Vascon Engineers: Building Momentum Amidst Monsoon Challenges in H1 FY26

Vascon Engineers Limited, a prominent player in India's engineering, procurement, and construction (EPC) and real estate sectors, has reported a resilient performance for the second quarter and half-year ended September 30, 2025. Despite facing the headwinds of heavy and prolonged monsoons that impacted on-ground operations, the company demonstrated sustained execution and strategic progress, setting a confident tone for the remainder of the fiscal year.

The company's consolidated total income for H1 FY26 stood at INR 471 crores, marking an 18% year-on-year growth compared to INR 400 crores in H1 FY25. For Q2 FY26, the consolidated income was INR 229 crores, a 14% increase over INR 202 crores in Q2 FY25. This growth was primarily driven by strong execution in the EPC segment. EBITDA for the half-year, excluding profit from the sale of Ascent Hotels, reached INR 36 crores, up from INR 34 crores in H1 FY25. Profit after tax for continued operations for H1 FY26 was INR 34 crores, a significant jump from INR 17 crores in H1 FY25, reflecting improved cost efficiency.

Segmental Performance: EPC Drives Growth, Real Estate Shows Promise

The EPC business continues to be the primary growth engine for Vascon Engineers. In Q2 FY26, the EPC segment contributed INR 497.72 crores to the total revenue, representing approximately 96.27% of the segmental revenue. The company's strong execution capabilities are backed by a track record of successfully completing over 225 projects covering more than 45 million square feet across India. A notable highlight is that around 74% of the total order book comprises government-backed projects, which ensures timely payments and robust cash flows.

Vascon's order book stands at a healthy INR 2,800 crores as of September 30, 2025, which is 2.8 times its FY25 EPC revenue, providing strong revenue visibility for the next 2 to 3 years. This includes INR 2,411 crores from external EPC contracts and INR 389 crores from internal real estate projects. In H1 FY26, the company secured new orders worth INR 386 crores from Royal Rides Private Limited and Saudamini Building MSEBHCL, further strengthening its high-value redevelopment portfolio.

The Real Estate segment, while contributing a smaller portion of the current revenue (INR 19.27 crores or 3.73% in Q2 FY26), is making steady progress. In H1 FY26, the company achieved new sales bookings of 64,541 square feet with a total booking value of INR 74 crores and collections of INR 88 crores. Revenue recognized from real estate projects like Tulip Phase 3 and GoodLife amounted to INR 116 crores. The company has four projects under active development with a total saleable area of 0.78 million square feet, of which 0.65 million square feet is attributable to Vascon.

Here's a financial summary of Vascon Engineers Limited for H1 FY26:

Strategic Initiatives and Future Outlook

Vascon Engineers has outlined clear strategic goals to sustain its growth trajectory. The company is targeting 20% annual growth in EPC revenue and profit, driven by enhanced execution efficiency and an expanded project pipeline. A key objective is to secure INR 1,500–2,000 crores of new EPC orders in FY26. The management is confident in achieving INR 1,200 crores in EPC revenue for FY26 and aims to cross INR 1,400 crores in FY27.

A significant development is the strategic Memorandum of Understanding (MOU) signed with Adani Limited. This 5-year engagement involves Vascon in the design and execution of select projects totaling approximately 13 million square feet in Mumbai. This partnership is expected to significantly enhance Vascon's business pipeline and strengthen its presence in large-scale infrastructure and real estate projects. While these projects are 6-8 months away from construction, the early engagement model highlights Vascon's integrated capabilities.

In the real estate segment, the company is focused on optimizing debt for cost efficiency and improving liquidity. It is also accelerating the completion of ongoing projects to boost revenue conversion and profitability, while preparing for new project launches. The near-term real estate pipeline is strong, including JV residential and commercial projects with a sales potential of INR 1,110 crores attributable to Vascon. The company expects a meaningful and consistent contribution from the Real Estate segment from the current year onwards, with sustained revenue of over INR 200-300 crores anticipated from the year after next.

Navigating Challenges with Financial Discipline

Despite the positive outlook, the company acknowledges certain challenges. Real estate EBITDA margins were impacted by higher marketing costs in H1. Sales for the Santacruz project have been slower than expected, although management is strategically holding prices. The company has also adjusted its margin expectations for new EPC orders downwards by a couple of basis points due to competitive bidding, indicating a more aggressive approach to secure projects. Furthermore, a key land acquisition in Thane is pending government approvals, which could affect project timelines.

However, Vascon's strong financial discipline and robust working capital position provide a solid foundation. The company has total sanctioned working capital limits of INR 645 crores, with INR 271 crores remaining unutilized and an additional INR 150 crores under appraisal. This unutilized capital can support up to INR 3,000 crores of additional EPC orders, ensuring predictable growth and healthy cash flow visibility. The management's transparent acknowledgment of challenges and proactive measures, such as adjusting bidding strategies and focusing on cost-efficient debt realignment, underscore its commitment to sustained progress.

Vascon Engineers is poised for continued growth, driven by its strong EPC order book, strategic partnerships, and a disciplined approach to project execution and financial management. The company's focus on leveraging its in-house capabilities and expanding its project pipeline positions it well to capitalize on opportunities in India's burgeoning infrastructure and real estate sectors.