Nomura, an international brokerage firm, has maintained its ‘Buy’ rating and target price of Rs 560 on Afcons Infrastructure, as the company’s management has guided for a strong FY26 despite a weak performance in Q4FY25.
Nomura on Afcons Infra: Q4 performance lower due to slow execution
The company’s revenue in the last quarter of FY25 dropped 11% year-on-year to Rs 3,220 crore due to slower order executions. The tepid execution was on the back of political instability in Bangladesh, payment-related issues, and labour shortages. On the operating front, Afcon Infra’s EBITDA margin of 9.1% was down 65 basis points YoY as low raw material expense was offset by high employee-related spending and other expenses.
Nomura on Afcons Infra: Total orderbook remains healthy
The brokerage firm has slashed revenue expectations by 8% for FY26 and 9% for FY27 due to the delay in the awarding of L-1 orders and management’s cautious stance on the execution of water projects. The total order pipeline is healthy at Rs 3.2 lakh crore, out of which Rs 1.3 lakh crore alone is coming from the urban infrastructure. Going forward, the management expects fresh order inflows of Rs 20,000-25,000 crore in FY26. This excludes orders of Rs 10,660 crore for which Afcons Infrastructure has been declared as the L-1 bidder, but have not yet been awarded due to land acquisition and cost overrun issues.
Although the company expects these orders to be awarded by the first quarter of FY26. This will augment the existing order book of Rs 36,870 crore, which translates into a book-to-bill ratio of 2.9x and is currently under execution entirely. Management guides for 20-25% revenue growth in FY26E along with an EBITDA margin of 11%.
“This is partly offset by a 50-60 basis points increase in our FY26-27F EBITDA margin to reflect management guidance. Subsequently, we lower FY26-27F EPS by 1% each,” said Nomura.
Afcons Infrastructure’s Q4 earnings
A week back, the Shapoorji Pallonji Group company reported a consolidated net profit decline of 23% YoY to Rs 110.92 crore in Q4 FY25, compared with Rs 144.90 crore in the corresponding period a year ago. The revenue from operations came in at Rs 3,223.27 crore in Q4FY25 as against Rs 3,636.43 crore in the same quarter of the last fiscal. Also, the board of directors approved a dividend of Rs 2.50 per equity share.