Detailed Narrative
Q3 & 9M FY25 Performance and NGT Impact
Ahluwalia Contracts reported a challenging Q3 FY25 with turnover declining by 7.26% YoY to ₹951.95 crores and PAT dropping by 30.10% YoY to ₹49.39 crores. The EBITDA margin for the quarter was 8.86%, down from 10.90% in Q3 FY24. For the nine months of FY25, turnover grew by 7.10% YoY to ₹2,882.79 crores, but PAT decreased by 32.64% to ₹118.35 crores. This degrowth was primarily attributed to the severe impact of NGT bans in the NCR region, which affects 33% of the company's order book, causing significant work stoppages from October to February.
FY25 & FY26 Revenue and Margin Outlook
The company revised its FY25 revenue growth guidance downwards to 8.5%-9% from an earlier expectation of around 10-15%, largely due to the NGT ban and project delays. However, management is bullish on FY26, projecting revenue growth of 15% plus and a return to double-digit EBITDA margins, expecting to exceed 10%. For Q4 FY25, margins are also anticipated to improve to about 10% as work picks up post-NGT ban lifting in February.
Order Book, Order Inflow, and Bidding Pipeline
As of December 31, 2024, the net order book stands at a healthy ₹16,258.44 crores, to be executed over the next three years. Total order inflow for FY25 year-to-date is ₹7,794.37 crores, and the company expects similar order inflows for FY26. The current bidding pipeline for undecided projects is approximately ₹5,500 crores, with an additional ₹3,000 crores expected to be bid by March. The total pipeline for next year is estimated to be around ₹25,000 crores, covering residential, commercial, and healthcare segments.
Project-Specific Updates: CSMT, Gem & Jewellery, DLF Arbour
Execution on the CSMT project has been slower than anticipated, with FY25 revenue guidance revised down to ₹80-₹100 crores from an earlier target of ₹300 crores due to design issues and complexity. However, management expects CSMT to contribute significantly in FY26, targeting ₹750 crores. The Gem & Jewellery Park project is expected to generate about ₹500 crores in FY26, with work commencing in the next 1-2 months. The DLF Arbour project is now well underway, with over ₹200 crores billed, and is expected to clock a healthy run rate in the coming quarters.
Working Capital, Debt, and CAPEX Management
The company reported a cash position of ₹246 crores and a total debt (including term loan) of ₹11 crores. Working capital requirements have increased due to larger, more complex EPC projects and higher mechanization costs. Mobilization advances stand at ₹621 crores, with 43% being interest-bearing. The company aims to reduce finance costs by strategically avoiding interest-bearing mobilization advances in the future. CAPEX for the first nine months of FY25 was ₹154 crores, with an estimated ₹125 crores for FY26, indicating a reduction as major project CAPEX is largely complete.
Labor Costs and Contract Structure
Labor availability remains a challenge, contributing to higher labor costs, exacerbated by idle labor during the NGT ban period. Management noted that 33% of their order book is in the NCR region, which was severely affected. In terms of contract structure, 87% of the company's order book comprises variable price contracts, with only 13% being fixed-price. Government contracts typically include escalation clauses for labor and material, while private contracts often cover volatile materials, with labor escalation paid in about 50% of cases.