SPML Infra FY26: From Pile of Debt to Order Book Full of Unexecuted Water

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1. At a Glance

SPML is a 45-year-old water and power EPC shop that spent the last decade on a tightrope: interest-choked debt on one side, a cash-starved project book on the other. FY26 flipped the script. Revenue hit ₹868 Cr (+13% YoY), net profit nearly doubled to ₹75 Cr, and the company’s debt-to-equity ratio fell to 0.4x from 1.1x in FY24. The magic: ₹5,616 Cr of new water and BESS orders landed since FY25, and the legacy order book (₹1,369 Cr of joint-controlled low-margin stuff) is thinning out.

The tension: execution risk is real. The company faces ₹5.4 Cr outstanding order book, half of which is new-order upside, half legacy runoff. And leverage is backed by arbitration payables, not pure cash. The data says leverage is falling; the risk is arbitration awards slip or execution slows.

Reader Question: If ₹4,280 Cr of new orders arrived since FY25, why did FY26 revenue only grow 13%?

2. Introduction

SPML Infra—Sapru–Prem Lall, confusingly—was founded in 1981 and made a name executing water infrastructure across rural India’s Jal Jeevan Mission. By FY20, it was a mid-cap darling with ₹1,706 Cr revenue. Then came the 2020–21 accounting unwind: a one-time write-off for a stalled mega-project, followed by a debt resolution scheme via NARCL (bad-bank entity). The company surrendered ₹700 Cr to lenders and entered a five-year repayment cycle.

The past two years, promoters pumped ₹275 Cr back into the business—a signal they believe the turnaround. Alongside, government capex for water and renewable storage hit inflection: Budget FY27 allocated ₹67,670 Cr to Jal Jeevan Mission (JJM) and, crucially, ₹1,000 Cr viability-gap funding for battery storage. SPML pivoted. It hired Energy Vault (a US BESS startup) as tech partner, committed ₹235 Cr capex for a 5 GWh battery assembly plant, and won a ₹1,128 Cr NTPC storage order in May 2026.

The company today is smaller in revenue than it was in FY20, but the order book is fatter, the borrowing lighter, and the margin floor is 10%.

3. Business Model: WTF Do They Even Do?

SPML is a three-legged stool with no seat yet.

Leg 1: Water—the legacy revenue machine. They design, build, and operate water treatment plants, distribution pipelines, and sewage systems for government clients. The Jal Jeevan Mission pays them to connect rural households to tap water. AMRUT 2.0 pays them to rebuild urban water systems. They’ve executed 400+ water treatment plants, laid 10,000+ km of pipeline, and manage 20-year O&M contracts. This is recurring revenue on multi-year stickiness—but it’s also commodity: many competitors can bid, margins are thin (7–9% on legacy work), and collections depend on government disbursement cycles. The good news: government clients pay fast (15–30 days if world-bank funded) and the order book is deep.

Leg 2: Power transmission—the boring stalwart. Grid substations, 400 kV switchyards, transmission line erection. Small ticket, high execution bar, zero glitz. These contracts de-risk the water book by diversifying customer and geography. May 2026, they won a ₹165 Cr RRPVNL transmission order. Margins here are similar to water (7–9%), but overhead is lower.

Leg 3: Battery storage—the unproven moonshot. SPML just entered. The NTPC order is 250 MW / 1,000 MWh—big, shiny, and entirely new to SPML’s execution team. The scope is full: they supply battery cells (via Energy Vault), build the civil foundation, install inverters, integrate everything, and handle 15 years of O&M. Management claims they’ll hit 10–12% margins on new BESS work, but this is an order they haven’t executed yet, an assembly line (Pune) that isn’t online, and a supply chain (batteries) they don’t control. The upside is massive—peak revenue ₹5,000 Cr from 5 GWh capacity. The risk is equally massive: delay, cost overrun, or supply crunch could gut the thesis.

The blended model: 95% construction/EPC, 2% O&M, 3% arbitration interest (non-recurring). Most of the future cash will come from water + BESS; transmission is ballast.

4. Financials Overview

Figures are consolidated, in ₹ crore.

The ₹868 Cr revenue in FY26 is a step up from FY25’s fire-sale, but it masks two realities. First, ₹50–100 Cr of FY27 work slipped into FY26’s closing months due to March liquidity tightness during the West Asia conflict. Second, the order book is now 6.2x revenue (₹5.4 Cr / ₹868 Cr), suggesting the revenue trajectory will accelerate. Management guided 25% top-line growth for FY27 minimum.

Q4 FY26 Spotlight:

• Revenue ₹294 Cr (+53% YoY, +27% QoQ)
• EBITDA ₹25 Cr, margin 8.4%
• PAT ₹27 Cr (+140% YoY)

The margin dipped vs management’s 10% target due to one-off legal/arbitration costs, non-cash Ind AS credit-loss provisions, and bank-guarantee mobilization fees. Stripping these, Q4 margins would’ve landed near 10%. This is management-speak, but the arithmetic checks: those items are non-recurring.

Concall colour: Management highlighted that the new order wins (water + BESS) have design approval ~70% complete, enabling “healthier billing” from Q1 FY27. Translation: cash will flow faster because they can recognize milestone-based revenue earlier. They also emphasized order intake of ₹4,280 Cr (net of JV dilution) since FY25, signaling momentum is real.

5. Market Expectations & Historical Multiples

This section describes how the market is currently pricing the company and how that compares with its own history and peer group. It is descriptive, not predictive.

The market pays 20x earnings for SPML today, down from a five-year average of 45x. This is a company that was repriced lower after the 2020–21 crisis. The peer set (L&T, IRB, Kalpataru, Cemindia, NBCC, etc.) trades at 17x median, and SPML sits above that—likely because the market is pricing in execution risk on the new order book and the unproven BESS entry. The spread (20x vs 17x) is small, not a valuation screamer.

ROE (8.7%) is weak relative to the peer median (12%) and the company’s own 5-year average (4.9%). The improvement from 4.9% to 8.7% is real