Vascon Engineers Jumps 5% After Bagging ₹131.58 Cr Buildings Contract from Reliance Industries

Synopsis:- Bagging a Letter of Intent worth Rs. 131.58 crore from Reliance Industries Limited, Vascon Engineers has secured a construction contract to build four G+12 residential-type buildings at the RG Expansion project in Jamnagar with execution to be completed within 19 months, adding near-term revenue visibility to an EPC book that saw revenue contract 12 percent in FY26.

A Pune-based EPC and real estate firm was in focus on May 18, 2026, after receiving a Letter of Intent from Reliance Industries Limited for a multi-building construction project at the latter’s RG Expansion site in Jamnagar, Gujarat. The contract covers the construction of four G+12 FLL Type Buildings in Sector-3 of the RG Expansion project.

With a market capitalisation of Rs.800.98 crore, the shares of Vascon Engineers Limited were last recorded at Rs. 34.57 per share, up 4.98 percent from its previous closing price of Rs. 32.93 apiece. It is trading at a P/E of 15.36.

Order Update

The LOI sets the contract value at Rs. 131.58 crore excluding GST, awarded on a Bill of Quantities (BOQ) basis. Under this structure, billing is tied to actual quantities of work executed against agreed unit rates, a standard arrangement for large civil construction contracts that links payment directly to certified progress rather than milestones. The full scope is to be completed within 19 months from the date of receipt of the formal order, placing the execution window broadly across FY27 and into Q1 FY28.

At roughly 13.9 percent of the company’s FY26 consolidated revenue of Rs. 949 crore, the order is a material addition to the EPC backlog. The company has confirmed that no promoter or promoter group entity has any interest in Reliance Industries, and the contract falls outside the scope of related party transactions.

Financials

The order arrives against a backdrop of revenue and margin softness in FY26. Consolidated revenue declined 12 percent to Rs. 949 crore from Rs. 1,077 crore in FY25, while the operating profit margin compressed to five percent from eight percent a year earlier. Reported net profit fell to Rs. 49 crore from Rs. 130 crore  though the FY25 figure included Rs. 90 crore in other income, making the headline comparison misleading. Stripping that out, the underlying operating profit trajectory is the more relevant gauge; at Rs. 52 crore in FY26, it reflects genuine deterioration relative to the FY25 operating base.

The working capital picture warrants attention. Operating cash outflow reached Rs. 122 crore in FY26, against a Rs. 5 crore outflow in FY25, pointing to capital getting locked into project execution. Borrowings rose from Rs. 206 crore to Rs. 300 crore over the same period, a 46 percent increase in a single year. The most recent quarter, Q4 FY26 (March 2026), reported consolidated revenue of Rs. 253 crore and net profit of Rs. 5.72 crore, with the latter depressed by an unusually high effective tax rate of 54 percent for the quarter.

Business Overview

Incorporated in 1986 and listed on BSE and NSE, Vascon Engineers Limited operates in engineering, procurement and construction and real estate development. The company has delivered over 200 projects spanning more than 45 million square feet. 

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