Execution worries may weigh on listed infra players in near term

Road and infrastructure firms face weak execution and margin pressure, though strong order books offer hope for a recovery in FY27

Infrastructure and road construction players saw a weak fourth quarter in financial year 2026 (Q4FY26), due to the ongoing West Asia crisis and execution delays.

 

KNR Constructions and HG Infra reported revenue declines of 40 per cent and 31 per cent year-on-year (Y-o-Y), respectively. However, Ceigall and GR Infra's revenue grew of 31 per cent and 27 per cent Y-o-Y, respectively.

 

Barring Ceigall, all road majors missed FY26 order inflow guidance. Despite this, order books are at book-to-bill ratios ranging from 2.5-4 times the trailing twelve months revenue for most players.

 

Road infrastructure companies' earnings before interest, taxes, depreciation and amortisation (Ebitda) and net profit also declined significantly. Ebitda margins contracted by 130 basis points (bps). Road construction in FY26 is expected to be 9,000–9,500 kilometres, a five-year low.

 

Ebitda margins were under pressure due to rising raw material costs and lower execution. Margin did expand for Ceigall (up 310 basis points Y-o-Y) and for KPIL (120 basis points Y-o-Y).  While, KNR Constructions and HG Infra saw their margins contract 810 bps and 500 bps Y-o-Y, respectively.

 

The working capital cycle for top companies deteriorated to average 187 days in FY26, against 147 days at FY25. HG Infra saw gross debt increase ₹560 crore Y-o-Y and NCC's gross debt rose ₹770 crore. This was due to investments in hybrid annuity model (HAM) and solar assets by HG Infra and in smart meters and higher working capital needs for NCC.

 

KEC also reported a rise in net debt from ₹4,600 crore in March 2025 to ₹6,700 crore in March 2026 due to higher working capital.

 

Asset monetisation plans remain key for developers like HG Infra, Ashoka Buildcon and KNR Constructions, since it could release growth capital. The highways bid pipeline improved month-on-month (M-o-M) to ₹1.1 trillion in June 2026 versus ₹84,800 crore in May 2026. The NHAI bidding pipeline is ₹88,200 crore across HAM (41 per cent), engineering procurement and construction (EPC) (33 per cent) and built-operate-transfer (BOT) (26 per cent) projects. Awarding was weak in FY26 with 3,100 kilometres awarded versus the initial target of 4,500 kilometres. The last three fiscals have low NHAI awards. Given slow NHAI orders, road companies have diversified to railways, solar, power transmission (T&D), mining among others.

 

Overall, the top 14 listed infrastructure companies saw an aggregate revenue fall of 3 per cent Y-o-Y in Q4FY26. Ebitda margin fell 130 basis points Y-o-Y to 9 per cent. EPC companies have held back on guidance for FY27 owing to geopolitics.

 

Diversified giant Larsen & Toubro (L&T) has substantial exposure to the West Asian region. During the Q4FY26 concall, L&T said the FY27 prospects pipeline was 6 per cent lower than in FY26, due to 28 per cent Y-o-Y dip in international prospects. L&T is hoping for a 30 per cent Y-o-Y rise in domestic prospects but domestic order-flow annually over FY23-26 was 8 per cent.

 

PNC Infra's Ebitda was flat in FY26, an improvement from a 7 per cent Y-o-Y decline in 9MFY26. The order book to sales in March 2026 was 3.9 times. PNC is the L1 bidder in projects worth ₹3,700 crore.

 

NCC's Ebitda fall narrowed to 9 per cent Y-o-Y in FY26, compared to a 20 per cent decline in 9MFY26. The order book/sales in March 2026 was 4.8 times. Both PNC and NCC could be looking at revenue surge if execution improves.

 

Dilip Buildcon saw its EPC Ebitda fall 5 per cent Y-o-Y and FY26 sales dip 22 per cent Y-o-Y. But OB/sales in March was 4.1 times. Sales could grow 35-37 per cent in FY27.

 

IRB Infra saw its Ebitda rise 9 per cent Y-o-Y, with 38 per cent Y-o-Y rise in Ebitda from InvIT-related assets. BOT and EPC sales dipped 17 per cent Y-o-Y. The OB/sales in March 2026 was 13 times, with 95 per cent of the order book from operation and maintenance (O&M).

 

IRB InvIT saw Ebitda grow 65 per cent Y-o-Y, driven by four new assets in the second half of FY26.

 

KNR Constructions' Ebitda fell 76 per cent Y-o-Y. The OB/sales in March 2026 rose to 4.2 times due to a mining project (41 per cent of order book), executable over five years with construction to start in Q4FY27. Ex-mining, OB/sales was 2.5 times.

 

A rebound in road awards in FY27 and better execution would be critical for most companies given external uncertainties.