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Techno Electric (Techno), reported a healthy 1QFY26 performance with revenue growth of 24% YoY and EBITDA margin expanding 170bps YoY to 15.4%. Order pipeline continues to remain strong, with T&D order pipeline of INR 400bn/year, driven by continued capex in T&D sector, where Techno aims to bag orders worth c.INR 25bn/year. Chennai Data Center Phase–I (5 MW) is complete and likely to deploy c.50 racks (0.5MW of capacity) by end of 2QFY26 and remaining by Dec’25. Management maintained its revenue guidance of INR35bn and EPS of INR 55 for FY26.

* Efficient project execution resulted in better margins: Std. Revenue grew 24% YoY to INR 5.1bn (JMFe of INR 6.7bn). EBITDA at INR 790n was up 39.8% YoY (JMFe INR 919mn), EBITDA margins expanded 170bps YoY to 15.4% (JMFe 13.8%) due to better execution mix. Additionally delivery timeline for some of the projects were compressed due to delay in acquiring land resulting in increased productivity and optimizing cost. PAT at INR 982mn grew 76.5% YoY (JMFe INR 906mn), aided by higher other income (up 149% YoY to INR 579mn).

* Strong order book: Order book at end of 1QFY26 stands at INR 104bn, up 14.4% YoY (4.2x TTM revenue), providing strong revenue visibility going forward. Company is L1 in orders worth INR 7.2bn. T&D segment order book stands at INR 71bn. Factoring in strong order pipeline largely in T&D, smart metering space, management expects to bag order inflows worth INR 35bn in FY26.

* Data Center update: Chennai Data Center Phase-I, deployment process has started and expect to deploy 50 racks (0.5MW) in 2QFY26 and to get fully deployed by Dec’25. Currently company is in talks with domestic banks, cloud service providers, global private sector bank to lease out the racks. Edge Data Center order from Railtel is progressing as per scheduled and 1st Edge data center at Gurgaon of 200KV capacity is now complete and company is in process of leasing out to customer. Mumbai data center site is likely to be operational by 2HFY26. Company targets to complete five edge data center site in FY26

* Maintain Buy with TP of INR 1,660: We believe TEEC strong execution track record, technical capabilities, presence across power value chain and diversified sector, augurs well for company to capitalise on upcoming opportunity in T&D, smart metering and Data Center. Maintain Buy rating on stock with SoTP of INR 1,660 valuing EPC business at 25x FY27E, factoring in strong order backlog & pipeline, and value Data Center on 1.2x P/BV considering completion of data center phase-I capex and expected client on-boarding in 2QFY26. Key Risk: Slowdown in ordering activity in T&D, delay in execution smart metering order and arising BS risk due to asset heavy model (smart meters and Data Center).

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