/** blogpostTitle: Effwa FY26: Strong ZLD-led growth, improving cash flow, and a bet on ZMD blogpostSlug: effwa-fy26 blogpostCoverImageUrl: null blogpostCoverImageDescription: Ultra-realistic corporate finance cover image showing a clean desk with a laptop and printed financial dashboard. The dashboard displays a rising revenue line from FY23 to FY26 and two smaller trend lines for EBITDA and PAT, plus a donut chart indicating FY26 service mix dominated by ZLD with smaller slices for recycling and O and M. Background includes a subtle industrial water treatment plant silhouette out of focus, with cool blue and grey tones. blogpostShortTitle: Effwa FY26 ZLD growth and cash flow */

Effwa FY26: Strong ZLD-led growth, improving cash flow, and a bet on ZMD

Effwa Infra and Research Limited ended FY26 with strong growth across revenue and profits, backed by project execution momentum and a heavier contribution from Zero Liquid Discharge systems. For FY26, revenue from operations stood at INR 253.29 crore, up 36.8% year on year. EBITDA increased 40.3% to INR 42.11 crore, and profit after tax grew 42.3% to INR 28.62 crore. EBITDA margin for the year was 16.6% and PAT margin was 11.3%.

Management attributed the performance to disciplined project execution, efficiency improvements, and technology adoption, including updated engineering software. The year also saw a clear improvement in operating cash flows, which is often the stress point for EPC and project-led businesses.

FY26 performance: growth with steady margins

The company’s H2 FY26 performance stayed strong, with revenue from operations of INR 163.09 crore, up 31.2% over H2 FY25. EBITDA in H2 FY26 was INR 26.68 crore with an EBITDA margin of 16.4%, while PAT was INR 18.47 crore with a PAT margin of 11.3%.

Across the year, the company showed operating leverage while keeping profitability broadly stable. FY26 EBITDA margin improved slightly to 16.6% from 16.2% in FY25, and PAT margin improved to 11.3% from 10.9%.

Revenue mix: ZLD dominates, O and M remains small

Effwa’s FY26 revenue profile is highly skewed towards ZLD projects. For FY26, effluent treatment plants with ZLD contributed 92.4% of revenue, while effluent treatment plants with recycling contributed 4.6% and operation and maintenance contributed 3.0%.

This concentration is also visible in H2 FY26, where ZLD contributed 95.1% of revenue, with recycling at 1.7% and O and M at 3.2%.

The company has been explicit about building the O and M business to create recurring revenue, and management said it is actively encouraging clients to bundle O and M with EPC. However, based on reported numbers, O and M is still early in its scale-up and remains a small portion of overall revenue.

Cash flows and balance sheet: operating cash turns positive

FY26 marked a meaningful improvement in cash generation. Net cash from operating activities was INR 29.43 crore in FY26, compared to negative INR 31.24 crore in FY25. The company attributed this to strengthened working capital management practices, improved receivable collections, and stricter credit control.

On the balance sheet, trade receivables were INR 128.71 crore as of March 2026. During the earnings call, management quantified retention money at around INR 28 crore to INR 30 crore and discussed using bank guarantees to accelerate retention recovery, with some clients already accepting the approach.

Effwa’s cash and bank balance increased to INR 43.29 crore in March 2026 from INR 26.06 crore in March 2025.

Order book visibility and execution approach

In the investor presentation, Effwa disclosed present orders in hand of INR 750 crore plus and a project pipeline of INR 2,600 crore plus. Management reiterated this on the earnings call, while also explaining that certain orders were declared in the company’s favour but were awaiting written intimation, and would be disclosed to the exchange once documentation was received.

Management indicated that execution timelines for large projects can extend to 18 to 20 months, and in some cases up to 36 months for the biggest opportunities. The company follows milestone-based revenue recognition and books revenue when a bill is accepted and approved by the client.

For FY27, management stated it anticipates around INR 350 crore plus to be executed or commissioned in the coming year from the order book. It also provided a medium-term growth expectation of 35% to 40% CAGR over the next three to four years.

Technology and expansion themes: ZMD, ERP, and selective new verticals

A key strategic theme in the company’s commentary is technology-led differentiation. Effwa said it is progressing with a patent application for Zero Material Discharge, positioned as a step beyond ZLD. On the call, management indicated a commercial launch target of around July 2027, with patent and full-scale demonstration efforts progressing in parallel, including an NDA-based project with a client.

The company also highlighted ongoing internal initiatives such as ERP implementation and broader operational excellence programs intended to improve monitoring and execution efficiency.

Separately, management mentioned exploratory efforts in high-purity water treatment for data centre applications, citing enquiry traction. During the call, management clarified it is yet to receive its first project in this area and acknowledged competition from players such as WABAG and Thermax.

Capital allocation: office purchase and asset-light intent

Effwa emphasized its asset-light model. The key balance sheet addition in FY26 was capital work in progress of INR 19.77 crore. Management clarified this represents payments made for a new office of about 10,000 square feet in Thane, which is under construction. Registration is already completed in the company’s name, and possession is expected in 2027, with a planned shift by December 2027.

Management also stated that, apart from this office purchase, it does not require additional capex to support its targeted growth, relying instead on an asset-light operating model.

Takeaways for investors

Effwa’s FY26 results reflect strong execution and profitability in a ZLD-heavy portfolio, supported by a sharp improvement in operating cash flows. The company has disclosed substantial order visibility and has provided medium-term growth expectations, while acknowledging that timing of order awards and dispatch schedules can shift due to client processes and external disruptions.

The near-term story remains about order conversion and cash collection in a milestone-based EPC model. The medium-term optionality is centered on scaling O and M for recurring revenue and progressing the Zero Material Discharge technology towards commercialization around July 2027.