Ajwa Projects: Civil construction became second-largest revenue

Ajwa Projects made civil construction its second-largest revenue stream in financial year (FY) 2025–26, with income rising 160.69% to Rs 13.96 crore. The shift coincided with manpower-supply income falling 64.20% to Rs 1.49 crore, while construction materials, subcontracting and work-in-progress became more important to execution.

Why did civil construction become Ajwa Projects’ second-largest revenue stream?

Civil construction became Ajwa Projects’ second-largest operating revenue stream because its FY 2025–26 income more than doubled while manpower supply contracted sharply. Civil-construction revenue rose from Rs 5.35 crore in FY 2024–25 to Rs 13.96 crore in FY 2025–26, an increase of 160.69%. Erection, commissioning, fabrication and contract income remained the largest category at Rs 32.98 crore, up 21.16% from Rs 27.22 crore.

Manpower-supply services income fell from Rs 4.16 crore in FY 2024–25 to Rs 1.49 crore in FY 2025–26. Ajwa Projects attributed the movement to a shift toward project-based contract execution. As a result, civil construction and erection, commissioning, fabrication and contract work together provided 96.93% of FY 2025–26 revenue from operations, compared with 88.68% in FY 2024–25.

The ranking change resulted from movements in both directions rather than from civil construction alone. Civil construction represented about 28.8% of FY 2025–26 operating revenue, calculated from the disclosed Rs 13.96 crore and Rs 48.42 crore figures, compared with about 14.6% in FY 2024–25. Manpower supply represented about 3.1% in FY 2025–26, down from about 11.3% a year earlier.

How did Ajwa Projects’ cost base change with civil construction revenue?

Ajwa Projects’ cost base moved toward materials and external execution as civil construction revenue increased in FY 2025–26. Cost of materials consumed rose 276.83%, from Rs 4.27 crore in FY 2024–25 to Rs 16.09 crore, lifting its share of total income from 11.58% to 33.13%. The disclosed inputs were primarily steel, cement, aggregates and other construction materials used directly on projects.

Steel consumption rose from Rs 46.94 lakh to Rs 9.82 crore, cement consumption rose from Rs 64.41 lakh to Rs 2.15 crore, and consumables rose from Rs 3.08 crore to Rs 4.09 crore in FY 2025–26. Raw-material closing stock was Rs 94.48 lakh at March 31, 2026, compared with nil at March 31, 2025. These changes are consistent with contracts in which Ajwa Projects procures materials rather than mainly supplying labour.

Employee benefits expense moved in the opposite direction, declining 10.36% from Rs 19.08 crore to Rs 17.11 crore. Its share of total income fell from 51.76% to 35.23%, as salaries and wages declined from Rs 17.59 crore to Rs 15.57 crore. Ajwa Projects connected the lower payroll cost to reduced manpower-supply operations and greater use of subcontractors and labour supply contractors.

The shift did not eliminate labour-related costs; it changed where they were recorded. Subcontracted manpower supply in other expenses increased from Rs 48.69 lakh to Rs 3.08 crore, while fabrication work increased from nil to Rs 1.66 crore. Other expenses consequently rose 117.14% to Rs 9.04 crore, or 18.62% of total income, from Rs 4.16 crore, or 11.29%, in FY 2024–25.

What happened to Ajwa Projects’ work-in-progress and profitability?

Ajwa Projects built up work-in-progress as civil construction activity expanded, while reported profitability also increased in FY 2025–26. Work-in-progress, meaning costs on ongoing projects not yet billed, rose 173.42% from Rs 1.80 crore at March 31, 2025 to Rs 4.92 crore at March 31, 2026. This produced a Rs 3.12 crore negative change in inventories expense in the restated profit and loss statement because an increase in work-in-progress is recorded as a negative expense.

Total inventory rose from Rs 1.80 crore at March 31, 2025 to Rs 5.87 crore at March 31, 2026, including Rs 94.48 lakh of raw materials. The inventory movement means some project expenditure had not yet been recognised as cost through billing and completion cycles. Continued revenue conversion therefore depends on execution and billing of the underlying civil construction work.

Total income increased 31.70% from Rs 36.87 crore in FY 2024–25 to Rs 48.56 crore in FY 2025–26. Profit before tax increased from Rs 4.75 crore to Rs 7.45 crore, and profit after tax rose 65.17% from Rs 3.28 crore to Rs 5.42 crore. The profit-after-tax margin increased to 11.17% from 8.90%, while the total-expense ratio declined to 84.67% from 85.34%.

The year-on-year profit comparison includes a non-recurring difference. FY 2024–25 included an exceptional item of Rs 65.22 lakh from a slump sale, while FY 2025–26 had no such item. Before that exceptional item, profit before tax increased 37.73%, from Rs 5.41 crore to Rs 7.45 crore, isolating the change in operating results from the disclosed one-time charge.

What must hold for Ajwa Projects’ new execution model to persist?

Ajwa Projects’ revenue mix can persist if civil contracts continue to be executed, supplied and billed at a scale sufficient to absorb the higher material and subcontracting requirements. Revenue from operations was Rs 48.42 crore in FY 2025–26, or 99.73% of total income, while other income was Rs 13.19 lakh, or 0.27%. That composition leaves results primarily dependent on core project execution rather than ancillary income.

Funding and working-capital management also matter because the new model increased inventory and receivable requirements. Net cash used in operating activities was Rs 2.88 crore in FY 2025–26, compared with net cash generated of Rs 4.18 crore in FY 2024–25. Ajwa Projects attributed the FY 2025–26 operating outflow largely to increased trade receivables and inventories despite the higher Rs 7.45 crore profit before tax.

Finance costs nevertheless declined 6.81% to Rs 1.60 crore in FY 2025–26 from Rs 1.72 crore, even as total borrowings rose 57.34% to Rs 12.52 crore. Ajwa Projects said it prepaid or repaid certain unsecured business loans carrying 16% to 22% annual interest and used lower-cost dealer and inventory finance of 11.5% to 13.0%, a 14.0% business loan and interest-free director loans. Whether this cost outcome continues depends on the mix of funding and the working-capital needs of projects.

The June 30, 2026 update shows the scale of the requirement increased further after year-end. Inventory reached Rs 8.12 crore, including Rs 6.90 crore of work-in-progress, compared with Rs 5.87 crore and Rs 4.92 crore respectively at March 31, 2026. Materials consumed in the June 2026 quarter were Rs 6.23 crore, or 50.06% of total income, compared with 33.13% for the full FY 2025–26.

Conclusion

Ajwa Projects’ FY 2025–26 numbers show a substantive change in the composition of its business: civil construction became the second-largest revenue line as manpower supply declined. The transition raised material consumption, inventory and subcontracting costs, but total income grew faster than total expenses and profit after tax reached Rs 5.42 crore.

The next disclosed datapoint to watch is the June 30, 2026 build-up in work-in-progress to Rs 6.90 crore and total inventory to Rs 8.12 crore. Their conversion into billed construction revenue, alongside the Rs 97.97 lakh operating cash outflow for the quarter, will indicate how the more material-intensive execution model is progressing.