Parth Electricals & Engineering Ltd Management Discussions

Rs.200.95 Cr	Rs.20.85 Cr	Rs.14.24 Cr	0.15x
Total Revenue	EBITDA (10.5%)	PAT (7.2%)	Debt / Equity

1. Industry Structure and Developments

Parth Electricals & Engineering Ltd. (PEEL / the Company) operates in the electrical power Transmission & Distribution (T&D) equipment and services industry, a sector currently benefiting from multiple structural tailwinds in India.

1.1 Government Policy Support

• The Revamped Distribution Sector Scheme (RDSS) — operational FY22 to FY26 — carries a total outlay of Rs.3,03,758 Cr, including Government budgetary support of Rs.97,631 Cr, aimed at improving DISCOM operational efficiency on a result-linked basis.

• The National Electricity Plan envisages T&D capital expenditure of approximately Rs.9.16 lakh Cr through 2032. Indias transmission network is planned to expand from 4.98 lakh (Nov 2025) to 6.48 lakh by 2032, with transformation capacity rising from 1,398 GVA to 2,345 GVA and inter-regional transfer capacity increasing from 120 GW to 168 GW — a long growth runway for transformer, switchgear and EPC players.

1.2 Demand-Side Drivers

• Indias peak electricity demand grew from 135 GW (FY13) to 207 GW (FY23), a CAGR of ~4%. The Central Electricity Authority projects peak demand of 335 GW by FY30, 60% higher than FY23 levels.

• Per-capita power consumption reached ~1,460 kWh in FY25, over 50% higher than a decade ago; rural power availability has improved to 22.6 hours/day and urban to 23.4 hours/day.

1.3 Technology & End-Market Shifts

• Ring Main Units (RMUs) are increasingly displacing conventional transformers in secondary distribution owing to their reliability, safety, compactness and ease of maintenance; gas-insulated RMUs are the fastest- growing sub-segment given their use in grids, underground installations, wind plants and mining.

• Indias clean-energy transition is reflected in a 50% increase in the 2024 power-sector budget, with Rs.205.02 Bn allocated to the Ministry of Power and Rs.128.50 Bn to the Ministry of New & Renewable Energy.

• Indias data-centre market is expanding rapidly — Mumbai now offers the second-lowest construction cost globally at Rs.589 (US$6.64) per watt. McKinsey projects Indias data-centre power demand to rise from 1.2 GW (2024) to 4.5 GW by 2030, driven by AI and digital adoption — a structural tailwind for MV/LV switchgear, panels, compact substations and control/relay panels, which form the electrical backbone of hyperscale data centres.

2. Business Overview and Segment-wise Performance

PEEL operates across two principal business verticals —

(a) Manufacturing & Supply and

(b) Services & EPC — supported by in-house R&D and design capability, and technology-transfer relationships with Schneider Electric SAS (France) for RMU and CSS/PSS manufacture, and with Hezong for 11kV-40.5kV GIS and 33kV RMU manufacture. The Company also holds a specialised services partnership with Pfisterer Switzerland AG for cable termination and jointing.

Business Vertical	Products / Services	Voltage / Capacity Range
Manufacturing & Supply	RMU, MV Panels, CSS/PSS, Control & Relay Panels, Earth Link Box, Metering Panels	11kV - 33kV (CSS upto5 MVA; Relay panels upto 132kV)
Services & EPC	Substation & cable installation, testing, commissioning, health check-ups, repair/refurbishment	415V - 400kV (GIS up to 400kV; AIS up to 220kV)

2.1 Order Book Composition

The Companys order book stood at a record Rs.271.59 Cr, expected to be executed during FY27 and partly in H1FY28 — providing strong revenue visibility for the next 12-18 months.

Segment	Order Book (Rs. Cr)	% of Total
Manufacturing & Supply	110.46	41%
EPC	144.57	53%
Services	16.57	6%
Total	271.59	100%

2.2 Key Business Developments in FY26

• First order win in Western Gujarat from Paschim Gujarat Vij Company Ltd (PGVCL) worth Rs.84.32 Cr

• Rs.45.4 Cr order for MV Block Compact Substations for an AI Factory / data-centre project — validating the Companys positioning in the data-centre value chain

• Successful execution of export orders worth Rs.10.62 Cr for ZESCO Ltd, Zambia

• First export dispatch of Intelligent Motor Control Centres (iMCC) to the USA, post compliance with ULand IEEE standards

• Rs.9.23 Cr order for 11kV Compact Substations from TATA Power Central Odisha Distribution Ltd (TPCODL)

• Rs.44.71 Cr EPC & Services contract for a 66kV/11kV GIS project for the Deendayal Port Authority, Kandla

