Knowledge Marine & Engineering Works: FY26 Surge Meets Order Book Glow

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1. At a Glance

Revenue surged 28% to ₹256 Cr in FY26, riding order wins and fleet expansion.

The company swung from modest cash flow to a stunning operating inflow, but Q4 saw a working-capital hit that warped the narrative. Order book now sits at ₹1,400 Cr—nearly six years of revenue at current run rates—anchored heavily on long-tenure green tug contracts.

ROCE softened to 16% from prior highs; net working capital days ballooned to –67. The balance sheet exploded: total assets grew 108% year-on-year, borrowings doubled, equity capital expanded by subscription. Shipyard capex looms. Tonnage tax adoption opened a margin door.

The earnings surprise lands here: a company that built itself on 50%+ ROCE growth and sub-100-day cash cycles just accepted a slower turn. Whether that’s a sign of scale-up growing pains or a signal that fleet-financed growth has structural limits remains the opening question.

2. Introduction

Knowledge Marine & Engineering Works went public in 2021 on the SME platform and graduated to the main board in 2024. The founders—Kewalramani and Daswani families—bring 50 years of combined maritime experience.

For two years the company did what startups dream of: expand fleet, win orders, grow margins. Revenue doubled from ₹126 Cr (FY24) to ₹201 Cr (FY25) to ₹256 Cr (FY26). PAT margin stayed in the high 20s. The order book went from ₹733 Cr (May 2024) to ₹1,400 Cr (December 2025)—a 91% jump in eighteen months.

Yet FY26 brought a tactical pivot. In October 2025 the company raised ₹285 Cr through preferential placement and warrant allotment, diluting the promoter stake from 67% to 54%. That same month it acquired land near Saphale for a shipyard and resolved to build vessels in-house instead of chartering. Management began talking about “discipline project selection” and margin-accretive growth instead of volume. The company opted into the Tonnage Tax regime, slashing effective tax rate by 90%. And Q4 results came with a note: two completed contracts (Pondicherry dredging, JNPA rock work) carried 100%-on-completion billing, so final invoices landed in Q1.

None of this reads as distress. It reads as a transition—from asset-light services to a vertically integrated maritime platform.

3. Business Model: WTF Do They Even Do?

KMEW operates three streams: dredging (capital and maintenance), chartering port ancillary craft, and now shipbuilding.

Dredging (₹184 Cr, 72% of FY26 revenue) is the backbone. The company owns 19 dredging vessels—three trailing suction hopper dredgers, nine cutter suction dredgers, two grab dredgers, two backhoe dredgers, and three hopper barges. It bids on tenders from port authorities and the Dredging Corporation of India for capital (deepening channels) and maintenance work. The spec? Dredging volume ranges from 10,500 cubic meters (JNPA rock work, ultra-hard material) to six figures for softer sediment jobs. Depth capability: 4m to 30m. Built-in repair capacity at yard keeps downtime low.

Charter & Hire (₹236 Cr, 62% of order book) is the new profit engine. The company owns 27 port ancillary craft: speed patrol boats, pilot launches, mooring boats, tugboats. Most are hired to ports for 3–7 years at monthly rates. But the real story is green tugs. Two contracts signed—with Visakhapatnam Port and VOC Port Chidambaranar—for 15-year, ₹690 Cr charters of 60-ton bollard-pull electric tugs. Build them in-house at Saphale. Revenue profile? Recurring, predictable, duration-locked. The company framed this as entry into the “Green Tug Transition Program,” India’s push to phase out diesel harbor tugs by 2040. Essentially, KMEW got a 15-year annuity wrapped in sustainability.

Shipbuilding (₹183.5 Cr unexecuted, 13% of order book) is the third leg. Acquired Knowledge Shipyard in FY26. Now building six work boats and accommodation boats for the Inland Waterways Authority, four cutter suction dredgers, four hybrid survey vessels, and two green tugs. Shipbuilding EBITDA margin targets 25–30% pre-subsidy, 35–40% with government support (10–15% of vessel cost). Build-own-operate thesis: design and construct vessels, own them, deploy for contracts, maintain. Reduces dependency on third-party builders and unlocks margin across the maritime value chain.

The business model morphed from “own a fleet, hire it out” to “own a fleet, charter it long-term, build new vessels for contract work, maintain everything in-house.” Concentration risk on government contracts remains high—DCI, IWAI, port authorities are the customer base. But scale is coming: management guides 30% revenue CAGR for the next two years.

4. Financials Overview

Figures are consolidated, in ₹ crore, quarterly reported.

Full-year FY26 saw revenue of ₹256 Cr (vs ₹201 Cr in FY25, +28% YoY), EBITDA of ₹97 Cr (38% margin), and PAT of ₹79 Cr (31% margin). EPS came in at ₹32.2 per share (4.24 Cr shares post-subdivision; price referenced is ₹1,824, not live).

Q4 was textbook lumpy: revenue slowed to ₹67.6 Cr, operating profit collapsed to ₹18.6 Cr from ₹38.6 Cr in Q3, yet net profit stayed resilient at ₹26.2 Cr. The reason, per management, was contract timing. Pondicherry (₹28 Cr) and JNPA (₹50 Cr) were both 100%-on-completion contracts; expenditure hit Q4 (matching the accrual), but final billing landed in Q1 FY27. Deferred revenue of ₹60 Cr shifted from Q4 to Q1. So Q1 FY27 guided to >₹100 Cr revenue with EBITDA margin >40%. Managements framed this as a timing artifact, not economics.

From the Concall:

Management emphasised “not only the growth in numbers, but the quality and sustainability of earnings,” adopting a “highly selective” bidding posture. On margin guidance, KMEW projected 35–40% EBITDA margin for the next two