1) Overview of the Infrastructure Industry and Outlook

Indias infrastructure cycle remains firmly in an expansion phase. The Union Budget for FY2026-27 provided for an effective capital expenditure of 171.1 lakh crore, 4.4% of GDP, with the Ministry of Road Transport and Highways own allocation rising roughly 8% to about 3.09 lakh crore for the year. Sustained public capital expenditure at this scale continues to widen the tendency of opportunity for contractors of NACDACs size, across buildings, bridges, urban infrastructure, and increasingly roads and highways.

Government emphasis on faster project clearances, multimodal logistics planning, and asset monetisation to crowd in private capital continues to shape how this opportunity reaches the market. For a mid-sized, agile contractor, this typically shows up less as a single large award and more as a widening set of entry points - sub-contracting on national highway packages, PSU and defence-sector infrastructure work, and continuing State-level building and civil works - each a smaller step, but each building the credentials for larger, more direct contracts over time. NACDACs own FY2025-26 shows this pattern in practice rather than merely in principle. The Companys order book and bid pipeline grew across a more diversified base of Government and PSU relationships, and it took its first direct step into highway-project execution during the year, discussed further in the following section.

Taken together, the outlook for Indias infrastructure sector remains constructive: robust central capital expenditure, continuing highway and railway investment, and a policy environment favouring execution-ready contractors. For a company at NACDACs stage, the opportunity lies less in the scale of any single programme and more in converting sustained public spending into a broader, better-diversified base of contracted and pipeline work - which is exactly the direction FY2025-26 moved in.

2) Business Overview of the Company

NACDAC Infrastructure Limiteds story remains one of steady, unglamorous evolution. What began in 2012 as a modest civil works contractor in Ghaziabad has, project by project, become a company Government bodies, PSUs and private clients return to. Our core work continues to be multi-storey buildings, bridges, foot overbridges, railway overbridges and electrical infrastructure, delivered with the same execution discipline that built our reputation in the first place.

The Companys listing on the BSE SME platform on 24 December 2024, following an IPO subscribed 2,209 times, is now a settled chapter in that history rather than a current-year event. FY2025-26 is the first full financial year NACDAC has operated as a listed company, and this report is written with that fact in mind - the numbers are reported plainly, including where they call for explanation rather than celebration.

As at 31 March 2026, NACDAC had completed 72 projects cumulatively, worth over 190 crore - up from the 63 projects worth over 120 crore reported a year earlier. The Companys unblinded work in hand stood at over 103 crore, with a further - 70 crore of bids submitted to Government departments, including Indian Railways and Indian Oil NBCC (India) Limited, under evaluation. NACDACs relationship with NBCC (India) Limited continues within this order book, now joined by a new client relationship with Bharat Electronics Limited - the Companys first named client relationship beyond NBCC, and a real sign that our PSU-ecosystem strategy is translating into contracted business rather than remaining an ambition.

FY2025-26 also brought two genuine firsts. The Company entered Steel Structure and Pre-Engineered Building (PEB) work as a new vertical, complementing our core civil and electrical capabilities. And in December 2025, NACDAC took its first step into highway-project execution: a sub-contracting assignment awarded by Sadhava Engineering Limited, the principal contractor engaged by the National Highways Authority of India for the four-lining of the Rampur-Kathgodam section of NH-87 in Uttar Pradesh, covering the repairing of borrow area approaches and village roads along the project highway. NACDAC is executing this on an item-rate, labour basis, deploying its own materials, machinery and manpower - a deliberate, measured entry rather than a direct NHA award, undertaken specifically to build highway-project experience ahead of pursuing larger, direct highway contracts in future years.

We now operate across Uttar Pradesh, Delhi, Uttarakhand and Punjab. Our ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certifications remain current, alongside our Class A Contractor status with the Uttarakhand Pipal Nigam. Behind all of this remains a simple philosophy, unchanged from a year ago: we build with precision, deliver with responsibility, and grow with purpose - and our people, now 32 strong against 29 a year earlier, are the ones who make that possible.

3) Financial Performance

FY2025-26 was a year of genuine growth that also asks to be read carefully rather than headlined. Revenue from operations grew 30.1% to 6,319.46 lakhs - our second consecutive year of growth above 30%. Profit after tax grew more modestly, by 6.9% to 442.91 lakhs, and earnings per share fell 14.1% to 42.21. That last figure is a share-count effect, not a performance one: FY2024-25s EPS was computed on a weighted average of 84.64 lakh shares, since our IPO shares were outstanding for only part of that year, while FY2025-26 carries the full 1,05,25,136 shares for the entire year.

