Buy Ahluwalia Contracts India Ltd For the Target Rs.1,050 By Axis Securities Ltd
Strong Orderbook & Execution to Drive Growth; Upgraded to BUY
Est. vs. Actual for Q1FY26: Revenue – INLINE; EBITDA Margin – INLINE; PAT – BEAT
Change in Estimates post Q1FY26
FY26E/FY27E: Revenue: 0%/1%; EBITDA: 0%/2%; PAT: 3%/0%
Recommendation Rationale
• Robust order book: The company has an order book of Rs 16,582 Cr (as of 30 th June, 2025) and a YTD order inflow of Rs 3,889 Cr. The order book is primarily composed of Hospital at 11.5% (Rs 1,902 Cr), Commercial at 16.8% (Rs 2,794 Cr), Institutional at 4.7% (Rs 784 Cr), Residential at 40.7% (Rs 6,752 Cr), Infrastructure at 25.6% (Rs 4,238 Cr), and Hotel at 0.7% (Rs 113 Cr). The robust order book provides revenue visibility for the next 2– 2.5 years. Hence, ACIL is expected to deliver a strong revenue growth of 19% CAGR over FY25–FY27E and is likely to post improved margins with better execution.
• Strong Order Inflow: The company reported YTD order inflows of Rs 3,889 Cr and holds L1 status in 2 projects worth Rs 1,796 Cr. For FY26, management has guided for order inflows of over Rs 8,000 Cr. The bidding pipeline stood at Rs 5,000 Cr for the private segment. It aims to keep 50–60% of its order book weighted toward private sector projects, reflecting its strategic focus on private capex, where it sees stronger visibility and more scalable opportunities.
• Pickup in EBITDA margins: As execution improves, especially with the pickup of the CST project in Delhi and India Jewellery Park, the margins are expected to improve. Double-digit margins are expected from H2FY26; however, in Q2FY26, the margins will remain flat due to execution being impacted by the monsoon. We forecast EBITDA and PAT to grow at a 34% and 32% CAGR, respectively, over FY25–27E.
Sector Outlook: Positive
Company Outlook & Guidance: For FY26, revenue growth of 15-20% is expected with doubledigit EBITDA margins.
Current Valuation: 20x FY27E EPS (Earlier Valuation: 18x FY27E EPS).
Current TP: Rs 1,050/share (Earlier TP: Rs 945/share)
Recommendation: We change our rating on the stock from HOLD to BUY.
Financial Performance:
Ahluwalia Contracts India Ltd. (ACIL) reported a positive set of Q1FY26 numbers. The company reported revenue of Rs 1,005 Cr (up 9% YoY) and EBITDA of Rs 86 Cr (up 43% YoY). It posted a PAT of Rs 51 Cr (up 68% YoY). EBITDA margins stood at 8.6% in Q1FY26 (Our Estimate: 8.6%) compared to 6.6% in Q1FY25.
Outlook
The executable order book remains robust. With favourable attributes such as a strong and diversified order book, a healthy bidding pipeline, steady order inflows, an asset-light model, and emerging opportunities in the construction space, ACIL is expected to generate healthy free cash flows moving forward and deliver revenue/EBITDA/PAT growth of 19%/34%/32% CAGR over FY25–FY27E.
Valuation & Recommendation The stock is currently trading at 21x/18x FY26E/FY27E EPS. We upgrade our rating from HOLD to BUY, valuing the company at 20x FY27E EPS, with a TP of Rs 1,050/share, which implies a 10% upside from the CMP.
Key Concall Highlights
• Order Book: The company has an order book of Rs 16,582 Cr (as of 30 th June, 2025). The order book is primarily composed of Hospital at 11.5% (Rs 1,902 Cr), Commercial at 16.8% (Rs 2,794 Cr), Institutional at 4.7% (Rs 784 Cr), Residential at 40.7% (Rs 6,752 Cr), Infrastructure at 25.6% (Rs 4,238 Cr), and Hotel at 0.7% (Rs 113 Cr). By geography, East constitutes 18%, North 42%, West 34%, South 4%, and Overseas 2%. The Central Government, State Government, and Private segments form 26%, 9%, 63% and the remaining percentage, respectively, with the balance from overseas projects.
• Order Inflow: The company reported YTD order inflows of Rs 3,889 Cr and holds L1 status in 2 projects worth Rs 1,796 Cr, which are expected to be awarded by Q2FY26. For FY26, management has guided for order inflows of over Rs 8,000 Cr.
• Capex and Working Capital: The company incurred a Capex of Rs 62 Cr in Q1FY26 and targets Rs 500 Cr in FY26 and Rs 200 Cr in FY27.
• As of 30 th June, 2025: Unbilled Revenue stood at Rs 557 Cr, Retention Money at Rs 397 Cr, and Mobilisation Advance at Rs 675 Cr. Cash balance stood at Rs 920 Cr, and the company is net debt-free.
Key Risks to Our Estimates and TP
• Delay in execution may impact revenue growth • Higher commodity prices may hurt margins
