/** blogpostTitle: Pace Digitek FY26: Scaling BESS Manufacturing While Telecom Execution Funds the Transition blogpostSlug: pace-fy26 blogpostCoverImageUrl: null blogpostCoverImageDescription: Ultra-realistic corporate financial scene showing a clean desk setup with a large monitor displaying two side-by-side donut charts for revenue mix and order book mix, plus a line chart of quarterly revenue rising sharply in Q4. In the background, a softly blurred industrial BESS container assembly line and a telecom tower silhouette suggest the two business verticals. Neutral lighting, no logos or readable text, professional investor-report aesthetic. blogpostShortTitle: Pace Digitek FY26: BESS scale-up and mix shift */

Pace Digitek FY26: Scaling BESS Manufacturing While Telecom Execution Funds the Transition

Pace Digitek ended FY2026 with a quarter that looked very different from the year as a whole. In Q4 FY26, consolidated revenue from operations rose to INR 1,096.8 crore, up 60.5% year on year, while PAT increased to INR 105.9 crore, up 88.1%. That surge came on the back of project execution and a growing contribution from the energy business.

For the full year, the picture was steadier but strategically important. FY26 consolidated revenue from operations increased 8.3% year on year to INR 2,641.3 crore. PAT grew 10.1% to INR 307.3 crore. The company also reported order inflow of INR 6,459.7 crore and an order book of INR 11,337.9 crore. The message from management was consistent across the investor presentation and the earnings call: FY26 was a transition year, moving from a telecom infrastructure execution company to an integrated infrastructure platform spanning telecom, digital infrastructure and utility-scale battery energy storage systems (BESS).

The mix is shifting, and so are margins

The clearest evidence of the transition is in the order book. As of May 25, 2026, energy accounted for 78.1% of the order book and telecom and ICT for 21.9%. In absolute terms, the executable order book was disclosed at INR 8,854.0 crore for energy and INR 2,483.9 crore for telecom and ICT.

Revenue mix has not yet fully caught up with this order book tilt. In FY26, telecom and ICT contributed 54.6% of revenue and energy contributed 45.4%, based on a disclosed revenue breakdown on total revenue from operations of INR 2,641.3 crore.

This mix shift matters for profitability. Consolidated EBITDA for FY26 was INR 455.2 crore versus INR 481.7 crore in FY25, and the EBITDA margin declined to 17.2% from 19.8%. On the call, the CFO explicitly said energy EBITDA margins are lower than telecom and that as energy execution increases in FY27, margins may reduce slightly.

A similar pattern is visible at the gross profit line. FY26 gross profit was INR 676.5 crore, down from INR 715.3 crore in FY25, and gross margin fell to 25.6% from 29.3%. Q4 FY26 gross margin was 22.7%, lower than the mid-year quarters, reflecting the project and product mix.

Even with margin pressure, PAT margin was stable at 11.4% versus 11.3% in FY25. Finance costs also reduced meaningfully. FY26 finance cost was INR 59.8 crore versus INR 115.2 crore in FY25, which management attributed to post-IPO borrowing reduction, treasury optimization and an improved rating.

BESS strategy: capacity, integration and BOO annuity

FY26 operational disclosures show BESS moving from a pilot stage to scaled execution. The company said it executed 480 MWh of utility-scale BESS capacity during FY26 and delivered 178 grid-scale BESS containers. It also reported about 80% utilization at its energy manufacturing operations.

The bigger story is the build-out of manufacturing capacity. The investor presentation describes operationalized BESS manufacturing facilities with 2.5 GWh installed capacity and a planned phased scale-up to 10 GWh. On the earnings call, management added more specific timelines. They said the expansion from 2.5 GWh to 5 GWh is expected to be operational from July 2026, and that the company has progressed infrastructure for the next expansion to 10 GWh with additional production lines expected to be operational in October 2026. Management also acknowledged a delay of about two months due to shipping disruptions linked to the West Asia conflict, and clarified that equipment is imported from China.

Alongside capacity, the company is pushing backward integration. Management highlighted in-house container fabrication as a response to logistics costs and risks associated with imported containers. They stated that in-house fabrication is expected to improve overall pricing and operating efficiencies by about 4% to 5%, while also reducing freight and transit damage issues.

