Afcons Infrastructure Navigates Headwinds with Strategic Focus in Q2 & H1 FY26

Afcons Infrastructure Limited, a flagship infrastructure engineering and construction company of the Shapoorji Pallonji Group, recently announced its financial results for the second quarter and first half of Fiscal Year 2026. The period saw the company navigating a dynamic and evolving global infrastructure landscape, marked by both strategic advancements and operational challenges. While the first half demonstrated modest growth and improved profitability, the second quarter faced near-term pressures, leading to a revised revenue growth guidance for the full fiscal year.

For the first half of FY26, Afcons reported a consolidated total income of INR 6,520 crore, reflecting a 3.4% year-on-year growth. The company's EBITDA rose by 6% to INR 846 crore, with a healthy EBITDA margin of 13%, indicating an improvement of 30 basis points. Profit After Tax (PAT) for H1 stood at INR 242 crore, a 7% increase over the previous year. However, the second quarter (Q2 FY26) presented a more subdued picture. Total income for Q2 was INR 3,101 crore, marginally higher than INR 3,090 crore in Q2 FY25. EBITDA for the quarter was INR 401 crore, compared to INR 427 crore in the same period last year, with an EBITDA margin of 12.9%. The PAT for Q2 FY26 was INR 105 crore, a decrease from INR 135 crore in Q2 FY25, resulting in a margin of 3.4%. This performance reflects the impact of project mix and execution challenges during the quarter.

Below is a financial summary table presenting the core data:

Navigating Operational Headwinds and Strategic Adjustments

The management acknowledged that the first half of FY26 presented its share of challenges. Execution of some projects was temporarily impacted by prolonged monsoon and natural calamities. Persistent liquidity issues with certain clients also added to these headwinds. Notably, the Jal Jeevan Mission project saw work stopped due to non-forthcoming payments, resulting in INR 450 crore of receivables. This situation led to an increase in working capital requirements and a rise in overall finance costs, despite efforts to optimize bank borrowing costs. The company also reported a sizable provisioning of approximately INR 100 crore in one project during Q2 FY26, impacting quarterly profitability.

Consequently, Afcons revised its revenue growth guidance for FY26 downwards, now estimating a moderate growth of 10% plus, compared to the earlier projection of 20% plus. This adjustment reflects delays in the conversion of L1 orders and the operational challenges faced. However, the management expressed confidence that the full-year EBITDA margin would be better than the general annual guidance of 11%, given the 13% achieved in H1. For FY27, the company aims to maintain a 15% top line growth and an 11% EBITDA margin on a sustainable basis.

Robust Order Book and Strategic Expansion

Despite the near-term pressures, Afcons maintains a strong order book and pipeline, which underpins its future growth prospects. The order inflow during the first half stood at INR 1,268 crore, and the pending order book remained robust at INR 32,681 crore as of September 2025. The company expects several L1 orders to fructify in the current quarter, contributing to its full order book guidance of INR 20,000 crore for FY26. The project pipeline is substantial, estimated at INR 3.6 trillion, with significant opportunities in urban infrastructure, hydro and underground, roads, and marine and industrial segments.

Afcons is also strategically expanding its international footprint. The company expects to receive a Letter of Award for the Croatia Railway project before the end of Q3 FY26, with Letters of Award for road projects to follow. These international projects are anticipated to increase the share of overseas projects to close to 30% of the pending order book. The company is actively pursuing opportunities in the Middle East and Africa, leveraging renewed engagement in these regions. Domestically, Afcons is adapting to the government's evolving infrastructure strategy, which increasingly features Hybrid Annuity Model (HAM), Annuity, and Build-Operate-Transfer (BOT) models, positioning itself as a preferred EPC player.

Strengthening Governance and Operational Excellence

Afcons continues to deliver on complex engineering challenges, achieving significant milestones such as the final breakthrough of the NATM tunnel for the Mumbai-Ahmedabad High-Speed Rail C2 Package and extensive TBM tunnelling in Kanpur and Delhi MRTS projects. The Pakal Dul hydroelectric power project was recognized as the best-rated construction project by NHPC for FY25, highlighting the company's commitment to quality and execution excellence.

In a significant development on the governance front, Mr. Pallon Mistry and Mr. Firoz Mistry, representing the next generation of the Shapoorji Pallonji Group, have joined the Board of Afcons Infrastructure. This move reinforces the promoter group's long-term commitment and ensures continuity in vision. Additionally, Mr. Santosh Nayar has been welcomed as an independent director, bringing over four decades of experience in project finance, banking, and insurance to provide invaluable strategic insight. These appointments are expected to strengthen governance and support Afcons' long-term growth initiatives.

Afcons is committed to operational excellence, stakeholder value creation, and sustainable growth. The company's diversified portfolio, strong execution capabilities, and prudent risk management framework position it well to navigate current challenges and capitalize on emerging opportunities in both India and overseas markets. With a focus on delivering complex, high-impact projects, Afcons continues to contribute meaningfully to national development and global infrastructure transformation, aiming for sustained growth and profitability in the coming years.