Afcons Infrastructure Limited — Q4 FY26 earnings call

Call held 19 May 2026

Management summary

Afcons Infrastructure reported a challenging Q4 and FY26, marked by a net loss of INR 89 crores in Q4—its first since 2010—and a 5.4% YoY revenue decline for FY26. The company cited geopolitical disruptions, supply chain issues, and delayed customer payments as primary reasons for underperformance and increased working capital. Despite these headwinds, Afcons maintains a healthy EBITDA margin of 11.7% for FY26 and projects a robust FY27 order booking guidance of INR 30,000 crores, with significant visibility, while acknowledging the need for debt reduction and improved profitability ratios.

Highlights

  • FY26 EBITDA Margin of 11.7% maintained, considered healthy and among the better margins in the industry.

  • Commissioned the HRRL crude oil terminal project at Mundra, showcasing growing capabilities in industrial and energy infrastructure.

  • Operationalized several infrastructure projects, including sections of Bangalore-Double Decker Metro and Flyover Corridor, and conducted trial runs on Agra and Kanpur Metro projects.

  • Received recognition from Engineering News Record USA, ranking 8th in Marine Category Globally and 12th in International Bridge Contractors.

  • Secured the Croatia railway line project (L1), with formalities expected to conclude shortly, contributing to future order book.

Concerns

  • Q4 FY26 resulted in a net loss of INR 89 crores, the first time since quarterly reporting began in 2010, impacted by project-specific developments and one-time factors.

  • FY26 revenue declined 5.4% year-on-year to INR 12,322 crores, and PAT stood at INR 251 crores, significantly lower than previous year.

  • Order intake in FY26 was below expectations due to deferment of large project awards and delays in converting L1 positions into firm orders.

  • Geopolitical developments and supply chain disruptions in Q4 severely impacted overseas project execution and profitability.

  • Croatia Road tenders, where Afcons was declared L1, were cancelled by the client due to budgetary constraints.

  • FY26 ROCE at 12% and ROE at 5% are considered quite low, reflecting the impact on profitability.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹2,777 Cr
    YoY -18%
  • Net Loss
    ₹-89 Cr

FY26

  • Revenue
    ₹12,322 Cr
    YoY -5.4%
  • EBITDA
    ₹1,439 Cr
  • EBITDA Margin
    11.7%
  • PAT
    ₹251 Cr
  • ROCE
    12%
  • ROE
    5%

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

₹15,000 Cr

as of 2026-05-19 quantified

Inflow this quarter

₹4,125 Cr

Execution

Long gestation projects (4 dams, high-speed railway) mean revenue accumulates from 2nd year onwards.

Composition

Mix 3 geographies
  • Overseas (of existing order book) 11%
  • Domestic (of existing order book) 89%
  • Overseas (of turnover) 30%

Share of order book by geography· categories overlap, and sum to 130%

Pipeline

qualified rfp

Bid pipeline of INR 4 lakh crores, with 70% domestic and 30% overseas.

Cancellations & deferrals

  • cancelled: Croatia Road tenders (L1) cancelled by client due to budgetary constraints.
  • deferred: Projects expected to ramp up during Q4 experienced delays due to design and alignment-related changes.
Order intake was below expectations due to deferment of large project awards and delays in L1 conversion, but the addressable pipeline remains robust.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹700 Cr this quarter · ₹1,069 Cr (FY26) planned
    So, in FY26, we have incurred a CAPEX of INR 1069. And this number was in December, this number was around INR 370 odd crores. So, in Q4, we have done close to INR 700 crores.
  • Debt Gross ₹3,538 Cr · Net ₹2,653 Cr
    Gross debt has remained in the similar range that of September and December and that stands at INR 3,538 crores and net debt is INR 2,653 crores on the net basis.
  • Liquidity Liquidity disclosed Management decided to balance funding projects and maintaining liquidity in Q4 due to payment issues from customers.
    Payments were not very smooth from majority of the customers. Working capital, funding to the projects continued in Q4 as well and under the circumstances, we decided to balance between funding projects and maintaining liquidity.

Guidance & targets

Order Inflow

  • Order Booking Guidance Order Inflow · FY27 · High confidence INR 30,000 crores
    Having a certainty of about INR 15,000 crores order including L1 in the current financial year, we expect to book another INR 15,000 crores of more orders, making a total order booking guidance of INR 30,000 crores for the current financial year.

