Direcional: 1Q26: Operational resilience supports solid results

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Direcional: 1Q26: Operational resilience supports solid results

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Direcional

1Q26: Operational resilience supports solid

results

Maintain Rating: BUY | PO: 18.00 BRL | Price: 13.21 BRL

Net income slightly above BofAe and consensus 11 May 2026

Direcional (DIRR) reported a solid 1Q26, with net income ex-non-recurring 5% above Equity

BofAe, mainly driven by slightly better than expected minorities. Other Operating Income

Victor Tapia >>

and Expenses came in at negative R$13mn (vs -R$26mn BofAe, -49% y/y and -61% q/q), Research Analyst

impacted by a non‑recurring positive result from corporate transactions, totaling Merrill Lynch (Brazil) tapia.victor@bofa.com

R$13mn. Despite recent concerns around construction cost inflation, gross margins and

Carlos Peyrelongue >>

backlog remain solid and stable at 43% (+10bps q/q and +130bps y/y) and 45% (-20bps Mex Eq Strat/Research Analyst

q/q and +30bps y/y), respectively. Merrill Lynch (Mexico) carlos.peyrelongue@bofa.com

Key watch points ahead include: (i) revenue growth catching up with current sales levels,

in line with construction execution; (ii) the sustainability of gross margins amid a

potentially inflationary cost environment; and (iii) sales velocity, which could act as a Stock Data

trigger for stronger cash generation or a revision to launch volumes. We recently

upgraded Direcional to Buy (from Neutral) as it remains one of the highest-quality Price 13.21 BRL

operators in the sector, having managed pandemic‑related cost pressures exceptionally Price Objective 18.00 BRL

well (c.2% gross margin decline vs. ~20% for peers), which we view as a defensive Date Established 5-May-2026

attribute in the current inflationary environment. DIRR is trading at 6.3x 2027 P/E (18% Investment Opinion C-1-7