KMEW Q3 FY26: Revenue Zooms 56%, Enters Shipbuilding, Tax Rate Nears Zero

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AuthorSatyam Jha|Published at:
KMEW Q3 FY26: Revenue Zooms 56%, Enters Shipbuilding, Tax Rate Nears Zero
Overview

Knowledge Marine & Engineering Works Ltd (KMEW) posted robust Q3 FY26 results, with revenue jumping 56% YoY to ₹90 crore and EBITDA margins at a healthy 43%. The company marked its entry into commercial shipbuilding, secured a significant green tug contract, and is set to benefit from a new tonnage tax scheme, driving its effective tax rate below 1%. KMEW's strong order book of ₹1,500 crore underpins its growth outlook.

KMEW Q3 FY26: Revenue Zooms 56% on Shipbuilding Entry, Tax Rate Nears Zero

Revenue grew 56% YoY to ₹90 crores; EBITDA margin reached 43%.
Reader Takeaway: Revenue soars on shipbuilding entry; tax benefits boost margins amidst operational focus.

What just happened (today’s filing)

Knowledge Marine & Engineering Works Limited (KMEW) reported a stellar Q3 FY26, with consolidated revenue surging 56% year-on-year to ₹90 crore. The company's EBITDA margin expanded to a robust 43%.

The company has successfully entered the commercial shipbuilding segment, securing INR 230 crore in orders from IWAI (Inland Waterways Authority of India) and a significant 15-year green tug contract worth INR 700 crore.

KMEW's total order book now stands at ₹1,500 crore, with bids in the pipeline exceeding ₹3,000 crore. This strong backlog is supported by continued high fleet utilization of 100%.

A major strategic development is the company's transition to the tonnage tax scheme, which management projects will reduce its effective tax rate to less than 1% of turnover, significantly boosting profitability.

Why this matters

The entry into commercial shipbuilding diversifies KMEW's revenue streams beyond its traditional dredging and marine operations. This move, coupled with long-term contracts like the green tugs, offers greater revenue visibility and potential for higher margins.

The tonnage tax benefit is a significant structural positive, directly enhancing net profit margins and freeing up cash flow that can be reinvested or used for debt reduction.

With a strong order book and full fleet utilization, the company is well-positioned for continued growth, aiming for INR 500-700 crore revenue within three years from its planned shipyard expansion.

The backstory (grounded)

In September 2025, KMEW completed a significant preferential issue, raising INR 284.81 crore. Funds from this issue are earmarked for working capital (₹30.81 Cr), capital expenditure for vessel purchase/construction (₹183 Cr), and general corporate purposes (₹71 Cr), supporting its growth ambitions.

KMEW migrated from the BSE SME platform to the Main Board of BSE and NSE, enhancing its investor reach and credibility.

What changes now

Shareholders can anticipate KMEW's enhanced revenue streams from commercial shipbuilding activities alongside its core dredging business.

The adoption of the tonnage tax scheme is expected to lead to substantially lower tax outgoings and improved bottom-line profitability.

The company plans a INR 100 crore investment in shipyard facilities to target expanded revenue, aiming for ₹500-700 crore within three years.

Capex of INR 183 crore is planned over the next three years for fleet expansion, further strengthening operational capacity.

Management expects a reduction in receivable days from the current 45-60 days to a more efficient 30-45 days.

Risks to watch

The Bahrain project operations are currently on hold pending the redeployment of a vessel to higher-margin Indian contracts, creating uncertainty for that segment.

While KMEW's management states there is no direct overlap with Dredging Corporation of India (DCI) due to different focus areas (river vs. port dredging), DCI has significant capex plans, indicating potential competitive intensity in the broader dredging market.

The shipyard expansion is restricted to building vessels under 100 meters with drafts less than 5 meters due to draft limitations.

Peer comparison

KMEW is expanding into shipbuilding, a segment where peers like Cochin Shipyard Ltd and Garden Reach Shipbuilders & Engineers Ltd (GRSE) are prominent, with GRSE having a substantial order book of ₹23,880 crore.

In dredging, KMEW faces competition from established players like Dredging Corporation of India (DCI), which holds a dominant market share (>80%) in maintenance dredging for major Indian ports.

Context metrics (time-bound)

KMEW achieved revenue of ₹90 crore in Q3 FY26, a 56% YoY increase from ₹57.6 crore in Q3 FY25.

Consolidated PAT surged 110.5% YoY to ₹328.94 crore in Q3 FY26 from ₹156.23 crore in Q3 FY25.

Operating margins in FY25 were around 41.56% and are projected to remain over 35% medium-term.

What to track next

Investors will monitor the successful integration and performance of the new commercial shipbuilding segment.

Progress on resuming operations at the Bahrain project and redeployment of the vessel will be crucial.

Further inflows of new orders, especially in shipbuilding and green tugs, will be key indicators of future growth.

The actualization of tax savings under the tonnage tax scheme and their impact on net margins need close observation.

Management's ability to reduce receivable days and improve working capital efficiency will be a significant positive.

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