Rajesh Power Services Ltd Management Discussions

Economic Overview

The global economy demonstrated resilience during 2025 despite persistent geopolitical uncertainties, evolving trade dynamics, inflationary pressures and fluctuations in commodity markets. While growth trajectories varied across regions, governments and businesses continued to prioritize investments in infrastructure, energy security, digital transformation and sustainability. The increasing emphasis on energy transition, electrification and grid modernization has reinforced the importance of reliable power infrastructure as nations seek to balance economic growth with environmental commitments. India remained one of the fastest-growing major economies in the world, supported by strong domestic consumption, rising capital expenditure, robust industrial activity and sustained policy reforms. Continued investments in infrastructure, manufacturing, logistics, urban development and renewable energy strengthened the countrys long-term growth prospects. Government initiatives aimed at improving ease of doing business, expanding industrial capacity and accelerating infrastructure development continued to create opportunities across sectors. According to the International Monetary Fund (IMF) World Economic Outlook Update, July 2026, global growth is projected to moderate to 3.0% in 2026 before recovering to 3.4% in 2027. Advanced economies are projected to grow by 1.7% in 2026 and 1.8% in 2027, while emerging market and developing economies are expected to remain the principal contributors to global growth, although their growth is projected to 3.8% in 2026, before recovering to 4.5% in 2027. Strong consumer demand and moderating inflationary pressures supported economic momentum through 2025. However, subdued investment activity, limited fiscal flexibility and underlying economic vulnerabilities continue to weigh on global growth prospects. These factors increase the likelihood of the world economy entering a prolonged phase of slower expansion compared with the pre-pandemic era. A partial easing of trade tensions has helped alleviate disruptions to international commerce; however, the impact of elevated tariffs and heightened macroeconomic uncertainty is expected to become more evident in 2026. Financial conditions have improved amid monetary policy easing and stronger market sentiment, yet risks remain elevated due to stretched asset valuations, particularly in sectors benefiting from rapid advancements in artificial intelligence. Furthermore, high debt levels and elevated borrowing costs continue to restrict policy flexibility, especially across developing economies. The convergence of economic, geopolitical and technological challenges is reshaping the global landscape, creating fresh uncertainties and exacerbating social vulnerabilities. Consequently, many developing economies continue to face significant growth constraints, hindering progress towards broader development objectives and long-term sustainability goals.

Economic activity across major regions is expected to remain broadly stable in 2026, although growth performance is likely to vary considerably across economies. The United States economy is projected to grow by 2.0% in 2026, compared with 1.9% in 2025, supported by accommodative monetary and fiscal policies. Nevertheless, a gradual softening in labour market conditions may temper overall economic momentum. In the European Union, economic growth is forecast at 1.3% in 2026, down from 1.5% in 2025, as higher trade barriers and persistent geopolitical uncertainties continue to weigh on export activity, business confidence, and investment sentiment. Chinas economic growth is projected to moderate from 5.0 per cent in 2025 to 4.6 per cent in 2026. Continued policy support is expected to underpin private consumption as well as investment in manufacturing and infrastructure. However, persistent weakness in the property sector remains a key concern, and export growth is likely to slow following the front-loaded shipments undertaken ahead of the United States tariff increases in 2025. In comparison to regional peers, China remains relatively less exposed to potential disruptions arising from Middle East energy volatility, owing to its diversified energy mix and substantial strategic reserves.Source: World Economic Situation and Prospects 2026, MID-YEAR UPDATE, United Nations, Department of Economic and Social Affairs India is among the worlds fastest-growing major economies, with strong foundations for sustained growth. With the goal of achieving high middle-income status by 2047, the country continues to advance through economic growth, structural reforms and social progress.

The countrys commitment to achieving energy security, supporting industrial expansion, and facilitating renewable energy integration has resulted in substantial investments across the power value chain. As electricity demand continues to rise alongside economic development, transmission and distribution infrastructure has emerged as a critical enabler of sustainable growth. The sector is witnessing increasing investments in network expansion, underground cabling, smart grid deployment, substation modernization, and energy storage systems, creating a favourable operating environment for specialized infrastructure companies.

