Concall AI

Ahluwalia Contracts (India) Limited — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Ahluwalia Contracts delivered a strong Q2 FY26, showcasing significant year-on-year growth in both revenue and PAT, driven by improved execution and margin expansion. The company maintains a robust order book and is confident in achieving its FY26 revenue and order inflow targets, despite acknowledging challenges like labor shortages and the NCR construction ban. Strategic investments in digitization and machinery are underway to support future scale and efficiency, while cash on books is being utilized to reduce costs and explore long-term growth avenues.

Highlights

Q2 FY26 Revenue of ₹1,177.30 crores, up 16.39% YoY.
Q2 FY26 PAT of ₹79.45 crores, up 106.07% YoY.
Q2 FY26 EBITDA Margin at 10.92%, significantly up from 7.25% in 2QFY25.
Net Order Book as of Sep 30, 2025, stood at ₹18,057.60 crores, executable in 2.5 years.
FY26 Order Inflow YTD is ₹4,521.06 crores, with an additional ₹1,620 crores in L1 projects.
FY26 Revenue Growth Guidance maintained at 15-20%.
FY26 CAPEX Target revised to ~₹400 crores from ~₹500 crores.
Working capital days improved to 87 days from 95 days as of June 30.

Concerns

Labor Shortage & Wage Inflation

Key financials

3 periods

Headline

Revenue
₹1,177.3 Cr
YoY +16.4%
PAT
₹79.45 Cr
YoY +107.1%
EBITDA Margin
10.9%
PAT Margin
6.6%
EPS
₹11.8
YoY +105.9%
Net Order Book
₹18,057.6 Cr
Retention Money
₹418 Cr
Unbilled Revenue
₹552 Cr
Mobilization Advances
₹708 Cr

H1 FY26

CAPEX
₹137 Cr

FY26 YTD

Order Inflow
₹4,521.06 Cr

What they filed

Q1 FY27: revenue up 12.0%, net profit down 78.4% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,011	952	1,216	1,005	1,177 +16%	1,061 +11%	1,322 +9%	1,126 +12%
Expenses	938	868	1,092	919	1,049	965	1,199	1,078
EBITDA	73	84	124	86	129 +77%	96 +14%	124 +0%	48 −44%
Margin	7%	9%	10%	9%	11%	9%	9%	4%
Other income	12	15	18	16	15	15	25	16
Interest	16	15	13	12	15	11	12	16
Depreciation	17	18	17	21	22	26	29	32
Profit before tax	53	67	112	69	106 +100%	74 +10%	108 −4%	15 −78%
Tax rate	27%	26%	26%	26%	26%	27%	26%	26%
Net profit	38	49	83	51	79 +108%	54 +10%	80 −4%	11 −78%
EPS	5.73	7.37	12.41	7.63	11.80	8.06	11.96	1.70

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.

Guidance & targets

Order Inflow

New Order Inflow Order Inflow · FY26 · Medium confidence ~₹8,000 crores

our target was, as I had explained last time, similar to last year, about Rs. 8,000 crores. We are confident that that is where we will end up, around that figure, new orders.

— Shobhit Uppal
New Order Inflow Order Inflow · FY27 · Medium confidence ~₹8,000 crores

I think so. I think so. I don't think there is going to be any slowdown. There is no slowdown on the horizon. ... I don't see a challenge in maintaining the growth of 15% to 20% even next year.

— Shobhit Uppal

Revenue

Revenue Growth Revenue · FY26 · Medium confidence 15-20%

I had given you a projection of 15% to 20%. We are maintaining that.

— Shobhit Uppal
Revenue Growth Revenue · FY27 · Medium confidence 15-20%

I don't see a challenge in maintaining the growth of 15% to 20% even next year.

— Shobhit Uppal

Profitability

EBITDA Margin Profitability · FY26 · Medium confidence More than double-digit

I am sticking my neck out and saying that we will maintain what I had projected last time. And we have done that. For this quarter, we have crossed 10%, we are nearly at 11%, and we are nearly at 10% for H1. So, I think overall, it will be more than double-digit. Let me just say that for the entire year.

— Shobhit Uppal

Project Revenue

Gems & Jewelry Project Revenue Project Revenue · FY27 · High confidence 30-35% of order value

Of the total order value, the first year is usually where things take shape. So, maybe about 30%-35% of the order value.

— Shobhit Uppal
CST Station Redevelopment Project Revenue Project Revenue · FY26 · High confidence ~₹400 crores

Actually, yes, what Vikas is saying is totally. We have given a projection of about Rs. 400 crores for the entire year, for the entire FY'26. And so the balance in H2 will be about Rs. 250 crores.

— Shobhit Uppal
CST Station Redevelopment Project Revenue Project Revenue · FY27 · High confidence ~40% of order book/value

About 40% of the order book or the order value.

