Patel Engineering Ltd

Page 2 of 17 Ladies and gentlemen, good day and welcome to the Patel Engineering Limited Q2 and H1 FY '26 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 this conference call, please signal an operator by pressing ‘*’, then ‘0’ on your touchtone phone. Please note this conference is being recorded.

I now hand the conference over to Mr. Harsh Patel. Thank you and over to you, sir.

Thank you and good evening, everyone. On behalf of Share India Securities, I would like to welcome all the participants for Q2 FY '26 Earnings Conference Call of Patel Engineering Limited.

We are pleased to have with us the Management Team represented by Managing Director – Ms.

Kavita Shirvaikar and Chief Financial Officer – Mr. Rahul Agarwal.

We will have the opening remarks from the Management followed by Q&A session. Thank you and over to you, ma'am.

Thank you, Harsh. Good evening, everyone and thank you for joining our Q2 and H1 FY '26 Earnings Call. We have uploaded the presentation summarizing the company’s performance for the quarter and half year ending September 2025, along with the results on the Stock Exchange.

I hope you have had the opportunity to review the same.

During this quarter, there was a heavy impact of monsoon in some of our project sites. Despite all challenges, we have been able to achieve around Rs. 1,200 crores revenue for the quarter.

This progress is dedicated to the hard work and commitment of the entire Patel team.

At our Subansisri project, which is located in Arunachal Pradesh, the wet commissioning of the first unit of 250 MW out of total 8 units was successfully carried out and the full commissioning of this unit and integration of the power grid is expected shortly for this unit. Further, post the quarter, the second unit wet commissioning is also in progress and we expect that all the balance units shall also be completed in the coming few months.

At Kwar Hydro Power Project, which is in Jammu and Kashmir, we achieved daylighting breakthrough of the Dam Top Road Tunnel and breakthrough in the upper horizontal portion of the Pressure Shaft 4. We successfully completed pouring of about 1.5 lakh cubic meter of concrete in the project. At the CIDCO Water Tunnel project located in Mumbai, we achieved a record breaking 752 meters of tunneling in a single month, one of the highest ever monthly urban tunneling progress recorded in India. At PGRW project, which is an underground water tunnel

Page 3 of 17 located in Mumbai, we completed 2,045 meters of tunneling using a 2.8 meter diameter TBM and achieved a breakthrough at the Ghatkopar lower level reservoir shaft, marking completion of the TBM excavation. There were various challenges pertaining to geology, which the company overcame through rigorous planning and execution. At our T7 tunnel project site located in Sikkim, we completed the concrete lining works in all aspects, which is significant milestone towards the completion of India's first underground broad gauge railway station.

This quarter, we have been able to achieve a consolidated revenue of Rs. 1,208 crores, growth of around 3% for the quarter as compared to the corresponding quarter in previous year. And on a half year basis, revenue has increased by around 7% to Rs. 2,442 crores from Rs. 2,276 crores in corresponding period last year. Our net profit is at Rs. 77 crores and for the half year it is Rs. 152 crores. During this quarter, we have settled a litigation in US with insurance companies for USD 5 million against a claim of USD 40 million. This was a claim of indemnity against sureties given by them for one of our subsidiaries where operations were closed earlier. Based on legal advice obtained, there was no adverse outcome expected, but to save on future litigation and other travel administrative cost involved, we agreed to settle this case for a value which would have been anyway incurred to fight this litigation over the next few years with the risk of outcome still open. Now, coming to our debt position:

Our debt as on September 25 is Rs. 1,543 crores as compared to Rs. 1,527 crores in last quarter.

During the quarter, we raised an NCD of Rs. 90 crores which carried a coupon of 10.25% per annum having a tenure of 3 years and we have repaid OCD of around Rs. 100 crore. Post end of the quarter, we have completed sale of Chengalpattu land parcel in Chennai and realized around Rs. 135 crore which shall be utilized to reduce debt. Further, in the quarter, we also received the letter of award for one project the Teesta V by NHPC. The project is located in Sikkim. Now, moving on to order book:

As of September 30, 2025, our order book stands at Rs. 15,146 crores. Out of that, hydro is 62%, irrigation is 20%, 7% from tunneling and remaining 11% from urban infra and other segments.

