The finest word in Gülermak’s interim activity report is not “growth,” but “mole.” The company describes projects involving roughly 400 kilometers of tunnels, 120 underground metro stations, nearly 1,600 kilometers of railway/high-speed rail lines, and the use and operation of nearly 60 tunnel boring machines to date. This matters not because it sounds good in an investor presentation, but because it gives away the company’s real economic machine: Gülermak makes money not from what it digs underground, but from how much of that digging comes up through progress payments, invoices, and cash with minimal leakage.
As of March 31, 2026, the number in the book is 251.5 billion TL of backlog. The market price on May 18, 2026 is 178.60 TL; using 322.6 million shares inferred from paid-in capital, equity value is roughly 57.62 billion TL. I use this conservative share-count calculation instead of the lower market-cap field from the market-data provider. At first glance, there is a large discount on the table: the market assigns about 23 kuruş of value to every 1 lira of signed work. But cheapness in Gülermak is not only a multiple story. The balance sheet carries 29.2 billion TL of “assets arising from customer contracts.” In Q1, profit attributable to the parent was 605.3 million TL, while operating cash flow was negative 1.48 billion TL. The tunnel has been written into the ledger; the cash has not yet come out of the ground.
The company’s mask is “international infrastructure contractor.” That is true, but incomplete. Of Q1 revenue of 9.66 billion TL, 55.1 percent came from Poland, 13.8 percent from Romania, and 25.4 percent from Turkey. Operations outside Turkey accounted for 74.6 percent of total revenue. The project mix is not a one-word story either: 58.9 percent of revenue came from metro, light rail, and tramway; 28.4 percent from railway; and 9.4 percent from highway.
The backlog side is even more interesting. Of the 251.5 billion TL order book, 42.3 percent is in Romania, 33.9 percent in Turkey, and 15.5 percent in Poland. By project type, 69.7 percent is metro/light rail/tramway, and 22.8 percent railway. So while Poland leads in Q1 revenue, the future of the ledger depends more heavily on large public infrastructure jobs in Romania and Turkey. This distinction cannot be waved away as “international growth.” Revenue flows today from Poland; tomorrow’s risk and optionality sit in Romanian-Turkish progress payments.
| Item | 2026Q1 revenue share | 31 March 2026 backlog share |
|---|---|---|
| Poland | 55.1% | 15.5% |
| Romania | 13.8% | 42.3% |
| Turkey | 25.4% | 33.9% |
| Total non-Turkey revenue | 74.6% | - |
The good side of the company is clear: signed work at this scale requires a level of technical trust that a small contractor cannot command. Q1 revenue rose 8 percent year over year to 9.66 billion TL. Operating profit increased from 637 million TL to 1.01 billion TL. EBITDA in the activity report was 1.47 billion TL; on a simple annualized run-rate, that equals 5.87 billion TL.
The control table is narrow. Gülermak Emlak Yapı İnşaat Yatırım A.Ş. owns 59.83 percent, and Gülermak Turizm İşletme Yatırımı A.Ş. owns 28.16 percent; the public and other investors are left with 12.01 percent. The most important post-quarter event also came from this control table: after an accelerated bookbuild, these two shareholders transferred a total of 6.267 billion TL in capital advances to the company. This money will be offset against a private placement capital increase to be completed after the CMB application.
That sentence should be read little and thought about a lot. The capital advance is not on the March 31 balance sheet; therefore it should not be bluntly added into the Q1 net debt calculation. But it should not be ignored in market valuation either. Because the company exited March 31 with 15.22 billion TL of financial debt, 2.97 billion TL of net financial debt after deducting the 12.25 billion TL cash figure used in its own net financial debt table, and a 15.66 percent net financial debt/total capital ratio. If the 6.267 billion TL insider advance reduces fear around project financing, it creates value. If later it produces pricing against minorities or low-return capital allocation, the same event turns into value transfer.
The smell is in balance sheet quality. Construction accounting recognizes revenue as work is completed; the company also says it accounts for contract revenue and costs using the percentage-of-completion method. This method is not wrong; it is the language of the sector. But inside that language there is estimation: total project cost, remaining work, change claims, final settlements, penalty provisions. The financial report states openly that changes in work performance and contract terms can affect estimated profitability.
In Q1, gross margin fell from 16.9 percent to 14.2 percent, EBITDA margin from 16.3 percent to 15.2 percent, and net profit margin from 16.9 percent to 6.3 percent. The net monetary position loss was 862.0 million TL; TAS 29 casts a thick inflation shadow across the face of profit. Earnings are not bad, but they are not clean.
| Item | 2026Q1 |
|---|---|
| Parent net income | TRY 605.3mn |
| Operating cash flow | TRY -1,482.0mn |
| Working-capital movement | TRY -2,549.0mn |
| Contract assets | TRY 29,221.0mn |
| Contract liabilities | TRY 3,814.9mn |
The cash side is harsher. Against 605.3 million TL of profit attributable to the parent, operating cash flow was negative 1.48 billion TL. The working capital change was negative 2.55 billion TL. Trade receivables rose from 6.62 billion TL to 7.79 billion TL. Prepaid expenses remained high. There is some relief because contract assets fell from 31.90 billion TL to 29.22 billion TL, but 29.22 billion TL is still more than half the calculated equity value. Gülermak can write profit; the real test is collecting it.
