Detailed Narrative
FY26 Financial Performance and Margins
Ahluwalia Contracts reported a robust FY26, with turnover growing 11.38% to INR 4,565.20 crores and PAT increasing 31.17% to INR 264.32 crores. The company's EBITDA margin expanded to 9.52% in FY26 from 8.34% in FY25. However, Q4 FY26 saw a slight PAT degrowth of 3.63% to INR 80.14 crores and EBITDA margin compression to 9.35% from 10.17% in Q4 FY25, attributed to various headwinds including elections and supply chain disruptions.
Order Book and Future Visibility
As of March 31, 2026, the net order book stood at INR 21,096.31 crores, providing revenue visibility for the next 24 to 30 months. The total order inflow for FY26 was INR 10,257.39 crores. The company is also L1 in two projects worth INR 1,620.95 crores. Management guided for 15-20% revenue growth and INR 8,000 crores in order inflow for FY27, expecting double-digit EBITDA margins, supported by a well-stocked order book with 89% having inbuilt escalation clauses.
Strategic Shift Towards Mechanization and Complex Projects
The company and the industry are at an inflection point, driven by increasing complexity of buildings, labor shortages, and skill deficits. Ahluwalia Contracts has been investing in mechanization, with FY26 capex at INR 274 crores and planned FY27 capex around INR 300 crores, a reduction from the previous INR 500 crores guidance due to efficiency gains. These investments are expected to yield 7-10% savings and improve efficiency, with full benefits on margins anticipated to accrue over 4-5 years as the industry matures.
Impact of External Headwinds and Mitigation Strategies
The company faced headwinds in Q4 FY26, including the impact of the war (LPG prices, labor migration, supply chain disruptions, fuel inflation), state elections, and NGT bans. Management noted that while the war's prolonged impact remains an uncertainty, most contracts have escalation clauses (e.g., Central Vista's INR 3,000 crores contract is WPI-linked), and private clients offer pass-through for volatile material costs. Efforts are also underway to mitigate NGT impact and labor shortages, with developers paying for idle labor during work stoppages.
Project Execution Updates
Key projects like CSMT, which was slow-moving for 1.5 years due to design changes, have picked up speed. Central Vista, a design-build EPC project, has broken ground and is expected to contribute INR 100-150 crores monthly. The India Jewellery Park (IJPM) project, delayed by administrative reasons and changes in SIR, is expected to commence ground work post-Mumbai monsoon. Varanasi airport is targeted for completion ahead of its June '27 schedule, aiming for January '27.
Working Capital and Liquidity
The company maintains a comfortable liquidity position with cash and bank balances of INR 817 crores. Mobilization advances stood at INR 802 crores, retention money at INR 450 crores, and unbilled revenue at INR 688 crores. Working capital days were 104 days in Q4 FY26, which management considers standard. The company is not considering a share buyback, preferring to maintain a 'war chest' due to market uncertainties and past downturn experiences.
Q1 FY27 Outlook and H2 Ramp-up
Management anticipates Q1 FY27 to be 'exceptionally slow' due to a confluence of factors including elections, labor migration (Eid, skilled Muslim workforce), and other disruptions. However, a significant ramp-up in execution and revenue is expected from Q2 onwards, with H2 FY27 projected to be substantially higher than H1, driven by the acceleration of existing projects and new order execution.