We have submitted tenders of around Rs. 34,000 crores which are currently under evaluation and we expect it will be opened in coming few months. Further, we have projects identified of around Rs. 18,000 crores which are in the pipeline and expected to come up for bidding in near future. We anticipate a healthy order inflow for the remainder of FY '26. This is apart from a list of tenders of more than 1 lakh crore worth projects which will be coming up for bidding in near future. We are hopeful of achieving our target order inflow of around Rs. 8,000- Rs.10,000 crores in next 6 months.

Globally, India is the third largest producer and consumer of electricity. As of September 25, non-fossil fuels accounted for 256 gigawatts which is 51% of the total installed capacity. India's target of 500 gigawatts of non-fossil fuel capacity by 2030 would double the current capacity.

Page 4 of 17 This would mean huge spends by government in this segment and the government has proposed to increase investment in power sector through its 9 PSUs by 21% to INR 86,000 crores in 2025- 26 budget. These investments are allocated to all green energy projects.

Further, there has also been progress made on river interlinking projects. So, far, detailed project reports have been completed for 11 such projects. The Ken Betwa project was the first to start and has already seen an investment of over Rs. 3,900 crore. These upcoming projects will help provide water for farming, drinking and also generate clean electricity. Also, there are multiple road, railway, metro tunnels and open excavation projects coming up which will add diversity in our order book. With a huge set of upcoming projects and to ensure that we are ready to undertake large value projects, the Board of Directors has decided to raise fresh capital of up to Rs. 500 crore via right issue which will ensure that all existing shareholders are given an opportunity to invest. These funds shall be utilized for debt servicing so that the cash flow from operations shall be available for deployment in new projects as we expect huge inflow of new orders.

Before I conclude, I would like to share a few moments of pride that reflect the dedication of our team. We were honored to be recognized as the fastest growing construction company medium category at the 23rd Construction Times Global Awards 2025. We also achieved an important safety milestone, 11 million safe man hours at the Parnai project. This achievement is a testament to our unwavering commitment to safety and quality which are values that remain at the core of everything that we do. The government's strong focus on hydropower, pump storage and tunneling is well aligned with our core strengths. Further, there is a huge opportunity coming up in Metro and other works. This is creating a large pipeline of new opportunities. We remain committed to timely execution and steady sustainable growth.

Thank you. Now, I will ask Rahul to take you through the company's financial numbers.

Thank you, Kavita and good evening, everyone.

I will now take you through the company's financials for the quarter and H1 FY '26:

On a consolidated basis, the revenue for the quarter is Rs. 1,208 crores, up by 3% year-on-year driven by a strong project execution. Operating EBITDA for the quarter is Rs. 159 crores which is a margin of 13.13% and profit after tax stands at Rs. 77.35 crores with a margin of 6.4%.

The revenue is Rs. 1,198 crores, an increase of 3.74%. Operating EBITDA is Rs. 151 crores with a margin of 12.6% and profit after tax is Rs. 64 crores with a margin of 5.37%. Sector-wise revenue breakup for the quarter, hydro is 55%, irrigation is 28%, tunneling is 10%, roads and others are another 7% and our book-to-bill ratio currently stands at around 3.1.

Page 5 of 17 Now, moving to the numbers for the half-year:

On a half-yearly basis, our consolidated revenue is Rs. 2,442 crores up by 7.29%. Operating EBITDA is Rs. 324 crores, a margin of 13.27%. Profit after tax has increased by around 18% and stands to Rs. 152 crores with a margin of 6.24%. On a standalone basis, revenue is Rs. 2,422 crores, an increase of 8%. Operating EBITDA is Rs. 310 crores with a margin of 12.79%. Profit after tax is Rs. 134 crores with a margin of 5.5%.

That was all on our Q2 FY '26 Results brief from our side.

Now, we are happy to take any questions that you may have. Thank you very much.

Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Nirmam from Unique PMS. Please go ahead.

If I look at the consolidated segmentreporting, there has been a substantial increase in the profitability for the civil construction segment. So, what led to that increase in profitability? And also, again, looking at the real estate segment, there is a loss. So, what are the reasons for that loss?

So, there is no actually revenue as such during the current quarter from the real estate segment.

