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Recovery hinges on execution & order momentum

IRCON reported Q4FY26 / FY26 standalone PAT of -12% / - 16% YoY. FY26 remained a challenging year due to execution bottlenecks and project clearance delays; however, the company witnessed a recovery in order inflows after a muted FY23–25 period, taking the order book to INR250bn as on FY26 (~2.9x TTM revenue) vs INR 203 bn as on FY25, with ~78% exposure to the railway segment. Management guided for FY27E revenue to remain broadly stable at FY26 levels (~INR85-90bn), while maintaining standalone EBITDA margins of 4–4.5% and PAT margins of 6–6.3%. Factoring in the softer execution outlook, we reduce FY27E/FY28E EPS estimates by 1%/4% and revise our SOTP-based target price to INR136/share (from INR143), while maintaining a HOLD rating. The key catalyst for re-rating remains sustained order inflows, with IRCON to benefit from the improving railway award environment as FY26 sanctioned railway projects increased to ~INR1.5tn in FY26 (up 110% YoY).

Weak Quarter:

RCON reported revenue of INR 30 bn down 8% YoY was 4% below our estimates, revenue was impacted due to execution and clearance delays. EBITDA came in at INR 1.3 bn down 5% YoY and 12% below our estimates, EBITDA margin stood at 4.4% vs 4.3% YoY. PAT came in at INR 1.9bn down 12% YoY, PAT was 10% above our estimates. Company declared final dividend of INR 0.70 per share with this total dividend for the year was INR 1.9 per share with dividend payout of 29% and dividend yield of ~1.3%.

Order book strong:

As of FY26 IRCON reported order book of INR ~250bn which provides visibility of 3x TTM revenue. The order book mix comprised ~54% competitively bid projects and ~46% nomination-based projects, with ~92% domestic exposure. Segment wise railways contributed 78% share in total order book followed by Highways at 16% and others at 6%.

Subdued FY27 Outlook:

IRCON guided for a subdued FY27 performance with revenue expected to remain broadly at FY26 levels, supported by an order book of ~INR 250 bn with execution visibility of 2.5–3 years. Management highlighted that despite intense competition and geopolitical uncertainties, the company has bid for projects worth ~INR 480 bn across 107 bids and expects incremental order inflows over FY27-FY28.

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