Whalesbook
Rajesh Power Services reported strong full-year FY26 results, with consolidated total income rising 51.68% year-on-year to ₹1,633.41 crore. Consolidated profit after tax reached ₹143.20 crore. On a standalone basis, total income also grew 51.68% to ₹1,633.41 crore, with profit after tax at ₹137.54 crore. For the half-year, standalone total income increased 30.47% to ₹993.34 crore, accompanied by a profit after tax of ₹79.48 crore.
The company's robust double-digit growth across annual and half-yearly periods signals healthy demand for its power infrastructure services. A 10% final dividend has been recommended, offering a positive signal to shareholders. However, investors are closely watching a sharp increase in standalone current borrowings and a significant portion of IPO funds remaining unutilized for capital expenditure.
Rajesh Power Services, an EPC contractor in power transmission and distribution since 1971, raised approximately ₹160-161 crore through its IPO in late 2024. The funds were designated for capital equipment, a solar power plant, developing green hydrogen expertise, and working capital. As of March 2024, the company held a substantial order book valued at around ₹2,358.17 crore. IPO documents had previously highlighted risks, including dependence on government bids and execution challenges in new ventures.
The strong revenue growth indicates robust order execution and market demand. Shareholders can anticipate a dividend payout. However, increased scrutiny is expected on the company's debt management and how it utilizes IPO funds for expansion. The company's strategic focus on renewable energy and technologies like green hydrogen may influence future growth.
Specific financial figures reveal a significant increase in borrowings, with standalone current borrowings rising from ₹2,890.41 lakh in FY25 to ₹8,158.82 lakh in FY26. Approximately ₹2,510.93 lakh of IPO funds designated for plant and machinery remained unutilized as of March 31, 2026, potentially delaying expansion projects. An exceptional charge of ₹63.92 lakh was recorded in FY26 related to the Code on Social Security, 2020. Investors are noting the increased financial leverage and potential interest costs, as well as execution risks related to project completion and dependence on government bids. Past analyses also indicated negative operating cash flow, which could strain liquidity if debt servicing or capital expenditure needs are high.
Rajesh Power Services operates in the power EPC and infrastructure sector. Its peers, which focus on similar projects, include KEC International Ltd (global EPC for power transmission and distribution), Kalpataru Projects International Ltd (EPC for power, infrastructure, railways), and Engineers India Ltd (comprehensive EPC services across sectors).
Looking ahead, investors will be tracking management's strategy for debt reduction and improved working capital. Key areas to watch include the timely utilization of IPO funds for capital expenditure, execution progress on the company's substantial order book, and the performance of new ventures like battery storage and green hydrogen. Developments in the power infrastructure sector will also be important.