Indian Power Sector Overview

Indias power sector continues to play a pivotal role in supporting economic development, industrial expansion, urbanization, and improved quality of life. Rising electricity demand, rapid industrialization, increasing penetration of renewable energy, and government-led infrastructure programs are driving sustained investments across generation, transmission, and distribution networks. The countrys energy transition agenda has further accelerated investments in grid infrastructure capable of integrating renewable energy sources while maintaining system stability and reliability. The growing share of solar and wind power in the energy mix necessitates enhanced transmission networks, modern substations, flexible grid systems, and energy storage solutions capable of managing intermittency and ensuring uninterrupted power supply.

Renewable energy has been the primary driver of capacity addition in the Indian power sector. Indias renewable energy capacity increased to over 260 GW by January 2026, including solar, wind, biomass and hydro. The major contributor to growth in RE capacity addition has been solar PV, which has expanded to about 140 GW by January 2026, making it the largest renewable energy source. Wind capacity has grown to about 55 GW and hydro capacity to 51 GW.

Source: National Generation Adequacy Plan, (2026-27 to 2035-36), Central Electricity Authority, GoI

Government initiatives including the Revamped Distribution Sector Scheme (RDSS), Green Energy Corridor projects, renewable energy evacuation programs, smart metering initiatives, and network modernization schemes are expected to create substantial opportunities for infrastructure developers and EPC companies over the coming years.

Year	Peak Demand (in GW)	Energy Requirement (in BU)
2026-27	289	1929
2027-28	305	2072
2028-29	325	2227
2029-30	345	2388
2030-31	364	2546
2031-32	388	2703
2032-33	407	2874
2033-34	427	3045
2034-35	446	3215
2035-36	459	3365

National Peak Electricity Demand (GW)

National Annual Electrical Energy Requirement (BU)

Source: National Generation Adequacy Plan, (2026-27 to 2035-36), Central Electricity Authority, GoI

The increasing focus on reducing technical losses, strengthening urban and rural distribution networks, and improving service reliability is driving demand for underground cabling, medium-voltage covered conductor (MVCC) systems, GIS substations, distribution automation, and network strengthening projects. These structural trends are expected to support sustained capital expenditure across the power sector and contribute to long-term industry growth. India is undertaking a significant expansion of its power transmission infrastructure to support rising electricity demand, renewable energy integration and the goal of ensuring reliable 24x7 power availability.

The country aims to increase its transmission network to approximately 650,000 circuit kilometres by FY32, with phased capacity additions planned over the coming years.

As part of this roadmap, around 114,000 circuit kilometres are targeted to be added by FY27, followed by a further 76,787 circuit kilometres between FY27 and FY32.

Indian Transmission Sector

Indias transmission infrastructure serves as the backbone of the nations power ecosystem, facilitating the efficient transfer of electricity from generation centers to distribution networks and end consumers. The increasing geographical dispersion of renewable energy assets, coupled with rising electricity consumption, has intensified the need for robust transmission infrastructure capable of supporting future demand growth. Indias Transmission & Distribution (T&D) sector continues to play a pivotal role in strengthening the nations energy infrastructure and supporting its long-term economic growth ambitions. The successful implementation of the One Nation One Grid One Frequency framework has enabled seamless integration of regional grids, enhancing power reliability and facilitating efficient electricity transfer across the country. The National Grid, supported by extensive transmission networks and robust transformation capacity, has accessibility and grid stability. To accommodate rising electricity demand and the accelerating transition towards clean energy, substantial investments are being directed towards the expansion and modernization of transmission infrastructure over the coming years.

