Ahluwalia Contracts (India) (AHLU IN) – Q1FY27 Result Update – Sharp margin miss and guidance reset – BUY
Published on 17 Aug 2026
Ahluwalia reported a sharp Q1FY27 earnings miss. Revenue grew 12% YoY to INR 11,258 mn, broadly in line with estimates, while EBITDA declined 44% YoY to INR 482 mn, with margin collapsing to a historic low of 4.3% vs 8.6% YoY. The margin pressure was driven by three key factors: ~260bps impact from a one-off reduction in the AIIMS Jammu bill, ~150bps impact from an unexpected 35–40% increase in NCR labour costs, and elevated staff and IDC costs related to mobilisation for large projects. Management has lowered FY27 guidance, with revenue growth now pegged at 12–15% vs 15–20% earlier, ruling out a double-digit EBITDA margin, while order inflow guidance has been cut to INR 40–50 bn vs INR 80 bn earlier. It also flagged potential NGT-related risks in Q3, though management expects margins to recover to ~8.6% over the coming quarters and return to double-digit levels in FY28. Following the results, we cut our revenue and margin estimates, resulting in a 24%/11% reduction in FY27/FY28 EPS estimates and a revised TP of INR 930 vs INR 1,045 earlier. We retain BUY, as the stock trades at ~15x revised EPS, below its 10-year average of ~18x, while the debt-free balance sheet and strong order book of INR 206.6 bn (~4.6x TTM revenue) provide comfort on medium-term growth.
