Vishnu Prakash R Punglia Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Revenue fell 12% YoY, but H2 recovery is the thesis: Q2 operating revenue dropped to ₹296 crore as working capital stress and slow Jal Jeevan payments forced the company to throttle execution to match cash inflows. Management is maintaining its FY26 revenue guidance of ₹1,500–1,600 crore, which requires executing roughly ₹1,000 crore in H2.
• Promoters backstopped the balance sheet: Promoters infused ₹229 crore (up from ₹59 crore) as an interest-free unsecured loan, used partly to repay debt and partly for working capital, reducing total banking/NBFC exposure from ₹648 crore to ₹488 crore.
• The order book is shifting toward faster-paying railways: Railways now account for 33% of the ₹5,001 crore order book, up from 15–17% three years ago, a deliberate pivot toward segments where payments are released immediately rather than stuck in state-government pipelines.
• Margins collapsed on interest and mobilization costs: EBITDA margin fell to 8.25% and PAT margin to 1.25%, driven by higher working capital utilization, slower repayment releases, and initial mobilization expenses on new projects. Management calls these temporary and expects normalized EBITDA of 13–13.5% in H2.
• What to watch next quarter: Whether the October pickup in Rajasthan government payments broadens into sustained receivable normalization across states, whether H2 execution ramps to the ~₹1,000 crore run-rate needed to hit guidance, and whether the ₹3,000 crore bidding pipeline converts into order inflows.

Revenue & Execution: The Cash-Linked Slowdown

• Revenue declined as execution was pegged to collections: The company deliberately slowed work to align with payments received, whereas earlier it would execute ₹7–10 of work for every ₹5 released. This shift compressed Q2 turnover to ₹296 crore, down ~12% YoY.
• H1 revenue is behind the pace needed for full-year guidance: H1 revenue stood at ₹572 crore, down 3% YoY. To hit the maintained ₹1,500–1,600 crore FY26 target, the company must execute roughly ₹1,000 crore in H2, implying a sharp ramp from the Q2 run-rate.
• WIP of ₹749 crore is already executed but uncertified: This work is complete and awaiting certifications and approvals; once certified, funds will be released, providing a built-in receivables pipeline. The WIP traction reduced by ₹50–60 crore during the quarter as some certifications came through.
• On-time delivery stayed above 90% despite the cash-flow constraints, and in-house steel structure and girder plants are running at full capacity, reducing scheme costs.

Sarfaraz Ahmed: "Earlier, suppose, if Rs. 5 is released, then we used to do work around Rs. 7 or Rs. 10. That was the aggression. But now, we are doing the work according to the payments released."

Receivables & Working Capital: The Jal Jeevan Overhang

• Jal Jeevan water supply projects are the primary stress point: Payments from some state government departments under this scheme have been delayed for 21–22 months, putting pressure on cash flow and profitability. Representations are being made, but management offered no timeline for resolution.
• Water segment dominates the receivables book: Of the non-retention portion of trade receivables, approximately 70% is tied to water projects. Management did not provide a separate railways receivables figure when asked.
• An ₹8.5 crore ECL provision was taken purely on aging: Management describes it as a notional conservative provision that does not reflect any concern about recoverability, but it further compressed already-thin reported profits.
• October brought partial relief from Rajasthan: Significant payments came from the Rajasthan government post-September, and the company expects Q3 and Q4 to improve as budget allocations flow through and state governments contribute their shares even when central funds are delayed.
• Trade receivables rose because certified bills converted to debtors: As bills moved from WIP to certified status, the debtor level increased while WIP reduced, shifting the composition but not necessarily signaling fresh stress.

Jayant Punglia: "Sir, even the state governments are supporting us a lot. The central government is not able to release it, so all the state governments are giving their shares from the central government."

