Likhitha Infrastructure Limited has approved the incorporation of a wholly owned subsidiary in Abu Dhabi, United Arab Emirates, alongside a strategic increase in its ownership stake in Likhitha HAK Arabia Contracting Company.

The board meeting held on September 28, 2026, authorized the acquisition of an additional 30% shareholding in Likhitha HAK Arabia from Arabian HAK Company Ltd. This transaction will raise the company's holding in the Saudi-based entity from 60% to 90%, consolidating control over its operations in the Kingdom of Saudi Arabia.

Strategic Expansion in the Middle East

The newly formed entity, tentatively named Likhitha Infrastructure Middle East LLC, will operate as a wholly owned subsidiary. It is slated to engage in oil and gas pipeline engineering, procurement, and construction (EPC) infrastructure contracting. The subscription to the share capital for this new entity will be made in cash.

Simultaneously, the acquisition of the additional 30% stake in Likhitha HAK Arabia is intended to strengthen the company's presence and business operations in Saudi Arabia. The deal involves the purchase of 150 equity shares, representing 30% of the paid-up equity share capital. The aggregate consideration for this acquisition is capped at SAR 525,000, subject to applicable valuation requirements and definitive contractual agreements.

Target Entity Financial Profile

Likhitha HAK Arabia Contracting Company was incorporated on December 10, 2022, in Al Khobar, Kingdom of Saudi Arabia. It is engaged in Oil & Gas EPC services, including pipelines, refineries, and oil wells. The following table details the financial and structural specifics of the target entity:

Regulatory and Transactional Details

The proposed acquisition does not constitute a related party transaction, as Arabian HAK Company Ltd is not a related party of Likhitha Infrastructure or its subsidiaries. The promoter group holds no interest in the target entity, and the transaction is being undertaken on an arm's length basis. No specific governmental or regulatory approvals are required beyond standard procedural compliances.

The indicative time period for the completion of the acquisition is six months. Upon completion, the company's shareholding in Likhitha HAK Arabia will stand at 90%, while the remaining 10% will be held by other shareholders.

What the Numbers Show

A notable divergence exists between the capital structure and the operational performance of Likhitha HAK Arabia. While the paid-up capital stands at SAR 500,000, the entity has reported nil turnover for the last three fiscal years (FY24, FY25, and FY26). This suggests that the acquisition of the additional 30% stake is likely a strategic move to secure future project execution capabilities or consolidate control over a dormant or early-stage vehicle rather than acquiring immediate revenue streams.

Likhitha Infrastructure reported a significant decline in profitability for FY26, with standalone profit after tax (PAT) falling 42% year-on-year to ₹4,002.10 lakh. Revenue from operations contracted 11% to ₹45,673.44 lakh, reflecting a slowdown in project execution compared to the prior fiscal year.

The company's financial performance was impacted by lower contract execution expenses and reduced revenue recognition. Despite the dip in earnings, Likhitha maintained a debt-free balance sheet and strengthened its liquidity position. The order book remained robust at over ₹850 crore as of March 31, 2026, providing visibility for future revenue streams.

Financial Performance

The standalone revenue from operations stood at ₹45,673.44 lakh in FY26, down from ₹51,221.54 lakh in FY25. EBITDA declined 38% to ₹6,245.91 lakh, while profit before tax (PBT) fell 42% to ₹5,427.21 lakh. The net profit ratio compressed to 9% from 14% in the previous year.

Consolidated figures mirrored the standalone trend, with consolidated PAT dropping to ₹3,854.91 lakh from ₹6,942.85 lakh. Consolidated revenue declined 12% to ₹45,673.44 lakh.

What the Numbers Show

The divergence between the sharp decline in PAT and the relatively stable cash position highlights a shift in working capital dynamics. While operating cash flows turned negative at -₹886.25 lakh due to increased inventory and receivables, the company’s current ratio improved to 8.72 from 8.00. This suggests that despite lower profitability, the company is maintaining strong short-term liquidity buffers, likely preserving financial flexibility for upcoming project commitments.

Operational Updates

Likhitha completed several major pipeline projects during the year, including the Krishnapatnam-Hyderabad Petroleum Products Pipeline and sections of the Nagpur-Chhindwara-Jabalpur Natural Gas Pipeline. The company also expanded its international presence, securing a ₹510 crore (USD 54 million) order from China Petroleum Engineering & Construction Corporation for the ASAB project in Abu Dhabi after the fiscal year closed.

The Board did not recommend a dividend for FY26. The Annual General Meeting is scheduled for September 28, 2026.