Ladies and gentlemen, the conference will begin shortly. Please take a nectar. Thank you. Ladies and gentlemen, good day and welcome to Power Mech Projects Limited quarter one fiscal year 2027 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Julie Paviska from Ashika Institutional Equities. Thank you, and over to you, Ms. Paviska.
Thank you. Good afternoon and very warm welcome to everyone. On behalf of Ashika Institutional Equities, I welcome you all to Power Mech Projects Limited Q1 fiscal year 2027 earnings conference call. Today, we have with us management represented by Mr. Rohit Sajja, Executive Director; Mr. N. Nani Aravind, Chief Financial Officer; and Mr. S. K. Ramaiah, Director, Business Development. We thank Power Mech Projects for giving us the opportunity to host the call. We will now like to hand over the floor to the management for their opening remarks, post which, we will open the floor for question-and-answer. Thanks, and over to you, sir.
Good evening, everyone. I am Nani Aravind, Chief Financial Officer of the company. I would like to extend a warm welcome to all of you joining us today for our quarter one fiscal year 2027 earnings call. Thank you for taking the time to participate in this discussion. As we begin financial year 2027, the first quarter reflected the continued strength of our growth trajectory with improved performance across most of our core business verticals, except ETC business. Our results reflect the strength of our integrated business model, disciplined execution capabilities, and continued focus on operational excellence. quarter one fiscal year 2027, the company recorded total revenue of INR 1,632 crore, reflecting 26% growth over the same quarter last year. The growth was driven by sustained execution across our core verticals, along with the ramp-up of operations in civil infrastructure, industrial EPC, O&M, and international projects.
EBITDA for the quarter was INR 176 crore at 10.8% margin, representing a 3% decline year-on-year. The margin was lower compared to the same quarter last year, primarily due to higher material and execution costs arising from the ongoing Middle East conflict; increase in royalty costs in the KRBM project following the government orders and royalty sharing for seized quantities; lower margins in the KBP mining business, primarily due to higher overburden removal costs from the opening new seams quarter one. production from these seams is expected to ramp up in the coming quarters, improving margins. Lower other income during the current quarter. However, our standalone business noted 11.3% EBITDA margin, compared to 10.2% in the same quarter last year. Profit after tax stood at INR 89 crore, reflecting 11% increase quarter one fiscal year 2026.
Profit after tax, after minority interest, stood at INR 80 crore compared with INR 53 crore in Q1 fiscal year 2026, reflecting a 53% increase over Q1 fiscal year 2026. This has helped to take the EPS to INR 25.23 compared to INR 16.61 in the corresponding quarter of fiscal year 2026. The management is confident of maintaining its full year target in terms of execution, order book, and margin profile. Coming to the revenue mix, the quarter continued to reflect a well-diversified contribution across our business segments. The O&M business continued its steady growth, contributing INR 431 crore, an 8% increase year-on-year, supported by new order inflows during the year.
The civil segment, including roads, railways, and water distribution projects, contributed INR 796 crore, registering a 28% year-on-year growth. The industrial construction business contributed INR 270 crore, down by 13% year-on-year, which was offset by the industrial EPC business, which contributed INR 96 crore.
The mining business showed strong positive trend with a revenue of INR 84 crore representing 223% year-on-year growth, supported by the commencement and ramp-up of revenue from the KBP mine from November 2025 onwards. Coming to the revenue mix for Q1 fiscal year 2027, the geographical revenue mix comprised 96% domestic and 4% international revenues. Sector-wise, the power segment contributed 51% of the revenue while non-power segment contributed the remaining 46%. From the order inflow, the company secured orders worth approximately INR 1,864 crore during Q1 fiscal year 2027 against our annual target of INR 12,000 crore, representing approximately 15.5% of the annual target. Order inflows during the quarter remained well-diversified across industrial construction, civil infrastructure and O&M. Among the key award wins during the quarter include O&M of Mumbai Monorail. This project also marks our entry into the highly technical urban mobility space.
Our total order backlog including MDO projects stands approximately INR 55,398 crore. Excluding MDO orders, the executable order book stands at around INR 16,229 crore. This provides us with strong multi-year revenue visibility across industrial construction, civil engineering, EPC and O&M business. We continue to see the strong order pipeline across thermal power, both construction and maintenance, BOP systems and civil infrastructure. In summary, we are pleased with the progress achieved during Q1 and fiscal year 2027. Our diversified order book, strong execution capabilities and strategic focus on high-value projects continue to position the company for sustained long-term growth.
Our key priorities remain to improve execution in line with our plan and trajectory, sustain and improve our margin profile through a higher contribution from O&M, mining and other relatively higher margin business, and further improve cash conversion and working capital efficiency with continued focus on collections, milestone certifications and mobilization advances. With a strong order pipeline and execution momentum across our business, we remain confident of delivering on our growth objective and creating long-term value for all our stakeholders. With this, I now request Mr. Ramaiah to share the key business developments and the outlook for the upcoming period.
