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SPML Infra Limited has secured a Rs 1,128 crore contract from NTPC Limited to build a 1 GWh Battery Energy Storage System (BESS) at the Barauni Thermal Power Station. This project is SPML Infra's first large-scale grid battery storage system, marking a significant step into a key area for modernizing India's power grid. The project involves an 18-month construction period followed by 15 years of operation and maintenance.
Key Contract Details
The project includes supplying, constructing, and installing the 250 MW/1,000 MWh BESS, complete with advanced battery and thermal management systems. This BESS will help stabilize the grid, manage peak electricity demand, and integrate renewable energy sources with the thermal power plant at Barauni. SPML Infra is working with technology partner Energy Vault (NYSE: NRGV). Managing Director Abhinandan Sethi called the contract a "defining moment" that shows the company's commitment to the growing energy storage market and its goal to "architect" India's energy future. The deal is seen as proof of SPML Infra's ability to compete in a sector expected to grow rapidly, supported by India's renewable energy goals.
Stock Valuation Faces Questions
The NTPC contract is a major win, but SPML Infra's stock valuation is drawing attention. On May 6, 2026, the company's share price jumped over 5% to about Rs 224.85, showing investor excitement. However, SPML Infra, a small-cap company, has a trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio between 29 and 31. This is higher than the industry average P/E of 22.26. This high valuation seems expensive considering SPML Infra's financial results. The company reported a revenue decrease of 41.6% in fiscal year 2025. Its revenue has also declined at an average annual rate of 1.34% over the last five years. SPML Infra's Return on Equity (ROE), which measures how well it generates profit from shareholder investments, is around 6-8%.
India's BESS market is growing fast, expected to reach $19.44 billion by 2035 with a 24.3% annual growth rate. This expansion is driven by government support, like Viability Gap Funding, and decreasing battery prices. Key competitors include Tata Power Renewable Energy, Reliance New Energy, Exide Energy, Amara Raja Energy & Mobility, and Adani Energy Solutions. SPML Infra's tie-up with Energy Vault (NRGV) is notable. Energy Vault had an earnings miss in Q1 2026 but is shifting towards an independent power producer model. While SPML Infra's stock has seen a strong return of over 500% in the last three years, its past trading has been highly volatile, with significant swings in its P/E ratio over the last decade.
Key Risks and Challenges
Despite the positive news from the NTPC contract, SPML Infra faces several challenges. Its revenue has not grown, with a sharp drop in FY2025. Combined with a high P/E ratio, this suggests its stock price might not match its financial reality. The company's working capital days have significantly increased from 61 to 131 days, raising concerns about how efficiently it manages its operations and cash flow. Some reports also point to a high risk from pledged promoter shares, adding financial vulnerability. SPML Infra's recent revenue performance and modest ROE show it struggles to convert project wins into steady, profitable growth. This is happening as the energy storage sector expands quickly and stronger, better-funded competitors emerge. For a company of SPML Infra's size, the risks of executing this large project are substantial. Any delays or cost overruns could worsen its financial situation. Historically, SPML Infra's stock has been very volatile, indicating its price movements may be driven more by speculation than consistent earnings.
Future Outlook
India's BESS market is expected to grow significantly, driven by the integration of renewable energy and government support. Analyst coverage on SPML Infra is limited, but a recent note from Edelweiss mentioned a potential for the company to "bounce back stronger," setting a target price of Rs 253.10. Successfully completing the NTPC Barauni project will be crucial for SPML Infra to gain a bigger market share and support its current stock valuation. Ultimately, long-term investor confidence will depend on consistent improvements in revenue growth and profitability.