Knowledge Marine & Engineering Works Ltd Q3 FY2026 Concall Summary

Key Takeaways

• 56% revenue surge, peak utilization: Revenue jumped 56% YoY as all equipment operates at 100% utilization, with dredgers deployed 270-300 days per year and port craft 365 days, leaving no idle capacity.
• Order book hits INR1,500 crores, pipeline doubles that: The order book stands at INR1,500 crores while the bids pipeline exceeds INR3,000 crores across dredging, chartering and the newly entered shipbuilding segment.
• Shipbuilding entry is now material: Secured INR230+ crores in government shipbuilding orders and INR700 crores in 15-year green tug contracts, with a INR100 crore shipyard investment planned to build tugs and smaller vessels in-house.
• Tonnage tax shifts the margin story: The company opted into the tonnage tax scheme effective Q3, which management says will cut the tax burden significantly below the prior corporate tax rate, though it declined to give a specific percentage.
• What to watch next quarter: Whether the INR285 crore capital raise translates into fleet expansion orders, progress on securing a replacement vessel for Bahrain, and any quantification of the tonnage tax benefit.

Revenue & Operational Performance

• Revenue growth driven by scale and pricing: The 56% YoY revenue increase reflects scaling efficiencies from past expansion initiatives, improved realizations and stronger market demand across key segments.
• Margins reflect operating leverage: EBITDA margin of 43% and PAT margin of 34% show that the growing order book is now contributing meaningfully, with expansion investments converting into improved profitability.
• Receivables elevated but normalizing: Receivables were higher in H1 because most revenue booked in August and September; they range 45 to 60 days and are expected to decrease as Bahrain-linked books had slightly longer cycles.
• Fleet at absolute capacity: All equipment is 100% utilized with none idle, meaning further revenue growth requires fleet expansion rather than better deployment of existing assets.

Kewalramani: "The only option available at that time with us, since the commitment in Bahrain was not for a particular vessel, we were able to move that vessel from Bahrain to India. That vessel has been gainfully deployed since it moved to India early 2025. It is executing the fourth contract right now at higher amount than Bahrain numbers that were available."

Order Book & Bid Pipeline

• INR1,500 crore order book as of the call date, spanning dredging, chartering and shipbuilding segments.
• Bids pipeline exceeds INR3,000 crores: dredging accounts for INR1,400 crores, chartering INR1,000 crores, and shipbuilding INR704 crores, signaling a broad-based demand environment.
• JNPT capital dredging win: A INR50 crore, 6-month specialized contract involving dredging with controlled drilling and blasting at the coastal berth, adding a technically complex project to the portfolio.
• DCI subcontracting revenue steady or growing: The percentage of revenue from DCI subcontracting in the 9-month period is similar to or higher than last year, though management did not provide the exact figure when pressed.

Shipbuilding & Green Tugs

• Commercial shipbuilding entry secured government orders: Won orders worth over INR230 crores from the Inland Waterways Authority of India for work boats, accommodation boats, survey boats and cutter suction dredgers.
• Green tug contracts anchor long-term revenue: Received 15-year orders from Vishakhapatnam port and VOC port for construction and chartering of 60-tonne bollard pull green tugs, with total contract value approximately INR700 crores.
• Shipyard investment of INR100 crores planned: The facility, funded through a debt and equity mix, will build tugs and smaller vessels; the company has tied up with a designer for green tug specifications and is negotiating with component suppliers, with assembly done in-house.
• Actively bidding more green tug tenders: Participating in tenders from Paradip, Cochin, Bombay and Calcutta ports; if won, the shipbuilding entity will construct the vessels and Knowledge Marine will operate them.
• Two green tugs being built for own fleet, adding to the operating asset base under Knowledge Marine.

Kewalramani: "We don't intend to build larger vessels more than 100 meters right now and draft in excess of 5 meters. So that is the restriction. We believe that we can reach a top line of between INR500 crores to INR700 crores with the facility 3 years down the line."

Fleet Strategy & Competitive Position

• TSHD redeployed from Bahrain to India for better economics: The trailing suction hopper dredger was moved because high domestic demand emerged on the West Coast for maintenance dredging at good pricing, with no other TSHD of 1,500-2,000 cubic meter hopper capacity available domestically. The vessel is now on its fourth Indian contract at rates higher than Bahrain.
• Company does not intend to return that vessel to Bahrain, and is instead exploring the international market for a lower-value replacement vessel to place there, though no decision has been made.
• DCI competition is not a direct threat: DCI is investing in large 12,000 cubic meter TSHDs and a 3,000-kilowatt cutter suction dredger with over 3-meter draft, all meant for ports and rock dredging that cannot enter rivers. DCI has zero dredgers operating in rivers, while the company has nine cutter suction dredgers there.
• Inland waterway demand set to multiply: The government budget announced 20 more national waterways to be made navigable, which management expects will drive a multifold increase in inland waterway dredging demand over the next five years.

Kewalramani: "Presently, DCI has 0 dredgers that are operating in rivers. They are into port dredgers and they are planning to buy water injection dredger is in combination with the trailing suction hopper dredger. So, it is not directly overlapping any of the asset base that we have."

Capital Allocation & Tax

• INR285 crores raised via preferential issue of equity shares and warrants, earmarked for fleet expansion and projects in hand and in the pipeline.
• Capex deployment spread over three years: The INR180 crore portion of the raise designated for capex will be phased out across that period.
• Share split executed: Shares subdivided from INR10 to INR5 face value effective December 22, 2025, aimed at improving liquidity and retail participation.
• Tonnage tax scheme adopted and accepted: The application to the Income Tax Department has been accepted, and the scheme applies from Q3 FY26 onward, not from April 2026 as earlier indicated.
• Tax rate guidance withheld: Management said the tax implication will be significantly lower than the prior corporate tax rate but declined to provide a specific percentage or range, citing that the number of vessels will not be constant.

Guidance & Commitments

Key Metrics