Afcons Infrastructure Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Afcons Infrastructure reported a mixed Q3 FY26, with revenue declining due to execution challenges and liquidity issues, but margins improving due to operational efficiencies and arbitration awards. The company maintains a strong order book and pipeline, with confidence in achieving its annual order inflow guidance, despite ongoing working capital pressures and selective bidding in competitive segments. Management is actively addressing project delays and liquidity concerns while focusing on operational excellence.

Highlights

  • EBITDA margin improved to 14% in Q3 FY26 (50 bps YoY improvement) and 13.3% for 9M FY26 (35 bps YoY improvement), indicating better operational efficiency despite lower revenues.

  • Secured new orders including a road project over EUR100 million in Uganda and two marine contracts worth INR1,400 crores in India, contributing to a 9M FY26 inflow of INR3,700 crores.

  • Maintained a healthy pending order book of INR32,635 crores, with a robust project pipeline of INR3.8 trillion, and is confident of achieving INR20,000 crores in order inflow for FY26.

  • Achieved significant operational milestones, including completing a 5.5-km TBM drive ahead of schedule and being recognized as the Most Innovative Knowledge Enterprise for the 8th consecutive year.

  • Net debt to equity stands at a comfortable 0.5x (net debt INR2,779 crores), with healthy cash balances and unused bank limits.

Concerns

  • Q3 FY26 Total Income declined 9% YoY to INR3,025 crores, and 9M FY26 Total Income saw a marginal 0.9% YoY decline, attributed to execution delays and liquidity issues with government clients.

  • Profit after tax for Q3 FY26 was INR97 crores, down from INR149 crores in Q3 FY25, impacted by a one-time provisioning of INR76.51 crores for the New Labor Code.

  • Working capital remains elevated due to stressed payments and slow certification from certain projects, leading to an increase in interest-bearing advances to ~40% of overall advances.

  • Competitive intensity in certain segments like metros and NHAI projects is rising, with bids going as low as -40%, leading to selective participation and the rebid of several L1 projects in Maharashtra.

Key financials

2 periods

Q3 FY26

  • Total Income
    ₹3,025 Cr
    YoY -9%
  • EBITDA
    ₹424 Cr
  • EBITDA Margin
    14%
    YoY +0.5%
  • PAT
    ₹97 Cr

9M

  • FY26 Total Income
    ₹9,545 Cr
    YoY -0.9%
  • FY26 EBITDA
    ₹1,269 Cr
    YoY +1.8%
  • FY26 EBITDA Margin
    13.3%
    YoY +0.35%
  • FY26 PAT
    ₹339 Cr

What they filed

Q1 FY27: revenue down 20.7%, net profit down 78.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,960 3,211 3,223 3,370 2,988 +1%2,976 −7%2,614 −19%2,671 −21%
EBITDA344 364 294 435 329 −4%410 +13%43 −85%251 −42%
Net profit135 149 111 137 105 −22%97 −35%-89 −180%30 −78%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹32,635 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹3,700 Cr

Execution

2.5 years is our average execution period

Composition

  • International (geography) ₹11,000 Cr

Pipeline

qualified rfp

Robust project pipeline spread across multiple geographies and sectors

Cancellations & deferrals

  • rebid: All 22 packages of Maharashtra project jobs are going for rebid, including Pune Ring Road and Nagpur-Gondia projects.
Management expects a pickup in ordering activity in Q4 FY26 and is confident in achieving its annual order inflow guidance, despite some L1 projects going for rebid.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹1,100 Cr
    • TBM for high-speed rail project ₹700 Cr
    So on the capex front, for this financial year, as you have rightly said, we had planned INR1,100 crores. And in that INR1,100 crores, the tunnel boring machine related to this high-speed rail project is around INR700 crores. Balance INR400 crores is something which we are going to do. And this TBM is something which is contingent upon, movement from China. If the approval comes, then we'll end up somewhere around say INR1,100 crores for this financial year. If that doesn't happen, then maybe we'll end up around INR400 crores.
  • Debt Gross ₹3,633 Cr · Net ₹2,779 Cr · 0.5× EBITDA
    Debt, the debt number has remained in the similar range that of September and stands at INR3,633 crores on the gross basis and INR2,779 crores on net basis. On net basis, the debt-equity is around 0.5 times of the net worth.
  • Liquidity Liquidity disclosed Continued liquidity issues with certain government clients, stressed payments across projects, and slow certification have led to elevated working capital and an increase in interest-bearing advances to ~40% of overall advances from customers. The company received INR15 crores from UP in January for Jal Jeevan Mission projects.
    Other factors that impacted the top line growth included continued liquidity issues with certain government clients.

