Power Mech Secures ₹1,000 Cr Orders from Adani Power Subsidiaries

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AuthorSimar Singh|Published at:
Power Mech Secures ₹1,000 Cr Orders from Adani Power Subsidiaries
Overview

Power Mech Projects Limited announced it has secured substantial orders totalling over ₹1,000 Crores (excluding taxes) from subsidiaries of Adani Power Limited. The contracts involve erection, testing, and commissioning for ultra-supercritical thermal power projects, extending the company's order book and providing strong revenue visibility for the next three years.

Strategic Analysis & Impact

Power Mech Projects Limited (PMPL) has announced a significant win, securing multiple large-scale orders aggregating over ₹1,000 Crores (excluding Goods and Services Tax and other applicable taxes) from subsidiaries of Adani Power Limited, namely Mirzapur Thermal Energy (UP) Private Limited and Mahan Energen Limited. These orders are for the erection, testing, commissioning, and manpower assistance for performance guarantee tests of steam generators and steam turbine generators for Units 1 and 2 of two 2x800 MW ultra-supercritical thermal power projects. [cite:NEWS] The scope of work highlights PMPL's specialized capabilities in executing complex power plant infrastructure.

This new business is a substantial addition to PMPL's already robust order book. As of June 30, 2025, the company's order book stood at approximately ₹14,749 crore, providing revenue visibility for around three years. With the addition of these new orders, PMPL further strengthens its position in the power EPC (Engineering, Procurement, and Construction) sector. The execution timeline for these new contracts is set within 36 months from the Notice to Proceed, indicating a steady stream of revenue over the medium term. Notably, the company has confirmed that these contracts are not related-party transactions, with promoters having no interest in the awarding entities, which is a positive governance indicator. [cite:NEWS]

Risks & Outlook

Specific Risks:

  • Execution Risk: While PMPL has a strong track record, the successful and timely completion of these large-scale thermal power projects remains critical. Any delays in project execution could impact PMPL's profitability and cash flows.
  • Sectoral Dependence: The company's significant reliance on the power sector, particularly on large clients like Adani Power, exposes it to sector-specific risks, including policy changes, regulatory hurdles, and client-specific financial health.
  • Adani Group's Execution Pace: Adani Power is actively expanding its capacity with multiple 2x800 MW projects. The pace of these projects and subsequent award of work packages to PMPL will be crucial for sustained revenue generation.

Negative History:

  • In July 2022, the Income Tax Department conducted searches at around 20 premises of Power Mech Projects and its subsidiary, Power Mech Infra, over allegations of claiming artificially inflated deductions, suppressing expenses, and over-appropriating revenue. Substantial incriminating evidence was reportedly seized. The company stated it was cooperating with the authorities.
  • In February 2025, PMPL received penalty orders from the GST Authority totaling over ₹47 million, related to disputes over input tax credit claims due to vendor defaults and excess availment of credit for the fiscal year 2020-21. The company considered the demands not maintainable and was evaluating options to challenge the orders.

The Forward View:
Investors will be watching PMPL's ability to efficiently execute these new projects, its success in securing further orders in the power and other infrastructure segments, and its ability to maintain healthy margins amidst execution complexities and potential cost escalations. The company's recent performance shows consistent revenue growth and stable EBITDA margins, indicating a resilient operational base.

Peer Comparison

Power Mech Projects operates in a competitive EPC landscape. Its peers include large conglomerates and specialized players. Larsen & Toubro (L&T) is a major competitor across various infrastructure segments, including power transmission and distribution, frequently winning large grid infrastructure orders. Bharat Heavy Electricals Limited (BHEL), primarily a manufacturer, also secures large EPC orders for power plants, often in conjunction with its equipment supply. Compared to these larger entities, PMPL, while substantial, is more focused on the power sector and niche areas like mine development. PMPL's order book, as of June 2025, was ₹14,749 crore, whereas BHEL's order book exceeded ₹1.05 lakh crore and L&T's revenue from its construction division is significantly larger. PMPL's strength lies in its specialized execution capabilities for thermal power projects and its growing presence in O&M and MDO (Mine Developer and Operator) segments, offering diversification and recurring revenue streams.

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