ordered based on the -- how much is the push comes from the BHEL side, BHEL has to do a lot of ordering. And then Adani is doing timely ordering. And then we have -- we are waiting for the act of L&T also about INR 42,000 crores. Of course, our interest is in the site construction execution EPC that we have identified INR 60,000 crores in item [ red ] contract, and INR 9,000 crores to INR 10,000 crores in BOP contracts. So maybe around INR 10,000 crores plus we look at next year as the guidance on the order inflow is concerned. Regarding MDO is concerned, this year, we will touch around INR 250 crores turnover. And second [indiscernible] will be ready by Q4 of '27, so we are projecting around INR 700 -- to INR 700 crores of revenue [indiscernible].

Okay. So, it's fair to assume INR 10,000 crores normal in your business, we may expect this kind of opportunity as an order inflow for the FY '27. That is the minimum level. Am I right, sir? Have I understood correctly?

That's right.

Second, sir, as far as CapEx is concerned, what would be your current month -- current year FY '26, the CapEx that trajectory is going? And looking forward in FY '27, what kind of CapEx you are looking for?

Yes. Right now, the regular CapEx in the Power Mech is only INR 100 crores, INR 120 crores depends on the order inflow, regular CapEx. And the washery, we are constructing in our books. So around INR 280 crores this year we'll -- approximately INR 280 crores will incur and the next year, maybe around INR 400 crores, total INR 680 crores to INR 690 crores of CapEx we will incur in the washery itself. So, INR 380 crores, you can take the current year and INR 520 crores next year.

Next year, you are saying INR 480 crores, right?

FY '26 by March, you can take roughly INR 300 crores -- cash outflow will be INR 380 crores in advanced form, but that will be booked as a CapEx post receipt of the material. So overall, this year and next year together around INR 690 crores to INR 700 crores as a washery cost in our books. And INR 100 crores to INR 120 crores on an average on the regular CapEx, the cranes and the vehicles.

Okay. And sir, the way you are saying now the MDO business has also started to contribute in the revenue and FY '20 onwards, it is going to have a significant contribution, so currently, we are having some kind of operating margin somewhere close to 12% and you are saying there is some kind of improvisation we are going to see in FY '27. So what kind of number we can expect as far as range is concerned above 12%?

Yes. So we're starting with 0.25% annual EBITDA jump. And after that year--on--year will be a 0.5% jump till we reach the [ peak ] capacity. By '29 onwards, you'll get to 13.5% to 14% EBITDA margin.

So somewhere close to 12.5% we can expect from initial level?

Yes. So last year it was around 12.3% level, and we will maintain maybe 0.25% extra this year, we'll maintain at 12.5%. Hoping that this will maybe increase of 0.5% a year--on--year. And once we reach the major -- once we are ready with our washery by '28 onwards, maybe 0.5% jump will be there in the margin.

The next question is from the line of Rajesh Kumar Rathi from Right Shopping Private Limited.

I'm not sure if somebody has asked a question before I was late to join. I have questions regarding the new labor laws. Industry sources are telling me that post implementation of the law, especially for the contract labors, the cost can go up by 8% to 12% because of the PF and ESI matters, et cetera. Do you concur with that view?

Yes. No, it is an important point what you have raised. You see minimum wages is a government prerogative but most of our contracts also tied up with the minimum wages as part of the price variation. And that should reasonably offset the -- in terms of cover of the -- any increased cost and all. And any such set of statutory variation where the government [indiscernible] if the provision is not there, it becomes a matter of issue. And previously, it has happened in 2018, '19 also similar problem came up finally, government settled it and most of the contractors, public sector companies, private companies also started implementing it. That means the variation was allowed and finally, we got the compensation. Therefore, we don't expect any impact on that because it is fairly covered in the contract provision itself because we put a very specific thing. Our prices are quoted based on the existing minimum wages and any variation that me except for the normal variation in the PVC or the price indices, the ad hoc decisions made by the government, it is subject to a variation clause. For that way, we are confident it can be [indiscernible].

So changing the clauses [indiscernible] with the client on the difference of cost. All the existing contracts, we can climb. But for the new contracts, we can load the additional cost and we can forget our tenders.

Yes. Of course, for the new contracts you can do that. But what about the MDO and nongovernment contracts, I don't think they generally accept that labor cost increase clause, et cetera.

