Meghna Infracon Infrastructure Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Overview

Indian real estate sector continued to demonstrate resilient structural growth, supported by rising urbanisation, improving household incomes, favorable demographics and sustained end-user demand. Residential real estate remained a key growth segment, with buyers increasingly prioritising branded developers, construction quality, timely delivery, amenities and well-connected locations. The sector also witnessed premiumisation, with demand shifting towards larger and higher-quality homes, while disciplined launches kept inventory levels broadly healthy.

Mumbai Metropolitan Region (MMR) remains Indias largest residential market, supported by its strong economic base, limited land availability and ongoing infrastructure development. In CY2025, MMR recorded housing sales of 97,188 units, growing 1% YoY, while new launches moderated to 87,114 units, down 10% YoY, reflecting calibrated supply and phased inventory releases. Residential prices increased by 7% YoY to Rs.8,856 per sq. ft., while unsold inventory declined 6% YoY, indicating a broadly balanced demand-supply environment.

Within MMR, peripheral and emerging micro-markets continued to gain traction as homebuyers sought relative affordability, larger configurations and improving connectivity. Major infrastructure initiatives, including metro expansion, road connectivity, the Mumbai Trans Harbour Link, Coastal Road and Navi Mumbai International Airport, are strengthening residential growth corridors.

Looking ahead, the MMR residential market is expected to remain resilient, supported by improving affordability, easing interest rates, infrastructure-led development and premiumisation. Increasing consolidation towards established developers is expected to reinforce the importance of execution capability, quality and timely delivery.

Business Developments

During FY2025-26, the Company continued to strengthen its operating platform and project portfolio. At the end of FY26, the Company had five ongoing projects with an aggregate estimated GDV of approximately Rs.282.69 crore and a project area of approximately 2.90 lakh sq. ft.

The Company has also built a meaningful upcoming project pipeline comprising 11 identified projects with an aggregate estimated area of approximately 14.15 lakh sq. ft. and estimated GDV of approximately Rs.2,151 crore.

The pipeline spans several strategically located micro-markets and is expected to provide opportunities for progressive expansion of the Companys development activities.

The Company continues to follow an opportunity-led approach to project additions, evaluating location, development potential, project structure, execution feasibility and expected risk-return characteristics before committing resources.

Business Model and Strategic Approach

The Companys business model is focused on creating value through residential development and redevelopment opportunities in established urban locations.

The redevelopment-led approach provides access to attractive locations while potentially reducing the capital intensity associated with outright land acquisition. The Company seeks to combine local market understanding with disciplined project execution and selective capital deployment.

Going forward, the Company intends to maintain a balanced approach towards project sourcing, including redevelopment opportunities, partnerships and other development structures where the underlying economics and execution profile are attractive.

The strategy remains focused on building a scalable portfolio rather than pursuing growth at the expense of financial or operational discipline.

Opportunities and threats Opportunities

1. Mumbai residential demand and premiumisation

Mumbai and the wider MMR continue to benefit from strong end-user demand, rising household incomes and a growing preference for quality, well-connected and amenity-led homes. The continued shift towards premium housing creates opportunities for developers with differentiated product offerings, strong execution capabilities and established market presence. The peer FY26 reports also identify premium and luxury housing as a key structural opportunity.

2. Redevelopment-led growth

Redevelopment represents a significant structural opportunity in Mumbai, given the ageing housing stock, scarcity of developable land and strong demand for modern residential spaces in established locations. As redevelopment gains momentum across Mumbais established micro-markets, developers with local market knowledge, execution capabilities and the ability to effectively manage stakeholder requirements are well positioned to participate in this opportunity. The growing prominence of redevelopment is also reflected in the FY26 strategies of leading developers operating in Mumbai.

3. Infrastructure-led expansion

Continued investments in metro networks, roads, coastal connectivity and other urban infrastructure are improving accessibility across MMR and supporting the emergence of new residential micro-markets. Improved connectivity is expected to expand the addressable market for residential development and create opportunities in strategically located peripheral and emerging corridors.

4. Opportunities through JVs and strategic acquisitions

The ongoing consolidation of the real estate sector is creating opportunities to acquire land parcels, enter joint development arrangements and undertake redevelopment projects with landowners and housing societies. Leading developers are increasingly using acquisitions and JVs to build future project pipelines.

Threats

The Company operates in a highly regulated and capital-intensive industry, and its performance may be affected by factors beyond its control, including:

Regulatory and approval delays: Delays in land, construction, environmental and other statutory approvals may affect project timelines, increase carrying costs and impact project feasibility.

Construction cost inflation: Volatility in prices of cement, steel and other construction materials, together with labour costs, may increase project costs and exert pressure on margins.

Availability of skilled labour: Shortages of skilled manpower can affect construction schedules and increase execution costs.

Interest rate and financing risk: Changes in interest rates and availability/cost of capital can affect both homebuyer affordability and the Companys financing costs.

