Industry

The arena in one minute

Pace Digitek sits at the intersection of two of India's largest, government-funded build-outs: the physical plumbing of the telecom network (towers, optical-fibre cable, and the DC power systems that keep base stations alive) and the energy transition (grid-scale battery storage and solar). It is not a telecom operator and not a utility — it is a contractor and equipment maker that the operators and the state hire to build, power, and maintain that infrastructure. Understanding this industry means understanding three things: how money flows from government budgets into projects, how those projects are won and paid for, and why the centre of gravity is shifting from telecom towers toward battery storage.

India is the world's second-largest telecom market, with roughly 1,165.5 million wireless subscribers at the end of FY24 — about 97.2% of the total subscriber base [1]. Serving them required about 0.754 million telecom towers in FY24, a base that has compounded at roughly 7.8% a year since FY20 [2]. Yet less than one-fourth of India's towers are fibre-connected, against more than three-fourths in China and the US [3] — the gap that public programmes are now spending hundreds of billions of rupees to close.

Sources: subscribers [1]; towers [2]; BharatNet outlay [4]; battery-storage requirement 2027-32 [5].

The single most important policy number to remember is the ₹1.39 trillion the Union Cabinet approved in 2023 for BharatNet, the programme to take fibre to roughly 6.4 lakh villages [4]. The second is the storage opportunity: India's required battery energy storage rises from 34,720 MWh in 2022-27 to 201,500 MWh in 2027-32 [5]. The first built Pace's past; the second is building its future.

How the money is made — the value chain and the jargon

A wireless network is mostly civil and electrical work, not radios. Passive infrastructure — the tower, the shelter, the power plant, the air-conditioning, the diesel/battery backup — is the part that is shared, leased, and maintained, and it accounts for around 70% of the capital cost of setting up a wireless network [6]. Companies like Pace are hired to build and electrify it. Four pieces of vocabulary unlock the rest of this report:

• Passive telecom infrastructure / EPC — building telecom towers and laying optical-fibre cable (OFC) on a turnkey "engineering, procurement and construction" basis. Pace provides "end-to-end integrated solutions in the telecom tower infrastructure and optical fibre cables," including erecting tower networks and OFC networks [7].
• Telecom DC power systems — the rectifiers, converters and batteries that keep a cell site running 24x7. Pace inherited this business through its Lineage Power brand, acquired with the GE Power Electronics India business back in FY2014 [8] — the heritage that makes it a power company, not just a civil contractor.
• BESS (Battery Energy Storage System) — containerised lithium-ion batteries that store grid or solar power and release it on demand. Pace builds these "in either standalone mode or coupled with solar PV plants," under both EPC and build-own-operate (BOO) models [7].
• EPC vs BOO vs O&M — three business models that recur across the industry. EPC is a one-time build for a fee. BOO means the contractor owns the asset and earns a long tariff (capital-heavy, annuity-like). O&M (operations and maintenance) is the recurring service contract that follows a build. Each carries very different margins, capital intensity and risk — a distinction the rest of this tab leans on heavily.

Pace runs three manufacturing facilities spread across 200,000 square feet in Karnataka — one for telecom-infrastructure equipment, one for lithium-ion battery systems, and one for BESS [9]. That vertical integration — from cells to finished containers — is the structural feature that separates the equipment makers in this industry from the pure civil-EPC contractors.

Source: segment revenue from the RHP restated consolidated financials; telecom was 94.22% of FY2025 revenue [10].

Today the company is overwhelmingly a telecom business — telecom was 94.22% of FY2025 revenue [10]. The energy story below is almost entirely a future mix, visible in the order book long before it shows up in revenue.

Market size: where the addressable pools are, and how fast they grow

The industry's demand is best read as a set of distinct sub-markets, each with its own policy driver. The passive telecom infrastructure market was estimated at ₹1,650-1,700 billion cumulatively over FY20-24 and is projected to rise to roughly ₹2,000-2,100 billion over FY24-28 [11]. The recurring tower-maintenance market — the annuity that follows every build — grew to about ₹40 billion in FY24 from ₹23 billion in FY19 [12]. The optical-fibre EPC market was about ₹84 billion in FY24 and is forecast to reach ₹135-140 billion by FY28, a 12.5-13.5% CAGR [13]. On the energy side, India added 55-60 GW of solar over FY19-24 and is expected to add 137-142 GW over FY25-29 [14] — and every large solar plant is increasingly required to pair with storage.