    — Paramasivan Srinivasan, Managing Director

Capex

  • Capital Expenditure Capex · FY27 · Medium confidence around INR 725 crores
    So, FY27, we are looking at a CAPEX of around INR 725 crores.

    — Ramesh Jha, Chief Financial Officer

Debt

  • Debt Reduction Debt · FY27 · Medium confidence sizable drop
    But one thing for sure we can tell you that for this financial year FY27, we will see a sizable drop in the debt number.

    — Ramesh Jha, Chief Financial Officer

Order Inflow Composition

  • Domestic vs International Split Order Inflow Composition · FY27 · Medium confidence 60% domestic, 40% international
    And in terms of domestic international split, it could be roughly about 40:60 or so. Domestic will be around 60, international will be around 40. Depending on which order we get, it could get shifted also in terms of percentage

    — Paramasivan Srinivasan, Managing Director

What to watch in Q1 FY27

Conversion of L1 orders to firm orders

Q1 FY27
Current INR 7,000 crores in L1 orders
Target Conversion of INR 7,000 crores L1 orders into firm contracts

Why it matters

Crucial for achieving the FY27 order booking guidance and future revenue visibility.

Booked around INR 8,000 crores of orders and declared L1 in another around INR 7,000 crores so far in this financial year. We expect these L1 orders to get converted in this quarter.

Risks & concerns

  • Geopolitical developments and supply chain disruptions

    high

    War-related issues, POL and gas-related challenges, and material movement problems in overseas markets severely impacted Q4 execution and profitability.

    Management acknowledged

  • Delayed payments from customers and working capital blockages

    high

    Payments were not smooth from majority of customers, especially government entities due to elections, leading to elongated payment cycles and increased finance costs.

    Management acknowledged

  • Lower-than-expected order intake and L1 conversion delays

    medium

    Deferment of large project awards and delays in converting L1 positions into firm orders resulted in order intake below expectations for FY26.

    Management acknowledged

  • Inability to recover escalated costs in fixed-price overseas contracts

    medium

    Overseas contracts are often fixed-price, making it difficult to recover escalated costs from geopolitical events, although some contracts have pass-through mechanisms beyond a certain threshold.

    Management acknowledged

  • Low profitability ratios (ROCE and ROE)

    medium

    FY26 ROCE at 12% and ROE at 5% are considered low, impacted by provisions, one-off costs, and under-recovery of fixed costs.

    Management acknowledged

Q&A highlights

6 direct
Reasons for Q4 performance miss and lack of FY27 guidance Direct
What happens that in Q4, we have seen that the customers, they release all the payments up to date. This is what our experience has been for quite some time. But this year was an exception wherein we have seen that there was a slowdown in terms of payment and payments were not forthcoming. That has impacted and we had to decide a choice between growth or to preserve the liquidity and then we had not taken that aggressive call to pursue the top line growth.

Analyst questioned the significant deviation from prior growth expectations and the absence of forward guidance, prompting management to detail the specific operational and external challenges faced.

Asked by Shravan Shah

Impact of geopolitical issues and supply chain on overseas projects Direct
Many places, the vendors were asking for advance payment and then only they were committing. And they were, despite giving advance payment, many places it was not available. So, that became a major constraint. And as I explained that we have got almost one-third which comes from overseas market and some of the countries are not having those kind of energy reserve. So, that severely impacted.

Analyst sought clarity on the specific issues affecting international projects, revealing that supply chain disruptions, energy availability, and advance payment demands from vendors significantly hampered execution.

Asked by Ankita Shah

Delayed payments from government customers and its impact on liquidity Direct
As such, we are not saying that there is concern, but what we have seen is in some of the states, there was election, and because of that, there was no decision. The payments were certified by the customer. It was sent to the treasury, and the payments were not coming. Some of the customers, we heard that they were not deciding. Payments were certified. It was sent to their centralized finance team, and then we just heard that the payments will be released. It was not released. It was released actually subsequently in the month of April.

Analyst probed the nature of payment delays, confirming that government-related issues, particularly elections, led to elongated payment cycles, impacting the company's working capital.

Asked by Jainim Jain

Total one-time costs and provisions in Q4 and FY26 Direct
I think all this put together, the quantum could be around say INR 260-265 crores. ... FY26, the number is close to INR 325 crores. See, Parvez, I will just explain you. What we have done is, this year we have, in Q4, what we have done is we have made a ECL provisioning matrix.

Analyst sought quantification of the significant provisions and one-time costs mentioned, revealing a substantial impact on Q4 and FY26 profitability due to a new ECL provisioning matrix and specific project issues.