Competition and affordability: Increasing competition, particularly from well-capitalised organised developers, may place pressure on pricing, customer acquisition and market share. At the same time, continued property price increases could constrain affordability in certain customer segments.

Redevelopment execution risk: Redevelopment projects may involve extended negotiations with society members, approval requirements, rehabilitation obligations and execution complexities, which could impact project timelines and costs

Outlook

The Company continues to explore the possibilities of expansion in its present activities and will also make the necessary investments when attractive opportunities arise. Your Company is well placed to seize the long-term opportunity in real estate market in India.

Risks and Concerns

The performance of your Company may be affected by the sales and rental realizations of its projects. These prices are driven by prevailing market conditions, the nature and location of the projects and other factors such as brand, reputation and the design of the projects. Your Company follows a prudent business model and tries to ensure steady cash flow even during adverse pricing scenario.

Internal Control Systems and their adequacy

As a part of the effort to evaluate the effectiveness of the internal control systems, your Companys internal audit system reviews all the control measures on a periodic basis and recommends improvements, wherever appropriate. The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business. These systems and procedures provide reasonable assurance of maintenance of proper accounting records, reliability of financial information, protection of resources and safeguarding of assets against unauthorized use. The management regularly reviews the internal control systems and procedures.

Discussions on Financial Performance with respect to Operational Performance:

Highlights	2025-2026	2024-2025
Revenue from Operations & other Income	10,39,20,000	21,72,87,168
Profit before Finance Cost, Depreciation and Tax	7,14,77,000	11,50,31,263
Finance Cost	13,43,000	4,59,522
Depreciation	54,27,000	18,23,809
Provision for Taxation (Including Deferred Tax & Fringe benefit tax)	1,08,10,000	75,94,369
Net Profit after Tax	5,38,97,000	9,23,78,205
Earnings per Share (in Rs.)	2 48	8.50
- Basic
- Diluted	2.48	8.50

Human Resource Development

The human capital today is one of the most decisive factors in the success of a company and thus we strive for excellence in the entire employee life cycle. Your Company continuously recruits skilled professionals from various streams and undertake several initiatives to retain the talent pool. Your Company also places emphasis on development and enhancement of skills and capabilities of employees to prepare them for future challenges. As in the past, the company enjoyed cordial relations with the employees at all levels. The Company focuses on improved Employee Engagement through several enterprise level initiatives. The Rewards and Recognition Programs here appreciate outstanding performers for their professionalism, dedication and outstanding contributions.

Key Financial Ratios:

Ratio	2025-2026	2024-2025
Inventory Turnover Ratio	0.05	0.10
Net Capital Turnover Ratio	3.58	1.57
Debt Equity Ratio	0.06	0.06
Debt Services Coverage Ratio	20.61	138.72
Net Profit Ratio	0.85	0.71
Return on Capital Employed	0.24	0.46

Ratios where there has been significant change (i.e. change of 25% or more as compared to the immediately previous financial year): All the figures mentioned hereunder are Rs. in Lakhs.

Inventory Turnover Ratio:

Inventory turnover is computed as cost of goods sold divided by average inventory. The ratio moves from 0.05 in FY 2025-26 to 0.10 in FY 24-25 indicates sale of inventory.

Net Capital Turnover Ratio:

Sales divided by Net Working Capital. The Ratio changes from 3.58 in FY 2025-26 to 1.57 in FY 2024-25, mainly on account of revenue and its corresponding impact in net working capital.

Debt Equity Ratio:

Debt equity ratio is computed as long-term Debts divided by shareholders fund.

Debt Services Coverage Ratio:

Earnings available for debt services divided by total interest and principal repayment.

Debt Services Coverage Ratio:

Earnings available for debt services divided by total interest and principal repayment.

Net Profit Ratio:

Net profit before tax divided by Sales. This ratio is changes from 0.85 in FY 2024-25 to 0.25 in the FY 2023-24 which indicates significantly increase in net profits of the company.

Return on Capital Employed:

EBIT / Capital Employed. The ratio increase from (0.46) in FY 2024-25 to 0.25 in FY 2023-24 indicating high efficiency of the company.

Internal and External Business Environment:

The Company operates in an environment characterised by strong long-term residential demand but also by regulatory complexity, competition and project-specific execution requirements.

Management believes that its focus on selected urban locations, redevelopment opportunities, disciplined project selection and execution-oriented approach provides a suitable platform to navigate these dynamics.

The Company will continue to monitor changes in market conditions and adapt its project and capital allocation strategy as appropriate.

Way Forward:

The Companys focus for the coming years will be on:

• Progressing and monetising the existing project portfolio;

• Converting the identified project pipeline into active developments;

• Strengthening presence across selected Mumbai micro-markets;

• Improving project execution and delivery efficiency;

• Maintaining disciplined capital allocation; and

• Building a scalable platform capable of generating sustainable long-term value.

The management believes that the Companys growing project pipeline and improving operating platform provide a strong foundation for the next phase of its development journey.