Vascon Engineers Q1 FY27 earnings call

Vascon Engineers reported a challenging Q1 FY27, with consolidated revenue from operations declining to INR 152 crores from INR 221 crores in Q1 FY26. Consolidated EBITDA also saw a significant drop to INR 10 crores from INR 34 crores in the prior year, with PAT reducing to INR 2 crores from INR 22 crores. This moderation was primarily attributed to lower EPC execution volumes and temporary cash flow constraints in two major government projects, which management expects to resolve from August 2026.

Despite execution challenges, the EPC segment maintained a healthy EBITDA margin of ~9% in Q1 FY27, up from 8% in Q1 FY26, on revenue of INR 148 crores. The total EPC order book stood strong at approximately INR 2,850 crores as of June 30, 2026, representing 3x FY26 EPC revenue. The company secured new orders worth INR 295 crores from CPWD and an LOI for INR 126 crores from M.P.W.D., and is targeting INR 1,500-2,000 crores in new EPC order intake for FY27.

The real estate business demonstrated strong booking momentum, achieving INR 66 crores in Q1 FY27 alone, significantly surpassing half of FY26's total booking value of INR 113 crores. New sales bookings amounted to ~30,690 sq ft, with collections of INR 20 crores. The near-term pipeline includes projects like Tower of Future and Ajanta redevelopment, representing ~1.74 million sq ft of salable area with an estimated sales value of ~INR 2,000 crores, of which Vascon's share is ~INR 1,000 crores. The company aims for an annual booking value of INR 1,200-1,500 crores by FY31.

The company's net debt stood at ~INR 152 crores as of June 30, 2026. Total sanctioned banking limits were approximately INR 760 crores, with INR 355 crores remaining unutilized, providing ample financial flexibility. Management noted that the INR 80 crores raised through a preferential issue (warrants) would be deployed primarily for real estate and EPC working capital over an 18-month horizon, with 25% already infused.

Q1 FY27 execution was hampered by temporary cash flow constraints in the Bihar Supaul and Sindhudurg EPC projects, which are now resolved with fund flows expected from August 2026. The working capital cycle also extended from 45 to 65-70 days. Management expects financial performance to improve progressively from Q3 onwards, driven by accelerated project execution and revenue recognition from key real estate projects like Coimbatore, TOA, and Orchid Santacruz in Q3/Q4. The company reiterated its full-year topline target of INR 1,200 crores.

Vascon is focusing on strengthening its real estate capabilities across business development, sales & marketing, and quality & customer experience. The company's strategy involves building a de-risked project pipeline, accelerating project launches, and ensuring timely execution with a strong emphasis on construction quality. Management also highlighted the mutual decision to not proceed with a Reliance order due to significant design changes, and ongoing delays in the Adani project and land acquisitions.