# Garuda Construction vs Sahana Systems: Comparing Growth, Risk, Management and Future Potential > This comparative investment thesis evaluates Garuda Construction (544271), a civil construction company, against Sahana Systems (SAHANA), an IT-enabled services provider. Spanning two distinct sectors, the analysis examines business models, management quality, future growth prospects, key risks and scenario outcomes to highlight how each stock may perform under different market conditions. **Companies**: Sahana Systems, Garuda Cons **Sectors**: Technology, Construction **Published**: 2026-09-20 **Last Updated**: 2026-09-22 **Source**: https://thesisloop.ai/thesis/garuda-construction-vs-sahana-systems-comparing-growth-risk-management-and-00f47818-8039-4759-850a-6beb5985f3f6 ## Score Overview | Company | Management | Business Model | Future Growth | Risk | |---------|-----------|---------------|--------------|------| | Sahana Systems | 73/100 | 66/100 | 56/100 | 88/100 | | Garuda Cons | — | 62/100 | 65/100 | 78/100 | ## Sahana Systems (NSE:SAHANA) **Sector**: Technology | **Industry**: IT Enabled Services ### Management Credibility - **[PRINCIPLE] Client Relationship Depth and Mining** (NEUTRAL, IN_PROGRESS): Management stated that it acquired marquee customers in the edutech ecosystem and had grown in that vertical, but provided no quantified implementation or revenue outcome. (1 in progress across 1 tracked commitment) > In parallel to that when we talk about our footprint in edutech, we have also acquired good marquee customers into edutech ecosystem and we have grown there well. - Source: Concall Transcript · Nov 2025 · p.3 - **[TREND] Analytics and AI Ops Growth** (POSITIVE, EXCEEDED): Management reported multiple large-scale government and port projects, including a digital twin for Tuticorin port and an IoT/AI upgrade for Dredging Corporation of India. It also described some projects as being in the two-digit-crore range. (1 exceeded across 1 tracked commitment) > Continue investing in AI/ML, DefenceTech, Electronic Warfare, FinTech, and Smart Classroom solutions while embedding ESG and responsible AI practices. - Source: Investor PPT · Nov 2025 · p.21 - **[TREND] Shift to Business Process as a Service (BPaaS)** (NEUTRAL): Management is developing an EV-charging business using third-party manufactured chargers enhanced with embedded systems, IoT and an internally developed CMS, with revenue shared per charging session. > We have tied up with ODM, which is actually manufacturing the chargers for us. With our capability of enhancing that chargers with our embedded system capability and IoT enablement ... We have also created our own CMS, which are deployed across those stations. And by which ... per charging, whatever - Source: Concall Transcript · Nov 2025 · p.10 - The presentation reports a workforce of 400+ rather than the committed target of more than 450 core technology personnel. Moreover, the disclosed figure is total workforce and is not identified as core technology staff, so the specific target is not demonstrated as achieved. (1 missed, 1 met, 3 in progress across 5 tracked commitments) (NEUTRAL, IN_PROGRESS) > Plus, we are also in talk with a couple of countries today, where we are planning to implement our interoperable UPI within that country, so the Indian technology can be leveraged on those countries. - Source: Concall Transcript · Nov 2024 · p.3 ### Business Model - **[METRIC] Client Retention Rate** (NEUTRAL, Change: STABLE): The relationship moat remained moderate rather than clearly expanding. FY2024-25 reported repeat business and long-standing relationships, but also high concentration: the top ten customers contributed 88% of revenue. The later baseline retains the same moderate assessment and flags concentration as a limitation. (1 stable) > Our top ten customers contributed approximately 88.00%... This high client concentration presents a potential risk. The baseline continues to classify switching costs and client relationships as moderate. - Source: Annual Report · Mar 2025 · p.89 - **[PRINCIPLE] Client Relationship Depth and Mining** (POSITIVE, Change: EXPANDING): The company reported long-standing customer relationships: US banking work had continued for years, healthcare work dated