Summary
Afcons Infrastructure Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 11, 2026 10:00 AM
Event Participants
Executives 4 Hitesh Singh (Head Corporate Strategy), Paramasivan Srinivasan (Managing Director), Ramesh Kumar Jha (Chief Financial Officer), Subramanian Krishnamurthy (Executive Chairman)
Analysts 6 Aditya (Investec), Ashish Shah (HDFC Mutual Fund), Balasubramanian (Arihant Capital), Bhavin Modi (Anand Rathi), Mudit Bhandari (IIFL Capital), Shravan Shah (Dolat Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Order Book | ₹32,635 crores | -2.6% QoQ; reflects lower-than-anticipated inflows and aggressive competition in domestic segments. |
| Total Income (9M) | ₹9,545 crores | -0.9% YoY; impacted by liquidity issues with govt clients and slower conversion of L1 projects. |
| Total Income (Q3) | ₹3,025 crores | -9% YoY; execution slowed by scope changes and delays in high-output projects. |
| EBITDA (9M) | ₹1,269 crores | +1.8% YoY; excludes one-time labor code impact. |
| EBITDA Margin (Q3) | 14.0% | +50 bps YoY; improved due to operational efficiencies and design optimizations. |
| PAT (9M) | ₹339 crores | -9.8% YoY; includes ₹76.51 crore provision for the New Labor Code. |
| Gross Debt | ₹3,634 crores | Similar range to Q2; net debt-to-equity remains stable at 0.5x. |
| Net Working Capital | Elevated levels | Management cited “stressed payments” and blocked working capital due to slow govt certifications. |
| Capex (9M) | ~₹200 crores | Significantly below ₹1,100cr annual target due to pending TBM imports from China. |
Geographic & Segment Commentary
- Domestic Market: Performance impacted by liquidity issues with government clients and slow certification. Management noted aggressive competition in NHAI (bids at -40%) and metros, leading to a highly selective bidding approach.
- International Market: Healthy pipeline remains; recently secured a road project worth >€100 million in Uganda. Conversion of ₹11,300 crore L1 pipeline (primarily Croatia rail and road) is a key trigger for Q4.
- Urban Infrastructure: Represents 35% of the ₹3.8 trillion bid pipeline. Focus remains on complex bridges and metros, though some high-output projects progressed slower than expected this quarter.
- Marine & Industrial: Ranked 8th globally in Marine facilities; secured two strategic domestic marine contracts worth ₹1,400 crores during Q3.
Company-Specific & Strategic Commentary
- New Labor Code Provisioning: The company took a one-time exceptional hit of ₹76.51 crores in Q3, impacting PAT margins by approximately 80 basis points for the 9-month period.
- Operational Innovation: Awarded “Most Innovative Company” by CII for the 8th consecutive year; completed a 5.5km TBM drive for CIDCO one month ahead of schedule.
- Asset Monetization/Arbitration: Recognized ₹165 crores revenue from Chenab Bridge arbitration; management expects 23-24% EBITDA flow-through from this award.
- Strategic Selectivity: Decided to avoid low-margin NHAI bids; focus is shifting toward high-value, pre-qualified projects to protect 11%+ EBITDA margins.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Order Inflow | ₹20,000 crores for FY26 | Requires ₹16,300 crores in Q4; contingent on Croatia rail (~₹6,700cr) and other L1 conversions. |
| Revenue Growth | 5% for FY26 | Revised downward from 10%; implies a ~20% growth requirement in Q4 (approx. ₹3,800cr revenue). |
| EBITDA Margin | 11%+ (Sustainable) | Management expects to exceed the historical 11% floor due to design savings and cost efficiencies. |
| Capex | ₹400cr - ₹1,100cr for FY26 | Range depends on whether ₹700cr TBM for High-Speed Rail is cleared for import from China. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical/Import | ₹700 crore TBM equipment for the High-Speed Rail project is stuck awaiting clearance from China; threatens project timelines. |
| Regulatory/L1 Conversion | ₹11,300 crore L1 pipeline faces delays; Maharashtra projects (Pune Ring Road) may go for rebid, removing them from immediate backlog visibility. |
| Counterparty Risk | Jal Jeevan Mission (UP) has ₹405 crore in outstanding dues; management has slowed execution and pruned establishment in response to poor cash flows. |
| Legal/International | Encashment of a ₹191 crore bond in Gabon due to employer abuse; matter is in ICC arbitration, currently sitting as increased debt. |
Q&A Highlights
Project Delays & L1 Status
- Question: What is the status of the stuck L1 projects, specifically Croatia and Maharashtra? (Aditya, Investec)
- Answer: Croatia rail (₹6,700cr) is at the PM-nod stage; road jobs may spill to next quarter. Maharashtra packages (Pune Ring Road) are likely going for rebid due to land acquisition delays and price discovery needs (P. Srinivasan).
Jal Jeevan Mission (JJM)
- Question: What is the ground reality for JJM projects in UP? (Mohit Kumar, ICICI Securities)
- Answer: Total JJM backlog is ₹1,300cr, with ₹530cr in UP. Payments are slow (only ₹15cr received in Jan); management remains cautious and has slowed work in UP while MP/Rajasthan projects remain on track (R. Jha/P. Srinivasan).
Arbitration & One-offs
- Question: What was the impact of the Chenab Bridge arbitration on margins? (Ashish Shah, HDFC MF)
- Answer: ₹165cr was recognized in revenue; the EBITDA impact is roughly 23-24% of that amount. Another ₹115cr claim for the same project is still in arbitration (R. Jha).
Working Capital & Debt
- Question: Why has the interest cost increased despite lower rates? (Balasubramanian, Arihant Capital)
- Answer: Average borrowing is higher due to blocked working capital. Also, interest-bearing customer advances rose from 20% to 40% of the total, increasing interest on advances (R. Jha).
Key Takeaway
Afcons Infrastructure reported a subdued Q3 FY26 with a 9% YoY revenue decline and a significant PAT hit due to a ₹76.51 crore one-time Labor Code provision. While top-line growth was hampered by a combination of “stressed payments” from government clients, delayed L1 conversions, and geopolitical hurdles stalling TBM imports for High-Speed Rail, operational margins remained resilient at 14%. Strategically, the firm is pivoting away from aggressive domestic road bidding toward complex international rail and domestic marine projects, evidenced by the ₹11,300 crore L1 pipeline. Management has moderated FY26 revenue growth guidance to 5% while maintaining a target of ₹20,000 crore in order inflows, heavily reliant on a Q4 recovery. The primary watch points remain the resolution of the ₹405 crore UP JJM dues and the successful import clearance of critical tunneling equipment to resume high-speed rail momentum.
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