Vascon Engineers Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Vascon Engineers reported a challenging Q3 FY26 with consolidated total income declining 14.77% YoY to ₹254 crores and PAT falling 88.16% to ₹9 crores, primarily due to project delays in EPC and lack of real estate project completions. Despite these short-term headwinds, the company maintains a robust order book of ₹2,825 crores, improved working capital terms, and a strong real estate pipeline, positioning it for future growth as execution momentum is expected to normalize.

Highlights

  • Strong order book of ₹2,825 crores providing 2.8x FY25 EPC revenue visibility for the next 2-3 years.

  • Improved working capital terms from SBI, reducing collateral coverage from 35% to 27% and bank guarantee margins from 25% to 15%.

  • CRISIL reaffirmed A-minus long-term credit rating, reflecting balance sheet strength and liquidity.

  • Healthy real estate pipeline of 1.94 million sq ft with an expected gross sales value of ₹2,360 crores.

  • Liquidity headroom with ₹370 crores unutilized working capital limit and an additional ₹60 crores under appraisal.

Concerns

  • Consolidated total income declined by approximately 14.77% YoY to ₹254 crores in Q3 FY26.

  • PAT declined by 88.16% YoY to ₹9 crores in Q3 FY26 (though Q3 FY25 included an exceptional gain of ₹75 crores).

  • EPC revenues were lower in Q3 FY26 due to Bihar elections and project approval delays, leading to a 9% YoY moderation.

  • No real estate revenue recognized in Q3 FY26 due to no project completions during the quarter.

  • FY26 EPC revenue target of ₹1,200 crores will not be met, with management expecting to be at similar levels to last year or slightly better.

  • Slower sales velocity in the Orchids redevelopment project, with only 13% sold after two quarters.

Key financials

3 periods

Headline

  • Total Income
    ₹254 Cr
    YoY -14.8%
  • EBITDA
    ₹17 Cr
    YoY -29.2%
  • EPC EBITDA Margin
    10%
  • PAT
    ₹9 Cr
    YoY -88.2%

9M

  • Total Income
    ₹725 Cr
    YoY +3.9%
  • EPC EBITDA Margin
    9%
  • PAT
    ₹43 Cr
    YoY -53.8%

9M, ex-Ascent

  • EBITDA
    ₹53 Cr
    YoY -8.6%

What they filed

Q1 FY27: revenue down 31.3%, net profit down 91.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue200 295 387 221 226 +13%249 −15%253 −35%152 −31%
EBITDA14 20 37 13 16 +9%13 −34%11 −72%5 −61%
Net profit10 76 35 22 11 +11%9 −88%6 −84%2 −91%
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

SegmentRevenueRevenue (9M)
EPC₹248 Cr₹676 Cr
Real Estate₹0 Cr₹49 Cr

Order book

high confidence

Total value

₹2,825 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹220 Cr

Execution

providing strong visibility for the next two to three years.

Composition

Mix 2 segments
  • External EPC contracts ₹2,470 Cr 87.4%
  • internal real estate projects ₹355 Cr 12.6%

Share of order book by segment, derived from disclosed amounts

Pipeline

other

Near-term real estate pipeline including joint venture residential project in Powai, Prakash Housing Society redevelopment, Tower of Future (commercial), and Ajanta real estate development. Total developmental potential of approximately 1.94 million square feet, with an expected gross sales value of Rs. 2,360 crores (Vascon's share: 0.82 million sq ft and Rs. 1,110 crores).

