Can Gamuda meet FY27 earnings projections?

Gamuda has secured billions of ringgit worth of new construction contracts in FY26, leading to a 28.7% increase in its share price. However, analysts argue that the market's optimism about Gamuda's earnings prospects may be misplaced. While Gamuda secured triple the value of construction jobs in FY26 compared to FY24, its margins have been declining.

The stock hit RM5.80 per share in August 2025, the highest since it was split in December 2024, but then declined to RM3.70 on March 31, 2027, as the group was unable to meet the earnings forecast. Analysts predict Gamuda's FY27 net profit could reach RM1.4 billion, based on consensus estimates. Gamuda's overseas ventures, while contributing the majority of its revenue, have declining profit margins, with overseas net profits only accounting for 48.9% of total overseas profits in FY26.

The group's orderbook is heavy on overseas contracts, with 57% of unbilled orders coming from overseas. Analysts believe that Gamuda's construction revenue growth in FY27 could reach between RM22.3 billion and RM23.8 billion, assuming a net profit margin of 5%. This would not only bring the company's earnings close to the RM1.4 billion forecast but also provide additional profits from its growing renewable energy portfolio.

However, Gamuda's debt-to-equity ratio is concerning, with net debt of RM9.4 billion against RM4.7 billion in cash and marketable securities. The company's rapid orderbook conversion and expected cash inflows from land acquisitions and the Eaton Park development in Vietnam are expected to accelerate deleveraging from FY27 onwards, but the question remains whether Gamuda can actually execute its growth plans and improve construction margins.