Desco Infratech's H1 FY26: Doubling Down on Growth and Green Energy

Desco Infratech Limited, a prominent player in India's infrastructure and energy services sector, has reported a stellar performance for the first half of Financial Year 2026 (H1 FY26). The company's total revenue surged by an impressive 85.74% year-on-year, reaching INR 42.04 crore, up from INR 22.63 crore in H1 FY25. This robust growth underscores Desco Infratech's operational excellence and strategic positioning within a dynamic market. The company's EBITDA also saw a significant increase of 80.96%, reaching INR 8.99 crore, while the Profit After Tax (PAT) margin strengthened to 14.68% from 14.36% in the previous year. These figures reflect consistent profitability and disciplined execution, setting a strong foundation for the remainder of the fiscal year.

The company's performance was primarily driven by the ramp-up of ongoing City Gas Distribution (CGD) projects and new orders secured in the power distribution and water pipeline segments. Desco Infratech's core competency in CGD EPC remains a key growth driver, complemented by successful diversification efforts. The management highlighted that the company surpassed its entire H1 FY24-25 sales within Q1 FY25-26, indicating strong demand and enhanced operational efficiency. This growth is further supported by improved client coordination and a disciplined cost approach, ensuring healthy margins even amidst expansion.

Strategic Expansion and Green Initiatives

Desco Infratech is not merely focused on current performance but is actively shaping its future through strategic initiatives. The company has incorporated a new wholly-owned subsidiary, Desco Bio Green Private Limited, to undertake projects in the Compressed Bio Gas (CBG) sector. This move aligns with the Government of India's 'SATAT' program, aiming to convert organic and agricultural waste into clean energy. The CBG business is expected to commence commercial operations soon, with revenue contributions anticipated from FY27 and a projected payback period of three to four years.

Further demonstrating its commitment to sustainable energy, Desco Infratech has entered into a tripartite Memorandum of Understanding (MoU) with KPI Green Hydrogen and Ammonia Private Limited and Naveriya Gas Pvt. Ltd. This collaboration aims to explore and implement projects for blending green hydrogen with natural gas, a crucial step towards India's clean energy transition and decarbonization goals. Desco Infratech will serve as the technology partner, leveraging its expertise in hydrogen generation, compression, blending, and delivery systems. This initiative is expected to reduce India's reliance on LNG imports and positions the company as an early mover in the emerging green hydrogen ecosystem, with execution anticipated within 12 to 18 months.

Operational Highlights and Future Outlook

The company's operational footprint is expanding, with operations spanning 55 sites across more than 13 states. The order book currently exceeds INR 345 crore, providing strong revenue visibility for the next 18-24 months. This robust order book, coupled with the company's ability to bid for projects worth over INR 50 crore, reflects growing trust in its capabilities and an acceleration of business. The management also highlighted a remarkable 599% increase in PNG gas meter installations in H1 FY26 over H1 FY25, alongside a 50% growth in piped natural gas conversions, enhancing customer reach and domestic penetration.

Despite the strong growth, the company acknowledged a negative operating cash flow in H1 FY26, primarily due to strategic pre-mobilization advances and project site expansions. This was a deliberate move to ensure uninterrupted execution in H2, especially given the monsoon-related slowdown in Q2. The management expressed confidence in a healthy operating cash flow improvement in H2 FY26, supported by ongoing collections and billing catch-up. The balance sheet remains strong with a negligible debt-to-equity ratio of 0.10:1, ensuring financial stability and flexibility for future growth.

Desco Infratech is well-positioned to capitalize on the strong industry tailwinds in the CGD sector and its strategic diversification into power and green energy. The company's vision to achieve INR 1,000 crore in revenue by 2030, coupled with its focus on operational excellence, prudent decision-making, and sustainable growth, reinforces its commitment to delivering enduring value to all stakeholders. With a robust order pipeline and disciplined capital allocation, Desco Infratech is poised for continued high, sustainable growth.