Ahluwalia Contracts FY26: A bigger order book, cautious guidance, and a push toward mechanisation

Ahluwalia Contracts (India) Limited closed FY26 with steady operating growth and a sharp improvement in profit, backed by a much larger order book. For FY26, the company reported income from operations of INR 4,565.2 crore, EBITDA of INR 434.5 crore, and PAT of INR 264.3 crore. In Q4 FY26, income from operations came in at INR 1,322.3 crore, EBITDA at INR 123.6 crore, and PAT at INR 80.1 crore.

The year was not free of operational friction. Management repeatedly pointed to disruptions linked to elections, labour movement, and war-led supply chain pressures. Even so, the company ended the year with an EBITDA margin of 9.5% for FY26 and guided for a move into double-digit margins in FY27.

FY26 performance: growth, but margins still the key debate

On a full-year basis, income from operations rose to INR 4,565.2 crore from INR 4,098.6 crore in FY25. EBITDA increased to INR 434.5 crore from INR 341.8 crore, while PAT rose to INR 264.3 crore from INR 201.5 crore.

Q4 was mixed. Revenue grew year-on-year, but PAT softened compared with Q4 FY25. Management attributed some of the quarter’s pressure to a confluence of factors: labour leaving due to elections, war-led disruption beginning in February, and the company’s annual cycle of wage increments typically taken in January. They also said March saw meaningful disruption in regions like Bengal and Assam because of elections, and a temporary cash crunch in Assam slowed execution.

Financial summary (Standalone)

Order book: visibility has expanded sharply

The core positive in the FY26 narrative is the scale-up in backlog. As of 31 March 2026, Ahluwalia Contracts reported a gross order book of INR 29,675.7 crore (excluding GST) and an unexecuted order book of INR 21,096.3 crore (excluding GST). During FY26, order inflows were reported at INR 10,257.4 crore.

Management’s messaging suggested the company is now better stocked than it has been in recent years, and several projects that were slow moving earlier are expected to ramp up as approvals stabilise. For instance, the CSMT redevelopment project had seen design and approval-related delays earlier, but management stated that designs are now approved and the project has picked up speed.

The unexecuted order book also shows a mix tilted toward residential and infrastructure. Residential is 39.7% of the unexecuted order book, infrastructure is 29.9%, and commercial or industrial is 17.6%. Hospitals and institutional projects together contribute about 12.2%, while hotels are negligible.

Mix and risk controls: escalation clauses and selective bidding

A major investor worry in EPC is inflation risk, especially when firms win contracts as L1 bidders and later face cost escalation. Management highlighted that escalation clauses are now embedded in most contracts. They said 89% of the order book has escalation clauses, and cited the Central Vista contract as one that includes escalation linked to wholesale price index, covering labour and materials.

At the same time, management acknowledged that short-term mismatches can emerge. They said the wholesale price index may not move in line with actual commodity inflation, especially in metals, and that industry bodies have taken this up with the government.

On the private side, management stated that heavy materials like cement and steel are typically pass-through for large developers, helping cushion volatility. This matters because the unexecuted order book is skewed towards the private sector at 61.2%, with central government at 28.5%, state government at 9.5%, and overseas government at 0.8%.

Another key message was selectivity. Management described a formal go or no-go framework, with regional tendering teams escalating decisions to senior leadership. They also said they are walking away from projects, including with existing clients, if risk-reward is not attractive.

FY27 outlook: cautious growth guidance and execution ramp targets

For FY27, management guided for revenue growth of 15% to 20% and targeted order inflow of about INR 8,000 crore, including projects where the company is currently L1.

They also reiterated an expectation of double-digit EBITDA margins in FY27, supported by a better mix of orders, geographic spread, and contractual escalation protection.

Project-wise, management gave directional targets for FY27 execution from key projects: CSMT around INR 600 crore, Central Vista around INR 1,000 crore, and Dahlias around INR 400 crore. For India Jewellery Park, they kept a conservative target of about INR 100 crore, citing design changes and execution timing.

Mechanisation and capex: betting against labour scarcity

Ahluwalia Contracts is leaning into mechanisation as a structural response to labour volatility and rising project complexity. Management described the sector as being at an inflection point, with taller and more complex buildings requiring more machinery, and with labour supply becoming unstable throughout the year.

Capex has therefore risen, and depreciation is expected to increase in line. Management indicated FY27 capex could be around INR 300 crore. They also discussed capex efficiency, saying they had earlier spoken about higher capex, but later moderated FY26 capex expectations to about INR 274 crore.

On returns, management did not provide a detailed ROCE bridge, but they did discuss payback expectations. They stated mechanisation payback is typically around 4 to 5 years, broadly aligned with assumed equipment life. They also said the return impact would come via savings in hiring and improved efficiency, though the benefits would take time to show meaningfully in reported margins.

Risks management is watching closely

The clearest risk theme in the call was the war and its second-order effects. Management listed immediate labour disruption due to LPG availability issues, inflation pressure via fuel costs, and supply chain delays such as longer lead times for electrical switchgear and panels. These issues can extend timelines and raise overheads.

NGT-related shutdowns in NCR remain a recurring threat. Management said clients have started compensating labour during shutdowns to prevent workers from leaving, and also highlighted that Central Vista is not impacted by NGT.

Working capital remains an execution variable. Management disclosed mobilization advance of INR 802 crore, retention of INR 450 crore, and unbilled revenue of INR 688 crore. Working capital days were discussed as being around 104 days and described as standard for the business.

Takeaways

Ahluwalia Contracts enters FY27 with stronger revenue visibility than it has had in years, driven by an unexecuted order book of INR 21,096.3 crore. Management’s guidance of 15% to 20% growth and double-digit margins is supported by expected ramp-up in key projects and a contract structure that includes escalation in most orders.

The next year will still be judged on execution. Labour availability, supply chain delays, and any prolonged war-led inflation shock can influence both timelines and profitability. Still, the company is positioning itself for a more mechanised and complex project environment, while keeping liquidity intact. CFO stated cash and bank balance at INR 817 crore, and management made it clear that preserving a war chest is a deliberate choice in a cyclical industry.