Dilip Buildcon FY26: The shift from EPC cycles to long-duration cash flows

Dilip Buildcon Limited (DBL) used its Q4 and FY26 communication to emphasise that the company is no longer positioning itself as a pure EPC contractor. Management framed the business as DBL 2.0, organised around three verticals: EPC as the execution engine, mining MDO as a long-term cash flow engine, and an asset platform where operational projects are monetised via InvITs.

The FY26 numbers show why this narrative matters. Revenue fell year-on-year, but profitability improved sharply due to asset divestment gains. On a standalone basis, revenue from operations declined to 7,005 crore in FY26 from 9,004 crore in FY25. EBITDA declined to 734 crore from 903 crore, though the EBITDA margin improved to about 10.5% from 10.0%. Standalone PAT jumped to 842 crore from 311 crore.

Consolidated revenue from operations also fell to 8,984 crore from 11,317 crore, and consolidated EBITDA declined to 1,766 crore from 2,151 crore. But consolidated PAT increased to 1,398 crore from 840 crore. The income statement notes profits from divestment of completed HAM SPVs in Q3, which management also referenced in the concall.

Order book momentum returned, and the mix is broader than before

DBL closed FY26 with an order book of 28,830 crore, compared with 14,923 crore in FY25. The presentation frames this as a transition away from a road-EPC heavy mix toward a more balanced portfolio across infrastructure and mining.

In FY26, DBL won 13 new projects worth 18,548 crore and completed 5 projects worth 2,812 crore. New wins included 2 HAM projects worth 2,734 crore and 11 EPC projects worth 15,814 crore. The company also highlighted equity divestments in HAM assets, including the listing of Anantam Highways InvIT on 16 Oct 2025 and divestment of 74% equity stake in 7 HAM projects.

The order book composition (as presented) is spread across roads and highways (19%), mining (20% using a three-year rolling inclusion for MDOs), renewables (18%), irrigation (16%), and transmission (6%), with the remainder across tunnels, metro and railways, optical fibre, bridges and urban development, and other categories.

Mining MDO became large enough to change the earnings discussion

Mining is one of the clearest pillars in DBL’s DBL 2.0 messaging. The investor deck lists a long-duration MDO order book value of 96,571 crore and details three projects: Pachhwara Central Coal Mine (55-year tenure), Siarmal Coal Mines (25-year tenure), and Pottangi Bauxite Mine (25-year tenure).

Operationally, the key datapoint is volume scale-up. The deck reports FY26 coal production of 22.35 million tonnes at Siarmal (up from 18.53 in FY25) and 6.37 million tonnes at Pachhwara (versus 6.87 in FY25). Management stated that combined FY26 coal production was 28.72 million tonnes.

DBL also disclosed segment economics for the mining business. In FY26, MDO revenue was 1,692 crore with EBITDA of 389 crore and EBITDA margin of 23%. FY25 MDO revenue was 1,608 crore with EBITDA of 414 crore and margin of 26%. Management attributed the margin decline and Q4 weakness to a temporary evacuation constraint, stating that at Siarmal there was about 6 million tonnes of stock lying at site due to delayed evacuation and unavailability of rail racks.

In the concall, management gave a structured view of the ramp-up. They indicated an FY27 mining revenue expectation of around 2,500 crore, rising to around 3,100 crore in FY28 and around 4,000 crore in FY29. They also reiterated a production target of around 57 million tonnes of coal annually by FY29, with Siarmal guided at 30-plus million tonnes in FY27, upwards of 40 million tonnes in FY28, and about 50 million tonnes by FY29, while Pachhwara remains around 7 million tonnes per year.

InvIT strategy and capital recycling are central to deleveraging claims

DBL’s asset platform is built around monetising operational HAM assets via InvITs and recycling capital. Management stated it held about 1,400 crore worth of units in Anantam Highways and around 200 crore in Shrem InvIT, taking total InvIT units value to nearly 1,600 crore.

Management also provided a quantified view of the next phase of HAM transfers. They stated that the next tranche of 11 assets is expected to require less than 200 crore of incremental investment, while generating InvIT units valued at around 1,800 crore, implying net equity value creation of 1,500 crore to 1,600 crore (as stated in the concall). They also said remaining HAM assets are expected to be transferred in phases through March 2027.

Debt is framed in relation to liquid and investment assets. Standalone net debt was presented at 1,889 crore at March 2026, while net consolidated debt was presented at 7,082 crore, down from 8,142 crore in 2025. Net debt to equity improved to 0.28 at March 2026 from 0.32 at Dec 2025.

However, the cash flow and working capital data show that deleveraging is not only a function of accounting profits. Standalone net cash generated from operating activities was negative 256 crore in FY26, versus positive 364 crore in FY25. Working capital days increased over the quarterly series to 131 days as of March 2026, with debtor days at 93 and inventory days at 169.

Renewables and transmission: new asset classes, but with partner equity

DBL’s broader asset-building plan includes renewable energy and power transmission. The investor presentation describes renewable projects totalling about 2.1 GW, backed by 25-year PPAs, and a transmission project with a 35-year operating period and yearly transmission charges of 331.35 crore.

On capital structure, the company described a plan to bring an acquirer/investor during construction to fund about 85% of equity requirement in these projects, with DBL contributing about 15%. The CFO stated that transmission EBITDA margin is upward of 24% and IRR would be high teens in both solar and transmission projects.

The equity and investment tracker in the deck shows total group outflows (HAM/BOT, mining, solar, and transmission) of 4,543 crore, with 1,697 crore invested up to March 2026 and 2,848 crore balance to be invested till completion. It also lists expected inflows from InvIT distributions and structured equity partners, resulting in a projected deficit of 253 crore in FY27 and near-breakeven in FY28.

Takeaways from FY26 and what to watch next

DBL’s FY26 narrative is internally consistent: the company is trying to move earnings away from EPC cyclicality and toward long-duration assets and mining. The reported jump in PAT supports the message, but it is also driven by divestment gains, while operating cash flow was negative and working capital remained high.

Management guidance for FY27 includes 30% to 40% standalone revenue growth over FY26, EBITDA margin target of about 11% to 12%, and order inflow expectation of 10,000 crore to 12,000 crore. Management also reiterated an ambition to become net debt-free by FY28 and described a plan to reduce debt by 600 crore to 800 crore in FY27, with expected interest outflow of about 375 crore to 400 crore.

For investors, the next set of checkpoints are measurable: mining volume dispatch normalisation at Siarmal, the pace and valuation of HAM transfers to InvIT, and whether cash conversion improves as execution scales up in FY27.