DEE Development Engineers Limited (DEEDEV) Q4 2026 Earnings Call Transcript

Good evening, ladies and gentlemen, and a very warm welcome to the Q4 and F52026 earnings conference call of the Development Engineers Limited. From the senior management team, we have with us today Mr. Krishna Lalit Bansal, promoter, chairman and managing director, Mr. Pankaj Agarwal, chief operating officer, and Mr. Brahm Yadav, chief financial officer. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Venakopal from AdFactors PR. Thank you, and over to you, sir.

Thank you, Nirav. Good evening, everyone. We welcome you to the Q4 and FY2026 Earnings Call of the Development Engineers Limited. Before we begin the Earnings Call, I would like to mention that some of these statements made in today's call might be forward-looking in nature, and hence it may involve risks and uncertainties, including those related to the future financial and operating performance. Please bear with us if there is a call drop during the course of the conference call. We would ensure the call is reconnected the soonest. I will now hand over the call to Mr. Krishan Bansal, sir, to share his views. Over to you, Bansal, sir.

Thank you, everyone, and thank you for joining us. presentation, which has been uploaded on the exchanges. Financial FY26 has been an important year for D. We have completed a significant part. operationalization of the Anjar pipe fabrication facility and the commissioning of our seamless pipe plant. At the same time, we have separated the business into core and non-core segments, and the results are showing up in our operating performance. And others continue to be where we generate the most value and margin. Cross-infrastructure, transport, energy, and industrial corridors, and India's broader capex cycle is... Thank you. Good morning, everyone. Open up a strong multi-year opportunity. Within the non-commerce segment, we are strategically pivoting towards biomass pallet manufacturing with a focus on enhancing capital efficiency, minimizing incremental capital commitment in the power segment, and building a more sustainable and scalable business model over the medium term. Almost around 5.5. We commissioned our seamless pipeline. This backward integration centers of our capabilities. It supports margins and reduces lead times. As utilization ramps up, the plan should support further operating leverage and margin improvements. With the CAPEX cycle now almost complete, or majorly it's complete, I would say. Operating performance are expected to... Everybody across our core end markets, particularly power, oil and cash, and process industries in India and overseas, remain healthy and strong water pipeline. Now, I invite our CFO, Mr. Barham Prakash Yadav, to take us through the financial highlights of the quarter and full year ended 31st March 2021. Thank you, sir.

Good afternoon to everyone on this call. Rather good evening to all. I will now take you through our financial performance for Q4 and FY26 for the whole year. During the quarter, we reported strong growth across most of our key performance parameters, with the full year metrics being the calendar reflection of underlying momentum. Before I get into the numbers, I would note that Q4 FY25 was an unusually high base as it absorbed revenue and profit spillover from Q3 FY25 last year. It calendars the read of our performance. Therefore, the full year FY26 set up 76.9% year on year. Revenue from Operation 424 was 361.6 crores. Thank you. Ebitda was 189.3 crores, which up by 52.9% year-on-year, supported by higher execution level and operating leverage in the core business, alongside the tariff division on the non-core side. Thank you. Thank you. In line with our guidance, don't switch after text. 27.7 crores, reflecting a stable performance. Thank you. Seventy-six-point-nine... Overall performance was primarily driven by higher execution momentum and improved capacity utilization across both facilities. Waited towards Skype. Dear friends, we remain focused. Thank you very much. Thank you very much. Thank you, everyone.

I think we can go for Q&A now.

Thank you very much. We'll now begin with the question and answer session. You may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. I'm going to press star and 1 to ask the question. From the line of Pranay, Chatterjee, from Berman Capital Management, please go ahead.

Hi, good evening. One very recently. So I was doing some research around that, and what I understand is globally, especially in the U.S., driven by the data center infrastructure setup, and hence the electricity demand load on the grid, there is a massive multi-year order backlog of gas turbines with GE, Siemens, and Mitsubishi. And what I also understand is some of the HRAG systems... Basically, we're going to be supplying the pipes for those, right? So, my question is twofold. One is yes or no, and the other part is Matt's question. Yes, no question is, is this related? Are these orders related to this multi-year backlog that is the Thailand order specifically recently? And secondly, I was doing some math. With respect to the disclosure that you have given, 60% of Thailand capacity, which is around 14,500, is around 8,700 tons. The revenue is about 150 crores annually, which works out to 160 per kilowatt of realization. Is this right to think that this is X material, which is only the value-add portion per kg, and hence revenue will be larger?