• Launching a dedicated Training & Skill Development Centre in 2026-2027, reinforcing long-term manpower capability

3. Opportunities and Threats

3.1 Opportunities

• Large multi-year policy-backed capex cycle in Indian T&D infrastructure (RDSS, National Electricity Plan)

• Rising structural demand from data centres, EV charging, renewable-energy evacuation and industrial electrification

• Import substitution and Make in India push in GIS manufacturing, an area currently dominated by a handful of global players

• Early-stage export franchise (USA, Zambia, Nepal, Bhutan) that can scale with UL/IEC-compliant product certifications

• Well-capitalised balance sheet post-IPO (Debt/Equity of 0.15x) providing headroom for further capacity expansion or working-capital funding

3.2 Threats / Risks

• Execution risk on large greenfield capex (Karachiya GIS plant and Odisha facility) — delays could push out revenue recognition

• Working-capital intensity of the EPC and export businesses, reflected in an elevated FY26 cash-conversion cycle of 73 days

• Customer concentration risk typical of a business dependent on a relatively small number of large utility and private-sector orders

• Commodity price volatility (copper, steel, aluminium) impacting gross margins on fixed-price contracts

• Competitive intensity from larger, well-established switchgear manufacturers and MNC-backed players in the higher-voltage GIS segment

4. Outlook

The Company enters FY27 with a record order book of Rs.271.59 Cr and a further Rs.100+ Cr of opportunities in the pipeline, providing strong near-term revenue visibility. Capacity additions at Karachiya (Vadodara, GIS Unit-2) and Khordha (Odisha) are expected to be commissioned progressively through FY27, supporting both higher-voltage GIS manufacturing and access to the Eastern Indian market. Managements stated priorities for the year ahead are to

(a) improve capital utilisation and lift return ratios from the enlarged post-IPO capital base,

(b) normalise the working-capital cycle without disrupting growth, and

(c) convert reported earnings more fully into operating cash flow.

Rs.271.59 Cr	Rs.100+ Cr	Rs.20.59 Cr	3
Order Book (FY 27 exec.)	Pipeline Opportunities	Cap ExDeployed to Date	New Facilities Underway

5. Risks and Concerns — Summary Register

Risk Category	Description	Mitigation
Execution / Project Risk	Delay in commissioning Karachiya GIS and Odisha facilities	Phased capex, part-utilisation of funds, experienced project team
Working Capital Risk	Elevated cash conversion cycle (73 days) in FY26	Management focus area for FY27; strong cash balance (Rs.43.59 Cr) provides buffer
Customer Concentration	Reliance on large utility / private EPC contracts	Diversifying into exports (USA, Zambia, Nepal, Bhutan) and datacentre clients
Raw Material Price Risk	Copper, steel and aluminium price volatility	Back-to-back pricing clauses in EPC contracts where feasible
Competitive Risk	Entry of larger / global players in GIS segment	Technology-transfer .tie-ups with Schneider Electric and Hezong; inhouse R&D
Financial Risk	Interest rate and forex exposure on export receivables	Low leverage (D/E 0.15x) and improved DSCR (19.64x) limit financial risk

6. Internal Control Systems and their Adequacy

The Company has an internal control framework commensurate with its size and the nature of its operations, covering procurement, manufacturing, project execution, billing and financial reporting. Independent Directors on the Board — including a practicing Company Secretary and a Chartered Accountant with over three decades of experience — provide oversight on governance and compliance matters. The Companys finance function is headed by a CFO with 14 years of experience, supported by a qualified accounts team, and the Company has been NSE Emerge-listed since 2025, subjecting it to applicable SEBI LODR disclosure and internal-control requirements.

7. Financial Performance and Analysis

7.1 Profit & Loss Overview

Particulars (Rs. Cr)	FY23	FY24	FY25	FY26
Net Revenue	65.53	86.78	174.67	198.00
Gross Margin	15.87	23.93	36.45	52.16
Gross Margin %	24.22%	27.57%	20.87%	26.33%
EBITDA	4.31	9.05	17.53	20.85
EBITDA %	6.58%	10.43%	10.04%	10.53%
EBIT	3.60	7.50	15.75	18.38
Profit After Tax	2.45	4.60	10.12	14.24
PAT %	3.74%	5.31%	5.79%	7.19%

7.2 Margin Trajectory

Revenue grew at a 4-year CAGR of 45%, from Rs.65.53 Cr in FY23 to Rs.198.00 Cr in FY26, while EBITDA and PAT compounded faster at 69% and 80% respectively — indicating meaningful operating leverage as the business has scaled. Gross margin, which dipped to 20.87% in FY25 on a higher share of lower-margin EPC pass-through revenue, recovered to 26.33% in FY26. EBITDA margin has held broadly steady in the 10.010.5% band since FY24. PAT margin has expanded in every year under review, rising from 3.74% (FY23) to 7.19% (FY26), a 140-bps improvement over FY25 alone, aided by lower interest costs and other income.

