Ircon International Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

Ircon faced a challenging Q2 with margin compression due to aggressive bidding and losses in specific joint ventures like CERL. However, the company maintains a strong order book of nearly ₹24,000 crore and is diversifying into safety systems and hydro power to counter stiff competition in traditional EPC. Management remains confident in achieving ₹10,000+ crore revenue for the full year with stable PAT margins.

Highlights

  • Total revenue reported at ₹2,112 crore for Q2 FY26

  • Profit After Tax (PAT) stood at ₹137 crore with a core EBITDA of ₹162 crore

  • Order book remains robust at ₹23,865 crore as of September 30, 2025

  • Order inflow for H1 FY26 exceeded ₹4,000 crore, with a similar target for H2

  • Management guided for a full-year FY26 revenue of ₹10,000 to ₹11,000 crore

  • PAT margins expected to be maintained in the 6% to 7% range despite competitive pressures

  • International projects contributed ₹20 crore in realized foreign exchange gains from the Khulna-Mongla project

  • Diversification into new segments like Kavach (railway safety) and Hydro power projects is underway

Concerns

  • Intense Competition in EPC

Key financials

2 periods

Headline

  • Revenue
    ₹2,112 Cr
  • PAT
    ₹137 Cr
  • Core EBITDA
    ₹162 Cr
  • Order Book
    ₹23,865 Cr

H1

  • EPS
    ₹1.47

What they filed

Q1 FY27: revenue up 9.5%, net profit down 43.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,448 2,613 3,412 1,786 1,977 −19%2,119 −19%3,189 −7%1,956 +10%
EBITDA201 132 254 200 141 −30%158 +20%267 +5%192 −4%
Net profit206 86 212 164 137 −33%100 +16%191 −10%92 −44%
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.

Segment breakdown

SegmentOrder Book ShareTurnover Share
Domestic Projects91%96%
International Projects10%4%

Guidance & targets

Revenue

  • Operating Revenue Revenue · FY26 · High confidence ₹10,000-11,000 crores
    we expect that on a console level, we should be having an operating revenue in the range of about Rs. 10,000 crores to Rs. 11,000 crores.

    — Ragini Advani, Director Finance

  • Operating Revenue Revenue · FY27 · Medium confidence ₹10,000 crores
    And for going forward for the next year also, we maintain a similar level, which will be around Rs. 10,000 crores.

    — Ragini Advani, Director Finance

Margin

  • PAT Margin Margin · FY26 · Medium confidence 6-7%
    we continue to say that our PAT margins going forward will be in the range of 6% to 7%.

    — Ragini Advani, Director Finance

Other

  • Order Inflow Other · H2 FY26 · Medium confidence ₹4,000 crores
    we have got orders more than Rs. 4,000 crores in the first half of this financial year. And we expect something of a similar range going forward.

    — Ragini Advani, Director Finance

Risks & concerns

  • Intense Competition in EPC

    high

    Management noted many jobs are being quoted below estimates, forcing IRCON to bid aggressively and accept lower margins.

    Management acknowledged

  • Consolidated Margin Erosion

    medium

    Losses in subsidiaries and JVs (like CERL) are impacting consolidated margins, with a projected 1% drop in normal execution margins.

    Both acknowledged

  • Concession Expiry

    low

    The profitable Ircon-Soma Tollway concession is ending next year, which will remove a steady profit contributor.

    Management acknowledged

Areas of evasion (1)

  • Slightly vague on the specific projects that incurred losses beyond the CERL JV.

Q&A highlights

3 direct
Margin Compression and Aggressive Bidding Direct
we have had some change in our course, wherein now we are also going with aggressive margins and trying to get orders... it does mean that there has been some impact on our margins.

Confirms a strategic shift to sacrifice some margin to maintain order book growth in a hyper-competitive EPC market.

Asked by Vishal, Antique Stock Broking

Joint Venture Losses (CERL) Direct
in CERL phase 1, there have been losses and we expect it to break even by the year or two years later... for it to break even, it will take another, lets say about 18 months to about 20 months period.

Identifies a specific drag on consolidated profitability and provides a clear timeline for turnaround.

Asked by Gaurav Jagirdar

Foreign Exchange Gains Impact Direct
the overall number, I think, is about Rs. 30 crores, and out of it, a significant amount, about Rs. 20 crores is Khulna-Mongla.

Reveals that a portion of the international margin is driven by one-off forex gains rather than pure operational efficiency.

Asked by Vishal, Antique Stock Broking

2 min read 5 chapters

Detailed narrative

Margin Pressure and Competitive Strategy

Management acknowledged that margins have 'taken a dent' this quarter due to a combination of factors, including losses in the CERL joint venture and a strategic shift toward more aggressive bidding. To counter intense market competition where projects are often quoted below estimates, IRCON has moved away from its previous stance of keeping margins intact at the cost of order wins. This shift is expected to result in a roughly 1% drop in normal project execution margins going forward, though management aims to maintain overall PAT margins between 6% and 7%.

Order Book and Revenue Visibility

The company's order book remains a key strength, standing at ₹23,865 crore as of September 30, 2025. Domestic projects dominate the mix at 91%, while 63% of the total book has been won through competitive bidding rather than nomination. Management guided for a full-year revenue of ₹10,000 to ₹11,000 crore for FY26, noting that execution typically picks up in the second half of the fiscal year. They also projected a similar revenue level of approximately ₹10,000 crore for FY27.

Joint Venture and Subsidiary Performance

The performance of joint ventures is currently mixed. The Ircon-Soma Tollway project continues to be profitable, though its concession period ends next year. Conversely, the CERL coal connectivity project is currently loss-making due to delays in surrounding mine development. Management expects CERL to break even in the next 18 to 20 months as traffic enhances following the completion of a spur line. Additionally, the IRFDC is in the final stages of liquidation, with investment recovery expected by early next year.

International Operations and Forex Gains

International projects, while representing only 4% of turnover, contribute significantly to margins and provide a hedge through foreign exchange earnings. In H1 FY26, the company realized approximately ₹30 crore in forex gains, with ₹20 crore coming specifically from the Khulna-Mongla project in Bangladesh. The international order book stands at roughly 10% of the total, and management intends to continue leveraging rupee depreciation for better realizations on these projects.

Diversification into Kavach and Hydro Power

To mitigate risks in the traditional EPC and road sectors, IRCON is diversifying into high-tech and specialized infrastructure. The company has entered the 'Kavach' railway safety segment and recently secured a hydro power project. These moves are intended to help the company understand new industry nuances and secure projects in areas with potentially less irrational bidding than standard road or railway EPC contracts.

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