Balance Sheet & Promoter Support

• Promoter infusion of ₹229 crore reshaped the liability side: The interest-free unsecured loan from promoters rose from ₹59 crore to ₹229 crore. Approximately ₹60 crore was used for debt repayment, with the remainder directed to working capital, reducing dependence on external borrowings.
• Total banking and NBFC exposure fell from ₹648 crore to ₹488 crore: The combination of promoter support and a new banking system with closer departmental relationships is intended to improve recovery and lower interest costs going forward.
• Interest cost is the single largest drag on profitability: Finance costs of ₹17.8 crore in the quarter, combined with mobilization expenses on newly commenced projects, were cited as the primary reasons PAT fell to just ₹3.3 crore on ₹297 crore of turnover. Management expects interest costs to decline in coming quarters as borrowings reduce.
• The company opted for promoter equity infusion over stock pledging: When asked why promoters chose selling over pledging, management said they evaluated multiple capital market instruments and took the decision based on requirement, without directly addressing the pledging alternative.

Order Book & Pipeline: Railways Take Center Stage

• Order book stands at ₹5,001 crore, providing two-to-three-year visibility: Approximately 50–55% of this book is due for execution in the next six months plus FY27. The composition has shifted materially toward railways, now at 33% versus 15–17% three years ago.
• The railways pivot is a cash-flow decision: Railway projects generate cash flow pass and release payments immediately, making them structurally more attractive than state-government water projects under current conditions. The company sees unprecedented opportunity to participate in new railway orders as Indian Railways modernizes its network.
• Bidding is deliberately restrained: With a healthy order book and visibility, the company is not bidding aggressively. The success ratio stands at 17–18%, and management says it is bidding only for appropriate profitability.
• A ₹3,000 crore bidding pipeline is under evaluation: Results are yet to come. When asked if this pipeline size had changed from the prior quarter, management confirmed two or three projects were declared where the company did not win, and it bid for two or three more, but did not clarify whether the overall pipeline grew or shrank.
• H1 order inflows were minimal: Beyond a ₹77 crore project, management confirmed that is all the company has bid for and won in the first half.
• PSUs are a growing focus: Apart from central and state government work, the company is targeting PSUs where payments arrive on time. It is also executing a ₹250 crore project for BHEL.

Margins & Profitability: The H2 Recovery Bet

• EBITDA margin compressed to 8.25%, PAT margin to 1.25%: The drivers were higher working capital utilization early in the quarter, slower repayment releases from free water supply projects, and initial mobilization expenses on newly commenced projects. Management describes all three as temporary.
• The normalized margin promise is 13–13.5% EBITDA in H2: Management confirmed this target "absolutely" when asked directly. The recovery rests on three levers: improving receivable inflows from October onward, lower interest costs as promoter funds reduce borrowings, and operating leverage as execution picks up.
• Interest and mobilization costs are the twin margin killers: Finance costs alone were ₹17.8 crore in Q2. While management expects interest costs to decline, it did not quantify the mobilization cost impact when asked.
• Revenue growth of 15–20% is still the aspiration: Management expressed hope that revenue should increase by 10–20%, but when asked directly whether the 15–20% growth guidance is maintained for the current year, the response was that Q3 and Q4 will be good rather than an explicit reconfirmation.

Sarfaraz Ahmed: "Sure, sir. Absolutely." (on whether 13–13.5% EBITDA margin will be achieved in H2)

Joint Ventures & Other Updates

• The Kalpataru JV dispute is resolved: The ₹28 crore project from four years ago involved a proprietorship firm that slowed work, prompting the company to give notice. The bank froze the project, Kalpataru appealed in court, but work is now complete. The chapter is closed, though it remains noted in audit books.
• The company operates 18 JVs, all for technical support only: Execution is 100% by Vishnu Prakash. Partners include BNG, RBI, PL, and JDA. When asked which JVs are of use, management did not name or detail them.
• Private projects are on the table if good opportunities arise: The company will pursue them 100%, though the current focus remains on government and PSU work where the order book is concentrated.
• Competitive intensity is unchanged: Management sees no impact on competition and describes it as usual across every segment.

Guidance & Commitments

Key Metrics