Thank you, Aravind. Ramaiah here. I think in continuation to what Aravind has said is that there is an improvement in our total order backlog from the end of the last year, INR 50,898 crore beginning, and now it is INR 16,228 crore, a +2%. Of course, major order improvement has come up in the civil segment with about 4.4% add-on backlog. O&M, substantially more growth is there with the first quarter order for INR 781 crore, and that has boosted the order backlog by 11.8% to INR 3,322 crore. That is a very positive sign. Of course, EPC segment, electrical, these segments, based on the revenue, it has to come down. ETC business also, because lot of opportunities, I will explain it later. That is on the segment-wise.
The domestic market continues to play a major role of 98.7% of the order backlog and order opportunities of booking, and international is 1.3%. The power sector continues to play a business in view of the huge capacities and huge investments coming into play, and the expertise we are having it, lot of focuses are there from the organization also. Non-power is about 26.4%. This is the overall order position. Coming to the opportunities. What we have done in the beginning when we started, we mapped an opportunity size of INR 70,000 crore-INR 75,000 crore on a broad basis in various segments of the different SBUs in power, non-power, installation, O&M, civil, then in the infrastructure, etc.
Coming to the quarter-wise, more focus is there, and that has to be seen based on the real opportunities, what we are going to get it as on today. About INR 20,500 crore of opportunities we are mapping on the power sector alone. That is mainly for the installation business, for the civil work, structural work, and the Balance of Plant packages. On the infrastructure side, about INR 8,500 crore. Over the quarter-wise, when we progress and all, the more opportunities will come up. This is based on the tendering opportunities and the tender notices issued. That is where we have to focus it. From the overall perspective, when I say in the power sector, the overall scenario is like this.
We have been tracking about 58,000 MW of ordering, which has been done in the main place at BHEL and L&T for the last three years. That is based on our interest, where we have to focus it. Of course, the capacities can be different based on the overall market. Specific projects, we are tracking it. Based on this, BHEL has got the bulk of the orders, about INR 2.41 lakh crore. L&T is capturing a lot of orders, INR 42,523 crore. Recently, JSW has entered the fray with the two major plants coming up, one at Salboni, another Assam, four units each, which will go MW. They are going to invest substantially between around INR 30,000 crore there in both the cases.
If you look at the overall scenario of the various players, apart from in the state sector, central sector, the private sector is taking the lead. Adani is planning to jack up their capacities from 18,330 MW- 42,000 MW in another five, six years. NTPC is planning to improve their capacity in the coal-based plant from 67 GW- 91 GW, 91,000 MW. JSW which has come recently, present capacity is 56 GW, 58 GW. They have got ambitious plan to achieve a capacity of 30,000 MW in the next five to seven years. There are other players also, the state sector like Singareni, CCL, JAMA, the Chhattisgarh Generation Company, on private player, Moser Baer Power, NLC, the central government. All of them, there is add-on capacity. DVC also, HPGCL already have taken action.
What we have done in this is that, we have mapped an opportunity which is available in the next, say, one or two years, about INR 60,000 crore. As on today, taking into account what has been gone forward in terms of ordering and et cetera. The balance ordering which has to be done from working to working, the site construction work is tendering. Balance is BHL about 9,000 MW. The Adani about 11,200 MW. That will come to 22,000 MW. JSW is planning the 6,400 MW. That should together come out 26,000, something like that. With that, we are expecting an immediate opportunity of INR 25,000 crore- INR 30,000 crore.
The coming year also it can add up, that is where the overall focus of the company is there because of the strength that we have developed it and better to capture it and going to the opportunities where it is there. Private sector, business opportunities also better for us because both Adani and JSW, their focus is on deliverables. They have got a preference for companies like Power Mech because of our delivery management. Recently we have taken a major job from JSW also for their Salboni job, INR 850 crore for the civil and structural. Adani we are continuing to pursue with all the ongoing projects or whatever is a new ordering, I said about 11,000 MW which they have to complete it. From that perspective, this will be increasingly the focus.
The other aspect is the O&M side. O&M is, we have seen INR 781 crore we have taken in the first quarter, the order backlog also has gone up by more than 11%. Compared to last year, the INR 2,972 crore is now INR 3,322 crore. One of the positive things can be how much is the capacities added in the new plants, particularly the private sector because they will be more interested like Adani, Vedanta Group, JSW, JSPL and all. We are working in all of them. That opportunity about, it is expected if the government's plan is to add up capacity from present 228 GW- 291 GW by 2030 to adding 61 GW, it will go up to 321 GW. The average additional capacity is 8,000 MW- 10,000 MW per year.
That should show an opportunity of INR 800 crore-INR 1,000 crore in O&M. O&M being a renewable-based type of segment, the existing contracts will be renewed, and the new contracts will add, which will lead to the actual growth and all. The other area which we can positively look at is in terms of the non-power sector and the new investments which are coming in the mining side. For example, NMDC is planning investment of INR 70,000 crore and certain tenders have come. We have participated in one tender earlier. We were L1, but they had an issue on the pricing. It has been re-tendered. We are again participating in that. Presently they are calling about three tenders. One tender we are trying to obtain, another two tenders will follow up.