No there -- my clients is Steel Authority -- EPC contracts for me. There is not an investment case for me. So Steel Authority and Central Coalfields will compensate, that PVC clauses are there in that. So that means they will cover this additional cost.

No, this ad hoc rises will be covered in the MDO contract because the prices are [indiscernible] quoted and taken based on this MDO cost based on the conditions exist or whatever the levels of pricing are available for minimum wages, if there is a substantial variation as the government directive, that is subject to contract variation.

Part of this pricing, sir, the MDO contract labor indices are also part of that escalation clauses. So accordingly --

I see. So you don't expect any dent on the EBITDA margin.

Majority of our projects are construction projects only, we are not into EPC [indiscernible] and all. So majority it covers all this --

Almost 75% to 80% of our contracts [indiscernible] variation or ad hoc revision is also a matter of basic contract offer.

So you don't expect any dent on the EBITDA margin?

It will not have any dent sir, but for the company employees where you have marginally -- you have to ship the...

Yes, yes, that's a onetime.

That's a onetime and [indiscernible] for whom we created this quarter.

What about production slowdown or some disruption because I'm told that this contract labor thing, a lot of paperwork has to be done, et cetera. So will it slow down the process a little bit for a couple of months or so?

No, I think some of the labor contractors are demanding some other additional benefits and so for that purpose they are fighting. Government already looking into that. And if any changes are there, it will have no impact on our financials. It will impact the employees' financials.

Even in [indiscernible] there is always a case for the contractors and labor people to starting raising the minimum wage...

Because I'm told there is a bandh today due to all this contract labor group, et cetera.

That is by the farmer. That is [indiscernible].

The next question is from the line of [ Hetali Shah from [ Shriram Mutual Funds ].

I wanted to know the breakup of the order inflow, the INR 6,700 crores in the various segments of mechanical, civil, O&M.

Mechanical is around INR 1,600 crores, INR 2,063 crores from civil, O&M INR 1,097 crores, electrical INR 280 crores, solar INR 159 crores and BESS INR 1,560 which comes around INR 6,761 crores.

The next question is from the line of [ Mudit Bhandari ] from [ IIFL Capital ].

Out of total order book of around INR 17,000 crores, what's our pending order book for JJM UP? And have we done any execution within this 3Q or 9 months FY '26?

The pending order book is INR 1,000 crores, sir. We are not -- because of the fund issue certification issue, we are not -- we are executing only the O&M projects where once 100% completed projects, we are bringing these projects into the O&M phase. So 250 schemes, which we have converted so far, and we are going to start building this from Q4 onwards. The existing pending works still the clarity from the government on allocation of fund will slow down the execution of these works. Only to bring the projects into the O&M phase only, the balance minimum requirements only, we are increasing funds and we are using. And to this year, we received almost INR 140 crores from the Q1 to YTD, around INR 140 crores we received from the state government, another INR 100 crores plus they are proposing. The file is pending before the Chief Minister. So we are expecting another INR 100--plus crores by before March.

Got it, sir. And regarding our EPC of BHEL in Singareni, so you said around 1 to 2 months, you will do procuring. So it will start execution in start FY '27, right?

Sorry, which one, sir? Singareni?

Yes, Singareni.

Singareni [indiscernible] INR 100 crores, we are expecting this for revenue.

Okay. Okay. Got it. And regarding BESS, so when do we expect to achieve financial closure?

This actually, we have as for the agreement, 9 months' time is there from the date of agreement. So mid of this month, we are signing the agreement. So we have 9 months' time after that to close the financials.

Agreement is indiscernible].

The next question is from the line of [ Bhagwat ] from [ Prosperity Wealth Management ].

Most of my questions have been answered. Just 2 more points I wanted to understand. #1, what is the expected fixed borrowing and the corresponding interest rate considering the MDO segment also peaked by FY '28 or '29.

Okay. We are majorly -- our borrowing is only the working capital limit so far, and we have equipment loan of INR 98 crores and the balance is INR 700 crores is the working capital limits, which we borrowed. Weighted average cost of the working capital is 8.5% and equipment loans, we are borrowing at 7.8%. So blend of around 8.2% to 8.3% average weighted cost will be there. With regards to MDO is concerned, the KBP mine, we are raising term loan of INR 256 crores. We have not drawn that money we are raising at 9.5% for the fund loan. And washery also raising loan at 9.5%.