A key growth driver for the sector is the Governments vision to integrate over 500 GW of renewable energy capacity by 2030. This initiative focuses on developing transmission systems capable of connecting renewable energy-rich regions with demand centers, thereby strengthening the nations sustainable energy ecosystem. Further enhancing the sectors prospects is the Revamped Distribution Sector Scheme (RDSS), which aims to improve operational efficiency, reduce distribution losses and ensure reliable power supply across the country. Backed by significant financial support from the Government, the scheme is expected to accelerate infrastructure upgrades, digitalization and modernization within the distribution network. With rising energy demand, rapid renewable energy integration and continued policy support, Indias Transmission & Distribution sector presents compelling opportunities for investment, innovation and long-term value creation. The transmission sector remains a critical area of investment as the country seeks to strengthen interstate connectivity, improve grid reliability, and facilitate renewable energy integration.

(Source: https://iced.niti.gov.in/energy/ electricity/transmission/transmission-lines)

The Central Electricity Authority has outlined significant transmission infrastructure requirements over the coming years, with substantial investments planned for transmission lines, substations, reactive compensation systems, and related infrastructure. Industry estimates indicate that investments exceeding 4.75 lakh crore may be required for transmission system expansion during the current planning cycle. improved power

With an exponential increase in Renewable energy capacity , the role of energy storage systems is likely to become increasingly crucial. Installed capacity of Pumped Storage Projects (PSP) is likely to increase to about 94 GW by 2035-36, while installed capacity of Battery Energy Storage Systems (BESS) is projected to be approximately 80 GW by 2035-36.

PSP(GWh)	27	39	79	140	191	263	326	387	477	567
BESS(GWh)	24	48	69	95	113	147	185	227	273	321

Source: National Generation Adequacy Plan, (2026-27 to 2035-36), Central Electricity Authority, GoI

The Government of Indias capital outlay has increased by nearly 89 per cent, from 5.92 lakh crore in FY22 to a budgeted allocation of 11.21 lakh crore for FY26, recognising the strong multiplier effects that infrastructure generates on the economy. Public expenditure on infrastructure has a high multiplier effect, estimated by studies to be around 2.5 to 3.5 times the GDP over the medium term.

1 This means, for every rupee spent by the government in creating infrastructure, GDP gains worth 2.5- 3.5 accrue.

2 The scale and consistency of this investment momentum have positioned infrastructure as a cornerstone of Indias growth engine. (Source: https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap09.pdf)

Category	Value (in Rs. Lakh Crore)
FY22 Base	5.92
FY23 Growth	1.48
FY24 Growth	2.09
FY25 Growth	0.69
FY26 Growth	1.03
FY26 Total (BE)	11.21

Key Growth Drivers for the Transmission Sector Include:

Integration of renewable energy generation capacity

Development of high-capacity transmission corridors

Strengthening inter-regional connectivity

Expansion of industrial and urban infrastructure

Grid digitization and automation

Smart grid deployment

Electrification of underserved regions

Enhancement of system reliability and resilience

These factors are expected to generate substantial opportunities for EPC companies possessing strong execution capabilities, technical expertise, and project management competencies.

Indian Distribution Sector

Indias distribution sector continues to undergo significant transformation driven by policy reforms, technological advancements, and increasing consumer expectations. The sector has achieved notable improvements in electricity availability, network reliability, and operational efficiency over the past decade.

Government-led initiatives aimed at strengthening distribution infrastructure, reducing aggregate technical and commercial losses, and enhancing service quality have accelerated investments across urban and rural networks. Distribution utilities are increasingly adopting underground cabling, covered conductor systems, smart metering technologies, and digital monitoring solutions to improve network performance and reduce outages.

The conversion of overhead networks into underground cable systems has emerged as a key area of investment, particularly in densely populated urban centers and industrial clusters. These projects not only enhance reliability and safety but also contribute to improved resilience against weather-related disruptions. The continued implementation of RDSS and related infrastructure programs is expected to drive sustained capital expenditure across the distribution segment, creating long-term opportunities for experienced EPC contractors and service providers.