Guidance & targets

Order Inflow

  • Annual Order Inflow Order Inflow · FY26 · High confidence INR20,000 crores
    Accordingly, we are hopeful of achieving our full-year order inflow guidance of INR20,000 crores.

    — Paramasivan Srinivasan, Managing Director

  • Annual Order Inflow Order Inflow · FY27 · High confidence INR20,000 crores
    Yes, that's the target, that around INR20,000 crores next year also will be targeting for order booking.

    — Hitesh Singh, Head Corporate Strategy

Revenue

  • Annual Revenue Growth Revenue · FY26 · High confidence 5%

    Previously 10% → 5%

    while we are still working to achieve our 10% growth as guided in the last call, a 5% growth looks definitely achievable.

    — Ramesh Jha, Chief Financial Officer

Margin

  • EBITDA Margin Margin · Sustainable · High confidence 11% plus

    From 11% today

    So that is where on a consistent basis we are talking about that 11% EBITDA margin is something which will be there, and if you see last 10-12 years, we are largely there some years maybe around say 9.5% -- but largely we are around say 10% plus and in recent time 11% plus. ... Definitely the margin will be, northwards of 11%, but at the moment, what we'll request that, let's keep it at 11% plus.

    — Ramesh Jha, Chief Financial Officer

Capex

  • Annual Capex Capex · FY26 · Medium confidence INR1,100 crores
    If the approval comes, then we'll end up somewhere around say INR1,100 crores for this financial year. If that doesn't happen, then maybe we'll end up around INR400 crores.

    — Ramesh Jha, Chief Financial Officer

  • Annual Capex Capex · FY27 · Medium confidence INR1,000-INR1,100 crores
    if this TBM moves to the next year, maybe around INR1,000-INR1,100 crores kind of capex will be there.

    — Ramesh Jha, Chief Financial Officer

What to watch in Q4 FY26

FY26 Order Inflow Achievement

Next quarter (Q4 FY26)
Current INR3,700 crores (9M FY26 inflow)
Target INR20,000 crores

Why it matters

Crucial for future revenue visibility and meeting annual targets, with INR16,300 crores expected in Q4.

Accordingly, we are hopeful of achieving our full-year order inflow guidance of INR20,000 crores.

Risks & concerns

  • Government Client Liquidity Issues and Working Capital Blockage

    high

    Continued liquidity issues with certain government clients, stressed payments, and slow certification on projects led to elevated working capital and increased interest-bearing advances.

    Management acknowledged

  • Jal Jeevan Mission (UP) Payment Delays

    high

    Significant outstanding payments (INR405 crores) and pending orders (INR500 crores) from the UP government for JJM projects, with slow cash flow traction.

    Management acknowledged

  • Execution Bottlenecks and Project Delays

    medium

    Recently secured projects progressed slower than anticipated, and there were exceptional delays in converting L1 projects, impacting top-line growth.

    Management acknowledged

  • Rising Competitive Intensity in Bidding

    medium

    Increased competitive intensity in segments like metros and NHAI, with bids going as low as -40%, necessitates selective participation.

    Management acknowledged

  • TBM Consignment Clearance Delays

    medium

    The second TBM consignment for the high-speed rail project is awaiting clearance, potentially impacting project timelines and FY26 capex plans.

    Management acknowledged

  • Gabon Bond Encashment Impact on Debt

    medium

    Encashment of a INR191 crores bond in Gabon increased debt, though management is confident of winning the ongoing ICC arbitration.

