Detailed Narrative
Q2 & H1 FY26 Financial Performance Overview
Afcons Infrastructure reported H1 FY26 revenue of ₹6,520 crores, marking a 3.4% year-on-year growth, with EBITDA rising 6% to ₹846 crores, achieving a 13% margin. PAT for H1 increased 7% to ₹242 crores. However, Q2 FY26 saw a modest revenue growth of 0.4% to ₹3,101 crores, while EBITDA declined 6.1% to ₹401 crores, and PAT fell 22.2% to ₹105 crores. The Q2 results were impacted by a sizable provisioning of close to ₹100 crores in one project and increased finance costs.
Order Book and Project Pipeline
The company's pending order book remains robust at ₹32,681 crores as of H1 FY26, despite a lower order inflow of ₹1,268 crores during the first half. Management expressed high confidence in achieving the full FY26 order inflow guidance of ₹20,000 crores, expecting L1 orders, including those from Croatia (₹11,500-12,000 crores) and Maharashtra (₹10,235 crores excluding some uncertain projects), to fructify in H2. The project pipeline stands strong at ₹3.6 trillion, with Urban Infrastructure accounting for ₹1.6 trillion.
Operational Highlights and Key Project Updates
Afcons achieved significant operational milestones, including the final breakthrough of the NATM tunnel (4.82 km) in the Mumbai-Ahmedabad high-speed rail C2 Package. In Kanpur MRTS, 6.53 km of TBM tunnelling was completed, and in Delhi MRTS (DC-7), 11.62 km of TBM tunnelling was achieved. The Pakal Dul hydroelectric power project was recognized as the best-rated construction project by NHPC for FY24-25. For the Mumbai High Speed Rail project, 15% of the work is complete, and force majeure🌐 has been accepted for TBM arrival delays.
Revised FY26 Outlook and FY27 Guidance
Due to delays in L1 order conversions and payment issues, particularly from the Jal Jeevan Mission, Afcons revised its FY26 revenue growth guidance downwards from '20% plus' to '10% plus'. Despite this, the company expects its full-year EBITDA margin to be 'better than 11%', having already achieved 13% in H1. For FY27, management aims to maintain a revenue growth guidance of 15% and a sustainable EBITDA margin of 11%.
Working Capital and Debt Management
Working capital has increased due to delays in work certification and payment releases, leading to a jump in requirements. The company is currently stuck with ₹450 crores in receivables from the Jal Jeevan Mission, which has led to project stoppage. Gross debt moved to ₹3,472 crores and net debt to ₹2,714 crores, with a net debt-to-equity ratio of approximately 0.5x. Management expects working capital to improve towards the year-end as payments from customers unwind.
Challenges and Mitigation Strategies
Afcons faces near-term challenges from geopolitical uncertainties, macroeconomic headwinds, and heightened domestic competition in metro projects. Delays in TBM consignment for the C2 project have also impacted progress, though force majeure🌐 acceptance provides a mitigation. The company is actively engaging with clients and authorities to expedite payments and secure TBM releases, while focusing on selective bidding and projects aligned with its technical strengths and prudent risk framework.