Power Mech Projects: Navigating Growth and Diversification in Q2 FY26

Power Mech Projects Limited, a prominent player in India's industrial and infrastructure sectors, has reported a robust performance for the second quarter of Financial Year 2026. The company's Q2 FY26 earnings call revealed a total income of INR 1,249 crores, marking a significant 19% year-on-year increase from INR 1,046 crores in Q2 FY25. This growth underscores consistent operational momentum, driven by strong execution across key segments. EBITDA for the quarter stood at INR 158 crores, an 18% rise from INR 134 crores in the corresponding period last year, while Profit After Tax (PAT) reached INR 78 crores, registering a 12% growth compared to INR 70 crores in Q2 FY25. Despite a marginal dip in PAT margin due to increased finance and depreciation costs, the company's overall trajectory remains positive, with core operations delivering healthy year-on-year growth.

The first half of FY26 also demonstrated strong performance, with a total income of INR 2,554 crores, a 24% increase over H1 FY25. EBITDA for H1 FY26 was INR 340 crores, up 33%, and PAT stood at INR 159 crores. The company's diversified business model, encompassing Erection, Testing & Commissioning (ETC), Operations & Maintenance (O&M), Civil Infrastructure, and Mining, Development & Operations (MDO), continues to be a key strength. The mechanical business was a significant growth driver, surging 90% to INR 435 crores in Q2 FY26, propelled by strong traction in industrial power construction projects. The O&M segment also performed well, growing 12% to INR 440 crores, supported by new order inflows. The nascent mining business (MDO) showed remarkable growth, increasing 164% to INR 31 crores, benefiting from higher offtake arrangements with SAIL. However, the civil segment, including railway and water distribution projects, experienced a 22% decline to INR 309 crores, primarily due to extended monsoon rains and delayed bill certifications in the Water division.

Financial Highlights: A Snapshot

To provide a clearer picture of Power Mech's Q2 FY26 performance, here's a summary of key financial metrics:

Strategic Initiatives and Future Outlook

Power Mech Projects Limited is not resting on its laurels; the company is actively pursuing several strategic initiatives to sustain its growth trajectory. A major focus is the ramp-up of its MDO business, particularly the KBP mining project, where operations commenced in April 2025, with coal production expected to begin in November 2025. The company anticipates significant contributions from its CCL and SAIL mines, projecting INR 140-150 crores and INR 57-65 crores, respectively, from these operations in FY26. The construction of a 3.5 million tons per annum washery for the SAIL mine, targeted for completion by September 2026, is crucial for achieving peak rated capacity and boosting MDO margins, which are expected to reach 26-28% by March FY27.

In a significant development, Power Mech secured a large-scale order worth over INR 2,500 crores from Bharat Heavy Electricals Limited (BHEL) for an EPC package for the Balance of Plant (BOP) at the 1 X 800 MW Singareni Super Thermal Power Project. This project, with an execution cycle of 38 months, reinforces the company's strong position in large-scale EPC and BOP execution within the power sector and expands its civil and structural capabilities. This win aligns with the company's strategy to strengthen its presence with marquee PSU clients and enhance its O&M portfolio. Furthermore, Power Mech is strategically diversifying into renewable energy, focusing on solar and battery energy storage systems on a BOOT (Build-Own-Operate-Transfer) basis. The company aims to enhance its solar capacity to 100 MW and battery energy storage capacity to 200-250 MWh by FY27, signaling a pivot towards green energy solutions.

Navigating Challenges and Maintaining Momentum

Despite the positive outlook, Power Mech is transparent about the challenges it faces. The company's net current asset days increased from 128 days in FY25 to 151 days in FY26, primarily due to delays in certification of water works and realization of receivables. This has led to negative operating cash flow, although it has improved from INR 166 crores negative in H1 FY25 to INR 63 crores negative in H1 FY26. Management is actively engaging with clients to expedite certification and payment clearance to improve working capital. The company has also revised its FY26 revenue guidance slightly, now expecting to achieve INR 6,200-6,300 crores, a minor slippage from the initial INR 6,500 crore target due to delays in new order acquisition. However, the company remains confident in securing INR 10,000 crores in new orders by March 2026.

Power Mech Projects Limited's Q2 FY26 performance reflects a company in a strong growth phase, strategically expanding its capabilities and diversifying its revenue streams. While facing temporary headwinds in certain segments and working capital management, the management's proactive approach to addressing these issues, coupled with a robust order book and clear growth initiatives, positions the company for sustained success. The focus on high-potential areas like MDO, large-scale EPC, and renewable energy underscores a strategic clarity aimed at long-term value creation and market leadership.