Thank you so much, sir. Thank you so much. First of all, our answer is yes. Most of the orders are related to this for HRSC market only from the overseas. And as far as your understanding is concerned, that is also partially correct. This is all. or the value which we shall get from the free-issue material supplied by the customer, and in some of the cases, we shall be supplying the material also, which will add further value to this particular turnover from our unit D Thailand.

So, in that case, if I were to think about it, 150 crores is the job work value, or if I were to put it crudely, the gross profit. So, the revenue number should be much higher, right? Is that the right way to think about it? No, no, sir.

Thailand is primarily, we are working on job work basis only. In Thailand. So, you know, it will not be, there will not be very high incremental increase. There may be some, but, you know, primarily that unit is functioning almost purely on job work basis.

So, in that case, is it right to say that the EBITDA margin on this revenue of 150 crores will be much higher than 20% because 20% will... Any CAPEX you need to do to execute this, or do you have capacity?

You know, some normal machinery, this, sometimes plus, sometimes minus, I mean, very, very nominal, or I will say insignificant capex may be required to execute this particular.

60% of production capacity that is reserved, it is on the 14,500, right? I have a question on domestic thermal. Should I go ahead?

Question, please. Is from the line of Aibav Shah from Equarist Securities, please.

Thank you very much for the opportunity. My first question is on the gross margin. So on a quarterly basis as well as on a quarterly basis, gross margin has declined.

First of all, let me tell you that, you know, it's very difficult for us to show all those things on quarter-on-quarter basis because we are a project-based company. We are not a commodity-based company, you know, where everything will go in a straight line. So it's very difficult to explain why it happened and why it didn't happen. So my request is that please compare it on year-on-year basis if it is possible, but otherwise, you know, there can be any number of factors going in for on-quarter-wise, quarter-dip or quarter-on-quarter, you know, abnormally high rise also. So that's my humble request to you, but I really will not be able to answer specifically that, you know, why this margin dip between this Q4. The reason was that, you know, some... You know, trading activities happened, which we continue to do it the year, actually. Chapter 4 also, you know, where the value of the material is just almost 100% or 95%, so that may be one of the reasons. Otherwise, there is no specific reason to that, sir. 100% up-to-date on job work and with material values.

They will live right now with us.

Yeah, we'll let you know later on, as of now.

I will say that it may not be exact numbers, but job work values as of now will be less than 20 percent. Remaining are all with material orders. No, sorry, sorry. It will be around 30 percent. Job work orders will be around 30 percent even now also. But these are very, very approximate numbers, sir. And alloy mix for all our literacy jobs or all for our thermal jobs in India. They are all alloy jobs. I will say power and oil and gas is for this particular year will be 70% will be going towards power. It's oil and gas, which means almost 60% or maybe around 55% to 60% will be alloy steel and remaining will be carbon steel or the non-alloy steels.

Understood, sir. Understood. The second question is on the capacity utilization. So what is the current capacity utilization at the new panjar plant and seamless pipeline? And how do you see it ramping up in FI2?

We are quite confident that in FY27, we should be at the optimal level as far as the fabrication facility at Anjar is concerned and also for the seamless plant. Seamless plant, we may be able to ramp up up to maybe around 60 to 70 percent, but fabrication facility, we should be going up to almost, you know, to the expected level.

Right. This is Anjar facility, that newly inaugurated Anjar oil and gas facility, right? Yeah.

Almost. Almost. I will say almost.

And lastly, sir, could you mention the EBITDA margins within the core business for piping segment and heavy fabrication business? And going forward, what would be the sustainable margin for this heavy fabrication business? And how do you see the margin expansion for piping business?

Sir, again, I will say that on a gross level, I can say with comfort and I can say with full confidence that we shall be above 19% on console level. But, you know, the breakup, again, it's very difficult, but you can very well consider that in heavy fabrication also. It will be almost to the same tune because in the coming year, we shall be doing a lot of... Material, and hence our EBITDA margin may drop on the face of it in terms of percentage, but value-wise it will increase. So, but you kindly consider that our console level EBITDA will be above 19% in any case. to come back for a follow-up question.

Thank you. Next question is from Lion of Rickon from Capri Global. Please go ahead.

Hi, sir. Thank you so much for the opportunity and congratulations on great execution. Thank you. In terms of order visibility and what kind of inflow do you expect this year, I think somebody has mentioned about 2000, can you just clarify what kind of order inflow you expect in 2027 And, uh...

We are expecting more than 2,000 crores orders. Out of that, major contributor will be the power sector only. We are starting around 60 percent jobs from power and rest from oil and gas.

And would this be, I mean, what would be the mix between domestic orders and outlay orders?

You can say like 60 to 65 percent will be domestic, and around 35 to 40 will be the export order.