Industry Opportunities

Indias power infrastructure sector presents a compelling growth opportunity supported by favourable macroeconomic conditions, policy support, rising electricity demand, and increasing investments in energy transition initiatives. The rapid expansion of renewable energy capacity is creating substantial demand for transmission infrastructure capable of evacuating power from generation sites to consumption centers. Simultaneously, utilities are undertaking extensive network modernization programs to improve reliability, efficiency, and customer service standards.

Several Emerging Opportunities are Expected To Support Sector Growth:
Renewable Energy Integration	Underground Cabling and MVCC Networks	GIS Substations
The increasing share of renewable energy within Indias energy mix requires significant investments in transmission networks, substations, and grid stabilization infrastructure.	Utilities are increasingly adopting underground cable systems and medium-voltage covered conductors to improve reliability, reduce losses, and enhance safety standards.	The growing preference for Gas Insulated Substations in space- constrained urban environments is creating opportunities for specialized engineering and execution companies.
Energy Storage Systems	Smart Grid Infrastructure
Battery Energy Storage Systems (BESS) are expected to play a critical role in supporting renewable energy integration and grid stability, opening new avenues for infrastructure development.	Digitization, automation, and intelligent network management systems are expected to drive substantial investments in advanced power infrastructure solutions.

SWOT Analysis

The Indian power transmission and distribution sector remains structurally well-positioned, supported by rising electricity demand, renewable energy integration, grid modernisation initiatives, and significant government-led infrastructure investments. While execution, regulatory, and funding-related challenges persist, the sector offers substantial long-term growth opportunities as India continues to strengthen and modernise its energy infrastructure.

Strengths

Weaknesses

Strong policy support from the Government of India for transmission expansion, distribution reforms, and renewable energy integration. Essential infrastructure sector with sustained demand driven by economic growth, urbanisation, and industrialisation. Expanding transmission and distribution network supporting rising electricity demand across the country. Significant investments planned in grid modernisation, renewable energy evacuation, and network strengthening. Increasing adoption of advanced technologies such as GIS substations, underground cabling, smart grids, and automation.

Delays in project execution arising from right-of-way (RoW) issues, land acquisition challenges, and lengthy approval processes. High capital intensity and long project execution cycles requiring substantial funding and working capital. Financial stress and operational among certain state-owned distribution companies (DISCOMs). Dependence on government spending and policy implementation timelines for a large portion of sector growth. Shortage of skilled manpower and specialised technical resources in certain segments of the industry.

Opportunities

Threats

Indias target of achieving 500 GW of non- fossil fuel capacity is expected to drive substantial investments in transmission infrastructure. Expansion of Green Energy Corridors and renewable energy evacuation networks across the country. Increasing deployment of Battery Energy Storage Systems (BESS) and grid-balancing infrastructure. Large-scale investments under the Revamped Distribution Sector Scheme (RDSS) and smart distribution infrastructure programmes. Rising demand for underground cabling, network modernisation, digital substations, and smart grid technologies. Growing private sector participation in transmission, distribution, and energy infrastructure development.

Escalation in commodity prices, particularly steel, aluminium, copper, and other key inputs, may affect project economics. Regulatory changes, policy shifts, or delays in government programme implementation could impact sector growth. Intense competition within the EPC and infrastructure execution segments may exert pressure on margins. Supply chain disruptions and equipment procurement delays may impact project schedules. Climate-related events and extreme weather conditions may increase infrastructure risks and project execution challenges. Delays in payments from utilities and public- sector entities may affect liquidity across the value chain.

Business Overview

Rajesh Power Services Limited has established itself as a leading EPC solutions provider in Indias power transmission and distribution sector. With a track record spanning more than five decades, the Company has developed strong capabilities across engineering, procurement, construction, commissioning, operations, maintenance, and consultancy services.

The Company offers comprehensive turnkey solutions for transmission lines, substations, underground cable systems, distribution networks, MVCC projects, and related infrastructure. Its integrated service portfolio enables it to participate across multiple segments of the power infrastructure value chain.

