Revathi Equipment FY26: A ₹17 Cr Operating Profit Propped Up By ₹13 Cr of Other Income

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1 — At a Glance

Revathi Equipment India closed FY26 with revenue of ₹139.44 crore, down from ₹178.53 crore a year earlier — a 21.9% contraction that the CARE rating rationale attributes to weaker exports and a shift by Coal India toward mine-developer-operator procurement. Net profit landed at ₹13.37 crore against ₹20.18 crore in FY25.

The number worth pausing on: operating profit for the full year came to roughly ₹17 crore, while other income sat at ₹13.11 crore. Nearly as much profit arrived from interest, dividends and investment gains as from drilling rigs. Add that the entire year’s operating profit essentially materialised in the March quarter (₹18.34 crore) after three quarters of near-zero-to-negative operating results, and the shape of FY26 becomes clear: a back-loaded, non-operating-assisted rescue of a headline number.

A CFO resigned in June 2026, CARE downgraded the credit rating in February, and receivables more than doubled. A company reporting steady profit for six years, wearing a lot underneath the profit line.

Does a ₹13 crore other-income cushion tell you about the drilling business, or about the treasury sitting next to it?

2 — Introduction

Revathi Equipment India Limited was incorporated in 2020, but the drilling business it houses is far older. Per the CARE report, drilling operations first commenced in 1977, ran under Revathi Equipment Limited, and — through a June 2023 NCLT-approved scheme — were demerged into the present entity while the leftover design-and-construction business stayed behind as Semac Consultants Limited. REIL listed on the exchanges in September 2024.

That family tree matters, because the two halves never fully separated. Corporate guarantees still flow from the listed drilling company to the group construction entity — a thread that runs through this year’s rating action.

FY26 was a step down on almost every operating line. Revenue fell 21.9%, production dropped from 22 rigs to 17 (per the disclosed insights), and capacity utilisation slid to 28% on an installed base of 60 machines. The recent corporate moves in the record: a CFO resignation effective 30 June 2026, a February 2026 credit downgrade, and the April 2025 incorporation of a wholly-owned LLP, Global Essential Mining Supplies.

3 — Business Model: WTF Do They Even Do?

They build machines that make holes. Big ones. The product line, per the company’s portfolio disclosure, runs from blast-hole drills (heavy rotary rigs for open-pit coal, limestone and ore) through jackless drills, water-well drills, hydro-fracturing units, exploratory rigs, and the ever-reliable spares-and-accessories drawer.

Here’s the tell the model doesn’t hide: the company describes itself as assembly-oriented. Per the CARE report, REIL doesn’t manufacture critical parts — motors, jacks, hydraulic systems, electronics — but assembles imported and vendor-supplied components. A drilling-rig maker that outsources the drilling-rig internals.

The revenue mix has quietly rotated. Per the disclosed bifurcation, drills fell from 69% of FY24 revenue to 48.5% in FY25, while spares climbed from 26.7% to 47%. When your machine sales halve as a share of the top line and your spares business nearly doubles to fill the gap, the aftermarket is carrying the showroom.

And then there’s the customer list. The company derives 62.5% of domestic sales from Coal India, per its disclosures; CARE notes top-five customer concentration rose to ~88% in 9MFY26. Geographically, FY25 was 62% India, 38% exports — with exports down from ₹76.70 crore to ₹68 crore, an ~11.2% slide the company attributes to trade disruptions.

A model that depends on one buyer, imports its own guts, and leans on spares to keep the lights on. Every dependency is somebody else’s decision.

4 — Financials Overview

Figures are consolidated in intent but drawn from the standalone data sheet, in ₹ crore. This is a full-year (FY26) result.

Operating profit fell faster than revenue — margin compression the data sheet puts at roughly 700 basis points, OPM from 17% to 12%. The CARE rationale attributes the weakness to poor cost absorption at 28% capacity utilisation: fixed costs don’t shrink when production does.

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 currently pays about 16x earnings here versus a peer median of 32.6x — roughly half the multiple the broader capital-goods set carries. ROE at 10.2% sits below its own 5-year average of 16.8%, and ROCE at 14.4% sits at the peer median.

What the multiple appears to be pricing in, using facts from the record: a 21.9% revenue decline, a profit line leaning heavily on ₹13.11 crore of other income, a working-capital cycle that has stretched, and corporate guarantees to a group entity exceeding net worth. The peer set trades on scale and growth; this entity trades on a shrinking top line with treasury income doing structural work. One factual observation on market expectations: the multiple sits well below the peer band while the operating metrics also sit below their own history.

6 — What’s Cooking

Three material events sit in the record. First, CFO Sudhir Raju resigned effective close of business 30 June 2026, citing personal reasons; the board is appointing a successor. Second, CARE downgraded the bank facilities in February 2026 to CARE BBB;Stable / CARE A3+ from BBB+ / A2, citing the FY25 revenue decline and 9MFY26 operating losses. Third, the company incorporated a wholly-owned LLP, Global Essential Mining Supplies, in April 2025.

