Detailed Narrative
Q1 FY26 Financial Performance Overview
Ahluwalia Contracts reported a turnover of ₹1,004.88 crores in Q1 FY26, marking a 9.3% year-on-year growth from ₹919.35 crores in Q1 FY25. Net profit (PAT) saw a significant increase of 67.03% to ₹51.11 crores, up from ₹30.60 crores in the corresponding quarter. This translated to an EPS of ₹7.63 for Q1 FY26, compared to ₹4.57 in Q1 FY25. The company's EBITDA margin expanded to 8.59% from 6.58% in Q1 FY25, while PAT margin improved to 5.01% from 3.29%.
Order Book and Inflow Dynamics
The net order book as of June 30, 2025, stood at ₹16,582.09 crores, with an execution timeline of 2-2.5 years. Including order inflows till July, the updated order book is ₹18,671 crores, with no order cancellations reported. Total order inflow for FY26 to date is ₹3,889.06 crores, and the company is L1 in two projects worth ₹1,796.00 crores. Management projects total order inflow for FY26 to be around ₹8,000 crores, with an overall order book of ₹18,000 crores to be executed over the next two and a half years.
Key Project Updates and Execution Pace
Progress on the CST project has improved, with 17-20% of the total work done at site, and a target run rate of ₹60-70 crores per month. The India Jewellery Park project is expected to break ground in two months, following environmental clearance, with an anticipated annual run rate of ₹400-500 crores once execution picks up. The DLF The Dahlias project, valued at approximately ₹2,000 crores, is expected to commence ground-breaking from the company's side in September, contributing around ₹500 crores in revenue from FY27 onward and completing in about 40 months.
Profitability Outlook and Margin Strategy
Despite Q1 being a traditionally slow quarter, management expressed confidence in achieving a double-digit EBITDA margin for the full FY26. They also project a double-digit EBITDA margin and a 15% topline growth for FY27. The company's strategy to focus on the private sector, where competitive intensity is lower, has resulted in higher margins compared to government projects. Currently, 55% of the order book is item rate, and 63% comes from the private sector, a significant shift from previous years.
Capital Allocation and Financial Position
The company reported a Q1 FY26 CAPEX of ₹62 crores. Total CAPEX for FY26 is projected to be around ₹500 crores, with a reduction to approximately ₹200 crores for FY27. Borrowings are minimal at ₹2 crores, while cash reserves stand at a healthy ₹920 crores. Key working capital components include retention of ₹397 crores, debtors of ₹623 crores, mobilization advances of ₹675 crores (35% interest-bearing), trade payables of ₹821 crores, inventory of ₹380 crores, and unbilled revenue of ₹557 crores.
Strategic Shift in Sector Focus and Competitive Landscape
Ahluwalia Contracts has consciously shifted its focus from the public sector to the private sector over the last two years, driven by increased competition and diluted qualification criteria in government contracts. The private sector now accounts for 63% of the order book, with 55% being item-rate contracts, which typically offer higher margins. The company is actively pursuing commercial, retail, and institutional projects, and is selective in bidding for large marquee government jobs where competitive intensity is lower. They are also strengthening relationships with premier developers like DLF, with whom they have projects worth ₹5,500 crores.