Asked by Parvez Qazi

Impact of interest-bearing advances on ROCE/ROE Partial
That will impact, that will certainly impact the ROE, but you are getting the money from the customer. So, your capital employed is not there and ROC, I think that the interest expenditures comes below that. So, that will not impact the ROC.

Analyst questioned the increasing proportion of interest-bearing advances and its effect on profitability ratios, with management acknowledging ROE impact but downplaying ROC impact due to capital employed not being tied up.

Asked by Shrinarayan Mishra

Cancellation of Croatia road tenders vs approval of railway project Direct
ECB has already approved the entire amount, and funds are already there with them. Therefore, we don't find any issues. Even with respect to road projects also, there is an ECB approval for the funding up to a value because there were a series of tenders, not these two tenders alone, there were other tenders as well.

Analyst sought clarification on the contrasting outcomes of Croatia projects, confirming that the railway project is fully funded and approved, unlike the cancelled road tenders.

Asked by Shrinarayan Mishra

Liquidation timeline for contract assets and working capital days Direct
And in that contract, anyways, we were not recognizing any margin and whatever was to be provided, we have already provided for the expenses. And as we have communicated earlier, we have close to 92% or so we had completed the project. So, since the contract at the moment, we are not recognizing anything as such thereafter. Now, coming to your second question of liquidation of some of the contract assets, as I explained that some of the receivables, we were in the March itself, we were looking at liquidation and it could not go through. We are looking at those liquidation, maybe say by June, we should see a sizable liquidation in the range of say INR 1000 odd crores. So, with that, we will see that getting realized. And also, we can look at reduction in number of working capital days, which we are looking at elevated number of 143.

Analyst inquired about the impact of Lombard Guarantee invocation and the timeline for liquidating contract assets, with management providing specific figures for expected liquidation and working capital improvement.

Asked by Siddharth Suren

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Detailed narrative

Q4 and FY26 Financial Performance Overview

Afcons Infrastructure reported a challenging Q4 FY26 with a net loss of INR 89 crores, marking its first loss since 2010. For the full fiscal year, revenue stood at INR 12,322 crores, a 5.4% decline year-on-year, while PAT was INR 251 crores. Despite the revenue decline, the company maintained a healthy FY26 EBITDA margin of 11.7%, though Q4 EBITDA margin was lower at 6.1%.

Factors Impacting Q4 and FY26 Performance

The underperformance was attributed to several factors including slower-than-anticipated ordering activity, delays in project conversion, and execution disruptions. Geopolitical developments in Q4 led to temporary disruptions in overseas projects, impacting supply chains and increasing costs. Domestically, payment delays from customers, particularly from government entities due to elections, caused working capital blockages and higher finance costs, further impacting profitability.

Order Book and Pipeline Outlook

FY26 order inflows were INR 4,125 crores, with total booked orders and L1 positions reaching INR 15,000 crores. Management provided an FY27 order booking guidance of INR 30,000 crores, with approximately 50% visibility already in place. The overall bid pipeline is robust at INR 4 lakh crores, split 70% domestic and 30% overseas, across segments like hydro, marine, rail, road, and urban infrastructure.

Capital Expenditure and Debt Profile

The company incurred CAPEX of INR 1,069 crores in FY26, with INR 700 crores in Q4, largely for accelerated depreciation on TBMs. For FY27, CAPEX is projected to be around INR 725 crores. Gross debt stood at INR 3,538 crores and net debt at INR 2,653 crores, resulting in a net debt to equity ratio of 0.49x. Management expects a sizable drop in debt in FY27, aiming for more comfortable levels.

Challenges in Project Execution and Cost Recovery

Afcons faced challenges in project execution due to non-achievement of margin recognition thresholds in some projects and under-recovery of fixed costs. While domestic projects generally have escalation formulas, overseas fixed-price contracts make it difficult to recover abnormal cost increases. The company also implemented a new ECL provisioning matrix, contributing to a total of INR 260-265 crores in one-time costs in Q4 and INR 325 crores for FY26.

Strategic Progress and Recognition

Despite the operational challenges, Afcons commissioned the HRRL crude oil terminal and operationalized several key infrastructure projects. The company received industry recognition, ranking 8th globally in Marine Category and 12th in International Bridge Contractors. It also secured the Croatia railway line project (L1), with formal conclusion expected shortly, and continues to pursue opportunities in the Middle East.

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