Bondada Engineering Ltd Q2 FY2026 Concall Summary

Key Takeaways

• H1 revenue doubled, seasonality intact: H1 FY26 revenue hit ₹1,216 cr, up 153% YoY, with the company on track for its typical 40:60 H1:H2 split. Management expects 60% of the full-year target to land in H2.
• Order book gives near-term visibility: A ₹6,000 cr confirmed order book plus ₹2,600 cr in L1 stage, against a March 2026 target of ₹8,500–9,000 cr. The tender pipeline stands at ₹7,500 cr with a historical 25% win ratio.
• The business model is pivoting toward asset ownership: The company is layering IPP solar (2 GW), BOO battery storage (2 GW), data centres, and defence onto its core EPC engine. Management frames the shift as building an annuity stream for long-term sustainability.
• Margins are stable, with a modest scale benefit expected: H1 EBITDA margin was ~12% and PAT margin ~7.5%. Management expects to sustain these ratios and capture an additional ~100 bps from economies of scale as project sizes grow.
• What to watch next quarter: Conversion of the ₹2,600 cr L1 pipeline into firm LOAs, concrete disclosure on the defence foray (areas, partnerships, CapEx), and progress on land pooling for the Madhya Pradesh IPP project.

Revenue Growth & Seasonality

• H1 performance: Revenue of ₹1,216 cr, a 153% jump from ₹480 cr in H1 last year, and a ~15% sequential increase over the previous H2 (₹1,100 cr). Net profit rose 150% to ₹92 cr.
• Seasonal pattern holds: The company historically delivers 40% of revenue in H1 and 60% in H2. This year, H1 contributed 40%, slightly better than the typical 35%, despite intense rains in Maharashtra, Gujarat, Andhra, and Telangana. Projects remained intact.
• H2 confidence: Management is confident that H2 will deliver 60% of the FY26 target, citing an intact project pipeline and already-deployed resources. The third and fourth quarters are historically strong for on-time delivery.
• Growth drivers: Growth is driven by customer commitments and the confirmed order book. The company states it must deliver by any means once an order is booked.
• Scale shift: Since 2023, the company has moved from small projects to large-scale ones, with the smallest now at ~₹300 cr and the largest up to ₹2,000 cr. Management says it is now financially qualified for tenders up to ₹4,000 cr and technically qualified for single plants of 1–1.5 GW.

Dr. Raghavendra Rao Bondada: "Now we have the credentials to even participate in tenders like financially, we are qualified up to INR4,000 crores. And technically, we are qualified up to the 1 gigawatt to 1.5 gigawatt of single largest Plants."

Order Book & Pipeline

• Confirmed order book: ₹6,000 cr as of October 28, 2025.
• Near-term conversion: ₹2,600 cr in L1 stage, expected to convert to LOAs in the next couple of months.
• Tender pipeline: ₹7,500 cr of tenders submitted and technically evaluated, with financial bids yet to open. Historical win ratio is 25%.
• March 2026 target: Management aims to close the order book at ₹8,500–9,000 cr by end of FY26.
• Solar EPC pipeline: 2.5 GW in work-in-progress, another 2.5 GW in L1 stage, for a total portfolio of ~6 GW. This year's planned execution capacity is 1 GW, potentially rising to 2 GW next year.
• Adani Khavda opportunity: A 650 MW order has been converted to work-in-progress. Discussions are ongoing for 3–4 GW over the next 3–4 years, with a permanent setup (labour colony, officers' colonies, medical facilities) being built to dedicate capacity for Adani over the next three to five years.