from 2016, and the smart-home customer relationship from 2019. These are concrete signs of repeat business and relationship stickiness. The later baseline confirms a moderate relationship moat but also identifies concentration, with the top ten customers contributing 88% of revenue. Therefore, relationship depth appears healthy, but dependence on a small customer base limits the strength of the moat. (2 stable, 1 shifted, 1 expanding) > Our strong delivery record has helped us build long-standing relationships with clients, many of whom continue to engage with us through repeat business across multiple project cycles. - Source: Annual Report · Mar 2026 · p.71 - **[PRINCIPLE] Process Maturity and Certification** (POSITIVE, Change: EXPANDING): The H1 FY25 transcript describes government empanelments with NIC, CDAC and RailTel, including selection in 23 of 24 technology categories after participation by more than 200 companies. These approvals created access to restricted government tenders and represented an early form of process and qualification advantage. The later baseline adds CMMI Level 5 and multiple ISO certifications, indicating that the formal quality and security moat strengthened over time. (5 expanding) > We are proud to be CMMI Maturity Level 5 compliant... ISO 9001:2015 (Quality Management), ISO/IEC 27001:2022 (Information Security Management), ISO 14001:2015 (Environmental Management), and... ISO/IEC 42001:2023 (Artificial Intelligence Management Systems). - Source: Annual Report · Mar 2026 · p.69 - **[TREND] Analytics and AI Ops Growth** (POSITIVE, Change: EXPANDING): The technology moat was already visible in H1 FY25 through a no-code computer-vision AI platform, processing of more than 5 million US healthcare transactions per minute, smart-home application and firmware work, and in-house anti-drone and radar systems. The company also described its anti-drone products as largely self-developed and customizable, with a solution costing roughly one-tenth of competing alternatives in one example. The later baseline continues to rate the technology moat as moderate and lists broader capabilities, so the moat appears to have strengthened, although no patent or exclusive-IP evidence was provided. (2 expanding) > We possess a no code AI platform into computer vision industry... we are processing more than 5 million transaction of US citizens health data per minute. - Source: Concall Transcript · Nov 2024 · p.4 - The company reported consolidated revenue of Rs. 52.6 crore in H1 FY25, compared with Rs. 69 crore for the full FY24. However, the transcript does not provide a separate IT-services revenue figure or share for H1 FY25. Management said its main focus is shifting toward defence technology and fintech services, both of which sit within the broader technology-services business. Compared with the later FY2025-26 baseline, IT Services remains a major revenue engine at 57.24% of revenue, but no direct quarter-to-quarter share comparison is possible from this transcript. (5 expanding across 2 engines) (POSITIVE, Change: EXPANDING) > FY 25-2026 23,659.24 13,543.14 57.24% 10,116.11 42.76 %. The significant contribution from IT Services highlights Sahana’s strategic focus on digital transformation and high-value technology solutions. - Source: Annual Report · Mar 2026 · p.70 ### Future Growth - **[PRINCIPLE] Client Relationship Depth and Mining** (POSITIVE, Trend: NEW_TREND): New customers contributed 24% of standalone revenue and 35% of Softvan revenue in H1 FY26. Softvan's higher new-customer mix indicates particularly strong acquisition momentum in the defence and deep-tech business, while the parent company has a more established customer base. With no earlier comparable percentages in the document, this is a newly quantified signal. (1 new trend across 1 signal) > For Sahana as a standalone, we have achieved 76% of the revenue from our existing customers. We have acquired 24% of new customers. ... for Softvan ... existing revenue of 65% ... and the new client acquisitions were 35%. - Source: Concall Transcript · Nov 2025 · p.4 - **[TREND] Analytics and AI Ops Growth** (NEUTRAL): Major new customer wins include the Indian Navy, Dredging Corporation of India, IPRCL and the Ministry of Information and