There is also a lot of investments will come up in the steel sector also that we have to see in all the players. Particularly JSW is planning a huge capacity expansion in Paradip and their existing plants and also putting a greenfield plant in Maharashtra. ArcelorMittal is coming with a huge plant near Vizag. That is around INR 10 lakh, huge capacity, about INR 1.5 lakh crore, about 10 million ton capacity plant and others. That is an opportunity which we have to see to expand our business. Mining side, I said about NMDC, the new plants which are coming up for mining side on a build operate transfer basis.
That is an opportunity based on the experience what we are gaining in our NMDC contracts, we can apply our expertise and all to see that how we can go into that. The other infrastructure jobs in roads, railways, as we know the government's continued investment is there and need-based opportunities we are capturing it in both roads and railways. Particularly in railways, the maintenance depot shops, we are now getting specialized. We are working in a couple of projects there and new projects when they come, we will definitely participate in that apart from the new railway lines. The EPC jobs in both in railways and the Road sector. On the international sector, the present focus is, of course, the disturbed conditions in the Middle East. Last year we have seen it is mostly on the O&M side, which is quite profitable.
We have taken long-term contracts in Nigeria, the Dangote Group job, and some more jobs we have taken on the medical jobs or maintenance jobs, nearly INR 300 crore. That is in UAE and GCC countries and all. That focus will continue to be there in the present year also. Hoping the situation will improve based on the ongoing conflict ending. With this, what I can say is that mapping all the opportunities, we continue to see how to achieve this INR 10,000 crore-INR 12,000 crore of order booking for the current year based on the opportunities, what we are having and the new opportunities which are expected to come. Thank you.
Shall we open the line for questions?
Yes.
Thank you. We'll now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah. Am I audible?
Yes, Deepak.
Go ahead.
Thank you very much, sir, for this opportunity. Just first up, wanted to understand on the margin front, you cited a few reasons.
Yeah
The overhead removal cost and the royalty as well as the raw material cost. How is the scenario right now? How should one look at overall annual EBITDA margins given the current scenario?
See the increase in royalty, last year, when you are comparing with the last year's quarter presentation, there is exceptional revenue recognized in Q1 fiscal year 2026. Seized quantity where we generated more revenue, subsequently, the government issued an order, and they reduced the royalty rates. This time, KBP Mining just started the production from November onwards. Initially, we did around 1.6 million tons of execution till March. The current year, we are targeting around three million tons. We started the new seams where initially OB removal is higher side, where we just started the seams. The corresponding coal production will start from the subsequent quarter. Overall, the stripping ratio is within the agreed quantity ratio only, but one quarter will have a higher OB cost and lower coal production. Subsequent quarters will cover that.
Overall, for the year, we'll maintain the same EBITDA committed margins of 15%-16% in KBP mine. Moreover, lower other income, we have QIP funds in the standalone level, and we are using that QIP funds for the washery construction. We have almost completed the QIP proceeds and the FDs which we are lying in because in our bank, the interest income is generated because of that also. Other income has a higher side, three quarters to four quarters higher side in the earlier periods. Now, we completed that and we are now not generating any revenue. We are generating revenue only on the margin money FDs only. That is also one of the reasons. Overall, we projected guidance is 12.5% margin, which we committed during the current year.
We are sure about getting this margin profile and with a lot of new orders we received during the last year on the O&M and civil infra projects where we got the good margins in those projects. We'll ensure that we'll generate this EBITDA margin in the current year.
Okay. Yeah. That was very helpful, sir. Then secondly, on MDO, what sort of execution we are targeting this year and next year from MDO?
Hi, Deepak. Rohit here. With regards to the MDO, we plan to do 3 million tons in our first mine, which is KBP. Perhaps in the second mine, the washery is about to get commissioned. We expect to do the hot commissioning by November, December. That's when we are going to achieve the full fee of the resource that we are going to produce here. Both the mines together, we expect to do INR 500 crores by the end of this year. 3 million tons in the first mine. Second mine will do close to 1.2 million tons -1.3 million tons because it's going to start ramping up once we have the full fee available after the washery gets commissioned.
Sure. Then what about fiscal year 2028?
fiscal year 2028, INR 1,100 crores- INR 1,200 crores.
There's going to be a significant ramp up because once the washery is commissioned, we anticipate to achieve peak rated capacity in the same mine, which is 3.5 million tons- 4 million tons , because there is 500,000 tons of JAMA coal that we also have to produce. Depending on how much JAMA that comes in seams. 3.5 million tons- 4 million tons is ideally what we should look at there after the washery is constructed. KBP, the first mine with CCL, this year we'll do 3 million tons , next year we will ramp it up to 4 million tons- 4.2 million tons, Deepak.
