DEE Development Engineers faces Q3 FY25 revenue decline amid project delays, but growth prospects remain strong

DEE Development Engineers Limited (DEE Development), a leading provider of process piping solutions, reported a challenging third quarter in the 2024-25 financial year (Q3 FY25), with significant declines in revenue and profitability. The company’s total income fell by 24.1% year-over-year (YoY) to ₹16,111 lakhs, while profit after tax (PAT) dropped to ₹(1,333) lakhs, marking a sharp 247.6% YoY decline.

Despite the financial setbacks, DEE Development remains confident in its strong order book, which has grown to ₹1,39,372 lakhs as of December 31, 2024, reflecting a 17% increase compared to ₹1,19,213 lakhs at the end of September 2024. The company continues to expand capacity and invest in new technologies to drive long-term growth.

What Led to the Revenue Decline in Q3 FY25?

The decline in revenue and profitability during the quarter was primarily attributed to delays in executing key projects. The company faced significant setbacks at its Palwal facility, which had been allocated for a major ₹13,900 lakh oil and gas project involving the establishment of India‘s first Propane Dehydrogenation (PDH) plant. While the order was secured in October 2023, execution was delayed by six months due to extended approval timelines for design drawings and materials. Originally expected to be completed by March 31, 2025, the project now faces further timeline risks.

Additionally, an international order valued at over ₹5,100 lakhs experienced delays due to customer-driven revisions in material specifications. Initially slated for completion in Q3 FY25, the execution was pushed to Q4 FY25, further impacting revenue recognition.

How Did Project Delays Affect DEE Development’s Profitability?

The financial impact of these execution delays was visible across key earnings metrics. EBITDA for Q3 FY25 declined 85.3% YoY to ₹477 lakhs, significantly reducing the EBITDA margin to 3.0% compared to 15.3% in Q3 FY24. Profitability was further pressured by higher fixed costs, as the company maintained operational readiness for the delayed projects.

PAT for Q3 FY25 stood at ₹(1,333) lakhs, a sharp contrast to ₹903 lakhs in Q3 FY24. The diluted earnings per share (EPS) fell to ₹(2.08) compared to ₹1.70 a year earlier. For the first nine months of FY25, DEE Development reported a 1.2% YoY decline in PAT to ₹1,212 lakhs, with a PAT margin of 2.2%, down from 2.6% in 9M FY24.

Despite the weaker profitability, DEE Development remains financially stable, supported by its growing order pipeline and ongoing expansion projects.

How Is DEE Development Expanding Its Capacity?

To enhance its production capabilities and support future growth, DEE Development successfully commissioned a 9,000 MT per annum expansion at its New Anjar Facility II in January 2025. This additional capacity strengthens the company’s ability to handle larger and more complex orders, ensuring it can meet rising demand for process piping solutions.

Further capacity expansion is planned, with an additional 15,000 MT per annum expected to be added by October 2025. The company is also on track to commence commercial production at its new high-wall seamless thickness pipe plant by January 2026, reinforcing its position as a leading provider of specialized piping solutions.

What Is DEE Development’s Strategy to Navigate Market Uncertainty?

Recognizing the challenges posed by project delays and market uncertainties, DEE Development remains focused on operational optimization, capital discipline, and technological advancements. The company continues to invest in state-of-the-art manufacturing processes and automation, ensuring it remains competitive in the evolving oil and gas, power, and chemical industries.

Despite near-term challenges, DEE Development’s management remains optimistic about long-term growth opportunities. Chairman Krishan Lalit Bansal emphasized the company’s commitment to executing its strong order book efficiently, while also identifying new opportunities for expansion.

By leveraging its expertise in high-pressure piping systems, modular skids, and industrial pipe fittings, DEE Development aims to strengthen its market position and drive future revenue growth. The company also plans to closely monitor economic and industry trends, making strategic adjustments to sustain profitability and shareholder value.

What Lies Ahead for DEE Development?

While Q3 FY25 marked a challenging period for DEE Development, the company’s expanding production capacity and robust order pipeline provide strong growth prospects. Successful execution of its delayed projects will be critical to improving revenue and profitability in Q4 FY25 and beyond.

With its ongoing capacity additions, investments in new technology, and strategic focus on process piping solutions, DEE Development remains well-positioned to capitalize on emerging market opportunities and drive long-term success.