Infrastructure Sector Update : Order inflow improves but EPS momentum soft by PL Capital
Quick Pointers
* Order inflow better in Q4 vs. Q3 led by road players
* Revenue growth soft for coverage universe at 0.7% YoY due to weak order book
Order inflows in the infrastructure sector saw a modest pickup in Q4FY26, rising to INR565bn (vs. INR548bn in Q3), led by strong performance from select road EPC players such as Ceigall and KNR, while PNC Infratech and HG Infra lagged their fullyear targets. Building EPC remained steady with Ahluwalia Contracts broadly meeting expectations, whereas diversified players like NCC and Dilip Buildcon drove overall inflow, partly offset by weak ordering at Afcons. Despite this, financial performance for Q4FY26 is expected to remain soft, with revenue growing ~0.7% YoY across the coverage universe. While companies like PNC and PSP Projects are likely to deliver strong growth, execution is expected to be flattish for NCC. We retain top picks: NCC and PSP.
Industry order inflow picks up: Order inflow remained stable, with industry reporting Q4FY26 inflow at INR565bn (vs. INR548bn in Q3). In road EPC, CEIGALL (INR112bn; 193% of FY26 guidance achieved) and KNR (INR94bn; 104% achieved) outperformed, while PNC (39% achieved) and HG Infra (46% achieved) lagged. In building EPC, Ahluwalia Contracts (INR96bn; 96% achieved) was in line with its order book guidance. Diversified players drove inflow—NCC (INR276bn; 108% achieved) and Dilip Buildcon (INR224bn; 112% achieved)—offset by weak Afcons (19% achieved). In railways, IRCON (INR89bn; 112% achieved) outperformed, while RVNL (70% achieved) remained subdued, highlighting stronger execution in diversified/T&D vs. mixed road EPC trends.
Order book stats:
Q3FY26 order book provides strong revenue visibility (2–4.5x), supporting execution momentum into Q4FY26. NCC stands out with a strong order book (INR796bn; 4.5x), indicating robust multi-year visibility, followed by PSP Projects (3.8x). In railways, RVNL (4.5x) and RITES (4.0x) provide strong visibility, while IRCON (2.4x) provides moderate visibility.
Financial performance soft:
Q4FY26 performance across the infra universe is expected to remain soft, with revenue growing ~0.7% YoY. Among key names, PNC Infratech and PSP Projects are expected to see strong YoY growth, while NCC, Ashoka, HG and IRCON are likely to report flattish revenue growth, and KNR and Dilip are likely to see decline in revenue. However, profitability pressure persists led by lower margin and interest cost. For our coverage universe, PAT is expected to decline by 4% YoY, with HG Infra, IRCON and KNR likely to see major weakness.
Please refer disclaimer at Report
SEBI Registration number is INH000000933