Broadcasting. These projects cover defence testing, connected and AI-enabled dredgers, a digital twin for Tuticorin port, and media monitoring for 58 ministries. > We have acquired one project with NEU Jamnagar ... Indian Navy ... upgrading one facility ... upgrading the Dredging Corporation of India with our internet of things and AI capability ... acquired a project to build a digital twin ... alongside IPRCL ... SAMVAD ... for the media monitoring of even P - Source: Concall Transcript · Nov 2025 · p.4 - Revenue increased sharply from Rs. 52.64 crore in H1 FY25 to Rs. 114.16 crore in H1 FY26, a 116.9% year-on-year increase. However, it was broadly unchanged versus H2 FY25 at Rs. 114.81 crore, indicating that the latest half-year growth has paused after the earlier step-up. (4 decelerating, 1 new trend across 5 signals) (NEGATIVE, Trend: DECELERATING) > Revenue from operations 114.16 52.64 116.9% 114.81 (0.6%) - Source: Investor PPT · Nov 2025 · p.17 ### Risk Assessment - **[METRIC] Client Retention Rate** (NEGATIVE): The company reported that 60% of revenue came from government and 40% from enterprise customers. Within standalone H1 revenue, 76% came from existing customers, showing strong dependence on repeat accounts. Compared with the March 2026 baseline, where the top 10 customers contributed approximately 88% of revenue, concentration remained materially high and later became quantifiably more severe. (1 intensifying) > our 60% of the business comes from government, 40% comes from enterprise... for Sahana as a standalone, we have achieved 76% of the revenue from our existing customers. We have acquired 24% of new customers. - Source: Concall Transcript · Nov 2025 · p.9 - **[PRINCIPLE] Process Maturity and Certification** (NEUTRAL): The report shows meaningful exposure because the company serves healthcare, defence, fintech, banking and government customers and offers cybersecurity, AI and data-intensive services. However, it does not report a cyber incident, quantified loss, breach, penalty or deterioration. The risk is material but its trajectory is not measurable. (2 insufficient_data, 2 stable) > Sahana has received multiple international certifications ... including ISO/IEC 27001:2022 (Information Security Management) ... and ISO/IEC 42001:2023 (Artificial Intelligence Management Systems). - Source: Annual Report · Mar 2025 · p.85 - **[TREND] Cybersecurity Services Demand Surge** (NEGATIVE, Risk: HIGH): Cybersecurity, data privacy and responsible-AI failures could cause contract losses, penalties, reputational damage and project restrictions. The risk is heightened because the company handles mission-critical defence, healthcare, fintech and government systems. [REGULATORY] > Cybersecurity Solutions Comprehensive cybersecurity services covering infrastructure protection, data privacy, compliance, and cyber resilience strategies. - Source: Annual Report · Mar 2026 · p.74 - The risk was already high in FY2023-24 and remained high in FY2024-25. The top 10 customers contributed 88% of revenue in FY2024-25, up from 81% in FY2023-24. This is an adverse movement because dependence increased by 7 percentage points. The March 2026 baseline reports 88% again, indicating no subsequent improvement. (5 intensifying, 5 high-severity) (NEGATIVE, Risk: HIGH) > As on March 31, 2026 ... Projects in progress ... 2,100.22 - Source: Annual Report · Mar 2026 · p.104 ### Scenario Analysis - Sahana Systems operates in IT-enabled services, which is not directly targeted by the Iran conflict's primary energy, logistics, subsidy, or defence-procurement channels. The company may face limited indirect effects through rupee volatility, inflation, tighter interest rates, or customer cost-cutting, but there is no evidence of exposure to affected end-markets, energy inputs, logistics infrastructure, or defence supply chains. The available web evidence does not establish any company-specific structural linkage. (NEUTRAL) - AI adoption can directly increase demand for Sahana's implementation and engineering work, including port digital twins, computer vision, dredger modernisation, defence systems and the SAMVAD 2.0 information-monitoring product. If these projects scale, they could create higher-value contracts, repeat integration work and