SPML Infra's Strategic Leap: Water, Power, and the BESS Revolution

SPML Infra Limited, a seasoned player in India's infrastructure landscape, has unveiled its Q2 and H1 FY26 standalone financial results, painting a picture of strategic transition and future-focused growth. While the first half of the fiscal year presented seasonal headwinds, including extended monsoons, state elections, and tendering delays, the company demonstrated stable operational performance and a clear pivot towards higher-margin opportunities. For H1 FY26, SPML Infra reported a standalone revenue of INR 362.8 crore. Despite a slight year-on-year dip in revenue, the company successfully enhanced its profitability, with EBITDA margins improving to 9.8% and PAT margins rising to 7.6%. This margin expansion signals the company's disciplined approach to project selection and the gradual phasing out of older, lower-margin legacy projects.

The second quarter, Q2 FY26, also reflected this strategic shift. Revenue for Q2 FY26 stood at INR 198.6 crore, a marginal increase of 2% year-on-year from INR 194.9 crore in Q2 FY25. While EBITDA for the quarter was INR 19.8 crore (down from INR 20.1 crore in Q2 FY25), PAT saw a healthy rise to INR 15.3 crore from INR 14.0 crore in the prior year. The EBITDA margin for Q2 FY26 was 10.0%, and the PAT margin was 7.7%. Management highlighted that the revenue contribution from newly secured, higher-margin projects is anticipated to significantly increase in Q3 and Q4 FY26, further bolstering overall profitability.

Charting a New Course: Strategic Initiatives and Market Opportunities

SPML Infra's future growth narrative is strongly anchored in several key strategic initiatives. A major thrust is the company's ambitious foray into the Battery Energy Storage Systems (BESS) market. SPML is establishing a 2.5 GWh Phase I BESS manufacturing facility at Supa-Parner MIDC, Maharashtra, with a planned investment of approximately Rs. 175 crore. This initiative is bolstered by a strategic tech collaboration with Energy Vault, a global leader in energy storage, providing SPML with IP ownership and system design rights for the Indian market. This facility is targeted for commissioning by Q1 FY27, with Phase II slated for FY28. The company aims to deploy 500 MWh in the next 12 months and manufacture 30-40+ GWh over the next decade, positioning itself as a comprehensive BESS solutions provider. This move is particularly timely, as India's BESS market is projected to reach USD 57 billion by 2031-32 and USD 443 billion by 2047, driven by renewable energy mandates and grid stability needs. Notably, the government's recent focus on BESS in thermal power presents an additional, significant growth avenue.

In its traditional segments, SPML Infra continues to build a robust order book. The company has secured new projects totaling over INR 3,772 crore across Jharkhand, Madhya Pradesh, Rajasthan, and Tamil Nadu. Furthermore, it holds an L1 position in tenders worth approximately INR 1,125 crore, which are expected to be awarded in the current fiscal year. This strong order pipeline, combined with an existing order book of around INR 1,600 crore, provides clear visibility on future revenue and earnings growth. The company's strategy emphasizes selective bidding for fewer but larger projects with high margins, ensuring they are fully funded and easy to execute. This includes focusing on cash-rich states, rigorous sub-contractor selection, and risk-averse mechanisms like Escrow to manage working capital.

Strengthening the Foundation: Financial Health and Debt Resolution

SPML Infra has made significant strides in strengthening its financial footing and resolving legacy issues. The company's sanctioned bank facilities have been enhanced from INR 205 crore to INR 505 crore by a leading public sector bank, underscoring lender confidence and providing greater flexibility for larger project participation. This improved liquidity is further supported by substantial promoter commitment: promoters have infused over Rs. 160 crore in the last three years and contributed Rs. 190 crore through a preferential allotment, which included debt conversion. With proposed infusions, the company expects to have a total cash liquidity of Rs. 463 crore for business operations.

Addressing its legacy debt, SPML Infra has a remaining debt of INR 400 crore (inclusive of interest) owed to NARCL. This amount is strategically backed by arbitration awards totaling INR 647 crore (inclusive of accumulated interest till October 2025). The company anticipates converting approximately INR 1,500 crore from its filed claims into awards, which will further enhance liquidity. The management noted that recent government initiatives, such as the Vivad Se Vishwas scheme and rules requiring a 75% deposit for challenging arbitration awards, are expected to expedite the settlement and realization of these claims.

Outlook: A Future of Growth and Profitability

SPML Infra is poised for a period of sustained growth and enhanced profitability. The management has set an ambitious target of achieving a business volume of INR 5,000 crore in the current fiscal year, with a similar or higher target for the next year. A key long-term objective is to achieve a 50:50 revenue split between water/power and BESS by 2029-2030, a significant shift from the current 90:10 water-to-power ratio. The company's strategic entry into the BESS sector, coupled with its robust order book in water and power infrastructure, positions it well to capitalize on India's massive infrastructure development and clean energy transition. With improved liquidity, a strengthened balance sheet, and a disciplined approach to project execution, SPML Infra is confidently building long-term value for its stakeholders.