• Achieved milestone entry into aviation sector with first airport project - consultancy for link taxiway construction (1,950 meters) at Nagpur Airport in October 2025
• Secured ₹256 crores unexecuted order book providing 2.5-3 year revenue visibility across 65 projects
• Won multiple new mandates during Q3 including projects from NHAI (NH 66 and NH 73 in Karnataka), JNPT (44 km maintenance supervision), and UP State Bridge Corporation
• Received 5 DPR orders from NHAI under new fixed-cost model at ₹5-6 lakh per km (double previous rates of ₹2-3 lakh per km) based on technical capability rather than financial bidding
• Successfully expanded international presence with ongoing projects in Mozambique and Ghana in Africa, receiving payments in dollars
• Empaneled with Odisha Bridge and Construction Corporation for supervision of road and bridge projects, strengthening regional footprint
• Team strength of 350+ professionals with 75% qualified engineers supporting technical excellence
• Active bid pipeline of ₹350 crores with strike rate of 20-25% for Indian projects and monthly bidding of ₹100 crores worth of projects

Dhruv Consultancy reported a challenging Q3 FY26 with a significant accounting adjustment of ₹30 crore related to revenue recognition on long-term contracts, resulting in a reported loss despite positive operational cash flows. However, the company maintains a strong unexecuted order book of ₹256 crores and has successfully diversified into aviation sector while expanding geographically into Africa and Middle East, though execution and governance concerns remain prominent.

For 9 months FY26, Dhruv Consultancy reported total revenue of ₹35.36 crores with a loss before exceptional items of ₹28 crores, primarily due to a one-time non-cash accounting adjustment of approximately ₹30 crores. This adjustment arose from revisions to project cost and margin estimates under Ind AS 8 and Ind AS 115 following a detailed review of select long-term contracts. Management emphasized this is purely a book adjustment with no cash outflow impact. The company reported operational cash flows of ₹70-75 crores for the year, demonstrating continued ability to service debts, pay employees on time, and meet tax obligations. The overall order book (executed + unexecuted) decreased from ₹490 crores to ₹465 crores (less than 10% impact) due to the accounting revision. Project-level profitability remains positive across majority of ongoing assignments. The adjustment reflects margin compression from assumed 30% to approximately 25% on certain projects due to policy changes by NHAI including reduced deployment requirements during land acquisition delays, key personnel replacement penalties, and attendance threshold adjustments.

Management adopted a defensive yet explanatory tone, spending considerable effort justifying the ₹30 crore accounting adjustment as a conservative realignment of revenue recognition practices rather than operational failure. They emphasized this is a one-time non-cash adjustment required by Ind AS standards and stressed that project-level profitability remains positive with strong operational cash flows of ₹70-75 crores. Management highlighted their position as the only listed consultant in their category, making comparable benchmarking difficult. They expressed confidence in their Vision 2030 strategy to diversify beyond highways into airports, railways, and metros while expanding internationally into Middle East and Southeast Asia. Strategic priorities include: (1) strengthening internal governance and controls to prevent future adjustments, (2) adopting more conservative milestone-driven revenue recognition, (3) diversifying client base beyond NHAI dependence, and (4) capitalizing on higher-margin DPR work under NHAI's new fixed-cost technical evaluation model. Management showed confidence in converting the ₹256 crore order book over 2.5-3 years and achieving their 1000 crore order book Vision 2030 target, though acknowledged current global uncertainties may impact timing.

The company faces several significant challenges: (1) A major accounting credibility issue with the ₹30 crore revenue adjustment raising investor concerns about financial transparency and forecasting accuracy, (2) Credit rating downgrade by CARE following the accounting revision, though management requested reconsideration after Q4 audited results, (3) Recent debarment issues mentioned by investors indicating past governance problems, (4) Persistent negative operating cash flows historically despite current year improvement, (5) Heavy concentration risk with majority revenue from NHAI and highway sector despite diversification efforts, (6) Intense competition in PMC assignments compressing margins, (7) Execution delays due to contractor mobilization issues and land acquisition problems impacting project timelines, (8) Policy uncertainty with frequent NHAI policy changes affecting revenue recognition (deployment requirements, attendance thresholds, key personnel replacement rules), (9) Geopolitical risks in Africa and Middle East expansion markets with war situations causing slowdowns, (10) High unbilled revenue creating working capital strain requiring significant bank guarantees, (11) Complex percentage-of-completion accounting creating volatility and investor confusion, (12) Balance sheet opacity with ₹85-100 crores in 'other assets' lacking clear explanation, and (13) Market skepticism reflected in depressed share price not reflecting stated book value.

Revenue Outlook: Management declined to provide specific Q4 or FY27 guidance citing regulatory restrictions, but expressed confidence in realizing the ₹256 crore order book over 2.5-3 years with small spillover into additional 3 years

Margin Outlook: Project margins revised downward from assumed 30% to approximately 25% on affected contracts; management adopting more conservative margin assumptions going forward

Key Targets:

• Vision 2030: Achieve top 5 consultant position in 2-3 infrastructure sectors beyond highways (airports, railways, metros)
• Vision 2030: Target ₹1,000 crore order book by 2030 (management noted this remains challenging given current conditions)
• Diversification target: 10-20% revenue contribution from airport sector over next 2-3 years
• International expansion: Entry into Middle East (Saudi Arabia focus) expected in FY26
• Order book growth: Expected to increase from ₹256 crores to ₹300 crores by next quarter

The Q&A session was dominated by investor concerns about the ₹30 crore accounting adjustment, with analysts repeatedly pressing for clarity on cash flow impacts, balance sheet composition, and governance issues. The first questioner (Saket Kapoor) consumed significant time seeking to understand the accounting treatment, clearly skeptical about management's 'non-cash adjustment' explanation and correlation with the credit rating downgrade. Management spent considerable effort explaining Ind AS requirements and NHAI policy changes, but struggled to provide satisfactory answers about balance sheet transparency. A particularly pointed exchange with Vivek Joshi highlighted investor frustration about the ₹85-100 crore 'other assets' lacking clear explanation, with the investor noting the depressed share price reflects market disbelief in stated book value. Analysts also probed operating cash flow history, order execution timelines, and diversification progress. Management's responses were defensive yet detailed on technical accounting matters, but vague on forward guidance and unable to provide granular financial breakdowns citing 'limited review' status. The tone shifted from technical accounting questions to broader governance concerns, with Ashwin directly raising past debarment issues alongside current accounting problems. Management acknowledged 'hard lessons learned' and promised improved transparency in Q4 audited results. Overall, the call revealed deep investor skepticism about financial reporting quality, execution capability, and whether the company's ambitious Vision 2030 targets remain credible given current setbacks.