    Both acknowledged

Q&A highlights

7 direct
L1 Project Status and Risk of Cancellation (Croatia, Maharashtra) Direct
On Croatia, the railway project is at an advanced stage of getting awarded... Maharashtra jobs, from the interactions we learned, the entire 22 packages of Maharashtra project jobs are going for rebid... Therefore, in Maharashtra projects L1, in our internal scheme of things, we don't expect to bag in the near future.

Clarified the status of significant L1 projects, indicating that several Maharashtra projects where Afcons was L1 are now going for rebid, effectively cancelling those opportunities for the company, while Croatia is progressing.

Asked by Aditya, Investec

Sustainability of Current EBITDA Margins Direct
the kind of margin we are seeing today is not because of purely arbitration award because, arbitration upside is a small fraction of that. The remaining part is towards the improvements we have done in the project. Some projects we have we are completing before time... Definitely the margin will be, northwards of 11%, but at the moment, what we'll request that, let's keep it at 11% plus.

Management explained that the improved margins are primarily due to operational efficiencies and project improvements, not just one-off arbitration awards, and reiterated a sustainable '11% plus' EBITDA margin.

Asked by Aditya, Investec

FY27 Revenue Growth Outlook Partial
In the light of delayed order intake, some of these orders in staggered manner we were expecting all through the year. As it is all bunching up towards end of the current quarter, towards the last quarter of the year, and with that kind of mobilization and other thing required for such large projects, it's -- in our assessment it is too premature to comment what will be the growth for the next quarter.

Management declined to provide specific FY27 revenue growth guidance, citing delayed order intake and the bunching of awards towards the end of FY26, indicating uncertainty for the immediate future.

Asked by Mohit Kumar, ICICI Securities

Challenges with Jal Jeevan Mission (JJM) Projects in Uttar Pradesh Direct
On Jal Jeevan Mission projects, our major problem is with respect to our UP. In UP, balance pending order is roughly around INR500 crores... Existing outstanding from the client is INR405 crores... not much traction had taken place in terms of cash flows. So we are still awaiting a cash flow coming through for us.

Highlighted significant liquidity and execution challenges in the UP JJM projects, with substantial outstanding payments and pending orders, despite government allocations, impacting working capital.

Asked by Mohit Kumar, ICICI Securities

Impact of Gabon Bond Encashment of INR191 Crores Direct
the encashment has happened. ICC arbitration has already commenced. We are confident of this thing. During the course of this thing only, we also learnt certain facts which had come to our notice during the course of these legal things. So we are quite confident of winning the award in the ICC arbitration -- and we don't expect any impact as far as this job is concerned. ... So this INR191 crores would be sitting in a debt today, right? ... Correct.

Confirmed that the INR191 crores bond encashment in Gabon has increased the company's debt, but management expressed confidence in winning the ongoing ICC arbitration and mitigating the long-term impact.

Asked by Ashish Shah, HDFC Mutual Fund

FY26 Order Inflow Target and Q4 Expectations Direct
Yes, so in the only the Croatia rail project is what we have factored in, which is around INR6,700 crores, rest all are in the new projects which are in the tendering phase. We in the no other L1 we have taken in account in this INR16,300 crores.

Management clarified that the remaining INR16,300 crores needed to meet the FY26 order inflow target of INR20,000 crores would primarily come from new projects in the tendering phase, with only the Croatia rail project (INR6,700 crores) being a factored L1 conversion.

Asked by Shravan Shah, Dolat Capital

FY26 and FY27 Capex Plans Direct
So on the capex front, for this financial year, as you have rightly said, we had planned INR1,100 crores. And in that INR1,100 crores, the tunnel boring machine related to this high-speed rail project is around INR700 crores... if this TBM moves to the next year, maybe around INR1,000-INR1,100 crores kind of capex will be there.

Provided a detailed breakdown of FY26 capex, heavily reliant on TBM clearance, and projected potential FY27 capex if the TBM procurement is delayed, indicating flexibility in capital deployment.

