Power Mech Q1 FY27: Growth holds strong, but margins wait for mining scale

Power Mech Projects opened FY27 with a sharp step-up in execution. Consolidated revenue in Q1 FY27 came in at INR 1,632.36 crore, up about 25% to 26% year on year. The growth was driven by Civil Infrastructure, Industrial EPC, water projects under JJM, O&M and international work.

Profitability, however, moved in the other direction. EBITDA stood at INR 176.00 crore with a margin of 10.78%, compared with 13.98% in Q1 FY26. PAT was INR 89.32 crore, up 11% YoY, helped by lower finance costs and tax. The company’s message was straightforward: the quarter carried temporary cost pressure, and the margin profile is expected to improve as mining and other higher-margin levers scale up.

What drove revenue: Civil Infra leads, O&M stays steady

The company’s segment mix shows both the benefit and the complexity of its diversified model.

In Q1 FY27, Civil Infrastructure contributed INR 796 crore, or 49% of revenue, reflecting the strength of urban infrastructure, roads, railways and water execution. O&M delivered INR 431 crore, around 27% of revenue, and remains the company’s key recurring line. Industrial Construction reported INR 217 crore, while Industrial EPC contributed INR 96 crore. Mining Development and Operations (MDO) contributed INR 84 crore, a small share of total revenue at 5%, but growing rapidly as the KBP mine ramps after commencement in November 2025.

Management also disclosed that geographical revenue mix in Q1 FY27 was 96% domestic and 4% international, while sector-wise the power segment contributed 54% and non-power 46%.

Why margins fell: KRBM royalty sharing, mining ramp costs, and input inflation

The primary discussion point for Q1 was the decline in EBITDA margin. Management attributed this to a combination of project-specific and macro-driven factors.

First, the KRBM project saw a sharp rise in costs after changes in royalty and penalty sharing. The company explained that the government introduced a change where 50% of penalties collected on seized quantities is retained by the government and 50% passed to the company. In addition, new levies and higher royalty rates increased the cost base. Management quantified this impact: KRBM EBITDA margin was around 14% annually last year, while in Q1 FY27 it came down to about 10% and is expected to be around 10% to 11% for the remaining quarters.

Second, mining at KBP was affected by higher overburden (OB) removal costs, as new seams were opened in Q1. The company expects coal production from these seams to begin in subsequent quarters, improving profitability.

Third, input costs rose due to the ongoing Middle East conflict. Management pointed to higher prices of base metals affecting steel and alloy steel, higher gas costs following an earlier LNG spike, and increased diesel costs which directly impacts mining operations. The company noted that most contracts have price variation clauses, but there can be a lag in index updates and the formula may not fully compensate immediate market spikes.

Order book strength and the FY27 execution target

On the visibility front, Power Mech continues to report a large order pipeline.

Q1 FY27 order inflow was INR 1,864 crore against an annual target of INR 12,000 crore. The total order backlog including MDO stood at INR 55,398 crore, while the executable order book excluding MDO was stated at around INR 16,229 crore.

Management also highlighted customer concentration details in the concall. It stated outstanding order book of around INR 2,400 crore with Adani across 14 projects under execution, and around INR 5,300 crore with BHEL across five major projects. It also mentioned Vedanta exposure of around INR 1,551 crore across six projects.

Working capital commentary was unusually specific. Management indicated that private customers like Adani typically pay within 15 to 30 days of bill submission, and BHEL follows around a 30-day cycle. Retention is generally 5%, but the company stated it uses bank guarantees to receive full running account bills without retention deductions.

Mining and O&M: the margin levers, but timing matters

The margin debate ultimately comes down to mix. The company is leaning on two structural levers.

O&M remains a core annuity business. Management stated O&M margins are around 18% and shared a revenue target of INR 2,089 crore in FY27 compared with INR 1,760 crore in FY26. It also expects growth driven by capacity additions and outsourcing trends, including new private-sector plants.

Mining is the other pillar. In Q1 FY27, mining revenue was INR 84 crore, with a breakup of INR 57.54 crore from KBP and INR 26.34 crore from Tasra. Management reiterated FY27 mining revenue guidance of INR 500 crore across both mines (KBP INR 350 crore, Tasra INR 150 crore). It also stated that the Tasra washery is expected to undergo hot commissioning around November to December, which should support throughput.

On longer-term profitability, management said current MDO EBITDA margin is about 15% and its share of revenue is 5% to 6% currently. It expects improvement as the mines scale. However, it also clarified that the higher blended margin profile is more visible once peak rated capacity is achieved.

Takeaways

Q1 FY27 reinforces Power Mech’s ability to grow through multi-segment execution, backed by a large order book. The near-term pressure is clearly in margins, driven by the KRBM royalty framework change, mining ramp costs, and input inflation.

The company’s stated path to better profitability rests on a higher contribution from O&M and mining, and deeper participation in BOP EPC packages. The next few quarters will likely be watched for two things: mining scale-up progress, especially around the Tasra washery timeline, and whether the blended margin begins to recover as mix improves.