greater demand for cloud, data engineering, MLOps and cybersecurity services. However, AI also makes routine development, design, outsourcing and digital-marketing work cheaper, potentially reducing headcount intensity and compressing prices and margins; this risk is relevant to Sahana's 400-plus workforce and is not quantified. Over time, regulation, scarce AI talent, government procurement cycles and dependence on third-party cloud and compute could favour larger platforms and integrators, leaving Sahana as a positive but execution-dependent application-layer beneficiary rather than an AI infrastructure winner. (POSITIVE) > Data and AI • Business Intelligence and Reporting • Generative AI • AI and ML • Big Data Analytics ... Cloud and DevOps • DevOps Services • CloudOps Services • MLOPs Services ... Digital Product Engineering ## Garuda Cons (BSE:544271) **Sector**: Construction | **Industry**: Civil Construction ### Management Credibility - **[METRIC] EBITDA Margin by Contract Type** (NEUTRAL): Continue prioritising niche, high-margin projects and avoid contracts that could dilute margins. > Our focus continues to be on niche and high-margin projects. We consciously avoid contracts that could dilute margins and instead prioritize those that align with our profitability benchmarks. - Source: Investor PPT · Oct 2025 · p.28 - **[PRINCIPLE] Execution Capability and Equipment Ownership** (NEUTRAL): Complete the landmark Gruha 5-star rated project in FY26-27. — target: Completion during FY26-27 (+4 more commitments) > Our landmark Gruha 5-star rated project is slated for completion in FY26-27 and is expected to significantly enhance our reputation for quality and execution excellence. - Source: Investor PPT · Oct 2025 · p.28 - **[PRINCIPLE] Order Book Composition and Quality** (NEUTRAL): Complete the International State-of-the-Art Convention Centre at Gorakhpur within the next 30 months. — target: Project completion within 30 months (+2 more commitments) > The Company anticipates completing the project within the next 30 months, with approximately two-thirds of orders from the public sector and the remaining one-third from the private sector. - Source: Investor PPT · Oct 2025 · p.14 - **[TREND] Road Sector Maturation and Sectoral Diversification** (NEUTRAL): Expand into development projects in addition to civil construction. — target: Current order book includes 14 development projects: 7 residential, 2 commercial, 3 infrastructure and 2 industrial (+1 more commitment) > Expanding presence from civil construction into development projects ... Current order book includes 14 development projects (7 residential, 2 commercial 3 Infrastructure, 2 Industrial - Source: Investor PPT · Oct 2025 · p.22 - **[TREND] Technology and Mechanization Adoption** (NEUTRAL): Strengthen project execution capabilities through adoption of the latest technology. > Strengthen our project execution capabilities – Aligned with the latest Technology - Source: Investor PPT · Oct 2025 · p.6 - Deliver stronger results as execution accelerates after the monsoon season. (+2 more commitments) (NEUTRAL) > We remain bullish on the coming times and committed to delivering much stronger results as the execution cycle gains momentum post-monsoon. - Source: Investor PPT · Oct 2025 · p.28 ### Business Model - **[METRIC] Debt-to-Equity and Balance Sheet Strength** (NEUTRAL, Change: SHIFTED): The FY2024-25 report showed virtually no debt relative to equity, with a standalone debt-equity ratio of 0.00. The later baseline reports a consolidated ratio of 0.03, still very low but modestly higher. The balance-sheet moat therefore remains intact but has weakened slightly in relative terms. (2 shifted) > Debt-Equity Ratio 0.03 0.00 8079.47% Due to Increase in Inter Corporate Deposit - Source: Annual Report · Mar 2026 · p.188 - **[PRINCIPLE] Execution Capability and Equipment Ownership** (POSITIVE, Change: EXPANDING): In FY2024-25, Garuda disclosed active projects across five residential, two commercial, one residential-cum-commercial, one industrial, one infrastructure and one civil-construction-cum-services project. The later baseline continues to describe a broader multi-sector execution track record, including residential, hospitality, infrastructure and EPC work. The