Okay. I got it. In terms of margin, given your higher share of revenue coming from MDO, what does it mean for the overall margins? How much benefit overall at the company level this increased MDO revenue can bring?
Yeah. I think fiscal year 2028, we should be able to see a net margin of 21%-23%, both the MDOs together. This margin profile is going to continue over the life of the mines with few ups and downs. Whenever we have to do some CapEx reinvesting at the end of seventh year, at the end of 13th year, there's a conveyor that we have to construct, otherwise, this is the averaged out margin profile that we see.
Okay. Next year at INR 1,100, INR 1,200, our 21%, 23% EBITDA margin in MDO is achievable task, right?
No. When we reach the peak grade capacity only, this is the expected 20%, 21% blended weighted average.
Okay.
Next year, fiscal year 2028, one of the mines, we still won't reach peak grade capacity. Probably from fiscal year 2029, you can see these margins. Next year we'll be around, again, 15%-17% range, then it'll ramp up to 21%-23%.
Next year would be 15%-17%, fiscal year 2029 maybe 21%-23% from MDO one can.
Yes.
Okay. Understood. Just one last thing on the opportunity size that you mentioned around INR 25,000 crore-INR 30,000 crore. Is this the amount that we look to bid, I mean, going forward?
Yeah, I think you are correct. Initially we make an estimate based on the opportunity. That is based on our internal assessment. Once the tenders comes in, we try to make a more accurate estimates of that, based on how the customer asks for the scope and qualification and other things. That is the sizing of the opportunity based on the real opportunity with your customer. That will develop from quarter to quarter. As on today, I said to you about INR 20,500 crore in the power sector, INR 8,000 crore in the non-power sector, infrastructure and other areas. Every quarter we will update that. Based on the tenders won and tenders lost, we re-update the new opportunities as it comes, and also see where all we can penetrate the new sectors of the business.
Correct. This INR 12,000 crore of order inflow for this year, we are looking from this pool of INR 25,000 crore-INR 30,000 crore, right?
In this, there are some specific opportunities only in the power sector. We are also mapping another balance of plant package. Two, three opportunities are coming up. We are working closely on that. O&M, we expect the growth will be there because of the additional capacities which are getting added and the new power plants getting commissioned. Particularly, we have got a very solid relationship with Adani based on our performance and our record of working. There are a lot of new plants which are getting added into their capacity addition plan, like Pirpainti is there, Assam is there, and new other mini projects. JSW also, a 6,400 MW project. We are hopeful the power sector business also should go up in terms of our insulation business as well as the civil and structural business.
With BHEL, we'll be targeting the balance of plant packages. O&M with all the private sectors.
Okay. Understood.
Also, Deepak, just to add to what Ramaiah sir had just said. Typically, in the power sector, to answer your INR 25,000 crore, INR 30,000 crore question. In the power sector, our strike rate is, success rate is around 60%-65%. Most of the bids we participate in, we anticipate or we expect to win based on historical data and the way we are progressing here. That's why we cap this at INR 30,000 crore-INR 37,000 crore in terms of the number of projects we bid for, and arrive at this number of INR 12,000. Just wanted to give you the clarity.
Yeah. Got it. That's quite helpful. That would be it from my side. Wish you all the best.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Madhu Aggarwal with Aggarwal Family Office. Please go ahead.
Just have a quick clarification. On the expected revenue from mining across KBP and Tasra, are we revising downwards from the INR 600 crore? I think last quarter we had said we do INR 350 from KBP and INR 150 from Tasra. Are we now revising that downward to INR 500 across both the mines?
No, both together is INR 500, ma'am. That's what we told, INR 350 plus INR 150 from Tasra, together INR 500 crore. There's no down revision.
Sorry, my apologies. I've just gotten my math wrong. My apologies. That's fine. Thank you.
Thank you. Next question comes from the line of Bhagwat with Prosperity Wealth Management Private Limited. Please go ahead.
Thank you for the opportunity. Could you please give us more details on the KRBM project, specifically the expected revenue from the project and EBITDA margin from this particular project after factoring in the revised royalty structures?
Sir, the nature of work of KRBM is that we have to ensure that the entire corporations which we have allotted the mining activity, we have to ensure that there is no leakage of royalty and we have to establish our checkpost and all the transport vehicles of people who are verifying the royalty. Any unpaid royalty transportation vehicle, then we used to collect a seizure fee, and we collect a double the penalty. The royalty indirectly, we get it 2x the royalty value. Subsequently, government, during middle of the year, last year, 50% of that royalty penalty collected, government is taking that 50% value, and 50% only is passing to the company.
Last year it was a huge seizure quantity which we recognized in our revenue. Subsequently, because of the heavy penalties, the clients are now not doing that much of avoidance of the penalty is not there now. The reduced seizure quantity value during the current year is because of this double payment penalties. That is one issue, and another is that they increased the royalty rate to INR 10 per metric ton as an additional royalty payment. Some MITF charges which they are collecting at 5% of the royalty value. These are all increased costs which we have incurred during the current year.