The cleaner way to size the demand engine, though, is to look at the public programmes funding it directly.

Sources: BharatNet ₹1.39 trillion [4]; DoT FY24 allocation ₹975.8 billion [18]; BSNL revival package ₹890.5 billion [17]; BSNL Phase-III tender ₹650 billion [4]; BESS PLI-ACC ₹181 billion and viability-gap fund ₹94 billion [20].

The demand engine: this is a government-capex industry

For a newcomer, the most important mental model is this: demand is manufactured by the state budget, not by consumer cycles. Three forces drive it.

1. Connecting rural India (BharatNet). Beyond the ₹1.39 trillion Cabinet outlay, Phases I and II were funded with ₹420.68 billion [15], and BSNL rolled out a ₹650 billion Phase III tender in February 2024 [4]. The National Broadband Mission targets 70% tower fiberisation versus just 35.11% achieved by mid-2022 [4] — a gap that translates directly into OFC and tower work.

2. Reviving the state telco (BSNL 4G saturation). BSNL is deploying 100,000 4G sites under the Atmanirbhar Bharat push, anchored by a roughly ₹190 billion TCS purchase order [17], supported by a Department of Telecommunications FY24 allocation of about ₹975.8 billion [18]. This is the programme that made Pace: its anchor contract is a 4G Saturation Project to build telecom infrastructure at 9,595 village sites worth ₹75,682.80 million (roughly ₹7,568 crore), with a five-year O&M tail [19].

3. Storing renewable power (BESS). The energy transition is the next leg. The PLI-ACC battery scheme carries an outlay of ₹181 billion for 50 GWh of cell capacity, and a viability-gap fund of ₹94 billion subsidises storage projects [20]. Management frames the runway in physical terms: India needs about 236 GWh of storage by 2030, of which only 25-plus GWh has been awarded so far [21]. And new state policies in Maharashtra, Gujarat and Rajasthan increasingly require BESS on solar installations of 50 MW and above [22], converting policy into mandatory demand.

The investment implication is double-edged: the pool is enormous and policy-protected, but it is also lumpy, tender-driven, and exposed to the pace of government disbursement — the central tension of this industry.

Where the industry sits in its cycle — and the pivot underway

Few companies show the industry's mechanics as starkly as Pace. Its revenue inflected roughly 13x in a single year — from about ₹502 crore in FY2023 to ₹2,433 crore in FY2024 — driven almost entirely by one event: the award of BSNL 4G-saturation tower erection at 8,920 sites for ₹7,033 crore [23]. This is the signature of a project industry: a single mega-tender can multiply a contractor's scale overnight — and create just as much risk when it rolls off.

Source: consolidated revenue and net profit, company financial filings (FY2023-FY2026); the FY2024 inflection traces to the ₹7,033 crore BSNL 4G award [23].

After that surge, telecom revenue plateaued — and the order book began to pivot decisively toward energy. By the end of FY2026, the executable order book had reached about ₹11,338 crore, of which ₹8,854 crore was in the energy segment [25]. Energy now makes up roughly 78.1% of the total order book [24] — a dramatic reversal from FY2025, when energy was already rising to 53.23% of a ₹76,336 million (≈₹7,634 crore) book [26] [27].

Sources: H1 FY26 order book energy ₹5,869 crore [16]; FY26 energy ₹8,854 crore and total ₹11,338 crore [25]; 9M figures are management's rounded references [21].

The cost of that pivot shows up in margins. FY2026 EBITDA was ₹455 crore (down from ₹482 crore) even as PAT rose to ₹307 crore at an 11.4% margin [28], and management guides PAT margins down to 10-11% as lower-margin energy work scales [29]. The bet is on volume: Pace is scaling BESS manufacturing from 2.5 GWh toward 10 GWh of operational capacity by October 2026 [25], positioning itself as, in management's words, the largest BESS manufacturer in India operating "cell to container" rather than merely assembling packs [31].

Source: operating and net margins derived from reported consolidated financials (FY2023-FY2026); FY2026 operating margin shown as pre-tax-margin proxy. FY2026 EBITDA ₹455 crore and PAT margin 11.4% confirmed by management [28].

The cycle read: the telecom-EPC leg is maturing (the headline tenders have largely been awarded), while the energy-storage leg is early-stage and ramping fast. The industry as a whole is best described as early-cyclical within a multi-year structural up-cycle — abundant policy-funded demand, but margins and balance sheets stretched by the working capital that government projects demand.