Business Model Shift: From Pure EPC to Asset Ownership

• Strategic rationale: Management states that while EPC will remain the core, the company needs annuity revenues for long-term sustainability. The IPP and BOO models are designed to build that stream.
• Asset-light core: Out of the 25 GW Vision 2030 target, ~21 GW will be EPC. Only 2 GW of solar IPP and 2 GW of BESS will be owned under IPP/BOO models, meaning less than 20% of the target is capital-intensive.
• Solar IPP: A 2 GW project has been allotted in Madhya Pradesh. Land pooling of 3,000 acres (out of 9,000 total) will be completed in the next four to five months, after which the company will apply for CTU connectivity. The first 250 MW is expected next financial year, with the full project phased over four to five years.
• BESS BOO: The TNGECL contract for 200 MW/400 MWh is a build-own-operate model for 12–14 years, yielding annuity income at a 16–17% IRR. The company targets 2 GW of BESS capacity across India under IPP/BOO over the next 3–5 years.
• Data centre entry: The company will start with land pooling and creating the ecosystem (power and fibre), not owning the data centre until an anchor customer is secured. This initial phase requires little capital. Ownership may begin after two years.
• Defence foray: The company has appointed a dedicated CEO (a retired Rear Admiral with five years in MoD procurement) and is pursuing an IP-centric, low-capital model. CapEx of ₹75–100 cr is expected, funded from internal accruals, with an announcement on areas, acquisitions, and tie-ups expected in the next quarter or two.
• Funding plan: The balance sheet (net worth ₹610 cr, no term loan) can support debt up to ~₹1,500 cr. The first tranche of debt is likely in Q1 2026. Equity dilution via preferential or rights issue may follow if required.

Satyanarayana Baratam: "definitely this company is going to execute EPC contracts on a long-term basis, but definitely our kind of company for a long-term sustainability, definitely we need to have some kind of annuity revenues, which is what we are going to, which is what we are wanting to build up or build up."

Margins & Working Capital

• H1 margins: EBITDA margin ~12%, PAT margin ~7.5%. EPC contracts deliver ~7.5% PAT, while O&M and products deliver ~10%, but their low volumes mean the blended PAT stays at 7.5–7.6%.
• Margin outlook: Management expects to sustain EBITDA, PBT, and PAT margins, with a possible ~100 bps improvement from economies of scale as project sizes increase from 100 MW to 300 MW to 500 MW single-phase.
• H2 continuity: The same processes and customers are continuing in H2, so the ratios reported in H1 are expected to remain intact.
• Working capital improvement: Debtor days reduced from 125 to 107. Cash conversion cycle improved from 110 days to 90 days (later stated as 80 days). Out of ₹700 cr in receivables, ~₹130 cr is retention money recoverable after project completion or defect liability period.
• Operating cash flow: Improved from negative ₹140 cr last year to negative ₹43 cr in H1, with ₹1,200 cr of realizations. The company is striving to achieve positive operating cash flow by March 2026.
• ROCE expectation: Management expects a 3–5% improvement in ROCE for existing and upcoming EPC projects. Once the IPP model starts, ROCE may correct slightly due to higher capital intensity.

Dr. Raghavendra Rao Bondada: "I think we are going to sustain both EBITDA, PBT or PAT margins. Maybe 100 base points increase will be there because of large scale operations, because economy of scale..."

Segment Dynamics

• Revenue mix stability: The current 80/10/10 split (RE/telecom/other) is expected to continue for the next 2–3 years. Data centres and defence may shift the mix slightly in subsequent quarters.
• BESS technology risk: The company is currently dependent on China for cells, which constitute 50% of BESS cost. Technology is changing rapidly, and management says it is monitoring developments but did not provide a specific sourcing contingency plan.
• Risk assessment: Management sees no risk of volumes declining, citing 100% growth over the last 4–5 years and 14 years overall. The company depends on public sector entities and financially strong private developers, with minimal exposure to state governments, so geopolitical impact is expected to be low.

Dr. Raghavendra Rao Bondada: "Right now we have order book of around INR850 crores. ... Even next 5 years I can tell that actually. This will go 100% CAGR. This order book and even execution will go. Even I am very optimistic at this point of time."

New Ventures: Data Centres & Defence

• Data centres: The company will first pool land and build the power and fibre ecosystem. It will not own a data centre until an anchor customer is secured, keeping initial capital requirements low. Ownership may begin after two years, with CapEx requirements still unclear. Revenue may start flowing in Q3 FY27.
• Defence: A dedicated CEO is in place. The strategy is IP-centric with high-value products and low capital infusion. CapEx of ₹75–100 cr is expected, funded from internal accruals, and will take another two quarters to deploy. Management declined to disclose the specific area of focus but indicated a sizable MoU with one PSU and one international company is likely in the next quarter.
• Disclosure timeline: Management requests one to two quarters before providing detailed business plans, revenue numbers, and growth outlooks for both segments.

Dr. Raghavendra Rao Bondada: "The area, I may not be able to disclose to you now, Mr. Parikh, actually. Just give us another one quarter time that actually we will come back to you with kind of sizable MOE with either one PSU and one international company."

Guidance & Commitments

Key Metrics