Cancellations & deferrals

  • deferred: EPC revenues were lower due to Bihar state elections and delays in receiving approvals for a couple of projects, temporarily slowing execution.
  • deferred: One top project, contributing Rs. 30 crores revenue per month, slowed down since September due to delayed payments from Bihar elections, resulting in a direct loss of about Rs. 100 crores of revenue.
  • deferred: Capgemini project slowed down due to internal processes and re-evaluation of CapEx, impacting Rs. 30-50 crores of revenue for the year.
  • deferred: Sindhudurg hospital project (third project) faced delays due to government and client-side decisions and bill approval process getting stuck.
While revenue during the quarter was impacted by the standing related factors, our execution environment is improving with a strong EPC order book, a healthy project pipeline and a strengthened balance sheet.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed Cost 13%
    • Rate reset Converting higher cost debt to lower cost to optimize interest rates.
    • New borrowing Increased real estate debt due to dropping the QIP program (which had ₹100 crores earmarked for real estate) and funding FSI purchases and approval costs for new projects (Powai, Baner, Prakash). ₹100 Cr
    See the real estate side business, the debt level is once again in the range of Rs. 150 crores to Rs. 160 crores kind of things, and which is very inevitable. It is likely to happen if you compare the debt level of 2024 was Rs. 80-odd crores. So, at that point of time everybody is aware that we are supposed to raise almost Rs. 100 crores through QIP, Rs. 125 crores from QIP, out of which Rs. 100 crores earmarked for the real estate. But due to certain market conditions, all these things, we do not want to dilute our equity drastically, we dropped the QIP program. But obviously, the project cannot be stopped. The fund mitigation has to be done through other sources. So, that's why the debt has been increased.
  • Liquidity Undrawn ₹370 Cr Total working capital sanction limit of ₹745 crores (fund-based and non-fund-based), with ₹370 crores unutilized and an additional ₹60 crores under appraisal. Improved SBI terms include reduced collateral coverage from 35% to 27% and bank guarantee margins for BGs > 3 years reduced from 25% to 15%. CRISIL reaffirmed A-minus long-term credit rating.
    Our available working capital can support execution of up to approximately Rs. 3,000 crores of incremental EPC orders... Of this, approximately Rs. 370 crores remains unutilized with an additional Rs. 60 crores currently under appraisal. This liquidity position provides us adequate headroom to execute our projects without disruption. With strengthened banking support and higher sanction limits, we are well positioned for rapid resource mobilization across projects. Our available working capital can support execution of up to approximately Rs. 3,000 crores of incremental EPC orders... During the current quarter, we also received a revised working capital assessment from SBI with improved commercial terms. This included better collateral leverage with collateral coverage reduced from 35% to 27%... Additionally, bank guarantee margins for BGs exceeding three years have been reduced to 15% from 25%. Further, CRISIL has reaffirmed our long-term credit rating at A-minus for the current year, reflecting the strength of our balance sheet, our liquidity position and our banking relationships.

Guidance & targets

Revenue

  • EPC Revenue Revenue · FY26 · Medium confidence similar levels as last year or slightly better

    Previously Rs. 1,200 crores → similar levels as last year or slightly better

    So, we will probably end up hopefully, at same levels as last year or slightly better is what our current target is.

    — Santosh Sundararajan

  • EPC Revenue Revenue · FY27 · High confidence Rs. 1,350 crores, Rs. 1,400 crores

    Previously Rs. 1,400 crores-plus → Rs. 1,350 crores, Rs. 1,400 crores

    But next year, we hope to then catch that back and put the growth trajectory back to the Rs. 1,350 crores, Rs. 1,400 crores target that we would take.

    — Santosh Sundararajan

Order Book

  • Cumulative Order Book Order Book · April 2027 · High confidence Rs. 3,000-plus crores
    Rs. 3,000-plus crores by April 2027, we shall take it head on.

    — Santosh Sundararajan

Market Share

  • Private Sector Client Share Market Share · Medium confidence 40% private, 60% government

    From only about 20% on the private sector today

    At this point of time, we are only about 20% on the private sector. We would like it to be about 60:40 at least, 40% private, 60% government.

    — Santosh Sundararajan

What to watch in Q4 FY26

EPC Order Inflows

By April 2027
Current ₹646 crores YTD FY26
Target Progress towards ₹3,000+ crores cumulative order book by April 2027

Why it matters

Crucial for achieving long-term revenue visibility and growth targets, especially after missing the FY26 order target.

Rs. 3,000-plus crores by April 2027, we shall take it head on.

Risks & concerns

  • EPC project delays due to external factors (elections, approvals)

    high

    EPC revenues were lower primarily due to the impact of election in Bihar state and delays in receiving approvals in a couple of projects, which has temporarily slowed execution.

