NCC Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

NCC delivered a challenging second quarter characterized by a double-digit revenue decline and the withdrawal of annual guidance. While the order book remains at record levels, execution was severely hampered by an extended monsoon and slow payment cycles, particularly in the Water segment. Management is pivoting towards higher capex to support a massive new mining contract while navigating working capital pressures.

Highlights

  • Consolidated Revenue reported at ₹4,585 crores, representing a 12% YoY decline.

  • Consolidated EBITDA margin stood at 8.66%, a slight expansion from 8.52% YoY.

  • Order book remains robust at ₹71,957 crores as of September 30, 2025.

  • Management officially withdrew FY26 guidance citing unprecedented rains and elongated payment cycles.

  • Annual Capex guidance revised upward to ₹1,050 crores from ₹750 crores due to a large mining order.

  • Net debt increased by ₹263 crores during the quarter to reach ₹1,890 crores.

  • Jal Jeevan Mission (JJM) receivables remain high at approximately ₹1,700 crores.

  • New orders worth ₹6,223 crores booked in Q2, primarily in Buildings, Water, and Irrigation.

Concerns

  • Elongated Payment Cycles

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹4,585 Cr
    YoY -12%
  • Consolidated EBITDA Margin
    8.7%
  • Consolidated PAT Margin
    3.4%
  • Order Book
    ₹71,957 Cr
    QoQ +1.2%
  • Net Debt
    ₹1,890 Cr
    YoY +16% QoQ +26%

H1

  • Order Inflow
    ₹9,881 Cr

What they filed

Q1 FY27: revenue up 12.2%, net profit up 11.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue5,196 5,345 6,131 5,179 4,543 −13%4,868 −9%6,233 +2%5,812 +12%
EBITDA443 441 555 456 393 −11%436 −1%550 −1%545 +20%
Net profit175 206 265 205 167 −5%135 −34%217 −18%229 +12%
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

Share of Order Book Value
₹71,950 Cr Total
  • Buildings ₹22,492 Cr 31.3%
  • Transportation ₹17,361 Cr 24.1%
  • Electrical ₹15,013 Cr 20.9%
  • Water and Railway ₹7,553 Cr 10.5%
  • Irrigation ₹5,394 Cr 7.5%
  • Mining ₹4,137 Cr 5.7%

Guidance & targets

Revenue

  • Revenue Growth Guidance Revenue · FY26 · Low confidence Withdrawn

    Previously 10% → Withdrawn

    Due to the challenging external business environment and elongated payment cycles, we have decided to withdraw the guidance for the financial year '26 and will be able to share any update by March '26.

    — Neerad Sharma, Head Strategy and Investor Relations

Capex

  • Annual Capex Capex · FY26 · High confidence ₹1,050 crores

    Previously ₹750 crores → ₹1,050 crores

    Earlier -- in the earlier call, we said the INR750 crores is the capex, but the capex now revised to INR1,050 crores.

    — Sanjay Pusarla, CFO

Margin

  • EBITDA Margin Lower Band Margin · FY26 · Medium confidence 9%
    So depending on the turnover, depending on the situation that improvement that will happen in Q3, we may reach the lower guidance... It is 9%.

    — Sanjay Pusarla, CFO

Other

  • Incremental Smart Meter Investment Other · next 1 to 1.5 years · High confidence ₹280 crores
    Another INR280 crores we have to make... Our time period may be another 1 year to 1.5 years.

    — Sanjay Pusarla, CFO

  • Vizag Land Deal Recovery Other · H2 FY26 · Medium confidence ₹80-120 crores
    This year, we expect to receive as per the agreement about INR80 crores -- INR120 crores, sorry, INR120 crores.

    — Sanjay Pusarla, CFO

Risks & concerns

  • Elongated Payment Cycles

    high

    Specifically cited as a primary reason for withdrawing annual guidance; clients are not making stipulated payments on time.

