Ircon Intl.

Ircon International reported a decline in its financial performance for FY26, with total revenue falling to ₹9,502 crores from ₹11,131 crores in the previous year, marking a 14.6% YoY decrease. Net profit also saw a significant drop to ₹592 crores from ₹724 crores, representing an 18.2% YoY decline. Despite these reductions, the company's core EBITDA margins improved by 94 basis points to 9.35% for the year, indicating some operational efficiency.

The company maintains a strong order book of ₹24,984 crores as of March 31, 2026, which provides approximately 2.6 times its FY26 annual revenue, offering robust revenue visibility for the next 2.5 to 3 years. In FY26, Ircon secured new orders worth around ₹5,000 crores and submitted 107 bids for projects totaling ₹48,000 crores, achieving a 10% success ratio for bids submitted in terms of value. The order book is predominantly domestic (92%) and includes a mix of competitive bidding (54%) and nomination (46%) contracts.

Management highlighted a challenging environment with intense competition, leading to compressed standalone core EBITDA margins, which are expected to be in the range of 4.0-4.2% for FY27. However, at a consolidated level, including contributions from PPP projects, core EBITDA margins are projected to be around 9%, with consolidated PAT margins expected to remain stable at 6.1-6.3%. This indicates that investments in PPP projects are crucial for maintaining overall profitability despite standalone pressures.

Ircon plans to invest approximately ₹400-500 crores in its PPP projects (primarily road and coal connectivity railway SPVs) in FY27, as part of a larger anticipated requirement of ₹700-800 crores for equity and quasi-equity investments in subsidiaries and JVs. The company has already invested ₹3,000 crores in these entities. Additionally, routine CAPEX and machinery purchases are estimated at ₹50-60 crores, reflecting a balanced approach to growth and operational needs.

International projects, particularly in Algeria, Myanmar, Bangladesh, Sri Lanka, Nepal, and Malaysia, contributed positively to profitability. The completion of long-gestation projects and benefits from foreign exchange earnings, coupled with inherently higher margins in international contracts, have improved their contribution. Furthermore, a previously loss-making JV, Rail Connectivity Project (CERL), has seen substantial reduction in losses and is projected to break even within the next two years, with overall JV profit expected to be in the ₹70-80 crore range going forward^⏳.

The company faced execution delays in FY26 due to issues like land acquisition and clearances, which impacted revenue realization. Management acknowledged the impact of raw material cost escalation (e.g., bitumen) and geopolitical situations on project costs. However, they noted that most projects include price variation clauses, and government initiatives, such as NHAI's circular on bitumen compensation, help mitigate these risks. A temporary working capital loan of ₹103 crores was taken due to delayed receivables, with 50% already repaid.