NCC Limited Navigates Monsoon and Payment Headwinds in Q2 FY26

NCC Limited, a prominent infrastructure and construction company, reported a challenging second quarter and first half for the financial year 2026. The company's consolidated turnover for Q2 FY26 stood at INR4,585 crore, marking a 12% decline compared to the previous year. For the first half (H1 FY26), the cumulative turnover was INR9,793 crore, a 9% decrease from the same period last year. Consolidated Profit After Tax (PAT) for Q2 FY26 was INR155 crore, with an EBITDA margin of 8.66%. The management attributed this performance to unprecedented monsoon rains and elongated payment cycles, leading to the withdrawal of their FY26 guidance.

The company's operational performance in Q2 FY26 was significantly impacted by external factors. Extended and aggressive rainfall across key geographies affected site access, activity, and productivity, causing temporary execution slowdowns. Additionally, delays in obtaining necessary permissions and right-of-way for certain projects further hampered progress. The management also highlighted issues with elongated payment cycles from clients, particularly affecting water projects, which strained working capital. These factors collectively contributed to the revenue degrowth and the decision to revisit their financial projections for the year.

Financial Overview

Despite the headwinds, NCC Limited maintains a robust order book and is making strategic investments for future growth. The consolidated order book as of September 30, 2025, stands at an impressive INR71,957 crore, reflecting a 37% year-on-year increase. This strong order book provides significant revenue visibility for the coming periods. During Q2 FY26, the company secured new orders worth INR6,223 crore, primarily in the Buildings, Water, and Irrigation divisions, demonstrating continued success in securing new business.

Segmental Performance and Strategic Initiatives

The company's order book composition reflects a diversified portfolio. The Buildings division accounts for 31% of the total order book, followed by Transportation at 24%, Electrical (T&D) at 21%, Water & Railways at 10%, Irrigation at 7%, and Mining at 6%. This diversification helps mitigate risks associated with any single sector. The company's H1 FY26 revenue composition shows Construction contributing 85% (INR8,233 crore), Coal Mining 13% (INR1,311 crore), and Real Estate 2% (INR178 crore).

NCC is actively pursuing strategic initiatives to bolster its long-term prospects. The company has increased its capex outlook from INR750 crore to INR1,050 crore for the current financial year, primarily to support a large INR6,800 crore mining order received in October. This investment is crucial for enhancing operational capabilities in the mining segment. Additionally, NCC has invested INR230 crore in smart meter projects during H1 FY26, with a total investment of INR300 crore to date and plans for another INR280 crore over the next 1 to 1.5 years. This move positions NCC to capitalize on the growing smart city infrastructure market.

Outlook and Management Focus

Despite the current challenges, management remains optimistic about the second half of FY26. They anticipate a normal ramp-up in execution, with several large sites expected to gain traction. The receding monsoon and sustained government infrastructure spending, coupled with ongoing tender activity, are expected to provide a favorable environment. The company's focus for H2 will be on improving cash flows, accelerating project execution, and optimizing leverage. While the FY26 guidance has been withdrawn, management expects to provide an update by March 2026, once there is more clarity on the operational environment and payment cycles. NCC's commitment to disciplined execution and working capital prudence, rather than solely revenue growth, underscores a cautious yet strategic approach to navigating the current market dynamics.