Over the years, the Company has successfully executed numerous critical infrastructure projects for government utilities, private distribution companies, industrial customers, and infrastructure developers. Its execution capabilities, technical expertise, and customer relationships have contributed significantly to its market position and growth trajectory. Within the evolving landscape, the Company remains strategically positioned to capitalize on emerging opportunities through its diversified capabilities across transmission, distribution, substations, underground cabling, EPC execution, operations and maintenance, and engineering consultancy services.

Operational Performance

FY2025-26 marked another significant year in the Companys growth journey. Strong project execution, healthy order inflows, and diversified business opportunities supported robust operational performance during the year. The Company continued to strengthen its position within both transmission and distribution segments while expanding into higher-value infrastructure opportunities. A notable achievement during the year was the successful entry into the 400 kV GIS segment through landmark orders valued at approximately 278 crore, marking a significant milestone in the Companys evolution and technical capabilities.

With growing penetration of renewable energy in Indias energy mix, Battery Energy Storage System (BESS) continues to play a critical role in ensuring grid flexibility and reliability. The Company is well placed to leverage its EPC capabilities to supporting Indias evolving power infrastructure through high-quality execution and long-term operational capability. The Company is strengthening its presence in the BESS segment, recognising energy storage as an important enabler of the transition towards a more flexible, reliable and resilient power system. Its focus in this segment is aligned with the growing requirement for grid balancing, renewable energy integration and demand management, while supporting the broader evolution of Indias power market towards a more flexible and decarbonised energy ecosystem.

The Company also secured substantial turnkey orders from UGVCL valued at approximately 922 crore for underground cable and MVCC conversion projects, reinforcing its leadership in network modernization initiatives. During the year, the Company continued executing projects across transmission lines, substations, underground cable systems, and distribution infrastructure while maintaining its focus on quality, safety, and timely delivery.

ORDER BOOK AND GROWTH VISIBILITY

One of the Companys key strengths continues to be its strong order book and revenue visibility. The order book remains well diversified across transmission and distribution projects, with distribution projects accounting for a significant share of the portfolio. The Companys ability to secure large projects from utilities and industrial customers reflects its strong execution track record and market credibility.

Unexecuted Consolidated Order Book + L1 3,326 Cr* (as of 31st March 2026)

Financial Review

Particulars ( Cr)	FY26	FY25	Growth (%)
Revenue from Operations	1,627.94	1,072.07	51.85%
Total Income	1,633.41	1,076.91	51.68%
EBITDA*	197.16	123.89	59.14%
EBITDA Margin (%)	12.11	11.56	-
Profit Before Tax	195.64	122.41	59.82%
Profit After Tax	143.2	96.63	49.19%
PAT Margin (%)	8.8	9.01	-
Earnings Per Share ( )	79.52	59.75	33.09%

Ratios Analysis

Particulars	FY 2025-26	FY 2024-25	% Change
Inventory Turnover Ratio	17.34	21.59	-19.71%
Current Ratio	1.21	1.49	-18.98%
Debt-Equity Ratio	0.31	0.29	6.56%
Debtors\u2019 Turnover Ratio	6.14	8.39	-26.89%
Operating Profit Margin (%)	12.39	12.37	0.16%
Return on Net Worth (%)	42.68%	55.45%	-23.03%
Interest Coverage Ratio (times)	23.25	17	32.84%

Details of significant changes in ratios

INTEREST COVERAGE RATIO -

The increase in the Interest Coverage Ratio is primarily attributable to improved operating profitability and higher EBITDA, which has strengthened the Companys ability to service its interest obligations.

DEBTORS TURNOVER RATIO -

The decrease in the Debtors Turnover Ratio is primarily attributable to higher receivables aligned with the Companys increased business scale and project execution, with collections remaining in line with the underlying credit cycle.

