Enviro Infra: FY26 Growth Intact, Working Capital Widened

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1. At a Glance

FY26 revenue rose ₹1,145.6 crore, up 7.5% on FY25’s ₹1,066 crore. Profit after tax (PAT) landed at ₹182.95 crore, a modest 3.8% increase year-on-year. The stock has shed 21.6% over the past year, yet sits near ₹184, pricing the company at 17x annualised earnings.

The tension: Net cash sits at nearly ₹335.24 crore; leverage is 0.34x. But working capital has blown out to 158 days, from 89 days in March 2025—a signal of stretched receivables and delayed government payments, particularly under the AMRUT water schemes.

Order book stands at ₹6,814 crore (disclosed at June 2026 concall), with meaningful renewables order growth now feeding the EPC pipeline. The company expects FY27 revenue near ₹2,000 crore, but on conservative execution assumptions. Wisdom line: the company is building two engines—water/wastewater (legacy) and renewables (nascent)—while waiting for government cash to unstick.

2. Introduction

Enviro Infra Engineers, formed in 2009, works on water and wastewater treatment plants (WWTPs), water supply projects (WSSPs), and increasingly renewable energy (solar, wind, BESS) for government bodies under schemes like AMRUT, Namami Gange, and Swachh Bharat.

The company went public in November 2024, raising ₹650 crore. By June 2026—just eight months into trading—it had pivoted visibly: acquisitions of EIE Renewables and Suyog Urja Limited (for wind EPC) announced, marking a shift toward a multi-platform infrastructure play.

Q4 FY26 (ended March 31, 2026) brought ₹427.31 crore in revenue (+8.75% YoY) and ₹51.92 crore in PAT (down 28.9% QoQ). Management attributed the margin compression to a mix of execution timing, higher operating costs, renewables projects with thin initial margins, and an ₹10 crore Expected Credit Loss (ECL) provision booked under Ind AS.

The concall (May 29, 2026) made clear: FY26 was a transition year. The company executed physical projects without slippage but faced delays in design approvals and order finalization—classic government-scheme friction. They missed prior guidance and now guide conservatively.

3. Business Model: WTF Do They Even Do?

Water/Wastewater Legacy. STP (sewage treatment plant) design, construction, operation. CETP (common effluent treatment plant) for industrial clusters. WTP (water treatment plant) for municipal supply. Most contracts are turnkey EPC plus O&M (1–15 years, depending on bid).

Project volumes ranged from 50–135 MLD (million litres per day). Notable recent deliveries: 100 MLD Jodhpur STP with IFAS biology and solar integration; 55 MLD Varanasi STP (NMCG-backed Namami Gange) incorporating rooftop solar; 30 MLD Bhiwadi CETP. Pipeline of marquee projects includes ₹5,000+ crore in Pune and Nashik STPs (Maharashtra Urban Development).

Renewables Pivot. FY26 renewables revenue was nascent: ₹129 crore, of which ₹117 crore came in Q4. But order book skewed heavily: NTPC BESS contracts (~₹1,070 crore announced), Suyog wind EPC (~₹1,200+ MW pipeline), solar IPP/EPC capability ramping.

Management indicated FY27 renewables target of ₹650 crore (out of ₹2,000 crore total), signaling aggressive ramp. BESS margin guidance: ~10% PAT (pressure from lithium-ion battery cell pricing inflation; mitigation is to defer battery procurement and sequence balance-of-system first). Wind margin assumed ~11% blended with solar.

Geography. MP, Rajasthan, UP dominate water revenues. Renewables spread across UP, Karnataka, Telangana, Assam, Bihar. Government counterparties = institutional credit.

4. Financials Overview

Figures are consolidated, in ₹ crore.

FY26 Narrative. Revenue growth held at 7.5%, slower than prior 50% (3-year CAGR), signaling order conversion delays. Profit growth of 3.8% lagged revenue—a red flag. EBITDA margin of 24.2% contracted from 25.1% in FY25 (1-point decline cited as mix + renewables overhead + ECL provision).

Q4 Specifics. Revenue ₹427.31 crore; PAT ₹51.92 crore. Management blamed: (a) renewal projects (NTPC BESS, Suyog wind) running at thin margins initially; (b) employee cost escalation (6% of revenue, up ~1.5 percentage points); (c) design/approval delays on MIDC CETP-ZLD and Bangalore projects inflating expense ratios; (d) depreciation jump to ₹8.6 crore (CWIP capitalization). Message from management: “margin profile has not gone down structurally”—rather, timing and accounting distorted Q4.

Working Capital Headwind. Unbilled revenue (UBR) blew out to 195 days (vs normal 60–80). Root cause: AMRUT fund releases failed to arrive by March across multiple states. Company continued execution, so cash got stuck in projects but revenue recognition lagged, inflating working capital days to 166 overall (target was 95–100).

Status: Funds from Chhattisgarh released; management expects releases from Rajasthan, Haryana, MP over Q1–Q2 FY27.

5. Valuation Discussion: Fair Value Range (Educational Only)

What follows is a walkthrough of how three valuation methods work, using this company’s numbers as the example — not a target, not a forecast, not advice.

Method 1 (P/E Approach). Annualised EPS (FY26 full year) is ₹10.42. Peer band for water/renewables infrastructure sits at 16–26x (Va Tech Wabag 26x, Denta Water 10.8x, Felix Industries 17.9x, EIEL median peer ~17x).

Arithmetic: ₹10.42 × 16x = ₹166.7; ₹10.42