capability moat is therefore expanding in demonstrated project breadth, although it remains moderate rather than dominant. (2 expanding, 1 stable) > The Company has established a diversified presence in the construction and engineering sector, with experience across residential, commercial, hospitality, infrastructure and EPC projects. Over the years, the Company has developed a strong project execution track record, supported by its capabilitie - Source: Annual Report · Mar 2026 · p.50 - **[PRINCIPLE] Order Book Composition and Quality** (POSITIVE, Change: EXPANDING): The order book expanded from Rs. 1,400 crore at IPO to Rs. 3,461 crore by October 2025, a 2.5x increase. The company also added approximately Rs. 353 crore of fresh orders during Q2 FY26. This strengthens revenue visibility and supports the later baseline assessment of a moderate execution moat. (1 expanding) > The Company's order book has expanded 2.5x, reaching Rs. 3,461 crore, up from Rs. 1,400 crore at the time of its IPO. - Source: Investor PPT · Oct 2025 · p.15 - **[TREND] Road Sector Maturation and Sectoral Diversification** (POSITIVE, Change: NEW): Industrial and infrastructure work became a meaningful revenue contributor, increasing from 0% in FY25 to 18% in H1 FY26. This reflects a favorable diversification away from dependence on commercial buildings, supported by the Gorakhpur convention centre, Rapti Nagar township and sports city, hydro project, and agro-processing cluster. (1 new) > Category wise Revenue Contribution: FY25 Industrial & Infrastructure 0%; H1 FY26 Industrial & Infrastructure 18%. - Source: Investor PPT · Oct 2025 · p.34 - **[TREND] Technology and Mechanization Adoption** (NEUTRAL, Change: STABLE): FY2024-25 management stated that it had not reported technology absorption or research-and-development spending, while also discussing adoption of modern construction technologies and digital project-management tools. The later baseline still describes technology adoption as unquantified and weak. There is no concrete evidence of a measurable technology moat developing. (2 stable) > Driving innovation by adopting modern construction technologies and digital solutions in project management and execution. - Source: Annual Report · Mar 2026 · p.5 - Construction-service revenue increased from Rs. 21,653.01 lakhs in FY2024-25 to Rs. 52,111.52 lakhs in FY2025-26, making it the dominant revenue engine. This is a substantial expansion of the core business. (5 expanding across 2 engines) (POSITIVE, Change: EXPANDING) > Revenue Arising from Construction Service (Refer Note 34) 52,111.52 21,653.01 - Source: Annual Report · Mar 2026 · p.131 ### Future Growth - **[PRINCIPLE] Execution Capability and Equipment Ownership** (POSITIVE, Trend: NEW_TREND): Garuda reports 16 ongoing projects across multiple states and uses an asset-light model, meaning it relies on third-party equipment, materials and labour rather than owning heavy machinery. The model supports scaling, but the document gives no earlier quarterly project-count series. Fixed assets remain very low at Rs. 1.7 crore as of September 2025, confirming the capital-light structure. (1 new trend across 1 signal, 1 leading indicator) > Relying on third-party subcontractors for equipment, materials & labor... Avoids heavy capital investments in machinery & improves margins... Asset-light approach ensures scalability & cost efficiency across geographies - Source: Investor PPT · Oct 2025 · p.22 - **[METRIC] EBITDA Margin by Contract Type** (NEGATIVE, Trend: DECELERATING): Margins have declined steadily over the longer period as the company scales: EBITDA margin fell from 34.6% in FY23 to 32.2% in FY24, 29.5% in FY25 and 29.3% in H1 FY26. PAT margin followed the same pattern, falling from 25.4% to 23.6% to 22.1%, before a modest H1 FY26 improvement to 22.8%. The latest quarter improved year on year, but the multi-year direction remains margin compression. (1 decelerating across 1 signal) > H1 FY26 EBITDA Margin 29.3% versus 30.6% in H1 FY25, -130 bps; PAT Margin 22.8% versus 23.1%, -30 bps... FY23 EBITDA Margin 34.6%, FY24 32.2%, FY25 29.5%, H1 FY26 29.3%. - Source: Investor PPT · Oct 2025 · p.30 - **[METRIC] Revenue Execution Rate (Revenue/Opening Order Book)** (POSITIVE, Trend: ACCELERATING): Revenue growth accelerated substantially from FY24 to FY25 and again in H1 FY26. H1 FY26 revenue of Rs. 241.6 crore already exceeded FY25 full-year revenue of Rs. 225.7 crore. The latest quarterly comparison shows Q2 FY26 revenue down 6.9% sequentially from Q1 FY26, reflecting a temporary monsoon-related execution slowdown rather than a clear reversal because year-on-year growth remained very strong. (1 accelerating across 1 signal) > Revenue from Operations 116.5 46.8 149.2% 125.2 -6.9% 241.6 81.9 195.1%... we have already achieved the full-year revenue of the previous fiscal within the first six months of FY26... prolonged and heavy rains during the quarter impacted on-ground progress... execution will pick up pace in the secon - Source: Investor PPT · Oct 2025 · p.30 - **[PRINCIPLE] Order Book Composition and Quality** (POSITIVE, Trend: ACCELERATING): The order book has expanded sharply to Rs. 3,461 crore, 2.5 times the Rs. 1,400 crore level at IPO. Q2 FY26 added Rs. 353 crore of fresh orders, indicating continued strong order traction. However, only one current-quarter inflow figure is provided, so the acceleration assessment is based mainly on the large cumulative expansion. (1 accelerating, 1 new trend across 2 signals) > With a strong order book of around ₹3,461* crore, Garuda Construction continues to build on its momentum. During the quarter, we added fresh orders worth nearly ₹353 crore... With a robust order book providing visibility for the next three years... - Source: Investor PPT · Oct 2025 · p.29 - **[PRINCIPLE] Subcontractor and Labor Management** (NEUTRAL): Growth is being achieved with strong profitability, although margins are slightly lower than the previous year as the company scales. H1 FY26 EBITDA was Rs. 70.8 crore, with a 29.3% margin, while PAT was Rs. 55.1 crore, with a 22.8% margin. — EBITDA and PAT margins: EBITDA margin down 130 bps YoY; PAT margin down 30 bps YoY > EBITDA Margin (%) 29.3% 30.6% -130 bps... PAT Margin (%) 22.8% 23.1% -30 bps - Source: Investor PPT · Oct 2025 · p.30 - **[TREND] Road Sector Maturation and Sectoral Diversification** (POSITIVE, Trend: ACCELERATING): The business is becoming more diversified. Industrial and infrastructure revenue increased from 1% in FY23 and 7% in FY24 to 5% in FY25 and 18% in H1 FY26. The government/private mix also moved from strongly private-led in FY23-FY24 to a more balanced 52% private and 48% government in H1 FY26. This is a positive, newly visible diversification trend, although the latest mix is only available for H1 FY26. (1 accelerating across 1 signal) > H1 FY26 52% 30% 18%... 1%... H1 FY26 52% 48% - Source: Investor PPT · Oct 2025 · p.34 - Garuda has a sizeable development pipeline of 14 projects: seven residential, two commercial, three infrastructure and two industrial. The document provides no earlier comparable pipeline count, so this is a new trend in the disclosed growth profile rather than a measurable multi-quarter acceleration. (1 new trend across 1 signal, 2 leading indicators) (POSITIVE, Trend: NEW_TREND) > Presence across MMR, Delhi, Rajasthan, Punjab, Karnataka, Tamil Nadu & Arunachal Pradesh... Ongoing: Rajasthan (1), Punjab (1), Uttar Pradesh (2), Mumbai (9), Bangalore (1) - Source: Investor PPT · Oct 2025 · p.23 ### Risk Assessment - **[CATALYST] Steel and Cement Price Movements** (NEGATIVE, Risk: HIGH): FY25 material consumption rose to Rs. 4,284.26 lakhs from Rs. 936.34 lakhs, while construction expenses increased to Rs. 9,666.41 lakhs from Rs. 8,500.22 lakhs. The company explicitly identifies raw-material price volatility and cost escalation as risks, but its disclosures state that commodity-price risk and hedging are not applicable. The FY26 baseline shows much higher materials and construction expenses, together around 66% of revenue, confirming greater cost sensitivity. This risk intensified. (3 intensifying, 1 high-severity) > The key risks include project execution delays, fluctuations in material and labour costs, intense competition, regulatory changes and working capital requirements. - Source: Annual Report · Mar 2026 · p.52 - **[METRIC] Debt-to-Equity and Balance Sheet Strength** (NEUTRAL, Risk: MODERATE): The company has increased its use of short-term related-party funding. Although total