Vascon Engineers Limited

Vascon Engineers reported a landmark FY25, achieving its highest ever revenue in both the fourth quarter and the full financial year. Consolidated total income for Q4 FY25 grew 64% YoY to INR392 crores, while full year FY25 total income increased 41% YoY to INR1,090 crores. The company's consolidated EBITDA for FY25 stood at INR100 crores, a 14% YoY growth, with a 9% EBITDA margin. Net profit for FY25 significantly increased to INR126 crores, up from INR61 crores in FY24, partly due to income from the sale of GMP.

The EPC segment was a key driver of performance, with Q4 FY25 revenue at INR344 crores (up 49% YoY) and full year FY25 revenue reaching INR1,013 crores (up 41% YoY). The company maintains a robust order book of INR2,825 crores, which is 2.8 times its FY25 EPC revenue. A significant portion, 78%, of external EPC projects are from government clients, providing stable cash flow. Additionally, two new EPC orders totaling INR311 crores were secured in April 2025, to be executed over the next three years.

While real estate profit appeared lower in FY25 due to Ind AS accounting, the company is optimistic about its trajectory. New sales bookings in FY25 amounted to 35,000 square feet, generating a sales value of INR23 crores and collections of INR58 crores. Management highlighted a strong pipeline of upcoming projects in Mumbai, Pune, and Coimbatore, with over INR1,500 crores of revenue expected to be recognized. They aim for real estate revenue to reach INR500-700 crores annually in the next 3-4 years, eventually targeting 60-70% of EPC revenue.

Vascon Engineers made significant progress in strengthening its balance sheet by reducing net debt from INR124 crores in June 2024 to just INR17 crores as of March 2025. This reduction was complemented by the divestment of non-core assets, including the entire stake in Ascent Hotels (consideration expected by Q1 FY26 for approximately INR45 crores), the subsidiary GMP (generating INR157 crores gross), and Aurangabad land (generating INR32 crores gross). These strategic moves allow the company to focus entirely on core operations.

The company is targeting aggressive growth, aiming for 20-25% organic YoY growth in its EPC segment, with a goal to double EPC turnover to INR2,000 crores in the next four years. For FY26, EPC revenue is targeted at INR1,200 crores with PBT margins pushing towards 9%. Real estate revenue is projected to exceed INR200 crores in FY26 with EBITDA margins of at least 15%. To support this growth, the company aims to secure INR1,200-1,300 crores in new order intake in FY26.

Management clarified that EPC working capital cycle is healthy at around 45 days, and they are disciplined in project-specific collections. For real estate projects, significant investments were made in FY25 (e.g., INR110-120 crores for Santacruz 2 and Powai), which impacted operating cash flow but are now largely mitigated by short-term loans and sales. While a QIP was considered earlier to fund real estate and attract institutional investors, it did not materialize due to market conditions. The company remains open to equity raises at an appropriate time^⏳ for faster growth.