Vascon Engineers FY26: Banking lines strengthen, execution normalises, and the order book stays firm

Vascon Engineers ended FY26 with stable operations but a softer revenue print, mainly due to project-level cash flow disruption in a few large contracts. Consolidated total income for FY26 stood at Rs 983.72 crore versus Rs 1,089.91 crore in FY25. EBITDA for FY26 was Rs 87.13 crore compared to Rs 99.90 crore in FY25. Profit after tax came in at Rs 48.90 crore versus Rs 126.45 crore in FY25, with management highlighting that the prior year benefitted from exceptional gains linked to the sale of GMP.

The year also marked a shift in operating posture. Management repeatedly emphasised financial discipline, especially the decision to not fund client projects through incremental borrowing when payments slowed. At the same time, Vascon used FY26 to improve banking support and collateral terms, which it believes will help restore execution pace in FY27.

What drove FY26 performance

Across the last eight quarters, EPC remained the dominant contributor to revenue, with real estate revenue appearing more lumpy and dependent on project milestones. The company attributed FY26 execution shortfall mainly to cash flow constraints in two major government projects and internal organisational changes at a large private client that affected on-site decisions and schedules.

Management said the impacted government projects were Sindhudurg and Suphal in Bihar. Importantly, it called out a strategic choice: the company did not borrow to keep those projects running at full pace, because it does not want to finance clients in the EPC business. From March onwards, management said both projects resumed payments and remobilisation began in April, with Bihar back in full flow and Sindhudurg in the process of restarting.

A separate operational drag was the slow start of Royal Rides, where management said work had not yet started at site and no revenue had been recognised, although the order remains live.

Financial snapshot

Note: Management stated FY25 PAT was supported by exceptional gains arising from sale of GMP.

Order book and working capital: the core FY26 positive

Vascon closed FY26 with a total order book of Rs 2,717 crore, with external EPC order book at Rs 2,387 crore. Management highlighted that the order book is about 2.9 times FY26 EPC revenues, indicating multi-year revenue visibility.

Order book quality was a theme. Around 79 percent of the order book is from government-backed projects, which management believes provides better payment security and receivable visibility. Key external orders include multiple medical colleges and hospitals, police housing, metro-related buildings and an IT park, reflecting Vascon’s focus on institutional and public infrastructure-heavy civil contracts.

The other major FY26 lever was banking support. The company disclosed total sanctioned working capital limits of Rs 745 crore, with utilisation of Rs 408 crore and unutilised capacity of Rs 337 crore. Management said SBI completed a revised assessment with improved commercial terms, including better collateral leverage and lower bank guarantee margins. It also stated that unutilised working capital can support about Rs 3,000 crore of additional EPC orders.

This is relevant because management linked FY26 execution disruption to working capital discipline. When payments slowed in specific projects, Vascon did not bridge the gap with additional funding. With improved bank lines now in place, the company expects project mobilisation and execution momentum to improve, provided client payments remain timely.

Real estate: asset-light model, but scaling remains the challenge

Vascon’s real estate business continues to operate on joint ventures, JDAs, and redevelopment, with management reiterating that it does not intend to put equity into land acquisition. The presentation positions this as an asset-light approach with low upfront deposits.

In FY26, the company reported new sales booking of 96,735 square feet. The presentation cites total sales value of Rs 113 crore and total collections of Rs 119 crore, while management on the concall cited booking value of around Rs 119 crore and collections around Rs 132 crore.

The company’s current under-development portfolio comprises Tulip Phase III in Coimbatore (JDA, 70 percent share), Tower of Ascend in Kharadi (JDA, 58 percent share), GoodLife in Talegaon (owned), and Orchids redevelopment in Santacruz, Mumbai. Across these projects, the company reported total sale of Rs 331 crore and collections of Rs 250 crore, with revenue recognised of Rs 126 crore.

However, the segmental P&L after allocation indicates the real estate segment remains loss-making at EBITDA level in FY26. The company acknowledged that real estate has underperformed for several years and needs to scale materially to cover overheads and deliver meaningful profitability.

To address this, Vascon appointed Raveesh Rao as CEO of the real estate segment. Management said this was a leadership gap for over a year and that the business needs sharper execution and sales momentum, particularly as some projects have seen slower sales (management called out Orchids and earlier weakness in Talegaon).

Segment view (FY26 segmental P&L after allocation)

Note: EPC segmental revenue includes internal EPC order revenue and construction expenses. Real estate includes items linked to Ajanta Enterprise and Phoenix Ventures as noted in the presentation.

FY27 signals: revenue target, capex guardrails, and execution capacity

On guidance, management provided clear internal targets and operating assumptions.

It stated an FY27 top line target of about Rs 1,200 crore, with EPC expected to cross Rs 1,000 crore and real estate expected to cross Rs 200 crore. It also said execution is typically H2 heavy, with Q3 and Q4 contributing more due to seasonality.

Capex expectations in EPC were framed as moderate. Management guided that EPC capex is usually 4 to 5 percent of top line, and for a Rs 1,000 to Rs 1,200 crore target, capex could be around Rs 50 crore, often supported through client advances backed by bank guarantees rather than external borrowing.

On capacity, management stated Vascon can execute up to about Rs 1,500 crore of EPC revenue annually with current assets, senior staff, and capex capability. It also discussed being L1 on projects aggregating about Rs 500 crore and being in the final stage of bidding for about Rs 2,000 crore of projects, though timelines for conversion depend on client decision cycles.

Balance sheet and cash flow context

Net debt stood at Rs 91.41 crore as of 31 March 2026. The company also disclosed sizeable fixed deposits, including lien FDs, which are part of overall liquidity and collateral structure.

On the concall, the CFO stated that debt increased during FY26 primarily to fund real estate continuity after the earlier equity raise plan did not materialise. Management also stated FY26 operating cash flow was negative, with EPC at about negative Rs 20 crore and real estate at about negative Rs 100 crore.

Takeaways

FY26 was not a year of aggressive growth, but it was a year of operational choices. Vascon accepted slower execution rather than funding clients, while it strengthened banking lines and collateral terms to support future mobilisation. With an order book of Rs 2,717 crore and a stated FY27 revenue target of about Rs 1,200 crore, the near-term focus is on translating backlog into execution.

Real estate remains the swing factor. The pipeline shows meaningful potential, but the segment has to scale beyond current levels to improve profitability. The appointment of a dedicated real estate CEO and planned launches such as Powai and Prakash Housing Society are positioned as the next step in that scaling effort.