Okay. On a total basis, what we can expect the total number of borrowings?

As of now, it is INR 833 crores gross debt as of December, sir. This will go up another INR 400 crores by next year.

Okay. INR 400 crores. Okay. And second question, what's the effective tax rate on the full year basis on consolidated numbers?

Sorry?

The corporate tax rate on consolidated book?

Yes. This is 25% on the main company. And there are the increase in the corporate tax is mainly some of the sand mines are on LLP names. So LLP, where the tax rate is 35% when we are consolidating that revenue, your average cost is coming is higher side.

Can you please comment like can we expect around 28% or 29% -- that's what we can expect on consolidated numbers?

No. It will come to 2.8% to 2.9% average... 28%, yes, average.

The next question is from the line of [ Amar Ahel ] from [ Radiance Capital ].

Yes, sir. Just one last question that where do you see demand across all your verticals?

Sorry, your voice is breaking, sir. We are unable to hear.

Is it fine now?

Yes, better.

Yes. I was asking that from which vertical of yours do you see a strong demand going ahead?

Power sector is the major vertical where we are going to get new orders from the power side. O&M also, O&M power. And now we are venturing into the O&M of non--power also. Recently, we won the monorail project of Bombay. We had to receive the order. So we are majorly expecting orders from the power side.

We'll take the next question from the line of Vedant Kabra from A Capital.

Yes. I just have a follow--up question on the labor loss. Just to estimate for the worst--case scenario, assuming the labor laws go into full implementation, do we have a quantifiable EBITDA margin impact?

Our labor component of the total cost can be about, say, in the service job, it is 50% to 60% 50%, 60% for the service -- whereas in the material--based contracts, it will be less. But absolute figures cannot be there because we pay to the contractors based on the item rates of the fixed rate. The actual values on which the labor payments are made. But on a broad basis, we know that [indiscernible] We have a limited impact on this rate variations because of the PVC clauses and minimum wages already we are implementing. So there are no much impact from the power bank.

So just to assume, let's say, the cost goes up by somewhere between 8% to 10%, in that case, what will be our EBITDA impact?

That's not. We can claim the PVC from the client. So our revenue also will go up. The compensation will come from the client, so we'll pass that compensation to the subcontractor.

Okay. This is true for even the locked--in contracts?

Yes.

Okay. And sir, just last question. What is your current understanding on this implementation time line of the labor law codes, especially across the states in which you are operating?

See, there are certain -- actually it is applicable from April. certain people are saying is applicable from April onwards, 1st April onwards. But the is already announced in the month of November. We are creating provisions in the Q3 itself for the existing liabilities in the books. And actual implementation will be from 1st April. So there are various interpretations are there. Now we are seeking clarification on that. But with effect from 1st April only, the government will implement this. There rules to be framed from the government side, so there is a delay.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing remarks.

Yes. Thanks for the participation and [indiscernible]. I think looking at what we can say is that reiteration of the profile of investment, government is bullish on investments. Now private sector is coming in mostly in the power sector. Power sector capacity expansion will go from, say, it will go up to 30 gigawatts. Maybe earlier they were planning 80 gigawatts addition from 2 to 20 gigawatts. That will add as of today, I told you about 55 to 60 gigawatt have been added more will come up because the projects which are in the pipeline development is 3,000 to 4,000 megawatts. Therefore, this will happen in the next 2 years. And then, of course, nuclear power, we have to see the present capacity of 9 gigawatts to 20 gigawatts. And battery storage where we have entered recently, government is very bullish on that battery storage, pump storage, they want to increase the capacity to battery storage to 47 gigawatts by 313 storage from 4.75 18.8 gigawatts. In fact, we are looking at some of these opportunities of pump storage to bring some synergy in our system on the civil and the electromechanical packages, and we are discussing with some of the players also on that. Therefore, then O&M, I said, increased capacity addition of 8,000 to 10,000 megawatts add about INR 1,200 crores to INR -- that will be every year it will be looking at it. It depends on how much we can capture that and who are the customers who will be keen to exit O&M in--house or outsourcing completely. So that is how we are looking at it. And we hope that next year also, we'll have a growth of 20%, 25%. Thank you very much.

On behalf of Nirmal Bang Equities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.