Particulars (\u20b9 in lakhs, unless stated)	FY2025-26	FY2024-25	Change
Revenue from operations	6,319.46	4,857.99	+30.1%
EBITDA	723.13	675.76	+7.0%
EBITDA margin	11.44%	13.91%	-247 bps
Profit before tax	594.40	546.77	+8.7%
Profit after tax	442.91	414.38	+6.9%
Earnings per share (\u20b9)	4.21	4.90	-14.1%
Book value per share (\u20b9)	27.29	23.08	+18.2%
Net worth	2,872.32	2,429.41	+18.2%
Total assets	5,121.47	4,403.45	+16.3%
Operating cash flow	756.52	(577.30)	+21,333.82 lakhs

Where the margin went. Material cost fell from 81.0% to 74.8% of revenue during the year - a genuine procurement and efficiency gain, the second consecutive year of improvement on this measure. What offset is at the operating line was the absence of a large work-in-progress build that had added 726.76 lakhs to FY2024-25s profit; FY2025-26 saw a much smaller 72.25 lakh addition. Read together, FY2024-25s margin was flattened by inventory accumulation, and FY2025-26s is closer to the cash truth - which is precisely why our operating cash flow swung so strongly positive this year.

Cash flow was the years strongest story. Operating cash flow swung from an outflow of 577.30 lakhs in FY2024-25 to an inflow of 756.52 lakhs in FY2025-26 - a turnaround of over 113.3 crore, and cash conversion (operating cash flow over EBITDA) of 104.6% against negative 85.4% a year earlier. This was driven by real, collected cash: trade receivables fell 25.0% even as revenue grew 30.1%.

The balance sheet changed shape. We invested 850.18 lakhs in land during the year, against plant and machinery additions of just 3.20 lakhs - 99.3% of the years 885.85 lakhs capital expenditure went to land, funded substantially by our own operating cash generation rather than fresh borrowing. This was a deliberate capital choice for the year, and it left free cash flow negative at 99.33 lakhs, a tenth of the prior years 752.47 lakh drain, but negative nonetheless. Total borrowings rose from 679.57 lakhs to 786.82 lakhs, and a working-capital overdraft of 436.72 lakhs appeared at year end, taking net debt to equity - including that overdraft - to 0.37 times, against 0.19 times a year earlier.

Key financial ratios	Ratio FY2025-26	Ratio FY2024-25	Change
Current ratio	1.68	2.01	-16.4%
Debt-equity ratio	0.27	0.28	-3.6%
Debt service coverage ratio (as disclosed)*	0.82	0.86	-4.7%
Return on equity (closing net worth basis)	15.42%	17.06%	-9.6%
Inventory turnover ratio	3.17	3.39	-6.5%
Trade receivables turnover ratio	5.71	5.87	-2.7%
Trade payables turnover ratio	11.32	11.02	+2.7%
Net profit ratio	7.01%	8.53%	-17.8%
Return on capital employed	18.71%	20.39%	-8.2%
Interest coverage ratio (supplementary)	6.90	6.41	+7.6%

Two ratios need a word of explanation rather than a bare number. Return on equity is computed here on closing net worth; on the same basis used to compute FY2024-25s return of 22.90% in last years report (average net worth). FY2025-26 works out to 16.72% the decline reflects a materially larger equity base carried for the full year, not a deterioration in earnings power. Second, our own disclosed debt service coverage ratio, which measures EBITDA against our entire outstanding borrowings plus finance costs, stands at 0.82 times, marginally down from 0.86 times. On the conventional basis lenders and analysts typically use - cash profit available for debt service against actual interest and principal obligations falling due in the year - the ratio is considerably stronger, at approximately 2.07 times, up from 1.23 times a year earlier. We set out both bases here because the gap is a matter of definition, not a liquidity signal, and we would rather explain that plainly than let a single number be misread.

Six disputed statutory matters - five under GST and one under income tax, totalling 27.67 lakhs - remain under appeal through the appropriate authorities; none has been written off or conceded. We paid no dividend during the year, consistent with our approach of retaining capital for growth at this stage of the Companys development.

4) Opportunities, Threats & Challenges

Opportunities

The Union Budgets continued emphasis on roads, highways, railways and urban infrastructure keeps opening doors for mid-sized, agile contractors. For NACDAC specifically, three developments during FY2025-26 turned that general opportunity into something more concrete. Our order book and bid pipeline diversified meaningfully beyond NBCC, with a new relationship with Bharat Electronics Limited and active bids with Indian Railways and Indian Oil Corporation Limited under evaluation. We added Steel Structure and PEB work as a new capability, opening a segment we had not previously served. And we took our first direct step into highway-project execution through the Sadhivane Engineering sub-contract on NH-87, a deliberately modest entry designed to build the track record needed for larger, direct highway awards in future years.