It is only operational expenses and one settlement of a contractor if you have for the real estate segment that should be showing in the loss.

And so, all the profitability that is improved is in the civil construction segment? Correct.

And second question on this rights issue. So, we were expecting a lot of money from these non- core asset settlement. So, while that is there, we are also raising money via rights issue. So, can you explain the rationale behind it?

Page 6 of 17 So, see the timing of the cash flow requirement is the question. So, as told on the call, we have sold one land bank. That money is going to repay the debt. Now, if we raise some funds right now, we can use funds for new projects. And because there are so much projects in pipeline, we have bided for around Rs. 34,000 crores, another Rs. 18,000 we will bid before March. And next year, another Rs. 1 lakh crore is coming up for bidding. So, we are wanting to have money so that we are easily able to plan these projects.

And one or two clarifications. So, one, do we have any operational business in the real estate segment or there is no business?

No, we do not have any operational business right now in the real estate segment. We have shut that business down. There is one project which we had done in Hyderabad, which OC is still pending, but the project is all completed. So, apart from that, nothing in the real estate business.

And secondly, we reported some settlements on the exchange. So, have all those settlements been accounted in Q2 results or anything is pending? No, everything is accounted.

And thirdly, in the cash flow statement, there is Rs. 65 crore excess credit return back. So, that was also netted off in the exceptional items, right?

No. See, mostly it will be part of other income. Part of the other income? Yes. Got it. Yes. That is it from my side.

Sorry for earlier. Congratulations on the steady ship and I think exciting years ahead. So, quick questions. Cash collections were very robust in the first half. What happened there? The receivable days are down to 52 days. Is that sustainable?

So, see, the first half for the year has been pretty good. And generally, the last quarter is also good. So, we see that receivable days between 45 to 60 days. So, that should be there.

That is a meaningful change from earlier, right, Rahul? Because a few years ago, we were at 114, then down to 80, then down to high 60s. Now you are saying 45-60 going forward is sustainable. Is it part of the contract?

Page 7 of 17 Yes. So, once the bills are getting certified, they are getting paid in 45-60 days.

Fantastic. That is going to make a huge difference in your cash flow profile. Ok great. Second question is your inventories have been restated from Rs. 4,386 crores in March 25 accounts to Rs. 1,092 as of current statement for March 25. Can you explain what happened there?

So, there is a reclassification. The inventories, it has been moved to other current assets and other non-current assets. Why is that?

So, based on accounting policies, we reviewed for other entities also and they are moved, basically the WIP has been moved to as contract assets in other current and non-current assets.

Is that market and accounting practice and why was it not being followed till now?

No. So, it is a practice which some companies follow and some do not. This time, we discussed a lot in length with auditors and we were convinced that we should also do it. Essentially, what also marks is the portion of which completed projects has been moved to non-current assets.

So, this has nothing to do with your settlements in this Vivad se Vishwas Scheme or anything like that? No. Nothing like that.

Next is your improvement in ratings. Are you expecting further ratings review giving account for asset sales in the months ahead and are you also seeing and negotiating lower borrowing cost?

So, the negotiation of lower borrowing cost is a continuous process. As and when the banks take it for renewal, based on the recent improvement in the ratings, we request for the reduction in interest cost and we are looking that some banks have started reducing also. As regards rating upgrade, we see that post-March, we will again request for an upgrade.

Understood. How much of your loans are fixed versus floating interest rate loans? So, where do you get the benefit if the entire rate side curve comes down?

It is all the working capital loans are floating. Right. And fixed and the term loans? The term loans are mostly fixed.

Page 8 of 17 Term loans are fixed. So, that is what we are repaying faster and we take advantage on the working capital side? Yes.

Understood. I have some more questions. Should I come back in queue? Sure.

Thank you. The next question is from the line of Dhananjay Mishra from Sunidhi Securities. Please go ahead.

So, just wanted to know, based on whatever bid pipeline we have, another Rs. 18,000 crores bid we are going to do. So, you said Rs. 7,000-Rs. 8,000 crores order inflow for next year, right?

And what is the number of guidance for this year FY '26?

So, FY '26 only we had said Rs. 8,000, Rs. 2,500 we have already done. Balance we are expecting next 5-6 months it should come.