What is the project size? If you could quantify that, number one.
The revenue we have, last year we did around INR 700 crore. This year also we will touch INR 700 crore-INR 750 crore from the KRBM.
Okay. What is the specific EBITDA margin for this project?
Earlier it was average. Last year we did around 14% EBITDA. This year, the first quarter it came down to 10%.
10% from the earlier 14%, right?
No, from 14% it has come down to 10% because of this additional royalty clause. 14 was annual.
Okay.
Q1 we expect to maintain 10%-11% until end of the year for the remaining quarters as well.
Okay. Thank you for that, sir.
Thank you.
Thank you. Next question comes from the line of Mahesh Patil with ICICI Securities. Please go ahead.
Thank you. Just a clarification, in the base quarter, Q1 fiscal year 2026, we had booked this additional royalty payment. I think penalty was there of around INR 2.8 billion.
Yes. In 2014, this was there. The Q1, there is no sharing of royalties. The INR 51 crore we recognized this quantity revenue during the Q1 of last year.
Q1 of last year, right?
Yes.
There was this INR 0.5 billion of EBITDA level impact because of that.
Yeah.
Is that correct?
Yes.
Is this the same project that we are talking about now where the royalty, the government has come up with this decision or is it different?
No, one is that seizure quantity, the violations have reduced now. The quantity is also reduced. Earlier, we just started one year before that. Last year, because of the heavy penalty, the people are paying the royalties. That seizure quantity is coming down now. Not much of the seizure quantity. Subsequently, they have allotted some of the private paddas and the river dredging activities to the new players. There, this penalty clause is majorly applicable. This is only minor amount which we are getting the seizure quantity during the current year.
Okay. In this current quarter, is there some amount that is comparable to last year? Is there any penalty amount booked in this quarter?
Around INR 30 crore seizure quantity only we have recognized, but in terms of value as compared to the previous, it is very less.
Okay, no one-off as such in this quarter, right?
Yes.
Okay. Sir, in terms of margins, I think you have also mentioned some impact from the cost escalation due to the Iran conflict, right? If you can just quantify it and just want to understand, don't you have an escalation clause for this Iran contract?
In a standalone level, our EBITDA margin has improved compared to the last year, because of the new orders which we received and we managed the cost in the standalone level. At consolidated level, our major consumption is the diesel and oil rates are increased, and that has impact on the profitability.
Okay. Got it. Sir, among the two mines, I think you have done INR 84 crore of revenue from mining this year, right? This quarter. Can we get a breakup of this?
The breakup. KBP we did around INR 57.5 crore. Satna INR 26.3 crore.
Okay. Thank you so much. Sir, sorry, one last question. Hello?
Yeah.
Yeah. Sir, despite the margin in Q1, we are still confident about achieving our around 7.5% of guidance. What gives us the confidence? Is it just the mining production ramp-up, or it is something else that we are so confident of achieving this much guidance?
See the KBP, even though as per the agreement is 1.5 million, but the clients are ready to take it up to 3 million tons during the current year. Conservatively, we've projected INR 350 crore of revenue based on the current production average basis, but we can do more than that also. Conservatively we are projecting at INR 350 crore, and we are confident of getting standard sort of revenue from
Okay. That is the key margin driver that will lead to our guided level, right?
By Q4, our washery also will be ready, and we are expecting that at least one or two months production will be there in the Tasra also. Overall, both together we can give you together around INR 500 crores.
Okay, sir. Got it. Thank you.
Thank you.
Thank you. Next question comes from the line of Mudit Bhandari with IIFL Capital. Please go ahead.
Hi, sir. Thank you for the question. Sir, previously we had stated that, and in this call also, that there will be many projects from NTPC and Adani coming up, like Lara, Yamunanagar, Raigarh, Mahan or Mirzapur. I think we got Singrauli and Mirzapur. Can you tell about various projects? In the last, let's say, one year, how many projects were awarded and how many we got, in terms of whether they have been delayed from the awarding or any other scope of any other player getting any other scope of work. What's the history been and coming ahead, let's say, within the next one year, which major projects are we targeting?
What I told you earlier, I will tell in terms of megawatts. Tendering has been out of the, whatever tracking I said, about 58,000 MW. Tendering which has been completed by BHEL and Adani comes to around nearly 28,000 MW- 30,000 MW out of 58,000 MW. The ongoing tenders or opportunities which we are tracking as on today is about 24,000 MW. That is where the opportunity comes to what I said earlier. The immediate opportunity is about INR 20,500 crores. That is as on today. There are about dozen projects which are in the pipeline for tendering from BHEL, Adani, JSW, and expected tenders to come from L&T also. To some extent, BHEL's tendering has been delayed for a variety of reasons, and there is packaging issues also.