The order book details provide a useful window into how Pace Digitek intends to monetize this capacity. In energy, the company reported an executable value of INR 8,854.0 crore across BOO, EPC and supply models, with 5.32 GWh of executable visibility. The disclosed mix was roughly 50.1% BOO, 49.8% EPC and 0.1% supply.

The BOO platform is positioned as a way to turn asset creation into recurring cash flows. In FY26, BOO revenue recognized was disclosed as INR 557.8 crore (shown as lease income recognition in the presentation). On the call, management explained that accounting treatment differs by project structure. They stated that for the current MSEDCL project they use a dealer-lessor model under Ind AS, with lease accounting applied, while some solar plus BESS projects are accounted for under a fixed asset accounting model.

Importantly, management also shared unit economics. Using the MSEDCL project as an example, the CFO said overall cost is about INR 1.3 to 1.35 crore per MWh including GST, with net cost about INR 1.2 crore per MWh excluding GST. They guided that SPV-level IRR is about 12% to 13%.

Working capital and input costs: the near-term friction

FY26 balance sheet expansion was significant. Consolidated total equity increased to INR 2,252.2 crore, supported by IPO proceeds and reserves. Total debt increased to INR 960.7 crore from INR 160.7 crore, reflecting investment toward BESS manufacturing expansion, energy asset creation and project execution scale-up. Cash and bank balances increased to INR 769.1 crore, and the company reported net debt to equity at 0.09x.

The working capital discussion was one of the more direct parts of the call. Inventories increased sharply to INR 540.3 crore. The CFO said this was a strategic move to manage lithium-ion cell prices and foreign exchange impact, and that the inventory is intended for consumption in Q1 FY27.

The company also highlighted cell price sensitivity. Management said cell cost is about 60% to 65% of the overall container cost. They also disclosed current container realization of about $82 to$84 per kWh and cell costs in the range of $48 to$50 per kWh. The CFO said that from April 1, rates increased by almost 20% due to regulatory changes, and that the inventory stocked at older prices provides near-term protection.

Receivables were another focus. The CFO said trade receivables are elevated due to Q4 sales concentration and milestone-based billing in telecom projects. They added that about 5% of outstanding is retention money and that a portion relates to a five-year billing schedule for a BSNL project. Management stated that INR 300 crore has already been collected in April and May, and that receivables are expected to ease further by September 2026. On cash flows, management said they expect cash flow from operations to be positive by FY28.

FY27 to FY28: guidance anchored to execution and a larger plant

Pace Digitek reiterated revenue guidance in both the investor presentation and call. FY27E revenue guidance is INR 3,200 to 3,400 crore and FY28E guidance is INR 4,000 to 4,200 crore. The company framed this as supported by a diversified order book across BESS, telecom, OFC and digital infrastructure projects, and by scaling manufacturing and execution capabilities.

Management also provided color on BOO contribution. The CFO guided that in FY27, around 20% to 25% of revenue is expected to come from BOO projects. They also noted that for FY27 and FY28, a large share of manufacturing output will be allocated to BOO projects, with 50% to 60% expected to be allocated to direct product business or EPC business.

Beyond India, the call included a discussion on an NEC partnership for select African regions. Management said NEC has in-roads in African power infrastructure and has signed an exclusive agreement with Pace Digitek for some regions. They guided for approximately 300 to 500 MWh of orders starting from FY27, with FY28 potentially growing 20% to 25% above FY27 levels, subject to project financial closure.

The company also reiterated its intent to broaden into C&I energy storage. The presentation states that C&I prototype solutions have been developed with commercialization planned from Q1 FY27. On the call, management linked this to state-level policies and the broader opportunity set in distributed storage.

Takeaways

FY26 shows Pace Digitek in the middle of a deliberate transition. Telecom and ICT still contribute a majority of current revenues, but energy dominates the order book and is increasingly central to the company’s strategy. The near-term trade-offs are visible in lower consolidated EBITDA margins and stretched working capital, but management has been explicit about the drivers: energy mix, manufacturing ramp-up, and inventory positioning to manage input volatility.

The next 12 to 18 months will hinge on whether the company can execute two things simultaneously: ramp BESS capacity from 2.5 GWh toward 10 GWh on the disclosed timelines, and convert the large executable order book into more evenly distributed quarterly revenues while keeping receivables under control. The FY27 to FY28 guidance provides a clear scorecard, but the market will likely judge Pace Digitek on execution discipline and cash conversion just as much as on top-line growth.