7.3 Balance Sheet Analysis

The Companys net worth grew from Rs.9.59 Cr (FY23) to Rs.111.45 Cr (FY26) — a nearly 12x increase over four years, driven both by internal accruals and the Rs.62.00 Cr equity raised through two pre-IPO rounds and the NSE Emerge IPO in FY26. Total debt, after peaking at Rs.33.33 Cr in FY25, was brought down sharply to Rs.17.16 Cr in FY26 (entirely short-term; long-term borrowings stood at nil), reflecting deliberate deleveraging using IPO proceeds.

Key Ratio	FY25	FY26	Movement
Debt / Equity	0.82x	0.15x	Improved
Current Ratio	1.17x	1.83x	Improved
Debt Service Coverage Ratio (DSCR)	2.99x	19.64x	Improved
Return on Equity (RoE)	37%	19%	Diluted (fresh equity)
Return on Capital Employed (RoCE)	22%	16%	Diluted (fresh equity)

The decline in RoE (37%—19%) and RoCE (22%—16%) is a mechanical consequence of the Rs.62.05 Cr equity infusion during FY26 (IPO and pre-IPO rounds) rather than a deterioration in underlying profitability — absolute PAT and EBIT both grew strongly over the same period. Management has identified improving capital productivity on this expanded base as a key priority for FY27.

7.4 Liquidity and Cash Flow

Metric	FY26 (Days)	Basis
Debtor Days	64	Receivables / Net Revenue x 365
Inventory Days	104	Inventory / COGS x 365
Payable Days	95	Payables / COGS x 365
Cash Conversion Cycle	73	Debtor + Inventory - Payable Days

Cash and bank balances rose steadily from Rs. 1.95 Cr (FY23) to Rs.43.59 Cr (FY26), providing a comfortable liquidity buffer for near-term capex and working-capital needs. Net cash flow from financing activities was Rs.38.26 Cr in FY26, predominantly IPO-related, while investing activities absorbed Rs.17.99 Cr towards ongoing capacity expansion. Operating cash flow after tax was marginally negative at Rs.(4.06) Cr in FY26, reflecting the elevated working-capital cycle discussed below; this is an area of specific management focus going into FY27.

7.5 Working Capital Cycle

The FY26 cash-conversion cycle of 73 days was stretched primarily by inventory build-up (104 days) ahead of new capacity commissioning and higher project-related work-in-progress, partly offset by extended payable terms (95 days). Normalising inventory levels without disrupting the current growth trajectory is explicitly flagged as a management focus area for FY27.

PARTH ELECTRICALS & ENGINEERING LIMITED

7.6 Capital Expenditure and Use of IPO Proceeds

STRATEGIC REVIEW

STATUTORY REPORTS_

FINANGAL STATEMENTS

Objects / Growth Plans	Allocation (Rs. Cr)	Status
Unit-2 (Karachiya, Vadodara) \u2014 GIS for 33/66/132/220kV	20	Part-utilised; balance parked in FD
New manufacturing unit \u2014 Khordha, Odisha	19	Parked in FD
Repayment of short-term borrowings	15	Utilised as specified
Miscellaneous & general corporate purposes	8	Utilised as specified
Total	62	\u2014

8. Human Resources and Industrial Relations

The Companys workforce stood at 270 employees as on date, with an average of 20+ years of industry experience across the core leadership team and an average tenure with PEEL itself of 10+ years — reflecting strong retention and institutional knowledge. Key functional heads span Technical, Projects, Services, Production, Fabrication, Testing, Planning, Execution, Purchase, Finance, and Corporate Affairs & HR. The Company was Great Place to Work-Certified (Mid-Size Organisations category) for December 2024-December 2025, and launched a dedicated Training & Skill Development Centre in May 2026 to build internal capability in MV/LV/HV/EHV switchgear installation, testing and commissioning — supplementing specialised overseas training undertaken with Pfisterer Switzerland (2019 and 2025) and technical training in China for HV GIS handling.

270	20+ yrs	10+ yrs	GPTW
Employees	Avg.Team Experience	Avg.Tenure with PEEL	Certified Dec24-Dec25

Date: 24/08/2026	Jigneshkumar Gordhanbhai Patel
Place: Vadodara	Chairperson
	DIN: 02467519