CRISIL Ratings Limited has revised the outlook on Afcons Infrastructure Limited’s long-term bank facilities and non-convertible debentures from ‘Stable’ to ‘Negative’. The company’s ratings have been reaffirmed at ‘Crisil AA-‘, while its commercial paper programme rating remains ‘Crisil A1+’. The outlook revision reflects concerns over increased working capital intensity and moderating operating performance.
Credit Rating Outlook Shift
CRISIL Ratings Limited has announced a revision in the credit rating outlook for Afcons Infrastructure Limited (AIL). The outlook for AIL’s long-term bank facilities and non-convertible debentures has been shifted from ‘Stable’ to ‘Negative’. Despite this outlook change, the company’s existing ratings of ‘Crisil AA-‘ have been reaffirmed. Furthermore, the rating for AIL’s commercial paper programme has also been reaffirmed at ‘Crisil A1+’.
Rationale for Outlook Revision
The revised outlook stems from a moderation in Afcons Infrastructure’s operating performance and a notable increase in its working capital intensity. This is primarily attributed to a build-up of contract assets and delays in the realization of receivables. Weaker-than-expected order inflows during fiscal 2026 led to lower mobilization advances, while extended debtor days stretched the working capital cycle. This resulted in a higher reliance on working capital borrowings and a weakening of key credit metrics.
Execution challenges, stemming from limited work front availability and slower conversion of projects at the L1 stage, have also contributed to the company’s performance during the past fiscal. The company’s operating income moderated to ₹11,976 crore in fiscal 2026 from ₹12,553 crore in fiscal 2025. However, operating profitability remained adequate, with margins above 10-11%.
Order Book and Future Prospects
Looking ahead, the company’s operating performance is expected to improve. Afcons has secured healthy order inflows of ₹15,695 crore in fiscal 2027 year-to-date, boosting its order book to ₹45,767 crore as of June 30, 2026. This strengthened order book provides significant revenue visibility and is anticipated to support growth from the second half of fiscal 2027 as execution ramps up.
Working capital intensity is expected to decrease as the company targets recovery of legacy contract assets and experiences improved mobilization advances. CRISIL Ratings anticipates that debtor days will fall below ~270-280 days by the end of fiscal 2027, which should improve operating profitability and cash flow. However, any delays in reducing debtor days or improving operating cash flow generation could lead to a rating downgrade.
Financial Health
The company maintained a strong liquidity position with cash and cash equivalents around ₹900 crore as on March 31, 2026. It also has access to unutilized fund-based working capital limits and untapped interest-free mobilization advances.
For fiscal 2026, Afcons reported revenue of ₹11,976 crore and profit after tax of ₹251 crore, compared to ₹12,553 crore and ₹487 crore, respectively, for fiscal 2025. Total debt increased to ₹3,529 crore as on March 31, 2026, from ₹2,230 crore a year earlier.
Source: BSE
