Rajesh Power Services has secured a turnkey contract worth ₹1,628.74 crore from Dakshin Gujarat Vij Company Limited (DGVCL) to modernize electricity distribution networks. This win expands the company's total order book to approximately ₹5,400 crore, a 35% increase. Investors should track the 24-month execution timeline and the company's working capital management given the capital-intensive nature of this business.
Rajesh Power Services Limited has secured a significant infrastructure contract valued at ₹1,628.74 crore from Dakshin Gujarat Vij Company Limited (DGVCL). The project involves the modernization of electricity distribution networks by transitioning legacy 11/22 kV high-tension and low-tension overhead power lines to underground cabling systems. The mandate is structured as a turnkey contract, meaning the company is responsible for the design, supply, and installation of the systems within a 24-month timeline.
In addition to the cabling work, the contract requires the deployment of equipment compatible with Supervisory Control and Data Acquisition (SCADA) systems. This technology is intended to improve grid reliability by enabling better monitoring and automation of power distribution across the state. This project win is part of a broader trend of state-led infrastructure upgrades in the power sector.
The successful bid marks a notable expansion of the company’s order book, which now stands at approximately ₹5,400 crore, representing a 35% growth. This adds to the company's recent project pipeline, including a ₹472 crore contract from Madhya Gujarat Vij Company Limited (MGVCL). For the first half of the financial year 2027 (H1FY27), Rajesh Power reported a revenue of ₹929.26 crore and a profit of ₹79.22 crore.
While the increase in the order book signals business growth, investors should consider the specific risks associated with the Engineering, Procurement, and Construction (EPC) sector. These projects are capital-intensive, often requiring significant cash outlays before payments are received from clients. This can lead to tighter cash flow if not managed carefully. Additionally, the company has a high degree of reliance on state-owned electricity distribution companies in Gujarat. This concentration risk means the company’s financial performance is closely tied to the project execution timelines and capital spending budgets of these specific regional utilities.
Looking ahead, the primary monitorables for shareholders will be the execution speed of the 24-month project and the company’s ability to manage its working capital requirements. Maintaining profit margins, which historically hover around 11-12%, will depend on the company's ability to manage material costs and operational expenses throughout the contract duration.