— Shobhit Uppal
Dahlias Project Revenue Project Revenue · FY26 · High confidence ₹100-125 crores

So, for '26, we are looking at a revenue of about Rs. 100 crores to Rs. 125 crores.

— Shobhit Uppal
Dahlias Project Revenue Project Revenue · FY27 · High confidence ₹300-350 crores

And for '27, the revenue will be between Rs. 300 crores and Rs. 350 crores.

— Shobhit Uppal
Airport Projects Revenue (Varanasi & Darbhanga) Project Revenue · FY26 · High confidence ~30% of order value

Yes. So, we are looking at 30%. Yes, we are on track to do that. One project is about Rs. 650 crores. 30% would be close to Rs. 200 crores. We will touch on that. We will cross the figure of 30% in both projects.

— Shobhit Uppal

Project Completion

Airport Projects Completion (Varanasi & Darbhanga) Project Completion · FY27 · High confidence Both projects completed

Yes, both projects will be completed. In fact, Varanasi, our stipulated date of completion is June or July '27. The client is trying to, because of elections, somewhere in March, in UP, on March 27th. The client is pressing us to squeeze the timeline. We are on track. And Darbhanga will be completed on October 26.

— Shobhit Uppal
Smaller Projects Completion Project Completion · FY27-FY28 · Medium confidence Most likely by FY27, or mid-FY28

So, we see the remaining value most likely will be completed by FY'27? ... You can't say that because in this smaller value projects, there would be some projects which would be, say, MEP projects, standalone projects, where our company is doing MEP works also, right. So, yes, but if not, FY'27, by the middle of FY'28, these smaller value projects should get over.

— Shobhit Uppal

Capex

CAPEX Capex · FY26 · High confidence ~₹400 crores

Previously ~₹500 crores → ~₹400 crores

For '26, we had given a guidance of about Rs. 500 crores in the last call. It will be less than this only. ... So, it should be around 400, 450 for '26. ... Yes, about Rs. 400 crores.

— Shobhit Uppal
CAPEX Capex · FY27 · High confidence ~₹300 crores

And for '27, it will be less because the equipment that we have invested in in the last cycle will become free. A lot of projects will get completed. And so FY '27, it should be about 20% less. ... And for '27, it will be around 300.

— Shobhit Uppal

Project Start

Whiteland Project Start Project Start · December (current year) · High confidence December

So, Whiteland was a project that was always slated to begin in December. And that is what it will begin in December now.

— Shobhit Uppal

Project Execution

Whiteland Project Execution Project Execution · FY27 · High confidence Starting from FY27

And then this would be the execution, most likely starting from FY'27 there. Whiteland, yes, FY'27, you can say that.

— Shobhit Uppal

Risks & concerns

Labor Shortage & Wage Inflation
high

Continuous challenge due to skills shortage and impact from events like elections and FIR implementation, being mitigated by higher mechanization.

Management acknowledged
NCR Construction Ban
medium

Approximately 40% of the order book comes from NCR, making it a significant factor, though management expects less impact due to mitigation measures.

Analyst acknowledged
Project Delays (Dahlias Project)
low

Slightly delayed due to heavy rains in September and client handover issues, but work has started on ground.

Management acknowledged
Working Capital Blockage (GST Revisions)
low

~₹70 crores stuck in Maharashtra and Assam due to GST revisions, considered a statutory increase and a matter of time for resolution.

Management acknowledged

Areas of evasion (1)

precise future depreciation calculation

Q&A highlights

3 direct

Impact of NCR Construction Ban Direct

So, we feel the impact this time around should be less. ... this time, the laborers are not being allowed to go back to their native place. In fact, post-elections in Bihar, the labor has started coming back. Even when there is no work, the clients have agreed to pay them, even when they are on site.

Addresses a significant operational risk in a key region and outlines mitigation strategies, suggesting a potentially lower impact than previous bans.

Asked by Shravan Shah

Employee Cost Jump in Q2 FY26 Direct

So, in H2, this will taper off slightly. This quarter, it has gone up because we have declared increments and paid arrears. Because our increment, they start from the calendar year, which is 1st January. This time, we were delayed in implementing. ... So, we paid the arrears in this quarter, Q2. That is why this figure is higher.

Explains a significant increase in a key expense line item, clarifying it's a one-off for Q2 due to arrears and not a new run-rate, which is crucial for margin outlook.

Asked by Shravan Shah

Scaling Up for Larger Order Book & Digitization Progress Direct

The company, a couple of years ago, embarked on a digitization drive. And it is an ambitious drive that is handled by Vikas himself. And as a step one, we have implemented SAP. ... On a journey of one to ten, I think we would be at four, if I were honest.

Provides insight into the company's strategic initiatives to handle growth, including IT systems and CAPEX, and a realistic self-assessment of their current stage of implementation.

Asked by Lakshminarayanan

3 min read 7 chapters

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.

This is an AI-generated summary of a publicly available earnings call transcript.

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