So, in next 4-5 months, how many bids are going to be finalized and out of this 34,000 bids we have committed, any idea on that?

See, we expect that most of this should come out in the next 6 months.

So, we are pretty confident of achieving these number Rs. 7,000-Rs. 8,000? Yes.

And secondly, this again coming back to this extraordinary Rs. 31 crore, so in note number 5, we have mentioned that apart from this settlement claim, there was also provision right back for associate company. So, what is the breakup of Rs. 31 crores? What was the settlement we had to pay and what was the writeback we got from associate company?

So, the settlement what we have to pay for the US settlement, which is $5 million around Rs. 44-Rs. 45 crores and rest Rs. 13-Rs. 14 crores is the writeback of provision.

So, Rs. 14-Rs. 15 crores we have received writeback? Yes.

And what is the margin outlook going ahead in H2?

Page 9 of 17 Margin outlook will be similar, 13%-14%. 13%-14%. And you also mentioned that we are entering into the new sector, to diversify. So, which all sector and whether the upcoming bids of Rs. 18,000 crores, whether we are entering into new sector, where we are going to be?

So, we are looking at some sectors like, maybe Kavita can answer more, but metro or other excavation.

So, related segment only, like there is lot of work coming in underground metro and surface metro. So, we are exploring the opportunity available in the sector, selectively road sector and metro that we are planning to enter into. And some related work, excavation work, earthwork, that also we will explore.

And we will be bidding standalone or we are going to do some joint venture with some other player who already have proven track record in this segment?

So, it will be decided based on the project which will be coming up for bidding. So, based on the PQ criteria, we will decide.

Thank you. That is all from my side. All the best.

Thank you. The next question is from the line of Varun Mishra from SK Investment. Please go Yes, hi. Thank you. So, I just wanted to know about the recent NCD which we agreed, like what would be like utilizing the funds for? Also, as of now, how much of the funds has been utilized and how much still remains to be like utilized? Could you give a bifurcation for that?

Yes, as of now, we have utilized everything. We utilized everything? Yes.

All right. So, like what has been like the purpose is that, if you could clarify a bit on that?

Purpose was simply replacement of debt only. So, we had other debt to be repaid. So, it is a replacement of debt.

All right, sir. And any further plans for fundraising for CAPEX or anything like that, sir?

Page 10 of 17 So, we have proposed the right issue in this board has approved of up to Rs. 500 crores. So, that we will be taking up at the right time. It is that we have taken a board approval and kept for that.

All right. And like what is the long-term potential for orders like which we see for like with respect to CEA and the recent announcement related to the hydropower capacity transmission like from the Brahmaputra Basin, if you could throw some light on that?

So, you are talking about that 76 gigawatt transmission? Yes.

So, there are a lot of opportunities. That is the reason we have been now looking at raising capital, so that we are ready when these projects come up because not only hydro, other segments are also coming up and there are many many opportunities there.

All right, sir. That is all from my side. Thank you.

Thank you. The next question is from the line of Jeet Gala from Centra Insights LLP. Please go Yes. Sir, the new order run rate has been slow, right, in the first half. So, we have added some Rs. 2,500 crores and probably expecting another Rs. 6,000-Rs. 7,000 crores for the second half.

So, usually what is that trend of new order coming in that happened in last year first half, if you can just and explain why the order flow is very slow this time?

See, last year was an exceptional year because of elections, the order inflow was very low. And before that year, it was last 2 years before that around 4,000-5,000 per year was there. And it is not fixed actually it depends upon when the bid happened and when they will complete everything and open. So, what we have seen right now is a lot of bidding has already been done around Rs. 34,000 crores. And so, we expect them to start opening anytime. That is why we said few months it will need.

Understood. And sir, we have a long-term debt of around Rs. 525 crores. So, what is the repayments coming up in the next 6 months and in FY '27?

So, between next 6 months will be around Rs. 30-Rs. 40 crores and FY '27 is around Rs. 150 odd crores.

All right. And so the entire money of rights will go towards debt servicing, largely long-term debt?

So, what we will do is we will use the money to service the debt so that the operational cash flows can be redeployed in the business.

Page 11 of 17 So, working capital closures also is what you are hinting at? Yes.