debt is still low, this borrowing is repayable on demand and could create a liquidity issue if the related party asks for repayment while project cash is tied up. [BALANCE_SHEET] > Debt-Equity Ratio 0.03 0.00 8079.47% Due to Increase in Inter Corporate Deposit - Source: Annual Report · Mar 2026 · p.188 - **[METRIC] Revenue Execution Rate (Revenue/Opening Order Book)** (NEGATIVE, Risk: HIGH): Revenue and profit depend heavily on management estimates of project completion and total cost. If costs rise, claims are rejected, or completion estimates change, previously reported revenue and profit may have to be reduced. [EXECUTION] > The recognition of revenue and measurement of contract assets involve significant management judgement and estimation, particularly in estimating total costs to complete the contracts, determining the stage of completion, evaluating contract modifications, variations, claims, liquidated damages and - Source: Annual Report · Mar 2026 · p.95 - **[PRINCIPLE] Order Book Composition and Quality** (NEGATIVE, Risk: HIGH): The October 2025 presentation shows a rapid scale-up: H1 FY26 revenue reached Rs. 241.6 crore against Rs. 81.9 crore in H1 FY25, while the order book expanded to approximately Rs. 3,461 crore. This increases the amount of future revenue and profit dependent on execution estimates across multiple projects. The presentation does not disclose contract-asset balances, project-level cost-to-complete estimates, claims, or provision coverage, so deterioration cannot be quantified. The later baseline confirms that contract assets and revenue had become substantially larger, indicating that the underlying estimation exposure increased over time. (1 intensifying, 1 stable, 1 high-severity) > Trade Receivables... UP World Trade Centre Private Limited 9,171.63... Contract Assets... Shree Umiya Builder & Developers 8,511.73... UP World Trade Centre Private Limited 1,833.27 - Source: Annual Report · Mar 2026 · p.135 - **[METRIC] Revenue Execution Rate** (NEGATIVE): The risk was already material in October 2025 because the order book was heavily concentrated in large, long-duration projects. The Gorakhpur convention centre alone had a total value of approximately Rs. 1,087 crore and outstanding order book of Rs. 1,015 crore, while Rapti Nagar Township had Rs. 687 crore outstanding. Management also reported that prolonged heavy rains had slowed on-site progress, although it expected execution to improve after the monsoon. Compared with the later March 2026 baseline, where additional large projects and phased Gorakhpur developments remained execution-sensitive, the risk appears to have intensified rather than been resolved. (1 intensifying) > The prolonged and heavy rains during the quarter impacted on-ground progress to some extent. However, we remain confident that execution will pick up pace in the second half of the year. - Source: Investor PPT · Oct 2025 · p.28 - **[PRINCIPLE] Subcontractor and Labor Management** (NEGATIVE, Risk: HIGH): FY25 construction expenses were Rs. 9,666.41 lakhs, including labour and works contract charges of Rs. 9,216.73 lakhs, while material consumption was Rs. 4,284.26 lakhs. Together these costs represented about 61.8% of operating revenue. Management specifically identifies subcontractor dependency, labour availability, raw-material volatility and cost escalation as key industry risks. The FY26 baseline shows labour and works contract charges of Rs. 19,494.78 lakhs and materials consumed of Rs. 14,492.33 lakhs, together about 66% of revenue. Cost exposure therefore increased and the risk intensified. (3 intensifying, 1 high-severity) > Labour and Works Contract Charges (Refer Note 34) 19,494.78... Cost of Material Consumed... Purchases 14,492.33 - Source: Annual Report · Mar 2026 · p.131 - **[PRINCIPLE] Working Capital Intensity and Cash Conversion** (NEGATIVE, Risk: HIGH): FY25 standalone contract assets were Rs. 9,613.25 lakhs, equal to about 42.7% of standalone operating revenue of Rs. 22,503.01 lakhs. This was a new and material balance compared with nil contract assets in FY24. The later FY26 baseline reports standalone contract assets of Rs. 21,891.23 lakhs, about 41% of revenue, and consolidated contract assets of Rs. 26,794.66 lakhs. Thus, the risk