Ircon shares in bear grip; target for railway PSU post subdued FY27 guidance

Ircon International Ltd, whose shares are in bear grip, received a 'Hold' rating from PL Capital with a target that suggested potential downside. In a note, PL Capital's Vice President and Research Associate for Institutional Research, Vishal Periwal, said IRCON reported weak FY26 with recovery going ahead hinges on execution and order momentum.
The analyst noted that Ircon has guided for a subdued FY27 performance with revenue expected to remain broadly at FY26 levels, supported by an order book of Rs 25,000 crore with execution visibility of 2.5–3 years.

Order inflow had in FY26 picked up, which arrested fall in the order book in the preceding three years. The railway PSU's management highlighted that despite intense competition and geopolitical uncertainties, the company has bid for projects worth Rs 48,000 crore across 107 bids and expects incremental order inflows over FY27-FY28.

For the March quarter, Ircon reported an 8 per cent YoY decline in revenue, whic can in 4 per cent below Periwal's estimates, hurt by execution and clearance delays. Ebitda was 12 per cent below its estimates.

For the quarter Ebitda margin stood at 4.4 per cent against 4.3 per cent YoY. PAT came in 10 per cent above PL Capital's estimates. Ircon International declared final dividend of Re 0.70 per share, with total dividend for the year standing at Rs 1.9 per share, suggesting a dividend payout of 29 per cent and dividend yield of 1.3 per cent.

"Factoring in the softer execution outlook, we reduce FY27/FY28 EPS estimates by 1 per cent/4 per cent and revise our target price to Rs 136/share (from Rs 143), while maintaining a HOLD rating. The key catalyst for re-rating remains sustained order inflows, with IRCON to benefit from the improving railway award environment as FY26 sanctioned railway projects increased to Rs 1.5 lakh crore in FY26 (up 110 per cent YoY)," Periwal said.

Ircon shares are already in a bear grip, having fallen 21 per cent year-to-date. PL Capital's target suggests 3.78 per cent downside over Ircon's Tuesday trading price of Rs 141.35 apiece.

Ircon's order book mix comprised 54 per cent competitively bid projects and 46 per cent nomination-based projects, with 92 per cent domestic exposure. Segment wise railways contributed 78 per cent share in total order book followed by Highways at 16 per cent and others at 6 per cent.