Patel Engineering building on it’s leadership in Hydropower

Mr. Rahul Agarwal, CFO, Patel Engineering Limited provides his take on infrastructure sector and the role of strategic financial leadership in navigating a dynamic business landscape.

How do you describe the financial health of the company?

Patel Engineering today stands on a strong financial footing, supported by prudent capital allocation, disciplined project execution, and a well-diversified order book. In FY25, we reported consolidated revenues of ₹5,093 crore, reflecting 12% year-on-year growth, with an operating EBITDA of ₹733 crore at a margin of 14.4%. Net profit stood at ₹242 crore despite macroeconomic challenges.

Our momentum continued in Q1 FY26, with revenues up 11.96% year-on-year to ₹1,233 crore, EBITDA margins at 13.4%, and net profit rising 55.9% to ₹75 crore. As of June 2025, our order book stood at ₹16,285 crore, providing long-term visibility. Debt has been reduced to ₹1,527 crore, lowering our Debt-to-Equity ratio to 0.42, supported by an improved A- (Stable) credit rating.

A significant part of this resilience comes from our leadership in hydropower. Projects like Subansiri, Dibang, and Kundah PSP not only anchor our order book but also reinforce Patel Engineering’s role in advancing India’s renewable energy transition.

What financial strategies and capital management have you ushered in to improve the company finances?

Our financial strategy is anchored in three priorities—deleveraging, selective bidding, and working capital optimization.

Debt Reduction: In FY25, debt fell nearly 15% to ₹1,603 crore, lowering interest costs by ~₹40 crore. By Q1 FY26, borrowings further declined to ₹1,527 crore.

Working Capital Discipline: We have brought down the working capital cycle from 297 days in FY21 to ~110 days in FY25.

Selective Project Bidding: We pursue projects with healthy margins, strong counterparties, and efficient capital structures. Wins like CIDCO’s Kondhane Dam (₹1,319 crore), NEEPCO’s HEO hydro project (₹711 crore).

Asset Recycling: We remain open to monetizing non-core assets, freeing capital for higher-yield opportunities.

These measures have fortified liquidity, enhanced profitability, and aligned capital management with long-term value creation.

What are the company’s key project developments and sectoral outlook?

Patel Engineering is executing marquee projects across hydropower, pumped storage, irrigation, and tunnelling.

Hydropower: Large-scale projects include Subansiri (2,000 MW), Dibang (2,880 MW), Arun-III (900 MW, Nepal), Kiru (624 MW), and Kwar (540 MW). Recent wins include NEEPCO’s 240 MW HEO project (₹711 crore) and NHPC’s Teesta-spillway works (₹240 crore).

Pumped Storage: Our flagships include the Ghatghar PSP (250 MW), executed in the past and the under execution Kundah PSP (500 MW) underscore our role in enabling round-the-clock renewable energy integration.

Urban Infrastructure: In Mumbai, we achieved a 2.7 km TBM breakthrough at Powai–Ghatkopar at 60m depth, while at CIDCO’s Raigad water tunnel project, we set a national record of 752m tunnelling in one month.

Irrigation: We’re proud to be delivering marquee irrigation projects that boost agricultural resilience. The Sleemanabad Irrigation Project will irrigate ~184,000 hectares and includes a 12 km tunnel with a 10-meter diameter, one of the largest of its kind. We’ve also recently secured the ₹958 crore Nira Deoghar pipeline project (PEL share ₹192 crore), aimed at improving water security and irrigation efficiency. These initiatives reflect our commitment to transformative, high-impact development.

The sector outlook is highly encouraging. With ₹11.2 lakh crore allocated for infrastructure and ₹6.7 lakh crore for Jal Jeevan Mission, growth drivers are strong.

Most importantly, India has set an ambitious target of 60,000 MW of pumped storage capacity, with ~22 GW already under survey. With decades of hydropower expertise and PSP execution, Patel Engineering is well positioned to capture a significant share of this opportunity.

How will the company’s order book determine future growth plans, and market positioning?

Our ₹16,285 crore order book provides revenue visibility for the next three to four years. Nearly two-thirds is anchored in hydropower and pumped storage, ~23% in irrigation, and the balance in tunnelling and urban infrastructure.

With hydro forming the majority, we are strategically aligned with India’s developmental push for hydropower and PSP projects , which will be central to the renewable energy grid. Our strong position in projects like Subansiri, Dibang, and Kundah reflects this alignment.

Recent wins—CIDCO’s Kondhane Dam, NHPC’s Teesta-V, and MKVDC’s irrigation project—demonstrate client trust. Equally, our tunnelling breakthroughs in Mumbai cement our reputation as India’s leading private EPC in complex urban works. Together, the order book ensures growth while reinforcing Patel Engineering’s proficiency in niche technically demanding projects.

What are the major risks and challenges that you see in project execution?