And sir, I am actually new to the company. So, if you can just highlight what are the non-core assets of the companies that probably are looking to monetize in the next 1 year?

So, we are looking at raising money around Rs. 150-Rs. 200 crores from non-core assets in next 1 year.

This is in addition to 135 that you already did, right?

Yes, Rs. 135 we have done. Additional next 1 year by FY '27, this much more can happen.

Understood. And sir, any guidance for FY '26, what will topline and margins look like for the balance 6 months?

So, this year we had given because of last year order inflow was less. So, only marginal growth around similar Rs. 5,000 crores as last year and margins around 13%-14%.

And sir, can you help me understand the margin profile with respect to the order book breakup?

Is hydro a better margin profile work or is irrigation better or is tunneling better? Just within the work profile, which kind of work has a better margin?

So, traditionally, hydro has been a better margin, maybe 100-200 basis points better than the others. And irrigation and roads have been lower. On an average, it is around 13%-14%.

Understood. And sir, one last question. So, when you said book to bill ratio of 3.1, which is what you are doing, right? Rs. 15,000 crores of order divided by 3 is Rs. 5,000 crores every year kind of number that you are working at, right? That is correct, right now. All right. Thank you so much.

Thank you. The next question is from the line of Vivek Gupta from Star Investments. Please go So, sir, can you provide a brief on the order pipeline and which states are planning to focus on, if any, like for the project bidding?

See, the order pipeline, around 50%-60% is from the hydro-PSP segment only. And so, the states generally for hydro is in the North, like J&K, Himachal, Northeast. PSP is coming up in other

Page 12 of 17 states also. Then there are other segments, for example, irrigation projects, urban infra projects, and tunneling projects. So, this is all spread across various states, Maharashtra, Chhattisgarh, everywhere.

So, could you please elaborate on the amount by which you intend to lower your debt during the current fiscal year?

So, current fiscal year, we are expecting debt to go down by another Rs. 100 odd crores from now.

Ok. That was from my side. Thank you and all the best for the future quarters.

Thank you. The next question is from the line of Bhavya Shah from Wallfort PMS. Please go Yes, good evening. My question is, what is the interest cost that we are estimating for the Financial Year ‘26 on the consolidated level?

So, right now, we are somewhere around Rs. 75-Rs. 76 crore a quarter. So, around should be there.

So, by that calculation, it should be around Rs. 280-Rs. 300 Cr? Yes. Correct.

So, wouldn't we get the benefit of interest rate reduction that has happened in last couple of months at the same time the reduction of the debt?

Yes. So, see, last year, we were at around 330. So, this year, almost 10% reduction is there.

And any update on the promoter share that has been pledged? Any update on the release of that?

Not yet, but we are working on them. Let us see, maybe by March or post-March, something could work. Ok that’s all from my side. Thank you.

Hi, Rahul. So, these recent litigations were settled. You said it is totally settled. Are there any other such litigations or disputes that are still pending?

Page 13 of 17 So, Viraj, there are no such material litigations which we have against us right now. Obviously, there are arbitration awards and claims that we have. That is separate.

Yes. So, there is nothing material against us.

Great. My next question is there were some very large hydropower projects coming up for bidding towards the end of this year. Is the Rs. 30,000 crores bid, does it include that or is that still to be put in as a bid going ahead? No. So, one is already bidded. One more. How large is that project, if I may? Around 15,000 plus.

So, that bid is already in. And when is the result expected for that? Maybe 3-4 months.

Understood. And given so congratulations, obviously, on the land monetization, Chengalpattu 200 acres. We have been asking for this for some time. So, this year, between arbitration and this land monetization, should we have upwards of Rs. 200 crores coming? We do expect that, yes.

And your land in Telangana, 430 acres, is that prime land or is it rural land? Because I believe land prices in that region are really skyrocketing. So, it is actually little outskirts.

And Panvel land is obviously very prime and getting more prime with completion of the airport. Yes, hopefully. Any plans to monetize that anytime soon?

No, we are actually, for Panvel, we are waiting and we are evaluating various options, what would be the best way to monetize that land parcel.

Understood. Great. And I saw in your deck with 25% of the projects, 50%-70% completed, and 20% of them, 30%-50% completed. Presumably, FY '27 and FY '28 should be big years for the company. Is that correct? In terms of revenue growth?