A resigned finance chief and a downgraded rating in the same six months. Not drama — just the record, in order.

7 — Balance Sheet

Assets equal liabilities in every column — the arithmetic holds.

• Borrowings jumped from ₹37.23 crore to ₹67.90 crore in one year, an ₹30.67 crore climb, even as net worth grew a modest ₹13.72 crore.
• Receivables more than doubled, from ₹25.15 crore to ₹60.44 crore — the debtors are growing faster than the sales that produced them.
• Investments of ₹57.90 crore still sit on the books; per the CARE report the term loans were fully repaid in H1FY26, leaving the entity net-debt-free against its liquid portfolio even as gross borrowings rose.

A balance sheet where the loan book and the receivables book expanded together while revenue fell is a balance sheet financing something other than growth.

8 — Cash Flow: Sab Number Game Hai

The swing is the story: operating cash flow went from +₹27.87 crore to −₹30.34 crore in a single year. The cash flow statement traces it to a ₹35.26 crore increase in trade receivables and a ₹22.83 crore drop in other current liabilities. To plug the operating hole, the company drew ₹31.71 crore in short-term borrowings — which is exactly where that borrowings jump in Section 7 came from. Profit that doesn’t convert to cash has to be funded somewhere; here it was funded by the bank.

9 — Ratios: Sexy or Stressy?

• ROE at 10.2% — the equity earned less this year than its own 5-year record of 16.8%, working a shorter shift.
• ROCE at 14.4% — capital is turning, but at less than half the 38% it hit in FY24, per the ratios sheet.
• PAT margin of 9.6% — respectable on paper, though ₹13.11 crore of other income is doing meaningful lifting inside it.
• D/E at 0.48 understates the story; the working-capital days blew out from 16 to 226, per the ratios sheet, and debtor days sit at 158.

10 — P&L Breakdown: Show Me the Money

The Other Income column is the point. It has risen every year — ₹8.65 crore, ₹10.25 crore, ₹13.11 crore — while operating profit has fallen every year, ₹40 crore to ₹30 crore to ₹17 crore. In FY26 the two lines nearly meet. The real business is shrinking while the treasury income grows to meet it halfway.

On EPS: FY24 carried an unusual pre-listing share count in the record, so a clean comparison starts FY25. EPS fell from ₹65.79 to ₹43.59, tracking PAT down 33.7% on a stable 30.67 lakh share count — this is a genuine profit decline, not a dilution artefact.

11 — Peer Comparison

Revathi is the smallest name on the list by a wide margin and carries the lowest multiple — about half the peer median of 32.6x. The peers pricing at 50–80x are showing quarterly revenue an order of magnitude larger and growing; this entity carries a fraction of the multiple on a fraction of the scale with revenue moving the other way.

12 — Miscellaneous: Shareholding & Promoters

The promoter block runs through the Dalmia family and Renaissance Group vehicles, with the Ajai Hari Dalmia Trust holding 46.43%. Abhishek Dalmia — who took the drilling business over from Atlas Copco in 2002, per the CARE report — is Chairman and Managing Director. FII holding has dwindled to zero from a token 0.06%. The register lists roughly 5,590 shareholders. The AGM notice sought approval for up to ₹300 crore in related-party transactions and a ₹4 crore MD salary — worth noting for a company doing ₹139 crore of revenue.

13 — Corporate Governance: Angels or Devils?

The statutory auditors expressed an unmodified opinion on the FY26 results — no qualification in the record. The genuine governance thread is the group exposure: per CARE, corporate guarantees extended to group entity Semac Construction Limited rose from ₹94 crore to ₹134 crore, amounting to 103.32% of REIL’s net worth, and lifted adjusted gearing to 1.59x by December 2025. SCL itself reported losses of ₹31.91 crore in FY24 and ₹5.84 crore in FY25. A listed drilling company guaranteeing more than its entire net worth on behalf of a loss-making construction affiliate is a fact that sits in the record without embellishment. Add the ₹300 crore RPT ceiling and the mid-year CFO exit, and the governance file is not empty.

14 — Industry Roast & Macro Context

Mining-equipment makers live and die by their customers’ capex cycles, and in India that customer is often a public-sector giant with its own procurement moods. The industry’s structural fact this year, per CARE: Coal India’s pivot to mine-developer-operator contracts reduces direct equipment purchases — the buyer decided to hire operators instead of buying machines, and every direct supplier felt it. Layer on export markets disrupted by geopolitical friction, and a rig-maker is squeezed from both sides. It’s a sector where the order book is written in someone else’s boardroom, and the assembly-oriented players — importing critical parts, holding inventory for long production lead times — carry the working-capital risk of a full manufacturer without owning the technology.

15 — EduInvesting Verdict

A company whose profit line looks steadier than its business, held up by treasury income and a single strong quarter while receivables balloon and guarantees to a loss-making cousin exceed its own net worth. The drilling rigs make holes; this year, so did the cash flow statement.