WPIL Ltd Q2 FY2026 Concall Summary

Key Takeaways

• International rescues a weak domestic quarter: Project revenue collapsed to INR 89 crores from INR 247 crores YoY, but international revenue surged to INR 456 crores in H1, giving the business balance and stability.
• Margins are recovering as promised: Consolidated EBITDA margin bounced to 18.87% in Q2 from a 16.09% H1 average, after Q1 was hit by acquisition costs. Management expects the recovery to continue through the second half.
• The order book is the bridge to better times: Record order backlog, robust enquiry pipeline, and large contracts expected at PCI Africa in Q3 underpin the growth momentum claim, even as domestic projects wait on policy.
• Domestic project recovery is a policy call, not a demand call: Jal Jeevan Mission funds are expected to start flowing shortly after a Centre-State issue was resolved, which would unlock cash, commissioning, and fresh bidding.
• What to watch next half: Whether JJM funds actually flow and domestic invoicing accelerates, the pace of PCI/Eigenbau revenue pickup, and any large inorganic move now that authorized capital has been increased.

International: The New Stabilizer

• Revenue doubled YoY: International revenues reached INR 456 crores in H1 FY26, up from INR 288 crores in H1 FY25, driven by strong execution and order books across subsidiaries.
• Share of the mix: International now contributes roughly 56% of revenue and may reach 60%, a deliberate shift after management flagged over-dependence on domestic projects 1.5 to 2 years ago.
• South Africa seasonality is a tailwind: The South African financial year and public expenditure cycle ends in December, so Q3 is expected to be a strong execution quarter. PCI Africa is also awaiting large contract awards in Q3.
• Australia and Italy: The Australian business sees promising opportunities in water and oil and gas. Gruppo Aturia secured strong oil and gas orders during the quarter, while MISA Italy continues working through legacy contracts and rebuilding brand credibility.
• PCI/Eigenbau ramp-up: Acquired only four months ago in May, the revenue pickup is expected in the second half, with a clearer picture emerging toward March.

Prakash Agarwal: "The good thing is that the highlight would be that Q2 half year, our international business has brought about stability to the business. We were a bit concerned and we had pointed out that we were getting too much domestic oriented. So, with this 56%, maybe going up to 60% international business, that gives us a good balance."

Domestic Projects: Waiting on the Tap

• The collapse in numbers: Project business revenue fell to INR 89 crores in Q2 FY26 from INR 247 crores in Q2 FY25, as the Jal Jeevan Mission slowdown continued to bite. Two additional projects were commissioned during the quarter.
• The fund-flow bottleneck: Most JJM projects have progressed beyond 60% achievement and are in final commissioning stages, with supplies mostly complete. The hold-up is a Centre-State fund disbursement issue that management says has been resolved to a great extent, with funds now expected to start flowing.
• What resolution unlocks: Positive news on the fund issue would lead to cash flows, release of blocked money, and activation of balance project completion. Management expects commissioning in the second half for projects not dependent on customer pipe supplies.
• The catch-up thesis: Management expects FY26-27 to see a catch-up that makes up for two years of slowed investment, with huge work remaining across Jal Jeevan, urban water, and irrigation. The company is positioned with qualifications and capabilities from commissioning large projects.
• O&M is a new, visible stream: O&M revenue has started flowing this year for completed projects and is expected to pick up in the second half and from next year onward, with a target of INR 70 to 100 crores by end of FY26-27.
• River linking is a slower burn: The company is well positioned for product supply, but momentum is slower; a pickup in river linking and irrigation projects is expected in calendar 2026.

Prakash Agarwal: "Our focus has been for the last 1.5-2 years, to bring down our order book and improve execution. So, I think the improved execution is now going to be helping us benefit from the future potential."

Margins: The Recovery Track

• Q2 bounce: Consolidated EBITDA margin recovered to 18.87% in Q2 FY26 from a 16.09% H1 average, after Q1 was depressed by newly acquired businesses and one-time expenses.
• Normalized band: Management describes the 16% to 20% margin profile as the normalized level and expects it to be maintained going forward, with Q1 characterized as a blip.
• Second-half trajectory: The recovery is expected to continue through the second half, with margins improving and normalizing for the full year. International margins are also expected to normalize, supported by a strong international order book.
• Employee cost lag: Employee costs rose from INR 63 crores to INR 74 crores sequentially because sites must be manned as fixed costs, even as revenues declined. Management says this lag will even out and a single quarter is too early to judge.
• Profitability floor: Management stated it can match last year's numbers at least on profitability.

Product Business & New Sectors

• Steady growth: Product division revenue grew to INR 151 crores in H1 FY26 from INR 138 crores in H1 FY25, supported by new product introductions, a strong export market, new customer relationships, and entry into segments like Navy and drainage.
• Second-half acceleration expected: Domestic product business is expected to be much stronger in the second half than the first, and international product business through Gruppo Aturia is also expected to perform well. The order book is rising and execution should further pick up.
• Naval traction: The company is well established in the naval sector, has received large orders, and sees constantly growing traction going forward.
• Drainage expansion: WPIL Thailand introduced new drainage products to capitalize on the expanding Thai drainage market.
• Nagpur expansion: A brownfield expansion at the Nagpur facility will add testing capability and manufacturing capacity; CAPEX is described as quite insignificant and mostly brownfield, with all plants currently having sufficient capacity.

Capital & Inorganic Strategy

• Authorized capital increase: The company is increasing authorized capital and reclassifying redeemable preference shares to equity shares in the authorized capital, giving flexibility to raise capital. No immediate plan exists, but the move is tied to conversations about larger acquisitions.
• US market entry via acquisition: Management sees an inorganic approach as more feasible for the US market because the sector requires local front-end presence for application engineering. The company is in good conversations, has cash on hand, and views this as the appropriate time to pursue a big target.
• Acquisition discipline: Management declined to discuss valuation parameters, citing the success of its buy-and-build consolidation model, and confirmed it is in lots of conversations and hoping to execute transactions.
• Balance sheet strength: Conceptual liability to clients has reduced drastically, creditor liability is negligible, and outstanding receivables have reduced considerably in the first half. The remaining balance is expected by March, with the deferral attributed to a policy issue rather than any collection challenge.
• Minority interest: Increased to INR 14 crores in H1 FY26 versus INR 22 crores for all of FY25, driven by money held abroad and international business investments, with no change in shareholding structure. Unravelling it is a cash flow matter to be addressed at an appropriate time.

Prakash Agarwal: "I think in our sector, we find that inorganic approach is more feasible because front-end is needed in each market for a client because there is a lot of application engineering and the front-end is therefore needed. It's not so much an export, it's more, you have to be local."

Guidance & Commitments

Key Metrics