Ircon International Ltd. (Ircon) is an Indian engineering and construction company with a rich history of handling major infrastructure projects. Their focus areas include railways, highways, bridges, flyovers, tunnels, EHV substations, and other significant infrastructure activities. Since its establishment, Ircon has primarily concentrated on the railway sector, but over the years, it has diversified into other transport and infrastructure segments, such as highway and road construction.
Ircon boasts a diverse portfolio and extensive experience in executing large-scale infrastructure projects both within India and internationally. The company primarily operates in two core areas: construction and infrastructure development. In the construction segment, railway projects account for a significant portion of the revenue mix, contributing to approximately 94% of total revenue. Ircon specialises in turnkey railway construction services, including the construction of new railway lines, conversion of existing lines, station development, signalling, and railway electrification. In its infrastructure development business, Ircon focuses on developing and maintaining railways and roads using a build, operate, and transfer (BOT) model.
Geographically, Ircon’s business operations are well-diversified, and the company achieved its highest-ever turnover in the quarter ending September 2023, totaling Rs. 3,136 crores. Approximately 90% of the company’s order book comprises domestic orders, which are typically procured through a competitive bidding process. Ircon strategically selects projects with high order values to benefit from economies of scale, ensuring consistent growth rates and healthy profit margins.

Investment Rationale
Ircon’s steady execution and robust order book reflect its strong financial performance. The order book is a crucial indicator of growth stability in the construction and infrastructure industry, representing anticipated future revenue. Ircon receives orders through competitive tenders and nominations by the Railway Ministry, serving both domestic and international markets. As of September 2023, Ircon’s order book stands at an impressive Rs. 32,152 crores, with 90% of orders originating from domestic sources. This strong order book has translated into significant growth, with a 36% increase in turnover in the quarter ending September 2023.

Ircon’s EBITDA margins for the same period were 12.5%, demonstrating consistent growth. Core EBITDA and PAT margins also exhibited sequential growth, reaching 8.1% and 8.0%,