Desco operating cash outflow reaches Rs 14.2703 crore in H1

Desco Infratech Limited reported a Rs 14.2703 crore net operating cash outflow for the half year ended 30 September 2026, despite generating Rs 12.8066 crore of profit before tax. Its standalone cash-flow statement shows that sundry debtors absorbed Rs 26.2424 crore and other current assets absorbed Rs 17.1813 crore during the period.

Why did Desco report negative operating cash flow?

Desco reported negative operating cash flow because working-capital uses exceeded cash generated before those movements in the half year ended 30 September 2026. Profit before tax was Rs 12.8066 crore, while depreciation of Rs 20.16 lakh, interest on loans of Rs 1.0346 crore and loan-processing charges of Rs 41.82 lakh took operating profit before working-capital changes to Rs 14.3016 crore. Cash generated from operations then turned negative at Rs 11.2966 crore.

The principal cash use was the Rs 26.2424 crore increase in sundry debtors, followed by Rs 17.1813 crore absorbed by other current assets. These movements were partly offset by a Rs 15.1693 crore increase in trade payables, a Rs 1.9900 crore change in trade payables related to bill discounting, and a Rs 1.1943 crore increase in other current liabilities. Net direct taxes paid were Rs 2.9737 crore, taking net operating cash flow to negative Rs 14.2703 crore.

The latest half-year outflow cannot be compared directly with the Rs 17.9597 crore outflow for the full year ended 31 March 2026 because the disclosed periods are of different lengths. However, both reported periods had negative operating cash flow, even as Desco recorded Rs 75.0494 crore of revenue from operations in the half year ended 30 September 2026.

How much did Desco's receivables and current assets rise?

Desco's trade receivables rose by Rs 26.2424 crore to Rs 56.6710 crore at 30 September 2026 from Rs 30.4286 crore at 31 March 2026. The balance-sheet increase matches the Rs 26.2424 crore cash outflow classified as an increase in sundry debtors in the cash-flow statement. The filing does not identify customers, projects or collection timing behind the movement.

Other current assets increased by Rs 17.1813 crore to Rs 73.1502 crore from Rs 55.9689 crore over the same six months. Short-term loans and advances rose to Rs 2.6691 crore from Rs 1.9760 crore, while inventories fell to Rs 5.3166 crore from Rs 5.4524 crore. The inventory decline released Rs 13.57 lakh of cash, unlike the material outflows associated with receivables and other current assets.

Total current assets stood at Rs 138.9347 crore at 30 September 2026, compared with Rs 94.5184 crore at 31 March 2026. Trade payables also increased to Rs 27.2108 crore from Rs 12.0416 crore, comprising Rs 24.2559 crore due to creditors other than micro and small enterprises and Rs 2.9549 crore due to micro and small enterprises.

How did Desco finance the cash movements?

Desco generated a Rs 18.2529 crore net cash inflow from financing activities in the half year ended 30 September 2026. This included Rs 15.9729 crore of net proceeds from short-term borrowings and Rs 3.7327 crore from long-term borrowings, offset by Rs 1.0346 crore of interest paid and Rs 41.82 lakh of loan-processing charges. The financing inflow exceeded the combined operating and investing cash outflows during the period.

Short-term borrowings on the standalone balance sheet increased to Rs 30.1193 crore at 30 September 2026 from Rs 12.1564 crore at 31 March 2026. Long-term borrowings increased to Rs 5.7967 crore from Rs 2.0639 crore. Desco stated that short-term borrowings include amounts payable for bill discounting, which it described as embedded in its procurement and working-capital cycle.

Investing activities used Rs 3.5474 crore in the half year, led by Rs 3.2495 crore invested in fixed deposits and Rs 46.10 lakh spent on fixed assets, including capital work in progress. After operating, investing and financing movements, cash and cash equivalents increased by Rs 43.52 lakh to Rs 1.1279 crore at 30 September 2026 from Rs 69.26 lakh at the beginning of the period.

What were Desco's profit, revenue and segment results?

Desco reported Rs 12.8066 crore of profit before tax for the half year ended 30 September 2026, down from Rs 13.6478 crore in the half year ended 31 March 2026 but above Rs 8.2495 crore in the half year ended 30 September 2025. Net profit was Rs 9.5023 crore, compared with Rs 10.2098 crore in the preceding half year and Rs 6.1714 crore a year earlier.

Revenue from operations was Rs 75.0494 crore, marginally lower than Rs 76.5730 crore in the preceding half year and higher than Rs 42.0396 crore in the corresponding 2025 half year. Finance costs rose to Rs 1.5926 crore from Rs 92.13 lakh in the preceding half year, while employee-benefit expenses increased to Rs 7.4394 crore from Rs 5.4012 crore.

City Gas Distribution was Desco's largest reported segment by revenue, contributing Rs 49.6768 crore in the latest half year. General Construction Service contributed Rs 21.4738 crore and Power Distribution contributed Rs 3.8988 crore. The company said it has diversified into power distribution infrastructure, general construction services and allied infrastructure activities alongside its existing operations.

Conclusion

Desco's half-year statement shows a gap between accounting profit and operating cash generation. The company reported Rs 12.8066 crore of profit before tax but used Rs 14.2703 crore in operations, with the stated cash-flow mechanisms being the Rs 26.2424 crore increase in sundry debtors and the Rs 17.1813 crore increase in other current assets. Higher payables and financing inflows partly offset these cash demands.

The next reporting period will indicate whether the Rs 56.6710 crore receivables balance and Rs 73.1502 crore of other current assets convert into cash, and whether borrowing continues to rise. Desco also disclosed that its wholly owned United Arab Emirates subsidiary, Desco Global FZ-LLC, had not commenced commercial operations and had no assets or liabilities at 30 September 2026.