The third risk is not off the books; it is written large in the notes. The Group’s guarantee, pledge, and mortgage position is 47.14 billion TL; all of it is in the nature of letters of guarantee, and the company says there are no mortgages or pledges. This is not “debt”; but in EPC work of this size, it shows the real cost of commitment. In addition, short-term provisions include 543.4 million TL for construction contract costs and warranty provisions, and 43.8 million TL for litigation provisions. Of financial debt, 8.46 billion TL consists of secured project loans used for the Krakow rapid tram project in Poland. These are not a disaster picture; they are the nature of the work. But it is a nature that can punish anyone approaching the share as “just a cheap multiple.”
Valuation must be read through two doors. The first door is the classic multiple. The 57.62 billion TL equity value is 3.04 times the 18.94 billion TL parent equity. If we multiply Q1 profit attributable to the parent by four, we get an annual run-rate profit of roughly 2.42 billion TL; the market is paying about 23.8x price/earnings for that. This is not cheap. On the EBITDA side, the picture is more reasonable, but not screamingly cheap: Q1 EBITDA was 1.47 billion TL; annualized, 5.87 billion TL. Adding the company’s March 31 net financial debt calculation to equity value gives an enterprise value of roughly 60.59 billion TL; this means about 10.3x annualized Q1 EBITDA. Since the capital advance will be offset against the private placement capital increase, it should not be cleanly deducted from the base multiple like net cash; it should be read separately only once dilution and the pricing mechanism become clear.
| Approach | Calculation | Read |
|---|---|---|
| Equity value / backlog | 57.6 / 251.5 = 0.23x | The market applies a heavy discount to the work book. |
| EV / annualized Q1 EBITDA | 60.6 / 5.87 = 10.3x | The classic multiple alone is not screaming cheap. |
| Capital-advance sensitivity | TRY 6.267bn advance is not deducted from base EV | It should be read separately once private-placement and dilution mechanics are clear. |
| P/E, annualized Q1 net income | 57.6 / 2.42 = 23.8x | The earnings multiple requires caution. |
| P/B | 57.6 / 18.94 = 3.04x | The book multiple is high for construction risk. |
The second door is company-specific: backlog value. It would be absurd to value all of the 251.5 billion TL backlog; there is contract profitability, collection, duration, and cost risk. But the 57.62 billion TL equity value is only 22.9 percent of backlog. A simple sensitivity: if one assumes 15 percent EBITDA conversion, close to the current Q1 EBITDA margin, the gross EBITDA potential of the backlog is 37.7 billion TL. Even if you erase half of that for time, cost, and collection risk, 18.9 billion TL of operational EBITDA pool remains. This is not a definitive valuation; but it shows that the market is applying a very heavy “show me first” discount to the backlog.
That is why the judgment is clear: Cheap. The cheapness does not come from the company being risk-free. On the contrary, it comes from the price being too afraid because the risks are visible. The work in Gülermak’s book is too large when compared with the market’s current value; the insider capital advance also softens the financing side of that scale. But this is not an industrial company to buy and forget. The same three things must be watched every quarter: is the backlog being converted, are contract assets turning into cash, and is gross margin being defended in the 14-15 percent band?
The counter-thesis must be stated in its strongest form. Gülermak may be trading at an expensive balance sheet multiple; Q1 net profit is far below last year; operating cash is negative; construction accounting requires investors to trust management; the Romania and Turkey backlog is exposed to political, administrative, and cost cycles. Also, the final price of the private placement capital increase and its effect on minorities do not yet appear in the sources as a completed fact. All of this can impose a lasting discount on the stock.
Where I reject this counter-thesis is scale and capital behavior. When I look at 251.5 billion TL of backlog, the 6.267 billion TL insider advance, the international revenue base, and mid-teens EBITDA margin at the same time, I think the market value is too skeptical. But the proof of this cheapness will not be found in the next presentation. It will be found in the cash box.
The breaking point is clear: if contract assets grow again in the next reports while operating cash remains negative, if gross margin slips below 12 percent, if backlog shrinks, or if the capital increase smells adverse to minorities, this thesis is withdrawn. If the opposite happens, if Q1’s dirty cash proves temporary, the capital advance enters the balance sheet cleanly, and backlog continues to turn into revenue and margin, the market will have to pay Gülermak not only a contractor discount, but also the receivable under the rail.
Gülermak is not the share of the calm dividend investor. This is the share of the investor who believes that the tunnel in the ledger will one day become an invoice, and that the invoice will one day reach the cash box, but who is willing to listen to the sound of the digging every quarter.