Afcons Infrastructure Q1 FY27 earnings call

Afcons Infrastructure reported a challenging Q1 FY27, with total income declining 20.3% year-over-year to ₹2,727 crores, compared to ₹3,419 crores in Q1 FY26. EBITDA saw a significant 41% reduction to ₹263 crores, leading to an EBITDA margin of 9.6%, down from 13% in the prior year. Profit after tax also fell sharply to ₹30 crores from ₹137 crores in Q1 FY26, primarily due to lower turnover, increased costs, and a higher effective tax rate of almost 40%.

Despite the subdued Q1 performance, Afcons secured healthy order inflows of ₹13,219 crores during the quarter, bringing the total order book to ₹43,290 crores as of June 30, 2026. The company has already booked ₹15,700 crores for FY27 and maintains its full-year order inflow guidance of ₹30,000 crores. A robust bid pipeline of approximately ₹1.5 lakh crores for the next 9 months and ₹3.96 lakh crores for the next two years provides strong revenue visibility, with a diversified composition across urban infrastructure, marine, hydro, and surface transport segments.

The lower Q1 performance was attributed to several factors, including adverse weather affecting marine projects, slower land handovers, labor shortages, and pending clearances on fast-track projects. Management acknowledged that approximately 11% of the order book is slow-moving and 20% is in the initial phase, impacting conversion to turnover. However, they expressed confidence that these issues are gradually easing, with proactive government involvement in land-related matters, and anticipate a significant uptick in execution momentum and profitability in Q3 and Q4 FY27.

Liquidity conditions remained tight, and collections were moderate during the quarter, contributing to an elevated net working capital position. Payment issues in the UP Jal Jeevan Mission continued, with only a small fraction of the previously stuck ₹400 crores received. Management is rigorously working with clients to accelerate recoveries and improve cash flows, aiming to strengthen the balance sheet by collecting stuck receivables and reducing debt. The net debt to equity ratio stood at 0.68x at the end of Q1.

The company capitalized approximately ₹150 crores in capex during Q1 FY27. For the full fiscal year FY27, capex is projected to be in the range of ₹700-800 crores, further moderating to ₹600-650 crores in FY28. Despite higher average borrowing in Q1, management expects interest costs to decline in the coming quarters^⏳ due to new interest-free international orders and efforts to reduce the average borrowing cost. The net debt is targeted to be reduced to ₹2,700-2,800 crores, with a closing debt target of around ₹3,500 crores for FY27.

In Q1 FY27, overseas revenue contributed approximately 16% to the total, a decrease from around 30% in March. Domestic revenue accounted for 84%. Management expects the order mix to shift back towards a higher overseas component, with a target to return overseas revenue contribution to a minimum of 30%. This strategic focus on international markets, which generally offer 200-300 basis points higher margins, is expected to support future profitability.