The economics every investor must underwrite — and the structural risks

The uncomfortable truth of this industry is that the headline growth is funded by the contractor's own balance sheet. Because the dominant customer is the government, getting paid is slow.

Source: ratios derived from reported FY2025 consolidated financials. Note the negative operating-cash-flow margin despite an 11% net margin — the defining feature of this industry's economics.

That last line is the point: in FY2025 Pace earned an 11% net margin but a negative operating-cash-flow margin, because cash is trapped in receivables and work-in-progress. The RHP quantifies it: net working capital of ₹9,692.74 million, working-capital days of 145 and debtor days of 218 [33], with trade receivables equal to 75.58% of revenue in FY2025 [34]. By FY2026 trade receivables had reached ₹2,442 crore [38]. Any investor must underwrite the receivables cycle, not just the order book.

Three more structural features define the industry's economics and risk:

• Customer concentration is extreme. Public-sector customers were 97.77% of Pace's order book [35], and the top three customers were 88.97% of FY2025 revenue [9]. The same dependence that drives growth concentrates the risk.
• Contracts go to the lowest bidder. Government tenders are awarded on price once eligibility is met, and the terms are largely non-negotiable [32] — which structurally caps pricing power and rewards low cost and execution discipline over differentiation.
• Capacity utilisation is volatile. Pace's passive-equipment capacity utilisation swung across 38.69% / 55.98% / 64.96% in recent years [37] — the operating-leverage swings that come with a tender-driven order flow.

The flip side — and the reason returns can be high despite all this — is that high capital intensity is itself a barrier to entry that protects incumbents [48]. Pace's FY2025 return on capital employed of 36.6% shows that when the working-capital cycle turns, the model can generate strong returns on the capital it deploys.

Competitive structure — who really competes, and on what

There is no single, clean peer group here, because the industry is a bundle of adjacent sub-markets. Pace's own filings name the most direct rivals: in its risk factors it lists listed competitors HFCL, Exicom Tele-Systems and Bondada Engineering [40], and its industry section benchmarks against Bondada Engineering, Delta Electronics India, Dinesh Engineers and Exicom Tele-Systems [39]. Notably, on the FY22-24 view Pace posted the highest revenue CAGR of 146.2% in that benchmarking set [41].

The table below classifies the screened peer set by how closely each shares Pace's model. The key insight for a newcomer: only Bondada is a near-full business-model match; the others overlap on one slice each.

Sources: business descriptions confirmed from each company's FY2025 annual report — Bondada [42], Suyog [43], HFCL [44], ITI [45], Exicom [46], and Shri Dinesh Mills [47] (a textile maker swept in by the sector screen — excluded from economics below).

On economics, the peer set spans loss-makers to high-return compounders — a reminder that execution and segment mix, not the end-market, decide profitability in this industry.

Source: latest-year (FY2026) figures from the financial data feed for each company; Pace's own ROE reflects its enlarged post-IPO equity base.

Source: financial data feed, latest reported year; Shri Dinesh Mills excluded as a non-peer.

The picture: Bondada is the truest comparable and is compounding revenue fastest with high returns; Suyog earns the fattest margins because tower tenancy is a rental, not a build (a different, annuity model); HFCL and ITI are larger but lower-return, weighed by their equipment/PSU mix; and Exicom is currently loss-making, a caution that adjacency to a hot theme (EV charging, power) does not guarantee profits. Pace screens as a high-growth, mid-margin, moderately-levered operator — attractive returns, but with the receivables and concentration risks the whole industry shares.

What would change the view — the watchlist

This is a story about whether policy-funded demand converts into cash, not just orders. The signals below are the ones that would move the industry thesis.

Source: synthesis of the cited evidence above — receivables and working-capital intensity [33], the energy order-book pivot [24], and margin guidance [29].

Bottom line for the rest of this report. Pace Digitek is a leveraged play on two government-funded build-outs — rural/telecom connectivity and grid-scale energy storage. The industry offers a vast, policy-protected demand pool and genuine entry barriers, but it extracts a price in working capital, customer concentration, and lowest-bidder pricing. The investable question is whether the pivot from a maturing telecom-EPC business into an early, capital-hungry energy-storage business can be executed without the receivables cycle swallowing the returns. Read the financial, competition and risk tabs with that single question in mind.