Secondly, if you could help understand, of course, like we have seen a major order on the Fertilizers Act by the government company in India. Any development on that front that you see, do you expect anything from that to also sort of flow through?

We are expecting one job, but I'm not pretty sure in this financially whether it will be matured or not. But yes, government of India is doing great in this fertilizer industry. The new plant is coming up in Namroup, so we are expecting some job from them, but I'm not sure whether it will come in this industry or not.

I will just add on to one more thing that just for the information of all that, you know, we are discussing on a very active mode for one of our export. Yeah, that's... That's on a... That's another field, I will say that that's another field, you know, where a lot of traction we are looking at, and it also can become quite a considerable part of our business. I mean, fertilizer section can also become a considerable part of our business in the coming future.

Interesting. That is very good to hear. And the last question that I have is with regards to working.

Currently, we are on improving trend in case of inventory day. And we'll be targeting in FY27. By this inventory day, we'll get reduced further for 15 to 20 days. Rather, data days will are almost fixed between 95 to 100 days. We will improve on payable days, which is, as of now, 42 days, which we are primarily paying in advance for the ordering of some of the material. So we are negotiating with the supplier. So definitely we will have a better negotiation, and it will be above 70 to 75. Right. So our total of. Working capital cycle would be around 200.

You know, since we are doing most of the jobs, almost 70% of the jobs, towards power, and, you know, I have been telling it earlier also that our cash conversion cycle and our inventory holding time for power sectors is much lower than the oil and gas sector. So, you know, that will be the major factor which will be contributing towards reduction in the inventory days.

Thank you. I reckon I'll request to come back for a follow-up question. I request to all the participants, kindly limit yourself to two questions per participant and rejoin for a follow-up. Next question is from the line of Vinit from Toro Wealth Management. Please go ahead.

Hi, sir. Good evening, and congratulations for the great results. I mean, the business momentum indeed looks very strong. Sir, I have two questions. First question is with respect to the HRSG order that we had received in the previous financial year from GE Varnava. I mean, I want to know what is the current status of execution for that and since in the similar lines, since the U.S. gas plant vendors are seeing increased order flows, are we also co-seeing any similar orders from GE again?

We have a good order book from G, so we are not expecting much order book in this financial year because we shall be executing those orders. But for GT piping, definitely there is a surge of the orders from G side. So I'm confident that the GT piping orders will come from them.

But again, again, again, again, I... We, you know, like Neuter Ericsson, they have fixed our capacities just for this HNSG piping also. We are discussing with other people also, like Siemens, we are working. So, you know, we are quite confident, you know, that they will also enter into some sort of an agreement like what Neuter has done. Or, you know, we are expecting. Right now, sir, it's not there. Right now, it's not there, because everybody is still... Assessing the laws, and, you know, still the situation is not normal. You know, until the situation becomes normal, nobody is going to do anything on an emergency basis. But, you know, as you have said, we do see it's a big opportunity which will come our way, and we may have to do something out of the way also to grab that opportunity. It may involve some sort of, you know, capex or something like that. But, you know, still it is very, very fluid. We just cannot... I'm going to comment on the same right now that, okay, this will be the opportunity, but definitely it's going to be a big opportunity.

Questions are from my side. All the best for the future.

Participants kindly limit yourself to two questions per participant. Next question is from the line of Daniel Desai, from Turtle Capital Partners, please.

But this year we see our order book has increased by 50% while we are projecting, you know, 20-25% kind of a growth. So how should we read into this? Is this because the delivery timelines will get extended or are we kind of, you know, so how should we read into this number?

Sir, my only question is that these are our very, very conservative estimates. We may have to do a little bit more work also. You know, as you are saying, and even we are also seeing a lot of traction, we may have to do a little more work.

With the overall CapEx and facility, we could be doing around 2,500 crores of revenue

by around 29, I believe.

30 is our target, but, you know, with the increased flow of orders, if it happens, it can happen earlier also.

Sir, sorry to interrupt.

Your audio is not clear. Can you speak a little louder, please?

Sir, I'll do that. So, on the seamless pipe side, sir, if you can talk about how the margins, you know, we plan to utilize 50% of the capacity in-house and sell remaining 50% to...

The question is from the line of Pratik Srivastava from Nivesh Wisdom, please. Go ahead.

Thank you for the opportunity, sir.

So, my question is on this Malwa power impairment, sir. This is the second year now that we have got a qualified opinion. So, what are we, sir, doing for this impact?

Thank you. Thank you so much.

Thank you all. Thank you all for... and goes out to our team and our

On behalf of DE Development and Users Limited, that concludes this conference. Thank you for joining us, and you may now just connect your lines. Thank you. Thank you.