Recovery narrative vs. -34% YoY revenue miss; order book target slips

True QoQ but YoY -34.2%; sequential growth masks severe annual decline

Achieved Rs. 2,329 Cr as of July; 23% miss on target

Q1 NPM 9.7%, EBITDA margin 17.9%; Q1 PAT -59% YoY despite revenue +30% QoQ

Q1 won Rs. 317 Cr orders; Q2 to date only Rs. 158 Cr; bid-win rate slowing

Prior guidance: Rs. 3,000 Cr by Q1 FY27. Delivered: Rs. 2,329 Cr (23% miss). Aggressive bidding pipeline not converting as expected.

Management committed this call to Rs. 900-950 Cr full-year (50% YoY growth). Not stated in prior call; aspirational given Q1 -34% YoY decline.

Now bidding in Bihar, MP, Maharashtra, Karnataka in addition to UP/Uttarakhand focus. Reduces regional concentration risk but adds execution complexity.

Prior: FY26 PAT >15%, EBITDA 22-23%. This call: targeting 'par to' 2024-25 levels by end FY27, implying 15% PAT, ~22% EBITDA. Delayed vs. expectation.

Restrictions lifted. Revenue of that magnitude will only be achieved from Q3. Q2 sewerage projects cannot ramp that fast due to monsoon seasonality.

Fixed costs (labor, rent, machinery) are inelastic. When weather/elections hamper execution, margins shrink. Will recover once revenue ramps. Competition increasing; margins may stay below 2023-24 levels.

6-9 months for engineering & approvals after work order; 18-24 months total project. Revenue starts 6-7 months post-order issuance.

Bouncing back from slower Q0 FY26. Returning to normal run-rate.

Q2 +30-35% vs Q1, Q3/Q4 >50% QoQ. Yes, confident in Rs. 950 Cr by year-end.

42% from Uttar Pradesh, 61% from Uttarakhand (state-level aggregate). [Did not disclose individual client names or concentration.]

Implies Q2-Q4 execution of Rs. 575-650 Cr. H2 seasonally stronger (Q3/Q4), but Q2 structurally weak (monsoon).

2024-25 proxy: ~22% EBITDA, ~15% PAT. Order book contracts built at these margins. Confidence hinges on revenue ramp; fixed costs imply margin recovery only if execution accelerates.

Management intends to optimize existing asset base rather than invest in new capacity.

42% from Uttar Pradesh, 61% from Uttarakhand. Likely overlapping projects within two adjacent states. Monsoon season disrupts both simultaneously.

Monsoon season (Q2/early-Q3) structurally weak; Q4 FY26 PAT 6.3% vs Q1 FY27 9.7% shows margin compression from weather stalls. Fixed costs cannot be flexed.

Establishment, labor, rent, machinery costs fixed regardless of execution. When revenue falls (weather, elections), margins collapse. Q1 margin 9.7% vs 15% target illustrates gap.

120-day DPO required; government payment delays extend cycle. Analyst flagged WC days increasing vs peers. Hampers new project ramps.

6-9 month engineering & approval phase post-order issuance; 18-24 month total project. Q1 won Rs. 317 Cr orders but Q2 to date only Rs. 158 Cr; bid-win rate halved. Delays in government approvals noted.