We are seeing a tremendous change in the way the Government has been improving in execution of projects over the years which was not seen in the past. Earlier, the industry did face a lot of issues with projects being allotted without proper clearances in place and also land acquisitions were not done. However, now there are proper systems in place, where in projects before getting allotted are cleared by the authorities and all clearances including land acquisitions are completed prior to allocating the project. With respect risks relating to cost overruns, which has been mitigated, as now all the contracts have escalation clauses built into them. So, any escalation in cost is a pass through and we get compensated for the same. It would be pertinent to note the progress from the Government in the right direction.

Also, with the suspension of the Indus water treaty we are seeing projects are also being fast tracked and on-going projects have constant monitoring to ensure projects are delivered on time.

How is the company’s debt managed?

Debt reduction has been a cornerstone of our financial strategy. Borrowings declined from ₹1,886 crore in FY24 to ₹1,603 crore in FY25, and further to ₹1,527 crore in Q1 FY26.

We are able to manage our debt by effectively controlling our working capital cycle, monetizing non-core assets, which has helped in repaying of loans, and most importantly by focusing on robust project execution while keeping our EBITDA margins around the 14% mark. These efforts have helped us achieve a credit rating of A- from India Ratings & Research (Fitch Group).

What is the company’s current working capital?

We have reduced our net working capital cycle from 297 days in FY21 to ~110 days in FY25 through aligning billing and payment activities, and disciplined monitoring.

We achieved this through a strategic blend of milestone-based billing and automated e-billing, ensuring timely and efficient cash flow. By securing mobilization advances from clients and negotiating favorable terms with suppliers, we optimized working capital and strengthened financial agility. These measures collectively enabled smoother project execution and improved operational efficiency. This efficiency is crucial for our capital-intensive projects like Subansiri and Kundah PSP, ensuring smooth execution without excessive reliance on borrowings.

How is Patel Engineering addressing ESG requirements, especially given the global shift toward sustainable infrastructure?

Our portfolio is intrinsically aligned with ESG principles:

Environmental: We are committed to embedding environmentally responsible practices across all our projects. At the Kiru Hydroelectric Project, we’ve developed a cutting-edge tower-belt system that enables efficient concrete delivery while significantly reducing reliance on diesel-powered dumpers.

Additionally, the deployment of IoT technologies across multiple sites allows for real-time tracking of vehicles, optimizing logistics and dramatically lowering fuel consumption. These initiatives reflect our dedication to sustainability through smart engineering and digital innovation.

Social: We are committed to uplifting local communities in the remote regions where we operate. Our CSR initiatives address critical challenges across healthcare and sanitation, education and sports, promotion of arts and culture, rural development, environmental sustainability, and disaster response. Through these focused efforts, we aim to foster inclusive growth and long-term resilience for the communities we serve.

Governance: We have a strong board of highly qualified professionals, that ensure an open work culture. That results in the in the maintenance of transparent disclosures, ethical practices, and compliance with SEBI, MCA, and other regulatory frameworks.

Through these, Patel Engineering contributes to sustainable growth, aligning infrastructure delivery with India’s decarbonization goals.

What is the ongoing future growth pipeline?

Our ongoing portfolio includes Subansiri (2,000 MW), Dibang (2,880 MW), Kundah PSP (500 MW), Kwar (540 MW) and Kiru (624 MW), along with major tunnelling projects in Mumbai and the North-East.

Future growth includes:

• Urban Infrastructure: CIDCO’s Kondhane Dam (₹1,319 crore).
• Hydropower: NEEPCO’s HEO (₹711 crore) and NHPC’s Teesta-V (₹240 crore).
• Irrigation: Nira Deoghar project (₹958 crore; PEL share ₹192 crore).

We carefully and strategically bid for projects that align with our core expertise and pass our internal parameters. In terms of the market opportunities, we are targeting new Hydropower and PSP opportunities in India, Nepal, and Bhutan. Hydropower is set to see a larger number of projects come up for development and with India targeting 60,000 MW of PSP capacity, this segment will be the backbone of renewable integration, and Patel Engineering is uniquely positioned to capture this growth.

Describe the company’s Infra-Tech Engineering Excellence?

Engineering excellence has defined Patel Engineering for over seven decades. Our leadership in the niche segments of hydropower and complex tunnelling works, where our execution efficiency, experience, strong PQ, know-how and cost discipline give us a competitive edge.

We have always been at the forefront of technological advancement which is reflecting

from the fact that we were the first Indian Company to build an RCC dam in India; carry out the first double lake tapping, the first company to carry out micro tunnelling in India, and constructed the world’s highest tunnel at an altitude of 13,000 ft. We constantly seek to improve and keep looking at new technologies that help us optimize resource allocation, improve forecasting, and enhance execution efficiency. We have implemented SAP across all project sites. Also, we have implemented IoT (Internet of Things) which is helping us in better monitoring in vehicular movement and fuel consumption which helps us make better informed decisions.

Patel Engineering’s infra-tech leadership is about redefining benchmarks in sustainability, safety, and efficiency. Our execution excellence positions us as the partner of choice in India’s infrastructure expansion, especially supporting the nation’s clean energy transition.