    Management acknowledged

  • Highly competitive EPC bidding environment

    high

    The market is very competitive, with tenders in UP going at -30% to -25%, making it difficult to bid above -10%.

    Management acknowledged

  • Delayed receivables from a large project in Bihar

    high

    Payments for a large project in Bihar (₹30+ crores/month work) are stuck due to elections, leading to work slowdown and affecting revenue.

    Management acknowledged

  • Real estate revenue recognition policy impacting reported revenue

    medium

    Revenue during the quarter was impacted by revenue recognition policy under which revenue is recognized only upon completion of projects. As no real estate projects were completed during this quarter, no revenue has been recognized.

    Management acknowledged

  • Slower sales velocity in new redevelopment projects (Orchids)

    medium

    Orchids project has sold only 13% after two quarters, but management is not unduly worried due to its small size and increased inquiries.

    Analyst acknowledged but manageable

Q&A highlights

5 direct
Slow sales velocity in Orchids redevelopment project in Mumbai Direct
Yes, primarily your observation is correct, because this is our first redevelopment project in Bombay... now since the movement is G+1, G+2, good amount of inquiry is happening. The velocity of inquiry has increased substantially, and we are expected a good conversion on or before Gudi Padwa. ... Since it's a small project and our inventory is small, we are not unduly worried about the slower velocity.

Highlights challenges in a new market segment (Mumbai redevelopment) and management's strategy to manage expectations and pricing despite slow initial sales, while noting an uptick in inquiries.

Asked by Himanshu Upadhyay

Increase in real estate debt and unsold inventory concerns from credit rating rationale Direct
See the real estate side business, the debt level is once again in the range of Rs. 150 crores to Rs. 160 crores kind of things... we dropped the QIP program. But obviously, the project cannot be stopped. The fund mitigation has to be done through other sources. So, that's why the debt has been increased. ... And also, a good chunk of this is not towards the two, three projects that are giving us sales and revenue at this point of time. We have Powai, we have Baner and we have Prakash, all of which needed purchase of certain FSIs and approval costs to launch these projects.

Explains the reasons for increased real estate debt (dropped QIP, FSI/approval costs for new projects) and clarifies that unsold inventory is partly due to revenue recognition policy and strategic holding for rental demand/collateral.

Asked by Himanshu Upadhyay

Unrecognized revenue from completed/near-completed projects (Vedanta) and slowdown in order inflows Direct
Vedanta, there is still some work has to be done, almost Rs. 30-odd crores work has to be completed... That hospital project is almost complete, is the ending work process and final bill certification is there. ... I mean, it's certainly become a very competitive market in the space that we have been operating in UP, Bihar and Maharashtra, a lot of tenders were put on hold because of the municipal elections over here.

Addresses specific project delays and the impact of political events on execution and revenue recognition, while also highlighting the intense competition in the EPC market, especially in states like UP and Bihar.

Asked by Siddhesh

Progress on Adani tie-up and potential revenue contribution Partial
The Adani tie-up is not a typical contract award... they want a partnership for us to work on the medium- to long-term together... I do not see any revenue translating out of this in the next two quarters for us.

Clarifies the nature of the Adani engagement as a long-term partnership rather than immediate contract awards, indicating no revenue contribution in the near term, despite ongoing discussions and site visits.

Asked by Mihir Vyas

Delays in Royal Rides, Goa project Direct
Yes, it has not started at all at site and we do not see it starting for the next quarter as well, in fact, almost six months because our part of the contract is dependent on certain approvals that our client has to obtain from the government. It's a ropeway project.

Reveals significant delays in a previously announced EPC project due to client-side approvals, indicating no revenue contribution from this project for at least the next six months.

Asked by Himanshu Upadhyay

Progress on the initial 13 million sq ft Adani projects in Mumbai Partial
Now initially, at the MOU stage, they had to put in some number, and they did talk about what you did mention about three projects and so many million square feet or this. But before these are massive projects... Each of them is at a different stage of approval, some of them very nascent.