Page 14 of 17 Yes, we are also expecting that.

Fantastic. And the rights proceeds are entirely for working capital to improve your ability to bid for further projects or is it also for debt pay down?

So, the way we are taking it is, we will use it for debt repayment so that next year, all debt repayments we are doing from this and so that we can use the operational cash flows for the working capital or mobilization of new projects.

Understood. So, immediately, the rights money will go towards debt pay down and then you will draw upon your working capital limits as we went forward.

Right. So, that way we can save on interest costs.

Absolutely. Any timeline for this rights plan? Not fixed yet. We will see now.

Thank you. All the very best to you, Ms. Shirvaikar and the rest of the team. Thank you.

The next question is from the line of Diya Jain from Sapphire Capital. Please go ahead.

Hi, sir. Thank you for the opportunity. So, we are targeted an order book of Rs. 25,000 Cr by the end of FY '26. So, are we still on track to achieve that?

We are looking at around Rs. 8,000 total by this year. So, with that, it should happen. So, 8,000 in H2?

No, 8,000 total for the year. So, another 6,000.

All right. And also, can we reach like Rs. 6,000 or maybe Rs. 5,500 Cr revenue by FY '27? And maybe like a 15%-16% EBITDA margin? So, that is our target.

This is your target or maybe even higher than this?

No, the first target is that only, that 10%-15% growth we get next year. All right. And for margin? Margin-wise, similar profile, 13%-14%.

Page 15 of 17 All right, sir. Thank you so much and all the best.

Thank you. The next question is from the line of Bhavya Shah from Wallfort PMS. Please go So, again, my question is, is there any change in employee strength from quarter-on-quarter?

Like, what is the employee strength as of now we have? Around 4,600.

And is that an increase or a decrease as compared to the last quarter? Minor increase only.

And I think one of the participants asked about rights issue. So, is the promoter category going to participate in this rights issue or is there any clarity on that? So, we expect them to participate. All right. Thank you.

Hi, Rahul. There were some cost optimization initiatives that you all were piloting. Have you made any meaningful progress on that and can you guide towards any kinds of savings starting FY '27?

It is difficult to put a number to it, but we are working on various options for that.

Would you like to maybe detail that in a subsequent call?

Yes. We can detail that in a subsequent call. Fantastic. All the very best.

Thank you. The next question is from the line of Rajeev Rupani, an Individual Investor. Please go ahead.

Page 16 of 17 Yes. Thank you for the opportunity. Sir, I had a follow-up question on the promoter pledge. So, you just informed us that post-March, you will request the bankers for release of some pledge.

So, let us say, one year from now, what will be the promoter pledge? What percentage can the promoter pledge come down to?

So, if discussions with lenders go well, we are targeting around pledge going down to around 50-60%.

And my next question was on the arbitration awards. So, what amount can we expect going forward in this year and next year? Any amount expected?

So, see, between arbitration awards and real estate monetization, we had kept a target around Rs. 150-Rs. 200 crores each year.

So, what we have realized is only from the real estate. So, any amount expected from the arbitration awards? Yes, maybe Rs. 50-Rs. 60 crores. Is that in current year or next year? Current year. And any estimate for next year?

Next year, again, see, it is difficult to say anything between arbitration award and real estate. We are saying between Rs. 150-Rs. 200 crores should come next year also.

And now, we have submitted tenders for about Rs. 35,000 crores. So, out of this, how much for pump hydro storage projects?

Out of 34,000, pump hydro storage is around 10%.

And going forward, will this bid submitted increase next year?

Yes. So, pump storage projects, we are expecting an increase in the bidding.

And my last question was on the tunneling part. So, any orders expected going forward for tunnels?

Tunnels also we have bidded and more projects are coming up for tunnels. So, we should be getting. So, generally, if we have our order book mix what we have today. In between, it may go haywire, but it may be remaining in the same range in the longer period.

Page 17 of 17 And this land which we have sold, is the full 200 acres in Chengalpattu has been sold? Yes. It is all together.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Thank you, everyone.

Thank you, all. And we can take your calls separately on email or whatever if you have more.

On behalf of Share India Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.