Strong margins overshadowed by toll-road dispute

Annualized Q1 run-rate: ₹6,752 Cr; on track but relies on sustained momentum

Q1 delivered 31% (₹524/₹1,688); guidance 12% implies severe compression post-Q1

All three awards confirmed; order book reconciliation from ₹22,000 Cr (prior) explained by inclusion of these new projects

Show-cause notice issued, toll collection suspended by NHAI, testing ongoing; loss of toll being debated

Prior call did not disclose toll issue. Q1 call revealed NHAI issued show-cause notice (timing unclear), toll collection suspended July 2026, testing ongoing. Risk of non-performer status or bidding restrictions not quantified. Reputational risk escalated.

Prior ₹22,000 Cr included 2 new HAM projects secured in Q1; ₹19,100 Cr is updated unexecuted OB including these HAMs plus new flyover (₹194 Cr), bridge (₹559.5 Cr), airport LOI (₹302 Cr). Reconciliation provided; no downgrade in pipeline, but order book growth stalled.

Prior calls likely mentioned JJM order book ₹2,310 Cr, but Q1 call disclosed ₹741 Cr in outstanding receivables, ₹136 Cr executed in Q1, ₹2,180 Cr balance expected over next 2 years (deadline Dec 2028). Highlights government payment paucity risk.

Issue still under NHAI consideration; we're submitting reply. Any order is speculative. Loss of toll is NHAI's decision. Contract stipulates repair timelines (24h–180d). We don't want to comment beyond exchange disclosures.

Maintaining same guidance. Received 5 new projects this quarter, expecting ₹12,000–15,000 Cr order inflow FY27.

JJM extended to Dec 2028; ₹2,180 Cr balance over next 2 years. ₹741 Cr outstanding from govt; state actively pursuing 50% subsidy release. Payment releases episodic; WC will improve with fund realization.

Mining: project proponent delayed land provision; local resistance faced. Now deploying new surface miners; should achieve ₹500 Cr FY27 & FY28, complete in 5 years. Pune: pre-casting + site execution cyclical; overall on track for 3-year completion.

Isolated stretches affected by torrential rains (routine maintenance per contract). Repairs follow contract timelines: 24h–180d depending on severity. Testing ongoing this month; everything will be clear August. We follow contract conditions, reserve position on toll loss (NHAI's decision).

24 bids already submitted (₹32,000 Cr value): 16 EPC + 8 HAM. 78 more projects identified (₹1.7 lakh Cr) for bidding in next 2–3 months. Total pipeline ₹2 lakh Cr (mix of HAM, EPC, TBCB, DBFOT toll).

Solar: ₹400 Cr equity; ₹1,000+ Cr revenue in FY28, remaining in FY29. Mining: no equity (EPC); ₹500 Cr FY27 & FY28, completed in 5 years.

Debt increase: term loan for machine financing (strategic decision; repayable in 4–5 years). Quarterly interest run-rate now ₹20 Cr (vs ₹30 Cr Q4). Debt will come down going forward.

Q1 ₹1,688 Cr annualized = ₹6,752 Cr; slight headwind from Kanpur-Lucknow may pull full-year to ₹6,000 Cr target

Assumes Kanpur resolved, order inflow ₹12,000–15,000 Cr FY27, and successful execution of new HAM/EPC projects

Q1 margin of 31% is significantly above 12% guidance. Suggests either Q1 benefited from one-time items (₹244 Cr arbitration) or management is very conservative. Full-year 12% likely if margin normalizes to historical 25%+ levels in subsequent quarters post-Q1 spike.

Q1 capex ₹70 Cr (machinery). FY27 total ₹150 Cr. FY28 likely similar ₹150 Cr. Mining project requires ₹350 Cr total capex over initial couple of years.

NHAI issued show-cause notice post-toll closure (July 2026 rains). Potential penalties, bidding restrictions, non-performer status. Lost toll revenue (₹42 lakh/day reported by analyst, ~₹15 Cr/year). Timeline uncertain; management said 'August resolution' for testing, but NHAI order timing unknown.

₹741 Cr outstanding from JJM & water projects (44% of Q1 revenue). Government payment paucity at state & central level; funds released episodically. JJM extended to Dec 2028. Working capital at 110 days elevated. Realisation timing uncertain; impacts debt repayment capacity.

EPC mining contract: project proponent delayed land provision; local resistance; discontinuous land parcels. Q1 execution was low. Recently deployed new surface miners to accelerate. Target ₹500 Cr FY27 & FY28; 5-year completion at risk if land issues persist.

64% of ₹19,100 Cr order book in highways (12,200 Cr). Diversification into water/canal (21%), mining (15%) in early phases. Kanpur issue raises risk of highway market share loss if bidding credibility damaged.

Q1 delivered 31% EBITDA margin; guidance ~12% for FY27. Gap suggests either Q1 had exceptional items (₹244 Cr arbitration award, which is ~14% of Q1 EBITDA) or management foresees margin compression in later quarters. If normalized margin is 12%, Q1 quality may be questioned.