Asked by Shravan Shah, Dolat Capital

NHAI Bidding Strategy and BOT Opportunities Direct
With respect to NHAI, we very selectively participate, for the simple reason the qualification criteria is so relaxed... Current pattern which is coming in, every bid is about 18, 20, 30 bidders and bids going as low as minus 40%. That is not a market we want to be in. ... BOT we don't intend participating as a BOT player. We would associate with concessionaires as an EPC player.

Management outlined a cautious and selective bidding strategy for NHAI projects due to intense competition and aggressive bids, and clarified that they prefer to act as EPC partners rather than BOT developers.

Asked by Vaibhav Shah, JM Financial

3 min read 7 chapters

Detailed narrative

Q3 & 9M FY26 Financial Performance

Afcons Infrastructure reported a marginal 0.9% YoY decline in 9M FY26 total income to INR9,545 crores, with Q3 FY26 total income declining 9% YoY to INR3,025 crores. Despite this, EBITDA for 9M FY26 grew 1.8% to INR1,269 crores, with margins improving 35 basis points YoY to 13.3%. Q3 FY26 EBITDA margin stood at 14%, a 50 basis point YoY improvement. Profit after tax for Q3 FY26 was INR97 crores, impacted by a one-time provisioning of INR76.51 crores for the New Labor Code.

Operational Milestones and Industry Recognition

The company achieved significant operational milestones, including the completion of a 5.5-kilometer TBM drive in the CIDCO water supply project one month ahead of schedule, setting a record for 777 meters of tunneling in a month. Afcons was also recognized as the Most Innovative Knowledge Enterprise for the 8th consecutive year and received the Grand Award for Top Innovative Company by CII. Furthermore, it was ranked 8th among International Marine and Port Facilities contractors and 12th among International Bridge contractors by Engineering News-Record USA in its 2025 rankings.

Order Book and Pipeline Dynamics

Afcons reported a pending order book of INR32,635 crores as of December 31, 2025, with a total order inflow of approximately INR3,700 crores for 9M FY26, including a road project over EUR100 million in Uganda and two marine contracts worth INR1,400 crores. The company maintains a robust project pipeline of INR3.8 trillion and is confident of achieving its full-year order inflow guidance of INR20,000 crores, with INR16,300 crores expected in Q4 FY26, primarily from new projects.

Margin Sustainability and Drivers

Management clarified that the improved EBITDA margins (14% in Q3, 13.3% in 9M) are primarily driven by project improvements, including early completion, design optimization, and cost savings, rather than solely from arbitration awards. They reiterated that an EBITDA margin of '11% plus' is sustainable. The 9M FY26 PBT margin stood at 4.8%, impacted by an 80 basis point provision for the New Labor Code.

Working Capital and Debt Management

Working capital remains elevated due to stressed payments and slow certification from certain government projects, leading to interest-bearing advances increasing to approximately 40% of overall advances, up from 20-22% last year. This has contributed to higher overall interest costs despite an improvement in average borrowing costs. The company's gross debt stood at INR3,633 crores and net debt at INR2,779 crores, resulting in a healthy net debt-to-equity ratio of around 0.5x, supported by healthy cash balances and unused bank limits.

Key Project Updates and Challenges

The second TBM consignment for the high-speed rail project is awaiting clearance, potentially impacting project timelines and the INR1,100 crores FY26 capex plan. Significant challenges persist in Jal Jeevan Mission projects in Uttar Pradesh, with INR405 crores outstanding and INR500 crores in pending orders, causing liquidity issues. Additionally, several L1 projects in Maharashtra, including Pune Ring Road, are going for rebid, effectively cancelling those opportunities for Afcons.

Strategic Outlook and Bidding Discipline

Afcons is adopting a disciplined approach to growth, focusing on operational excellence and prudent risk management. The company is selectively participating in NHAI projects due to relaxed qualification criteria and aggressive bidding, preferring to wait for a return to the old pre-qualified model. They also clarified that they do not intend to participate as a BOT player but rather as an EPC partner, potentially taking nominal stakes for qualification purposes.

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