emerged in FY25 and increased substantially in absolute value by FY26, even though the ratio to revenue remained broadly similar. (5 intensifying, 5 high-severity) > Contract Assets - Revenue in Excess of Billing 21,891.23 9,613.25 - Source: Annual Report · Mar 2026 · p.124 - **[TREND] Road Sector Maturation and Sectoral Diversification** (NEUTRAL, Risk: MODERATE): The company operates in only one business and one geography, so a slowdown in Indian construction demand, approvals or real-estate activity could affect the entire business rather than just one division. [DEMAND] > The Company operates in single business segment i.e. Construction Activity hence segment information has not been provided. Further the Company conducts its business in only one Geographical Segment, viz., India. - Source: Annual Report · Mar 2026 · p.142 - This risk was already present in FY25 because construction revenue was recognised using the percentage-of-completion method. FY25 contract assets of Rs. 9,613.25 lakhs were recognised for revenue earned in excess of billing, showing that a sizeable amount depended on progress and billing estimates. The statutory auditor identified trade receivables and related management estimates as a key audit matter. The FY26 baseline reports revenue of Rs. 53,071.52 lakhs and contract assets of Rs. 21,891.23 lakhs, meaning the exposure increased materially in absolute terms. The risk therefore intensified from FY25 to FY26. (4 intensifying, 1 emerging, 3 high-severity) (NEGATIVE, Risk: HIGH) > The project spans approximately 207 acres and comprises an integrated greenfield township of approximately 177 acres and a Sports City spread over approximately 30 acres... The development is proposed to be executed in phases over a period of approximately three years and six months. - Source: Annual Report · Mar 2026 · p.50 ### Scenario Analysis - AI may eventually help Garuda with design, tendering, scheduling, documentation, quality inspection and project controls, but there is no evidence that these tools are currently deployed or generating savings. The main external opportunity—construction of data centres, substations, cooling systems and related power infrastructure—is not visible in its project mix, which remains concentrated in commercial and residential work. Consequently, AI is unlikely to materially change near-term revenue, margins or the current order book, although outsourced labour could face gradual productivity and workforce pressure as construction becomes more automated. Over time, specialist contractors with data-centre, electrical and digitally managed-facility experience may gain share, potentially leaving Garuda relatively less competitive unless it develops those capabilities. (NEUTRAL) > Strengthen our project execution capabilities – Aligned with the latest Technology - The first-order shock reaches Garuda indirectly through higher diesel, freight, insurance and petroleum-linked construction inputs, with additional rupee risk for imported MEP, HVAC and electrical equipment. In the second order, vendors and subcontractors may raise quotations or face delays, compressing margins on contracts without strong escalation clauses; advance procurement and slower customer payments could also strain cash conversion despite zero short-term borrowings. Higher inflation and interest rates may weaken private-sector construction starts, while fiscal pressure could delay lower-priority public projects or payments. In the third order, energy-security, logistics and defence-related civil work could create opportunities, but Garuda's disclosed order book is concentrated in general infrastructure, buildings, townships, hotels and convention-centre projects, so no meaningful structural upside is established. (NEUTRAL) > Source, transport, and manage materials and equipment safely. --- *Generated by [ThesisLoop](https://thesisloop.ai) — AI investment research for Indian equities.* > AI-generated research for informational and educational purposes only — not personalized investment advice, a stock recommendation, or a guarantee of returns. ThesisLoop is not a SEBI-registered investment adviser or research analyst. Do your own diligence and consult a registered professional before making any investment decision.