Unlike a vertical composite package, integrated package which Adani gives it, in terms of end-to-end construction solution which fits into our execution philosophy, we prefer to work there, where the size of the package will be more. There is additional advantage of doing that work along with undertaking the civil structural work. Therefore, most of the projects what we have done in Mahan, Mirzapur and now Raipur and now what is expected in JSW also we're planning to do both civil structural and mechanical work. Therefore, from that way, we are tracking closely with both Adani and JSW to see how it develops into BHEL. That's where that opportunity has been mapped. We continue to be more bullish on the Adani and JSW jobs.
Got it, sir. I was looking for if any projects that we are targeting, not issues.
There are projects which we have already. In the case of Adani, Pirpainti is there, then some project is there. In the case of JSW, Salboni is there, another sub-project is there. Some more projects have to develop for them and that is expected to come for tendering. BHEL, yes, because of the packaging philosophy and all, we have to take a call on that. On the balance of plant packages, there are some specific projects which we are targeting. Durgapur is there as on today. These are all very specific projects on which work is going on for tendering.
Got it, sir. Thank you so much. When we say we have been impacted because of raw material price increase, what specific raw material are we looking at? Is it basically the commodity or anything else?
One is the cost of a few base metals has increased. That has directly impacted the prices of raw materials like steel and alloy steel. Because of when the war had started in the initial stages, in the month of February, March, there was a spike in LNG prices as well. This has also trickled down to increasing cost of gases that we use in construction. Of course, the recent prices, as you can see, the crude price has been up and down, and there is also an increase in diesel price over the last two months, which we use predominantly in our mining projects. Majorly it's these three.
Got it, sir. Last-
We have PVC clauses that compensate for most of these increases. These PVC clauses sometimes kick in a quarter later when the indices get updated. Sometimes if it's a private client, we usually try to approach immediately. Most of the increase has been factored in. Part of the increase has been factored in.
Got it, sir. For fiscal year 2027, at console level, what revenue are we looking at? Second part to this, for O&M in this 1Q, it was little lower, only INR 413 crore. If I look at quarterly run rates for the last few quarters, it was little higher. Any specific reason, or it's just a quarterly impact?
Can you repeat the question? The second part.
Yeah. For second part, in this first quarter of fiscal year 2027, O&M revenue was only INR 413 crore. If I look at last few quarters, it was little higher than this level.
Any specific reason or just a quarterly impact and quarterly phenomenon?
Actually, last year, we have done some one-time special jobs of overhauling of the power plants. Their revenue is higher side during the last quarter and previous year. The one-time jobs even this year also will get as and when we get, we'll achieve that number. As of now, the projected number is based on my existing order basis.
A few R&M projects, renovation and modernization projects of a few plants that a few IPPs have purchased. We were also getting revenues from those plants in last year. Those we have already commissioned, and for some of those, we have already got O&M contracts. On account of that, there is a slight increase also in revenue. Overall guidance for fiscal year 2027 is INR 7,300 crores, and we are on track to achieving that.
Got it, sir. All the very best.
If you look at the overall year-over-year basis, we are targeting around 28% growth in O&M. Last year, it was around INR 1,760, this year we are targeting around INR 2,089. Quarter-on-quarter, there's a variation, but at the end of the year, we will get that growth of more plus 20%+ only will get that revenue growth.
Thank you, sir. Looking for that figure.
Thank you. Next question comes from the line of Abhinav Mandovara with Aequitas Investments. Please go ahead.
Yes, hi. My first question was regarding the costs, we have seen increase in cost of gases and waste metals. Are our contracts will pass through or variable in nature or fixed-price contracts?
Abhinav, your voice was muffled. Can you repeat the question?
Sorry.
Yeah, I'll repeat my question again. My question was whether our contracts are variable or fixed-price contracts, as we can see that there has been increase in the cost such as gases, engine, waste metals, and it has impacted our margin.
Yes. Most of the contracts have PVC clauses factored in, so they are variable contracts. Sometimes it doesn't compensate to the extent of the market price increase because they take some time to update the index. In such cases, especially with private clients, we take up with the client and see whatever is not factored or protected as per the formula, any erroneous increases, sometimes clients pay back. In most cases, the clients are paying back.
Actually, to add on to what he said. Most of the contracts cover with the price variation clause during the contract period and extent period, there is an element of what is called fixed cost compensation, overrun cost. That also there's a fixed amount. What happens is when the major portion of the work is done after the contract period, the problem arises. Such a case, we have to resort to claims management. Of course, in a very unforeseen circumstances, we can also invoke the arbitration and dispute resolution mechanisms. That is an exception case. Generally, we try to settle it. As Rohit said, private customers, they try to settle it and pay a cost, whatever is there reasonable.
They will try to do in a business way, in a future jobs, we will take it gets some sort of understanding on that. In a public sector, there are rules for them, they have to go by that. As a last resort, we have to resort to a dispute resolution, putting a proper claim when we find the additional costs have exceeded our own, whatever our costs were incurred.
Okay.
Hi, this is Riya this side. I just wanted to understand for a state build in nature, how much, these bigger contracts have to sign a receivable for the bigger contracts like Adani and BHEL. What is the amount of orders which are pending from these two entities specifically?