Threats

The sectors risks are broadly unchanged from a year ago. Larger, better-capitalised EPC players continue to compete for the same Government tenders. Raw material prices - steel, cement, bitumen - remain capable of moving margins in either direction over the course of a project. Government payment cycles and approval timelines can create working capital pressure that is outside any single contractors control. And a broader economic slowdown or a sustained tightening in public spending would affect the pipeline every contractor in this sector depends on.

Challenges

Scaling as a newly listed company brings its own demands. Building the capability - manpower, equipment, systems - to handle larger and more complex projects remains an ongoing task, and one where our capital allocation this year leaned toward land rather than machinery, a choice we discuss candidly in the section that follows. Entering new geographies and new segments, as we did this year with Steel Structure/PEB and our first highway sub-contract, has to be done carefully rather than quickly. And retaining the skilled engineers and site managers who make our execution record possible remains, as ever, a competitive and continuous effort.

None of this changes our overall view: the road ahead carries real risk, some of it visible in this years own numbers, but our discipline in naming and managing these risks - rather than a belief that we are somehow exempt from them - is what gives us confidence in NACDACs ability to keep growing responsibly.

5) Risks and Concerns

Growth in infrastructure never comes without risk, and we would rather describe ours honestly than dress them in reassuring language that doesnt hold up to scrutiny.

Execution risk.  Infrastructure projects face the usual hazards of land access, regulatory approval and labour availability. Our response remains what it has always been - robust project management, advance resource planning, and close coordination with clients - and our record of on-time delivery through FY2025-26 reflects that discipline holding up.

Working capital and liquidity.  This is the years most candid point to make. We chose, deliberately, to deploy a large part of our operating cash generation into a land investment rather than keep it in reserve, and that choice left our cash position tighter at year end than we would ordinarily like, supported by a working-capital overdraft facility. We are not going to describe this as anything other than what it is: a real trade-off, taken with eyes open, and one we are actively managing by continuing the receivables discipline that drove this years cash generation in the first place. Government and PSU payment cycles remain a structural feature of our business that we plan around rather than assume away.

Cost of capital.  As we scale our borrowing base to fund growth, the cost of that borrowing matters more than it once did. We are managing this through the working-capital efficiency already underway rather than by adding further debt, and we will continue to look for opportunities to bring our effective borrowing costs down as our credit profile strengthens.

Raw material volatility.  Steel, cement and bitumen prices remain outside our control. Long-term supplier relationships, advance procurement planning and escalation clauses where contracts allow them remain our primary tools for managing this, and our improved material cost ratio this year suggests they are working.

Regulatory compliance.  As a listed company, our compliance obligations have only grown. We carry six disputed statutory matters under appeal, none conceded, and we treat SEBI, tax and other regulatory compliance as a matter of culture rather than a checklist, backed by our ISO-certified systems and our Audit Committees oversight.

Our people.  Retaining skilled engineers and sites managers in a competitive industry remains both a challenge and a priority. Our headcount grew from 29 to 32 during the year, and we continue to invest in the people-first culture that keeps our attrition low and our execution standards high.

None of this changes our overall view: the road ahead carries real risk, some of it visible in this years own numbers, but our discipline in naming and managing these risks - rather than a belief that we are somehow exempt from them - is what gives us confidence in NACDACs ability to keep growing responsibly.

6) Internal Control Systems and Their Adequacy

For NACDAC, growth is only meaningful when it is matched by discipline, accountability and transparency. Our internal control framework continues to be built around three simple objectives: that our financial numbers are reliable, that we comply with the law, and that our resources - cash, materials and assets - are protected from misuse.

Our FY2025-26 Auditors Report issued an unmodified opinion on both our financial statements and on our internal financial controls over financial reporting. Our accounting software maintains a complete audit trail throughout the year, with no instance of that trail being disabled or tampered with, and no fraud was reported by the audit officers during the year. Our internal processes continue to be reviewed by independent internal auditors, whose findings are reported directly to the Audit Committee of the Board, ensuring that any gaps are identified and addressed on an ongoing basis. In the view of management, the Companys internal control systems remain adequate and effective for our current scale of operations. As we take on larger and more complex projects - including our first steps into highway-project execution this year - we remain committed to strengthening these systems in step with that growth, rather than allowing scale to outpace control.

7) Cautionary Statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, expectations, projections or predictions may be considered forward-looking statements within the meaning of applicable securities laws and regulations.

These statements are based on certain assumptions and expectations of future events. Actual results, performance or achievements may differ materially from those expressed or implied, depending on economic conditions, Government policies, the regulatory environment, tax laws, natural calamities, market conditions, raw material price fluctuations, and other incidental factors.

The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events, except as required under applicable laws.

Readers are therefore advised not to place undue reliance on these forward-looking statements, and to exercise their own judgment when assessing the Companys future performance.