Guiding Growth: EPC and Real Estate in Focus

Somnath Biswas CFO,
Vascon Engineers Ltd

What is the target for fresh order inflows in FY26, and how confident is the company about achieving those? On average, what is the execution timeline for these projects once awarded?
We are targeting fresh order inflow of ₹1,800-2,000 crore so as to close the total order book as on March 2026 stands in the range of ₹3,800 crore to ₹4,000 crore. On an average, the execution timeline is three years and in practicality, one-third of the closing order book gets executed in the subsequent year.

Real estate currently contributes a relatively small share to total revenues. How does the company plan to scale this segment over the next 2-3 years? How do the margins of real estate compare with EPC in terms of gross and EBITDA levels?
As per accounting standards, Real Estate revenue gets recognised on a completion basis. Most of our projects are ongoing and their revenue will get recognised significantly from March 2026 onwards based upon the completion schedule. On an overall basis, Real Estate is to recognise close to ₹1,500 crore revenue (minimum) in the next four to five years based upon current ongoing projects. There is potential upside subject to closure of any ongoing tie-ups. In a normal case, Real Estate has a gross margin in the range of 30 per cent in comparison to 14-15 per cent of EPC and EBITDA in the range of 20 per cent in comparison to 9-10 per cent of EPC.

With approximately 78 per cent of the external EPC order book linked to government contracts, how does the receivables and collection cycle compare to private clients? What are the credit risks and cash flow characteristics of these government-led projects?
Since most of the projects are of a priority nature, we have steady and stable cash flow for all the government projects. As of now, we never faced any cash flow issue or credit risk with such projects. Eventually, our net working capital cycle of the EPC segment is 45-50 days which is very healthy and stable.

What are the company’s long-term topline and margin targets for the EPC and real estate segments individually? When does the company expect real estate to contribute meaningfully to our financials?
During the next five years, our endeavour is to have an EPC topline in the range of ₹2,000 crore and Real Estate estimated revenue already mentioned in point 2. In terms of margins, it will be in the same line only. We are confident on growth in terms of absolute numbers and investing & introducing various technologies to improve the margin.

As already mentioned above, we are expecting significant contribution from Real Estate to our financials from March 2026 onwards.

What is the company’s revenue and EBITDA margin guidance for FY26 at the group level?

The above statement is the last three years' Gross Earnings and Corresponding PBT and EBITDA. We are expecting 15-20 per cent growth in earnings and 25-30 per cent growth in EBITDA on the current year's number excluding Profit on Sale of Investment of GMP.