    Management acknowledged

  • Rising Debt Levels

    medium

    Net debt increased by ₹263 crores in Q2 due to working capital pressure and slow receivables.

    Analyst acknowledged

  • Execution Delays due to Monsoon and ROW

    medium

    Unprecedented rains in AP, Karnataka, and Maharashtra, along with Right of Way (ROW) delays, hampered Q2 turnover.

    Management acknowledged

Areas of evasion (2)

  • Specific details on JJM client information (cited as confidential).
  • Refusal to provide even qualitative color on H2 performance expectations.

Q&A highlights

2 direct
Withdrawal of Guidance despite large Order Book Direct
There is unprecedented rains that happened in the Q2. In addition to that, there were elongated payment cycle. These are the 2 main reasons which has caused a drop in the turnover.

Explains the disconnect between a record order book and declining revenue, highlighting execution and cash flow bottlenecks.

Asked by Mohit Kumar, ICICI Securities

Jal Jeevan Mission (JJM) Receivables and Overdues Partial
There is no overdue as such because last time we said INR1,700 crores, even now also the same level. But we used to keep billing and we are getting money also. The money is getting churned and the outstandings will become latest.

Reveals that while payments are coming in, the net exposure to the Water segment remains high and stagnant, impacting working capital.

Asked by Parikshit Kandpal, HDFC Securities

Incremental Profit from Subsidiaries and Smart Meters Direct
So the profit is coming from subsidiaries like Pachhwara Coal Mining, Urban and also on the smart meters... the execution is happening at NCC level as an EPC contractor. And the profit is captured partly at the SPV level and also at the NCC level.

Clarifies the contribution of non-EPC segments and subsidiaries to the consolidated bottom line, which outperformed standalone results.

Asked by Ashish Shah, HDFC Mutual Fund

2 min read 5 chapters

Detailed narrative

Guidance Withdrawal and Macro Headwinds

NCC management took the significant step of withdrawing its FY26 revenue guidance, citing a 'challenging external business environment.' The primary drivers were unprecedented and extended monsoons in key states like Andhra Pradesh, Karnataka, and Maharashtra, which stalled work fronts. Additionally, elongated payment cycles from government clients have forced the company to prioritize working capital management over aggressive execution, leading to a 12% YoY decline in consolidated turnover to ₹4,585 crores.

Order Book Resilience vs. Execution Challenges

Despite revenue headwinds, the order book remains a point of strength at ₹71,957 crores, providing over 3.5x revenue visibility. The Building division remains the largest contributor at 31% (₹22,492 crores), followed by Transportation at 24%. However, management noted that approximately ₹28,000 crores of orders received late last fiscal year are only now entering the execution phase in Q3 and Q4 FY26 due to standard 5-6 month mobilization and clearance periods.

Working Capital and Debt Dynamics

Working capital intensity increased during the quarter, with net debt rising by ₹263 crores to reach ₹1,890 crores. Debtors outstanding decreased slightly to ₹3,277 crores, but working capital days increased from 77 to 78 days. The company is grappling with ₹1,700 crores in receivables from the Jal Jeevan Mission (JJM), which management claims are 'churning' but remain at the same absolute level as the previous quarter, indicating slow net recovery.

Strategic Mining Pivot and Capex Expansion

In a notable strategic shift, NCC raised its annual capex guidance from ₹750 crores to ₹1,050 crores. This 40% increase is primarily driven by a large new mining order worth approximately ₹6,800 crores received in October. This project requires significant upfront equipment investment but is expected to provide long-term revenue stability and potentially better margins than traditional EPC work.

Smart Metering and Subsidiary Performance

The company's consolidated performance was bolstered by its subsidiaries, which contributed an incremental ₹50 crores in profit compared to standalone results. Key contributors include the Pachhwara Coal Mining project and the nascent Smart Metering business. NCC has invested ₹300 crores in smart meters to date and plans an additional ₹280 crores over the next 12-18 months, with execution being captured both at the SPV and EPC levels.

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

More Construction earnings calls