Indicates that the large-scale Adani projects initially discussed are still in early stages of approval and planning, with current engagement focused on smaller projects, suggesting a longer gestation period for the major projects.

Asked by Himanshu Upadhyay

Revised FY26 EPC revenue and margin targets Direct
Yes, you are right. It does look like we will not achieve what we projected up to last quarter in terms of Rs. 1,200-plus crores. It was a target... So, we will probably end up hopefully, at same levels as last year or slightly better is what our current target is.

Management explicitly revises down the FY26 EPC revenue target due to project delays, acknowledging a miss on prior guidance and setting a more conservative outlook for the current fiscal year.

Asked by Kanishk Shah

3 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Vascon Engineers reported a consolidated total income of ₹254 crores in Q3 FY26, marking a 14.77% year-on-year decline from ₹298 crores in Q3 FY25. EBITDA for the quarter stood at ₹17 crores, down from ₹24 crores in the prior year. Profit after tax significantly decreased by 88.16% to ₹9 crores, though the previous year's figure included an exceptional gain of ₹75 crores from the sale of GMP. For the nine months ended December 31, 2025, consolidated total income grew by 3.87% to ₹725 crores, while PAT declined by 53.76% to ₹43 crores, also impacted by prior year's exceptional gains.

EPC Segment Performance and Order Book

The EPC segment's revenue for Q3 FY26 was ₹248 crores, a moderation of approximately 9% year-on-year, primarily attributed to election-related delays in Bihar and project approval delays. Despite these short-term headwinds, the total order book as of December 31, 2025, stands strong at ₹2,825 crores, providing 2.8 times visibility over FY25 EPC revenue for the next two to three years. New EPC orders worth ₹646 crores were secured year-to-date, including a ₹220 crore order from Navi Mumbai Municipal Corporation in Q3 FY26. Approximately 77% of the order book is from government-backed projects.

Real Estate Segment and Future Pipeline

No real estate revenue was recognized in Q3 FY26 as no projects were completed, contrasting with Q3 FY25 which included revenue from the GoodLife project. For the nine months ended December 31, 2025, new sales bookings totaled 77,315 square feet with a value of ₹86 crores, and collections were ₹105 crores. The company has a robust near-term pipeline of 1.94 million square feet, with an expected gross sales value of ₹2,360 crores, including projects like Powai, Prakash Housing Society redevelopment (construction expected Q1 FY27), and Tower of Future.

Capital Structure and Liquidity

The company's real estate debt increased to ₹150-160 crores from ₹88 crores in FY24, mainly due to the cancellation of a QIP program (₹100 crores earmarked for real estate) and the need to fund FSI purchases and approval costs for new projects. Vascon has a strong working capital position with a total sanction limit of ₹745 crores, of which ₹370 crores remains unutilized and an additional ₹60 crores is under appraisal. Improved terms from SBI, including reduced collateral coverage from 35% to 27% and lower bank guarantee margins (from 25% to 15%), enhance liquidity. CRISIL reaffirmed an A-minus long-term credit rating.

Challenges and Revised Guidance

Management acknowledged that the FY26 EPC revenue target of ₹1,200 crores will not be met due to project delays in Bihar, Chennai (Capgemini), and Sindhudurg, which collectively impacted revenue by over ₹100 crores. The market for EPC tenders remains highly competitive, with some bids going as low as -30% to -25%. The company now expects FY26 EPC revenue to be at similar levels to last year or slightly better, but aims to achieve ₹1,350-1,400 crores in FY27. The Orchids redevelopment project in Mumbai is experiencing slower sales velocity, with only 13% sold after two quarters.

Strategic Focus and Outlook

Vascon is focusing on improving EPC execution efficiency, expanding its project pipeline, and actively pursuing new order inflows to strengthen its order book, targeting ₹3,000+ crores by April 2027. In real estate, the focus is on optimizing debt, timely completion of ongoing projects, and preparing for upcoming launches. The company aims to increase its private sector client exposure from the current 20% to 40% of its order book, leveraging its integrated design and execution capabilities. The Adani tie-up is viewed as a long-term partnership, with no revenue expected in the next two quarters.

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