Pace Digitek’s Consolidated EBITDA Rose While EPC Profit Fell

Pace Digitek reported consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) of Rs 158.6 crore in the second quarter of financial year 2027 (Q2 FY27), up 68.5% year on year. Its standalone engineering, procurement and construction (EPC) EBITDA, however, declined 10.7% to Rs 71.9 crore as the standalone EBITDA margin fell to 12.1% from 23.5%.

Why did Pace Digitek’s consolidated EBITDA increase in Q2 FY27?

Pace Digitek’s consolidated EBITDA increased because revenue and gross profit rose with higher project execution. Q2 FY27 revenue from operations reached Rs 808.2 crore, 51.5% above Rs 533.4 crore in Q2 FY26 and 45.5% above Rs 555.4 crore in Q1 FY27. Management attributed the revenue increase to higher execution across Energy projects, alongside continued contributions from Telecom & ICT projects and operations and maintenance activity.

Gross profit rose 77.3% year on year to Rs 250.4 crore in Q2 FY27 from Rs 141.2 crore. Gross margin widened to 31.0% from 26.5% a year earlier and 28.0% in Q1 FY27. After employee expenses of Rs 36.8 crore and other expenses of Rs 55 crore, consolidated EBITDA was Rs 158.6 crore, compared with Rs 94.1 crore in Q2 FY26 and Rs 86.1 crore in the preceding quarter.

Pace Digitek’s Q2 EBITDA margin was 19.6%, up 2 percentage points from 17.6% in Q2 FY26 and 4.1 percentage points from 15.5% in Q1 FY27. Other expenses rose 138.4% year on year to Rs 55 crore. Employee expenses increased 53.2% to Rs 36.8 crore, broadly in line with the 51.5% increase in revenue, according to management.

How did standalone EPC profitability compare with consolidated results?

Pace Digitek’s standalone EPC profitability moved opposite to the consolidated result: Q2 FY27 standalone EBITDA declined 10.7% to Rs 71.9 crore from Rs 80.5 crore, while consolidated EBITDA rose 68.5% to Rs 158.6 crore. The standalone accounts represent EPC revenue from projects executed for subsidiaries and external customers, making them a narrower reporting perimeter than the consolidated accounts.

Standalone revenue nevertheless climbed 73.8% year on year to Rs 594.6 crore in Q2 FY27 from Rs 342.1 crore. Gross profit increased only 11.9%, to Rs 132.4 crore from Rs 118.4 crore, reducing gross margin to 22.3% from 34.6%. The difference between revenue growth and gross-profit growth coincided with the lower standalone gross margin.

Standalone employee expenses rose 34.8% to Rs 26.3 crore, while other expenses increased 86.7% to Rs 34.2 crore. Standalone EBITDA margin therefore fell 11.4 percentage points year on year, from 23.5% to 12.1%. The presentation does not provide a reconciliation between standalone and consolidated EBITDA, and does not quantify subsidiary contributions or other consolidation effects behind the difference.

What happened to Pace Digitek’s profits below EBITDA?

Pace Digitek’s consolidated profit after tax increased 43.3% to Rs 97.3 crore in Q2 FY27, but grew more slowly than EBITDA as finance costs increased. Finance costs were Rs 35.6 crore, compared with Rs 6.5 crore in Q2 FY26 and Rs 28.3 crore in Q1 FY27. Management said the sequential increase primarily reflected higher project funding requirements and working-capital utilisation.

Consolidated profit before tax rose 36.4% to Rs 130.4 crore, below the 68.5% EBITDA increase, and its margin declined to 16.1% from 17.9%. Depreciation and amortisation increased 179.0% to Rs 5.8 crore, while taxes rose 19.2% to Rs 33.1 crore. Net profit margin was 12.0%, compared with 12.7% in Q2 FY26, despite the improvement in EBITDA margin.

The standalone outcome was lower at each principal profit level. Standalone profit before tax declined 5.1% to Rs 78.3 crore and profit after tax fell 5.3% to Rs 58.2 crore, compared with Rs 61.5 crore a year earlier. Finance costs more than doubled to Rs 10 crore from Rs 4.8 crore, while depreciation and amortisation rose to Rs 4 crore from Rs 1.1 crore; other income rose to Rs 20.4 crore from Rs 7.8 crore.

Does the H1 FY27 result show the same earnings-quality difference?

Pace Digitek’s first-half FY27, or H1 FY27, results show the same contrast: consolidated EBITDA rose 40.5% to Rs 244.7 crore, while standalone EBITDA declined 20.9% to Rs 121.4 crore. Consolidated H1 revenue increased 51.4% to Rs 1,363.5 crore, whereas standalone revenue rose 26.0% to Rs 858.8 crore. The differing growth profiles therefore persisted beyond the Q2 comparison.

At the consolidated level, H1 gross profit increased 57.1% to Rs 405.9 crore and EBITDA margin was 17.9%, down from 19.3% in H1 FY26. At the standalone level, gross profit was nearly unchanged at Rs 218.9 crore versus Rs 219 crore, while gross margin dropped to 25.5% from 32.1%. Standalone EBITDA margin consequently declined to 14.1% from 22.5%.

The revenue mix changed materially between the two first halves. Energy represented 80% of H1 FY27 revenue and Telecom & ICT represented 20%, compared with 15% Energy and 85% Telecom & ICT in H1 FY26. As at 30 September 2026, the executable order book was Rs 10,735.3 crore, with Energy accounting for 79.4% and Telecom & ICT for 20.6%, consistent with the increased weight of Energy project execution disclosed in the results.

Conclusion

Pace Digitek’s Q2 FY27 consolidated earnings expanded on 51.5% revenue growth, a 31.0% gross margin and EBITDA of Rs 158.6 crore. The standalone EPC accounts showed a different outcome: revenue reached Rs 594.6 crore, but gross margin fell to 22.3%, EBITDA declined to Rs 71.9 crore and profit after tax declined to Rs 58.2 crore. Group-level profit growth and standalone EPC profitability did not move together.

The next disclosed operational markers are manufacturing and project-execution milestones. Pace Digitek said its additional 2.5 gigawatt-hour line was commissioned in August 2026, Line 3 was targeted for commissioning by December 2026, and trial production of in-house battery energy storage system containers was scheduled for November 2026, with full-scale production targeted from January 2027. These plans and execution of the Rs 10,735.3 crore order book will be relevant to the future mix of Energy and Telecom & ICT revenue.