PNC Infratech Navigates Headwinds, Eyes Diversified Growth in Q2 FY26

PNC Infratech Limited, a prominent player in India's infrastructure development sector, has reported its financial results for the second quarter and first half of the fiscal year 2026. While the company faced certain operational headwinds, leading to a revision in its full-year revenue guidance, it continues to demonstrate strategic agility through significant asset monetization and diversification into new growth segments like renewable energy and coal mining. The management's transparent communication regarding challenges and proactive measures to address them underscores a disciplined approach to navigating the dynamic infrastructure landscape.

For Q2 FY26, PNC Infratech recorded a consolidated revenue of Rs. 1,128 crore, with an EBITDA of Rs. 253 crore, yielding a margin of 22.4%. Profit After Tax (PAT) stood at Rs. 216 crore, translating to a PAT margin of 19.1%. Looking at the first half of FY26, the consolidated revenue reached Rs. 2,550 crore, with an EBITDA of Rs. 620 crore and a PAT of Rs. 647 crore. These figures reflect a period of adjustment, particularly when compared to previous periods, influenced by external factors impacting project execution timelines.

Operational Performance and Strategic Shifts

The company's operational performance in Q2 FY26 was notably impacted by delays in securing appointed dates for several Hybrid Annuity Model (HAM) projects. Four HAM projects, awarded in 2023, experienced delays exceeding two years, significantly affecting revenue recognition. Additionally, a subdued awarding environment from the National Highways Authority of India (NHAI) over the past 2.5 years, coupled with a prolonged monsoon season, further constrained construction activity. Consequently, PNC Infratech revised its FY26 revenue growth guidance downwards from an earlier projection of 15-20% to a more conservative 5% over the previous year.

Despite these challenges, the company's strategic initiatives are progressing. The unexecuted order book remains robust, standing at over Rs. 20,100 crore as of September 30, 2025. This substantial backlog, which is more than 3.6 times the FY25 revenue, provides strong revenue visibility for the coming years. The order book is also well-diversified, with Road Highway, Road Expressway, Railway, Airport Runway, and Canal EPC projects accounting for 71% of the total, complemented by contributions from water, canal, area development, and coal mining projects.

Diversification and Capital Allocation

PNC Infratech is actively pursuing diversification to broaden its revenue base and mitigate sector-specific risks. A significant step in this direction is the award of a 300 MW ISTS Connected Solar Power Project with Energy Storage Systems by NHPC Limited, valued at approximately Rs. 2,000 crore. This project marks the company's entry into the renewable energy sector, with an equity investment planned for FY27 and FY28. Furthermore, the company secured a substantial coal mining project from South Eastern Coalfields Limited (SECL) worth Rs. 2,957 crore, with physical execution already underway.

Capital allocation remains a key focus. The company successfully completed the monetization of 11 road assets, including 10 HAM assets sold to Highways Infrastructure Trust (HIT) for an equity consideration of Rs. 1,827.6 crore. This strategic move allows PNC Infratech to recycle capital into new infrastructure opportunities, bolstering its financial strength and funding future growth. The remaining equity requirement of Rs. 663 crore for its 13 HAM projects is planned to be met through internal accruals and funds from PNC Infra Holding over the next 2-3 years, demonstrating a prudent financial strategy.

Outlook and Management Confidence

Despite the short-term adjustments, management expresses confidence in the company's long-term growth trajectory. For FY27, the company aims for a 20% growth, with aspirations to reach 30% once the FY26 base is firmly established. EBITDA margins are expected to remain stable at 12.5-13% for both FY26 and FY27. The company is actively bidding for new projects, targeting an additional Rs. 6,000 crore plus in new orders before the end of FY26, leveraging the significant pipeline announced by NHAI and other departments.

The credit rating upgrades for four of its subsidiaries from CARE Single A to CARE AA Plus highlight the improving financial health and project execution capabilities. This, coupled with a healthy standalone net debt to equity ratio of 0.14 times and a consolidated ratio of 0.76 times, positions PNC Infratech favorably for future growth. The company's integrated business model, in-house capabilities, and experienced leadership team further reinforce its ability to capitalize on emerging opportunities in India's expanding infrastructure sector.