Detailed Narrative
Strong Q2 FY26 Performance and H1 Momentum
Ahluwalia Contracts reported a robust Q2 FY26, with turnover growing 16.39% YoY to ₹1,177.30 crores and PAT surging 106.07% YoY to ₹79.45 crores. This strong performance was accompanied by significant margin expansion, with EBITDA margin reaching 10.92% (up from 7.25% in 2QFY25) and PAT margin at 6.63% (up from 3.75%). For the first half of FY26, turnover stood at ₹2,182.18 crores, and PAT at ₹130.16 crores, indicating sustained growth momentum.
Healthy Order Book and FY26 Inflow Targets
As of September 30, 2025, the company's net order book was ₹18,057.60 crores, providing revenue visibility for the next 2.5 years. Total order inflow for FY26 year-to-date was ₹4,521.06 crores. Management expressed confidence in achieving its full-year FY26 order inflow target of approximately ₹8,000 crores, similar to the previous year, and expects a similar inflow for FY27. The company is also L1 in two projects aggregating ₹1,620 crores, including OUTR Bhubaneswar (~₹1,000 crores) and RML Hospital Delhi (~₹570 crores).
Strategic Investments in Digitization and Mechanization
To support future growth and enhance efficiency, Ahluwalia Contracts has embarked on an ambitious digitization drive, implementing SAP and utilizing tools like Power BI. While acknowledging they are currently at 'four out of ten' in this journey, the company is aggressively investing in heavy-duty machinery, including larger cranes, electronic batching plants for higher concrete grades (up to M80), and CNC machines for rebar fabrication. These investments aim to mitigate skill shortages and improve project execution capabilities.
Key Project Updates and Revenue Projections
Several major projects are progressing well. The Gems & Jewelry project is expected to start ground work in two months, targeting 30-35% of its order value in FY27 revenue. The CST Station Redevelopment project is gaining momentum, with ₹400 crores revenue projected for FY26 (₹250 crores in H2) and 40% of its order value in FY27. The Dahlias project, though slightly delayed by rains, has seen work begin on two towers, with revenue targets of ₹100-125 crores for FY26 and ₹300-350 crores for FY27. Airport projects (Varanasi and Darbhanga) are running full stream, aiming for 30% of their order value in FY26 revenue and full completion by FY27.
Revised CAPEX and Working Capital Management
The CAPEX target for FY26 has been revised downwards to approximately ₹400 crores from the earlier guidance of ₹500 crores, with H1 FY26 CAPEX at ₹137 crores. For FY27, CAPEX is projected to be around ₹300 crores, a 20% reduction from FY26, as existing equipment becomes free from completed projects. Working capital days improved to 87 days from 95 days as of June 30. The company reported ₹418 crores in retention money and ₹552 crores in unbilled revenue as of September 30, 2025.
Addressing Labor Challenges and Private Sector Strategy
Labor availability and skill shortages remain a continuous challenge, exacerbated by events like elections and festivals. Management is actively mitigating this through increased mechanization to reduce dependency on manual labor. The company's private sector order book currently stands at 6-9%, with a long-term aspiration of 60%. Management emphasized strong due diligence for private clients, noting that major clients like DLF (₹3,300-3,500 crores in order book) are financially stable and often fund CAPEX interest-free, de-risking projects.
Cash Position and Future Growth Avenues
Ahluwalia Contracts holds approximately ₹1,000 crores in cash on its books, with ₹419 crores restricted and ₹615 crores free. This cash is being strategically utilized to fund CAPEX (avoiding interest-bearing advances on government projects), reduce procurement costs, and explore future growth avenues. While acquisitions are not on the immediate anvil, the company is studying diversification into adjacencies, new technologies, and potential foreign partnerships over the next 2-3 years.