Major Penny Stock Trigger! SEPC Unlocks Rs 154 Crore After Legal Breakthrough

SEPC Ltd has secured a Madras High Court-approved settlement that ends a series of long-running execution proceedings and immediately releases attachments on receivables worth Rs 154 crore, providing relief to its Banking operations and working-capital position.

The court order dated September 30, 2026, approved a joint memo of compromise between award holders and judgment debtors, including SEPC. It terminates Execution Petition Nos. 91 and 92 of 2023, 7 of 2024, 15 and 16 of 2025, along with the unnumbered E.P.(SR). No. 126896 of 2026. Connected pending applications have also been closed.

The settlement consideration totals Rs 149.5 crore. This includes a Rs 147 crore demand draft drawn on Axis Bank and Rs 2.5 crore already lying to the credit of the court under A. No. 1812 of 2026.

SEPC said it would have no direct monetary outflow from the settlement because the payment has been made entirely by Judgment Debtor 1 under an indemnity agreement entered into in 2015. That distinction is important for the engineering and Construction company, whose operations require substantial working capital and access to banking facilities.

The court directed that the Rs 147 crore demand draft be handed to the Registrar General and placed in an interest-bearing account. The amount will be paid to the petitioners after they file a memo, based on the allocation specified in the joint compromise memo. The Rs 2.5 crore held in fixed deposits will also be released to the respective petitioners under the same process.

More importantly for SEPC’s day-to-day operations, all interim attachments imposed under the execution petitions have been raised following their termination. The company said this removes the attachment over Rs 154 crore of receivables with immediate effect and completely lifts restrictions on its banking operations.

The order therefore addresses an execution-related constraint rather than creating fresh revenue or profit. However, the release of receivables and banking restrictions could improve operational flexibility for an EPC company that depends on project collections, bank guarantees and working-capital facilities to execute contracts.

The settlement amount is equivalent to about 14.2 per cent of SEPC’s consolidated revenue from operations of Rs 1,054.50 crore in FY2025-26. While the amount was paid by another judgment debtor under the indemnity arrangement, the lifting of attachments is material against SEPC’s sizeable balance of contract assets and receivables.

As of March 31, 2026, consolidated contract assets stood at Rs 1,463.51 crore and trade receivables were Rs 589.14 crore. The company had also reported negative standalone operating cash flow of Rs 263.35 crore for FY2025-26, largely due to an increase in contract assets and receivables. This underlines why unencumbered collections and normalised banking access are relevant to its execution cycle.

The development comes as SEPC seeks to execute a consolidated Order Book of around Rs 10,000 crore, according to management’s FY2025-26 annual report. The company reported consolidated net profit of Rs 53.54 crore in FY2025-26, compared with Rs 24.84 crore a year earlier, as revenue rose 76.4 per cent.

The settlement does not remove all financial risks. SEPC’s auditors had issued a qualified opinion on certain deferred-Tax assets and the recoverability of overdue contract assets and trade receivables linked to stalled projects, regulatory approvals and disputes.

As of 9:37 AM on October 1, 2026, SEPC shares were trading at Rs 5.13, up 2.19 per cent from the previous close of Rs 5.02. The stock remained about 57.8 per cent below its 52-week high of Rs 12.17, while standing around 10.3 per cent above its 52-week low of Rs 4.65.

Disclaimer: The article is for informational purposes only and not investment advice.