Riya, you will have to repeat the question.
Sorry.
Your voice was We couldn't-
Record it.
quite get what you said.
Hello, am I audible?
You're audible. Now it's better.
Just wanted to understand what is the order backlog from Adani, NTPC, and BHEL, these major customers. My second question is in terms of receivables, what is the nature of receivables we are seeing since our order size is increasing? Is there any change in payment cycle, or what is the newer payment cycle for the current customers?
What I can say on this, on the BHEL side, we have got a broad classification. On the installation side, we got a backlog of INR 1,586 crore. On the civil and power sector, INR 4,292 crore. On the O&M side, which is mostly in the private sector, that is about INR 3,500 crore. On the Balance of Plant, what we are doing with the BHEL, that is our INR 2,675 crore. Specific backlogs are there, railways INR 780 crore, electrical balance work INR 684 crore. The other sectors like roads and then drinking water about INR 900 crore, INR 1,000 crore, sorry. Like that, we have got a breakup of the backlogs available, pending work has to be completed.
Ma'am, see in Adani, we're having outstanding around INR 2,400 crore orders worth, total orders worth of pending, 14 orders we're executing right now. In BHEL side, around INR 5,300 crore, the five major projects which we are executing.
These two are the majors. If you see, we are not having much of exposure. Vedanta, we have another private player. We are executing six projects with Vedanta, which is around INR 1,551 crore of order backlog is there.
Got it. Also Adani, about the INR 400 is over how many years and also for BHEL?
The order timelines you're asking about, the order execution timelines. Generally, it will be typically ranges from two to three years between them. O&M generally they give typically three to five years, and the construction, civil and all, 2-3 years between.
Okay.
All our closing order book, you can take 2.5 years as the execution period, you can take average period.
Got it. Also with Adani and BHEL, what is our current cycle of payment and are we seeing any delay from the bigger, larger players? Do we have any different terms?
No, generally, Adani, and other private players, after submission of bills, they take another 15 days- 30 days. Initially, they'll give 70% payment on submission of the bill, and after that, before month-end, they'll pay the balance 30%. In the case of BHEL, their period is 30 days from after the submission of the bill to them.
Most of the contracts is within 30 days. After the certified bills are matched, and then the payment is due.
Got it. Is there any amount kept for retention?
Sorry?
Any retention money?
Retention, generally-
5%
Five percent general retention money is there. As per the agreement clauses, we are submitting bank guarantee and we're collecting the money along with the running bill. There is no deduction. They're releasing the money against the bank guarantee.
Got it. For the last question, for the current year, we've guided for around 3.5% margin. Considering around 20%-21% for FPO, what will be the LOM margin like? Are we seeing a dip in that?
On FPO margin.
See, the MDO margin will be 15%, but that component is only 5%-6% at this point of time. With overall turnover. The remaining 95%, if you take the standalone average, you can take 11% range, including blended with O&M business, around 12%-13% will be there in the standalone level business.
Got it. I think that would be helpful. Join back the queue for further question. Thanks.
Thank you. Next question comes from the line of Suhas Naik with Crede Capital. Please go ahead.
Hi. Thank you. Can you share your view on the O&M business, how it's likely to scale up in the next two to three years? What kind of margins we enjoy in this business at operating level?
I think O&M continues to drive the business and top line as well as the bottom line. We have seen it has compound some more 30%, 35%, 30% of our overall business. The major push for the O&M continues to be the capacity additions, as I said earlier, which is going to happen in the next five to six years at the rate of 8,000 MW- 10,000 MW. There, the importance of the O&M is from the private sector for outsourcing and whatever plants are getting commissioned. Suppose there is a plan for Adani to complete more than 20,000 MW, JSW has got plants, Vedanta is having plants. Therefore, these plants will definitely come up for O&M business. That is a long-term outsourcing, and the opportunity size will be about INR 800 crores per annum.
That depends how much is the outsourcing is done, and we expect most of the projects in the private sector commissioned will come for outsourcing. The public sector is a question of how they take as a policy matter. Recently what we have seen is that about five projects, five plants were working on O&M, long-term O&M. That is a indication that public sector also will be interested to add on to the O&M profile to see that their plants are better managed with better margins and outsourcing than in-house management. We expect more opportunities in the public sector also. Therefore, the growth will be there. What we have seen, the growth will continue to be there in the O&M side in the coming five to six years.
What about margins? What kind of margins we enjoy in this business?
Around what we are having, 18%-20%.
That's good. Great. One more question is about our execution capacity, both human capital as well as balance sheet. How much of orders we can execute on a yearly basis based on our current strength, both of manpower and balance sheet?
One is the financial capacity and the working capital management. I will bring out the physical capacities. The organization is having a huge HR base, time base with about 4,000 engineers, and then about 45,000 workforce -50,000 workforce. That is the basic strength. Another important aspect is the two aspects of project, this one, management and construction management. We have got very specialized groups in each of these segments and they also take up the adequate plans and requisite inputs planning required for doing the new projects. In fact, the organization's capacity to enhance the resources is quite substantial. Last time, last about one year back, we had about 40,000 headcount.
