Ahluwalia Contracts (AHLUCONT) Q2 FY27 Profit Drops 29% Despite Strong Revenue Growth
The construction firm's revenue climbed 24% year-on-year, but a surge in material costs and depreciation led to a sharp profit decline.
Ahluwalia Contracts reported a 24% rise in Q2 FY27 revenue to ₹1,464 crore. However, net profit fell 29% to ₹56 crore as total expenses, led by material costs, grew faster than sales.
For Ahluwalia Contracts, a strong order book is translating into higher revenue, but the path to profit is getting rougher. The September quarter saw a sharp divergence as sales grew robustly but earnings fell, highlighting a margin squeeze that has become the central story.
The numbers show the split. Revenue rose 24% year-on-year to ₹1,464 crore, a solid 30% jump from the weak June quarter. Profit, however, fell 29% from a year ago to ₹56 crore, though it rebounded sharply from a low base last quarter. The net profit margin compressed to 3.8%, down 290 basis points from the 6.7% seen in Q2 FY26.
Revenue & profit
Revenue (₹ Cr)
Net Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,463.66YoY +24% | 1,125.81 | 1,177.30 |
| Net Profit (₹ Cr) | 56.09YoY -29% | 10.39 | 78.57 |
| Net Profit Margin (%) | 3.8YoY -43% | 0.9 | 6.7 |
Why the top line didn't reach the bottom
Costs rose faster than revenue, eroding profitability. Total expenses grew 29% year-on-year, outpacing the 24% sales growth. A key driver was a 46% surge in the cost of materials to ₹688 crore, as reported by MarketsMojo. Higher depreciation, up 56% year-on-year, also weighed on profits.
Management had flagged a shift to selective, higher-margin bidding after a difficult first quarter. The Q2 EBITDA margin of about 7.6%, reported by Perivis, shows some recovery from Q1's 4.3% low but remains well below historical levels. The company has ruled out double-digit EBITDA margins for the full year, according to StockWatch.
The runway ahead
A record order book of about ₹21,100 crore, as noted by Anand Rathi Research, provides strong revenue visibility. Recent wins like a ₹310 crore order from Bennett University add to the pipeline. However, the market is focused on margin recovery.
Analyst consensus remains positive, with 10 of 11 brokers rating it a Buy, StockWatch reports. The median price target implies significant upside, but the debate centres on the timing of a sustained margin rebound. The stock closed at ₹528 on results day, having fallen over 40% in the past year.
Key Points
- Revenue growth of 24% YoY was strong, but profit declined 29% due to faster-rising costs.
- The net profit margin fell to 3.8%, down 290 basis points from the year-ago quarter.
- A robust order book supports future revenue, but margin recovery is key to the investment thesis.
- The stock trades at a significant discount to the industry average P/E.
Hexa Perspective
The quarter confirms that Ahluwalia Contracts' growth engine is running, but profitability is under strain. The margin compression is not a one-off; it reflects persistent input cost inflation and project-specific pressures like the AIIMS Jammu bill reduction.
The path forward hinges on execution. If the company's selective bidding strategy and hoped-for labour cost normalisation in the second half materialise, margins could stabilise. If not, the valuation discount may persist despite the strong order book. Investors are betting on a cyclical recovery, but patience is required.
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