Vascon Engineers Limited

Vascon Engineers reported a consolidated income of INR229 crores in Q2 FY26, marking a 14% year-on-year growth. For the first half of FY26, the consolidated income reached INR471 crores, an 18% increase compared to H1 FY25. Despite these positive figures, the company acknowledged that heavy and prolonged monsoons in Q2, following early rainfall in Q1, hampered on-ground operations and slowed execution across multiple sites. However, with weather conditions normalizing, site activity is picking up, and the company anticipates enhanced execution intensity in the coming two quarters.

The EPC business continues to be a key growth driver, with H1 FY26 EPC revenue growing 10% year-on-year to INR431 crores. The total order book as of September 30, 2025, stands at a strong INR2,800 crores, providing 2.8 times FY25 EPC revenue visibility for the next 2 to 3 years. This order book comprises INR2,411 crores from external EPC contracts and INR389 crores from internal real estate projects, with approximately 74% derived from government-backed projects, ensuring timely payments. The company secured new orders worth INR161 crores in Q2 and INR225 crores in April 2025, contributing to INR400 crores of new orders in FY26 so far.

A significant development is the strategic MOU signed with Adani Limited for a 5-year early engagement model. This collaboration involves design to execution for select projects totaling 13 million square feet in Mumbai. Management indicated that this partnership could contribute to about 30% of Vascon's annual turnover. While the projects are currently in the nascent design stage, they are expected to translate into construction and revenue within 6 to 8 months, strengthening Vascon's position in large-scale infrastructure and real estate.

In H1 FY26, the Real Estate segment achieved new sales bookings of 64,541 square feet, valued at INR74 crores, with collections of INR88 crores. The company has four active projects with a total saleable area of 0.78 million square feet, of which 0.65 million square feet is attributable to Vascon. While Real Estate EBITDA margins declined in H1 due to high marketing costs, management is confident of a meaningful and consistent contribution from this segment starting this year. Sustained revenue growth and profitability are expected from next year, with significant revenue of INR200-300 crores projected from the year after next.

Vascon Engineers targets 20% annual growth in EPC revenue and profit, aiming for INR1,200 crores in EPC revenue for FY26 and over INR1,400 crores for FY27. The company also aims to secure INR1,500 crores in new EPC orders for FY26. With INR400 crores secured so far, there's a shortfall of INR1,100 crores to meet this target in the remaining 5 months, necessitating aggressive bidding. Management acknowledged that this might lead to a slight drop of 0.5-0.75 basis points in margins for new projects in FY27, but the increased scale is expected to compensate for this.

The company maintains a strong working capital base with total sanctioned limits of INR645 crores, of which INR271 crores remain unutilized. An additional INR150 crores is currently under appraisal. This unutilized working capital, totaling INR421 crores, is sufficient to support up to INR3,000 crores of additional EPC orders, ensuring predictable growth and healthy cash flow visibility. Management emphasized financial discipline and execution excellence as core tenets of their growth framework.