Today, it has gone up to 50,000 based on the requirement of the manpower in the increased O&M business and also some of the new installation jobs which has come up in the private sector with the power also. Another matching important capacity requirement is in terms of handling equipment, construction equipment in civil, mechanical, cranes, and then in all the civil area of the equipment. That I continuously updating, we are providing capital budget for that, for the new add-on capacities. Where only exception cases with the capacities are very high, craneages like 500 ton capacity or 700 ton capacity, we resort to hiring. Otherwise, 80%-90% is managed with in-house capacities.
In addition to that, sir, what he said, the working capital requirement, basically 30% of our revenue is coming from the O&M business, where there is no material involvement and equipment requirement. The one-month salary is only the money required for maintaining these employees. The 70% of the business, our EPC business we recently entered, and earlier we used to do majority of them are in the construction contracts through LCs and all. We manage the materials. With the present level of working capital limits, with the present staff, we can do up to INR 10,000 crore of revenue. Only thing we need to add every year INR 100 crore, INR 120 crore of CapEx are the requirement, new orders requirement.
Great. One last question is about the trajectory of operating margin. What we are talking about is we are getting into Balance of Plant more, then you're talking about MDOs here, and the third is the O&M. All these businesses will have a higher margin. Overall, at the company level, do you expect the margin profile to improve as we go into 2028 and 2029?
Yeah, because it depends on the mix of our O&M and mining business. Year-on-year, our EBITDA margin will go up. We are targeting around 0.5% jump in every year until 2030. After 2030, it will touch at most 14% of the EBITDA margin from the present 12.5%.
Great. Thank you, sir. Thanks for the response. Thank you.
Thank you. Next question comes on the line of Dhananjay with Centrum Broking, Mumbai. Please go ahead.
Thanks for the opportunity. Sir, in this quarter, the ETC business, in terms of revenue, it has come down from INR 250 crore- INR 217 crore. Also we didn't have any order inflow in this segment. How do you see overall revenue in this segment? Last year we had a very strong growth. On annual basis, we did about INR 1,300 crore from ETC segment. How do you see this segment to do this in current quarter, looking at quarter cycles?
The major thrust out of the segment, we used to do the Athena Vedanta project and FGD projects. Due to the accident happened at Athena project last year, three, four months back. First quarter, we have impact of revenue in the Q1. Recently they started the work in our work, That will be covered in the Q2 onwards. FGD also, we almost completed the major works and we are nearer to the completion. Maybe in this quarter, we'll try to close that entire FGD balance works also. Due to this, comparatively, there's a lower revenue in the ETC business. Again, EPC, internally, our erection and civil people internally, they are working on the internal in-house EPC business. That will come under the EPC turnover of INR 96 crore, once they're engaged with the EPC works also.
Whatever shortfall we'll have here in Q1 power plant construction is also partly because of some of the skill has been diverted to doing industrial construction EPC, the Balance of Plant EPC project that we have taken up with BHEL. It's a similar nature of work, we are using the same skill to execute some amount of work there. You'll see some growth there, but overall power construction and EPC together, you'll see a good growth. You'll see a growth of 20%-22%, if you club both of them. If it's only power plant construction, erection, testing, commissioning, we believe we have maximized our execution potential. We are able to execute 14 boilers-15 boilers, 800 MW boilers around at the same time.
We plan for this to only increase by one or two boilers year-on-year, which will only contribute to a minor increase of 5%-7% growth here. On the other hand, EPC is going to grow at 22%-22%. An average growth of 14%-15% is what can be expected from the power sector.
Looking at the backlog, if you see the trend previously, in the year 2024-2025, we had a backlog of INR 14,387 crore, we executed revenue of INR 6,000+ crore. Today, the backlog is INR 16,228 crore. From that angle, even 40%+ the new orders will come up should give reasonable growth for the current year also.
Mr. Dhananjay, are you done with your questions? Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I now hand the conference over to the management for closing comments.
Yeah. Thanks for your participation and all. I think at the beginning of the quarter, we have seen what are the directions which the company has to go. The diversification into the balance of plant is a huge work perspective. New opportunities are going to come up there. The continued investment in the power sector with around the pace of 60 GW in the coming seven to eight year, six years, we will continue to focus on that. The resultant O&M opportunities that come up with the new plants will be there. The focus on the infrastructure side of railways and other sectors that will be stabilized. The international business, we are doing pretty well in terms of O&M and maintenance jobs with better margins.
We expect that the new opportunities coming up in West Africa and the Middle East and the GCC countries should enable us to grow in the international sector also. Definitely new two, three opportunities are being closely worked on with the EPC contractors there. That will substantially add up to the installation jobs and the service jobs, like what we have done earlier, before 2023-2024. That will come back on the pipeline once this phase comes into the function there.
Thank you. On behalf of Power Mech Projects Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.