Ahluwalia Contracts builds its way to the top with strong order book and rising profits

THE LEELA PALACE in Delhi, All India Institute of Medical Sciences’ campuses in West Bengal and Maharashtra, and the airport passenger terminal of Birsa Munda airport in Ranchi — construction company Ahluwalia Contracts India Ltd has built an enviable portfolio of projects over nearly five decades.

Headquartered in New Delhi, Ahluwalia Contracts is among the companies riding India’s public capital expenditure wave of the past four years. The civil contractor has a broad-based portfolio of residential housing projects, commercial projects, hotel projects, and educational institutions in its kitty.

The ₹2,450-crore redevelopment of Chhatrapati Shivaji Maharaj Terminus (CSMT) in Mumbai is among the big-ticket projects the company is undertaking. Its executed projects in the Maximum City also include Mumbai Metro Depot for Mumbai Metro One Pvt. Ltd.

Consistent growth

With a nearly 50:50 public-to-private contract ratio, Ahluwalia Contracts’ order books have been swelling owing to the government thrust on capital expenditure and subsequent crowding of private investments. The company, which has been clocking in high growth in profitability, looks poised for the long runway of orders worth ₹16,258 crore it has signed, as of December 2024.

Between FY21 and FY24, its sales and net profit registered a CAGR of 24.83% and 69.33%, respectively. The earnings per share also rose in tandem.

The hefty order book and rising profitability catapulted Ahluwalia Contracts to the top of Fortune India’s maiden 100 Emerging Stars list.

However, the company has seen its share of challenges. Its Q3 performance took a hit after National Green Tribunal (NGT) banned construction activities in Delhi-NCR due to pollution.

“Our staff expense has gone up to nearly 9% on account of the NGT ban and the slow-moving orders," deputy managing director Shobhit Uppal said during an analyst call after the Q3 results in February, the latest available numbers.

With BJP winning the Assembly elections, the company is pinning its hopes on the change of guard in Delhi to tackle the pollution-induced pain-points. “The industry is also making representations to various governments,” Uppal said. On NGT, he said that with the BJP emerging as the ruling party in the entire NCR, the company was hoping that there would be concrete measures put in place. “We are hopeful that the industry voices will be heard, and the work may not be impeded between October and January.”

Notwithstanding the ban-induced construction challenges in January, the company expects to bounce back in Q4FY25. “We feel that the top line at the end of the year would have grown by 8.5-9%,” Uppal said during the analyst call.

“We are well stocked in terms of the order book and staff. The turnover will go up and margins will increase,” he added.

The company is also bullish on the upcoming financial year as design issues of the CSMT project are being sorted out. “By the end of this quarter, we expect most of the client-side approvals to be in place. So, as far as our execution on that project (CSMT) is concerned, we would be taking off,” Uppal said, adding that most of the slow-moving projects will be completed by the end of the March quarter.

Analysts are betting on the robust order book of Ahluwalia Contracts and its strategy to focus on high-value projects. “The company has an order book of ₹16,258 crore and a year-to-date order inflow of ₹7,794 crore. The breakup of this order book is: hospital — 14% (₹2,279 crore), commercial — 17.4% (₹2,832 crore), institutional — 7.6% (₹1,234 crore), residential — 30.8% (₹5,002 crore), infrastructure — 29.3% (₹4,763 crore), and hotel — 0.9% (₹149 crore),” says Uttam K. Srimal, senior research analyst, Axis Securities, in a result update note dated February 13.

In April, Ahluwalia Contracts secured a significant construction contract worth ₹396.5 crore from Godrej Properties Ltd. According to the deal, Ahluwalia Contracts will construct core and shell for substructure and superstructure of four residential towers, including the non-tower area, clubhouse, retail space, and boundary wall, as well as rainwater harvesting, waterproofing, and lightning protection system installations at the Godrej Riverine project in Sector-44, Noida.

In October 2024, the company bagged a contract worth ₹1,094.67 crore with DLF City Centre to construct civil and composite steel structural works in Gurugram. The work targets a mid-2026 deadline.

“The robust order book provides revenue visibility for the next three to four years. The bidding pipeline also remains robust. The company is, therefore, expected to achieve a revenue growth of 15% CAGR over FY24-FY26E and is likely to post improved margins with better execution,” Srimal says in the note.

IDBI, in its third-quarter FY25 result review, emphasised the company’s continuing focus on its core segments — residential, healthcare, and commercial projects. “In the long term, it aims to maintain an equitable 50:50 mix between the private and government sectors (currently at 44:56). Additionally, the company is increasing the average ticket size of projects by targeting higher value contracts,” IDBI had stated.

With a well-balanced order book and a government keen on promoting infrastructural investments, Ahluwalia Contracts is comfortably poised to add more successful projects to its kitty.