Risks And Concerns

In an increasingly interconnected and rapidly evolving business environment, companies must navigate a range of challenges, including regulatory developments, geopolitical uncertainties, environmental considerations, technological disruptions, and changing market dynamics. Effectively managing these risks is essential to sustaining growth, protecting stakeholder value, and ensuring long-term business resilience. The Companys operations are exposed to various risks inherent to the infrastructure and EPC sector.

These include:

Fluctuations in raw material and commodity prices.

Changes in government policies and regulations.

Working capital intensity associated with large EPC projects.

Competitive pressures within the industry.

Labour availability and project resource management challenges.

At RPSL, risk management is embedded within the Companys strategic and operational decision-making processes. We maintain a proactive and structured approach to identifying, assessing, and mitigating risks across the enterprise. Our risk profile is continuously monitored and periodically reviewed to ensure alignment with the evolving business landscape. Regular updates are provided to the Board of Directors and senior leadership, enabling informed decision-making and robust governance oversight. The Company continuously implements appropriate mitigation strategies through strong project management systems, financial discipline, procurement planning and stakeholder engagement. Regulatory risks are addressed through a dedicated compliance mechanism and active engagement with evolving policy frameworks, ensuring timely adaptation to changing requirements.

Operational risks are mitigated through disciplined project management practices, enhanced digital monitoring capabilities and robust contingency planning.

To manage financial risks ,

RPSL focuses on prudent capital allocation, efficient working capital management, and maintaining a diversified funding approach. At the same time, the Company continues to invest in talent development, leadership succession, and employee engagement initiatives to build a skilled and future-ready workforce.

Environmental, Health and Safety (EHS) considerations remain integral to our operations. Through stringent compliance standards, regular audits, certified management systems and a strong safety culture, we strive to maintain safe and sustainable operations across all business locations.

By integrating regulatory preparedness, operational excellence, financial discipline, and human capital development within a comprehensive risk management framework, RPSL is well-positioned to navigate uncertainties, capitalize on emerging opportunities, and deliver sustainable value to its stakeholders.

INTERNAL CONTROL SYSTEMS

The Company maintains an adequate system of internal controls designed to safeguard assets, ensure compliance with applicable laws and regulations, maintain financial discipline, and support operational efficiency. Internal control mechanisms are periodically reviewed and strengthened to align with the evolving scale and complexity of operations. The Company also undertakes regular audits and management reviews to ensure adherence to established policies and procedures.

Particular attention is given tocontrolsover reporting, ensuring the accuracy, completeness and reliability of financial data. These controls play a critical role in the Companys overall governance and compliance mechanisms.

HUMAN CAPITAL

The Companys people remain central to its ability to deliver sustainable growth and create enduring value. Rajesh Power Services Limited continues to invest in talent development, technical training, leadership capability enhancement, and workplace safety. The Companys execution excellence is supported by a highly skilled workforce possessing deep domain expertise across engineering, project management, construction, commissioning, operations, and maintenance activities. Continuous learning and capability enhancement remain key priorities as the Company expands into newer technologies and higher-voltage infrastructure segments. As of March 2026, RPSLs workforce stands at over 1500 employees, reflecting its success in building a resilient and future-ready team.

OUTLOOK

Indias power infrastructure sector is poised for sustained growth, supported by rising electricity demand, renewable energy integration, transmission expansion, distribution modernization, and energy storage deployment. The Companys strategic focus remains centered on execution excellence, operational efficiency, technology adoption, customer satisfaction, and disciplined growth. As India continues its journey toward a more resilient, reliable, and sustainable energy future, Rajesh Power Services remains committed to creating enduring value for all stakeholders through the infrastructure it builds and the communities it serves.

FORWARD-

LOOKING STATEMENT

Certain statements in this Management Discussion and Analysis describing the Companys objectives, projections, expectations, estimates, and predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. The Company undertakes no obligation to publicly update or revise any forward-looking statements based on subsequent developments or events.