/** Title: ACIL Q1 FY27: Growth Holds, Margins Take a Hit */

ACIL Q1 FY27: Growth Holds, Margins Take a Hit

Ahluwalia Contracts India Limited reported a mixed start to FY27. The topline stayed resilient, but profitability fell sharply, driven by a one-time billing reduction on a completed project and a sustained increase in labour costs.

In Q1 FY27, income from operations was INR1,125.8 crore, up from INR1,004.9 crore in Q1 FY26. EBITDA, however, dropped to INR48.2 crore with margin compressing to 4.3 percent versus 8.6 percent a year ago. PAT declined to INR11.4 crore from INR51.1 crore, leaving net margin at 1 percent.

Management described the quarter as unusually disrupted. It highlighted three primary margin pressures: an adverse billing outcome on AIIMS Jammu, wage escalation driven by labour tightness and minimum wage changes in parts of NCR, and higher staff costs as the company ramped its team for a larger project portfolio.

What went wrong in margins

The largest identifiable item was linked to AIIMS Jammu, a project that was already completed. Management said the final bill was frozen in Q1 and the bill value was reduced by INR29 crore. It added that this is under dispute and will be raised through arbitration. The company quantified the adverse EBITDA impact from this item at about 2.6 percentage points.

The second pressure point was labour. Management indicated that labour pricing moved up sharply, particularly in NCR, and that many large private sector contracts do not include a labour escalation clause. It also stated that once labour prices rise, they typically do not correct downward, implying the cost base has structurally shifted.

On top of that, staff costs increased. Management linked this to a deliberate ramp-up in headcount and site staffing, as new large projects such as Central Vista and Dahlias moved into heavier execution phases. It suggested this ratio should rationalise over the next three quarters as project revenues scale up.

A broader operating backdrop added friction. Management referenced supply-chain disruption and longer delivery timelines for items such as panels and switchgear, which increased from a 4 to 6 week cycle to 3 to 4 months in some cases.

Order book remains the key support

Despite the weak profit print, ACIL continues to carry a large and expanding order book. As of 30 June 2026, the unexecuted order book stood at INR20,663.5 crore. The investor presentation also reported a gross order book of INR29,713.8 crore as of 30 June 2026. Management said the current unexecuted book is expected to be executed over the next 3 to 3.5 years.

Order book mix suggests a business tilted toward private sector building construction. Segment-wise, residential accounts for 39.7 percent of the unexecuted order book, followed by institutional and infrastructure at 18.3 percent and 18.2 percent respectively. Commercial and industrial is 17.4 percent, hospitals are 5.8 percent, and hotels are 0.6 percent.

Region-wise, the concentration in the North remains high at 52 percent of unexecuted order book, with the West at 23.5 percent, East at 16.3 percent, and South at 7.5 percent. Overseas exposure is limited at 0.7 percent, with Nepal as the referenced geography.

The quarterly order inflow in FY27 to date was INR512.8 crore excluding GST, as per both the presentation summary and management opening remarks.

Key financial snapshot

Project updates: where the billing growth is expected

Management spent meaningful time discussing execution and billing expectations for a few flagship projects.

Central Vista was positioned as a major revenue driver over the next few years. Management said demolition of Nirman Bhawan was complete and foundation casting had begun. It also said structural steel erection would start in September. For Udyog Bhawan, the company received possession around three weeks before the call, and about 90 percent demolition was completed. It expects demolition to finish in about 15 days and indicated excavation is underway with foundation work expected to start about a month later. It guided for billing of about INR700 crore in FY27 and about INR1,000 crore in FY28, with overall project completion targeted in FY29.

For the CSMT redevelopment project in Mumbai, management said work is constrained by staged approvals and the availability of blocks due to rail traffic. It indicated Q1 billing of about INR70 crore, and expected average billing of INR40 crore to INR45 crore per month over the remaining nine months, translating to INR400 crore to INR450 crore in the balance of FY27 and a chance to exceed INR500 crore for the full year. It guided to about INR700 crore in FY28.

Gems and Jewellery Park in Mumbai is delayed by a client-driven design change. Management said ground work is likely to begin only in Q3 FY27. It guided for billing of about INR100 crore in FY27 and about INR450 crore in FY28, and described the project duration as 3.5 years.

These are meaningful numbers relative to quarterly revenue, and management’s implied strategy is clear: higher throughput from large projects should improve operating leverage and pull margins back toward historical levels.

Guidance and what investors should watch

On outlook, management retained its FY27 revenue growth expectation of about 12 to 15 percent, with 15 percent presented as the base case. It explicitly ruled out a double-digit EBITDA margin for FY27, citing cost volatility and one-off disruptions.

It also discussed uncertainty around possible NGT actions in NCR. While no quantified impact was provided, management signaled that Q3 could be affected and that this uncertainty limits visibility on the timing of margin recovery.

Order inflow expectations were moderated. Management said it is no longer very aggressive on winning new work given volatility in material and labour costs, and indicated a conservative full-year inflow range of about INR4,000 crore to INR5,000 crore. It also disclosed that fixed-price contracts are about 10.34 percent of the order book.

On capital allocation, management pushed back on the idea of share buybacks, saying cash should be retained for business growth, digitization, and machinery investments to offset labour shortages. Capex guidance was reduced, with the company indicating FY27 capex could be INR220 crore to INR250 crore.

Balance sheet disclosures from the call

Management shared several working-capital related disclosures on the call. It stated trade payable of INR776 crore, retention of INR401 crore, inventory including real estate inventory of INR391 crore, mobilization of INR924 crore, and unbilled revenue of INR946 crore. It disclosed gross debt of about INR2.28 crore and cash and bank balances of about INR920 crore.

It also explained why finance costs rose in Q1 FY27: the company availed mobilization advance for Central Vista. Management indicated finance costs are expected to stay at similar levels in upcoming quarters. It also stated that about 31 percent of mobilization advance is interest-bearing, with an average interest rate around 8 percent.

Closing takeaways

Q1 FY27 was a clear margin setback for ACIL, but the company’s commentary offers a structured way to interpret it. A large part of the damage was tied to a specific billing reduction on AIIMS Jammu, which management is contesting via arbitration. The more important question for investors is how much of the remaining margin compression is structural, led by labour costs, and how quickly pricing resets and productivity measures can offset it.

The order book remains strong in size and visibility, and project billing guidance for Central Vista and other large sites suggests scope for revenue growth through FY27 and FY28. The next few quarters will likely be judged on two variables: execution ramp on large projects, and whether cost pressures in NCR can be partly compensated through client negotiations, incentives, or improved site productivity.