Summary
DEE Development Engineers Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 4:00 PM
Event Participants
Executives 2 Brham Yadav (CFO), Krishan Lalit Bansal (Promoter, Chairman & Managing Director)
Analysts 6 Daksh (Nexa Securities), Kamlesh Bagmar (Lotus Asset Managers), Prashant (Individual Investor), Prisha Shah (RS Family Office), Ram Modi (Prabhudas Leeladhar), Ripunjay Aggarwal (Amar Alliance Equity Research)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹286.7 crores | +77% YoY; Driven by strong execution in core business and ramp-up at Anjar facility. |
| Operating EBITDA | ₹43.4 crores | +666.4% YoY; Significant jump due to low base and operating leverage. |
| Operating EBITDA Margin | 15.2% | +1170 bps YoY; Improved from 3.5% in Q3 FY25; core business margin is higher. |
| Core Business EBITDA | ₹129.8 crores (9M) | +175.5% YoY; Excludes non-core power segment losses and one-time labor impacts. |
| Profit After Tax (PAT) | ₹18.6 crores | Significant YoY recovery; 9M PAT reached ₹49.5 crores (+308.2% YoY). |
| Order Book | ₹1,303 crores | Strong multi-year visibility; includes significant domestic PSU and international private contracts. |
| Net Debt Repayment | ~₹40 crores (Annual) | Management expects to reduce debt burden using internal accruals and improved cash flow. |
Geographic & Segment Commentary
- Core - Process Piping & Fabrication: This segment remains the primary value driver with 9M EBITDA margins reaching 17.4% (adjusted). Execution is focused on the power sector in Tatarpur and oil & gas in the Anjar facility. Strategic focus is shifting toward high-margin applications like nuclear, semiconductors, and pharma.
- Non-Core - Power Generation: The segment faced a ₹14.3 crore EBITDA hit in 9M due to tariff revisions (dropping from ₹8.57 to ₹3.50 per unit in some plants). Management is transitioning this segment toward biomass pellet manufacturing to achieve EBITDA neutrality by FY27 and ringfence capital.
- Anjar Facility: Now fully operational and strategically located near the port to reduce logistics costs. It is dedicated to oil & gas and the upcoming seamless pipe manufacturing business, expected to drive future asset turns.
Company-Specific & Strategic Commentary
- Backward Integration (Seamless Pipe Plant): A ₹90 crore investment for a 7,000-tonne capacity plant is nearing commissioning. It targets high-spec alloy and stainless-steel pipes (up to 120mm) for subsea and thermal power, with a peak revenue potential of ₹450 crore and an IRR of 30-35%.
- Asset Utilization & Scale: Management targets a 3x revenue growth over the next 3-5 years, aiming for a top-line of ₹2,300–2,500 crores at 90% utilization of current facilities.
- Biomass Pellet Pivot: To mitigate power segment losses (₹36 crore drainage in FY26), the company is commissioning a pellet plant in Q4 FY26. This uses paddy straw as fuel, insulating the company from husk price volatility.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Core EBITDA Margin | 18% - 20% | Expected to sustain as high-margin seamless pipe plant and Anjar ramp-up contribute. |
| Power Segment Profitability | EBITDA Neutral (FY27) | Expected relief from biomass pellet sales and potential tariff revision orders from PSERC. |
| CAPEX | ₹10 - ₹15 crores (Post-FY26) | Major growth CAPEX cycle (95-98%) completes by March 2026; future spend limited to maintenance. |
| Order Pipeline | ₹300 - ₹400 crores | Immediate visibility on new tenders where the company is L1, primarily in the power sector. |
Risks & Constraints
| Risk | Context |
|---|---|
| Working Capital Intensity | High inventory levels (₹500-600 crores) are required to support the tailor-made, project-driven nature of the business and long lead times for imported alloys. |
| Regulatory/Litigation | Uncertain timelines for tariff appeals in the power segment; the Malwa Power relief is still pending a final order from PSERC. |
| Input Cost Volatility | While mostly insulated via back-to-back ordering, a slight upward trend in raw material prices requires constant monitoring. |
Q&A Highlights
Power Segment Losses
- Question: Why is the EBITDA impact from the power segment so high at ₹14.3 crores? (Kamlesh Bagmar)
- Answer: One plant’s tariff dropped from ₹8.57 to ₹3.50, causing a ₹2.5–3 crore monthly drain. This effectively creates a ₹36 crore annual hit, which management aims to eliminate through the pellet plant pivot (Krishan Lalit Bansal).
Debt & Cash Flow
- Question: Is there a vision to reduce debt to improve the bottom line? (Ripunjay Aggarwal)
- Answer: Growth CAPEX ends in March 2026. Repayments of ₹40 crore annually plus improved cash flows in H1 FY27 will significantly reduce financial costs (Krishan Lalit Bansal).
Segment Diversification
- Question: How is the company preparing for the end of the current power cycle? (Prisha Shah)
- Answer: The company is aggressively qualifying for NPCIL (nuclear) projects and targeting the semiconductor and pharma sectors for specialized piping solutions (Krishan Lalit Bansal).
Inventory Management
- Question: Why is the inventory holding period so high compared to peers? (Ripunjay Aggarwal)
- Answer: 100% of products are “built to print” with specific vendor lists. 50% of raw materials are imported, requiring immediate procurement upon order receipt to secure supply (Krishan Lalit Bansal).
Key Takeaway
DEE Development Engineers delivered a robust Q3 FY26, characterized by 77% YoY revenue growth and a 104.8% jump in 9M operating EBITDA, despite a ₹36 crore full-year drag from its non-core power segment. The company successfully transitioned into a high-execution phase, evidenced by the operationalization of the Anjar facility and the near-completion of a ₹90 crore backward integration into seamless pipes. Strategically, the firm is ringfencing its core piping business, which maintains healthy 17-18% margins, while pivoting the loss-making power division toward biomass pellets to reach EBITDA neutrality by FY27. With the major CAPEX cycle concluding in March 2026 and a strong ₹1,303 crore order book, the management is shifting focus toward debt reduction and high-margin sectors like nuclear and semiconductors. The company remains well-positioned to scale toward a ₹2,500 crore top-line potential as utilization ramps across its specialized manufacturing hubs.
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