Q3 FY24 Concall notes
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Project Highlights:
- Completed 7 projects in Q3FY24, including Adani Realty’s residential and industrial warehousing for Reliance Jamnagar.
- Awarded 2 major projects: Kalamkhush Campus at Gandhi Ashram and Gujarat Biotechnology Research Centre.
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Order Inflow and Bookings:
- Q3FY24 order inflow at Rs.1,060 crore; total Rs.1,995 crore post recent letter of acceptance.
- Outstanding order book at Rs.4,443 crore (51% government projects) as of 9MFY24.
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Project Development Updates:
- Legal proceedings for Surat Diamond Bourse underway.
- UP Projects revenue: Rs.250 crore (Q3), Rs.1,429 crore (9MFY24).
- SMC administrative building progressing; Q3 revenue Rs.49 crore, 9MFY24 total revenue Rs.171 crore.
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Recognition and Awards:
- Awarded “Fastest Growing Construction Company in India” at 21st Construction World Global Awards, 2023.
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Financial Outlook:
- Company bids for large projects in new states, displaying confidence in effective nationwide execution.
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Strategic Vision:
- Gradual move up value chain, targeting higher-ticket projects.
- Bid book spans Madhya Pradesh, Odisha, Delhi, UP.
- Aligns with 2024 budget’s Rs.11 lakh crore infrastructure allocation (3.4% of GDP).
- Commitment to India’s growth, positive development, confident in solid economic fundamentals.
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Financial Performance (Q3FY24 vs Q3FY23):
- Revenue from Operations: Rs.697 crore (40% YoY increase).
- EBITDA: Rs.71 crore (16% YoY increase).
- EBITDA Margin: 10.25% (down from 12.39%).
- Net Profit: Rs.33 crore (8% YoY decrease).
- PAT Margin: 4.63% (down from 7.01%).
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Expense Analysis:
- Other Expenses: Increased from Rs.5.2 crore (Q2) to Rs.8.51 crore (Q3), includes ECL provision on Trade receivables.
- Employee Costs: Rose from Rs.29.56 crore (Q2) to Rs.33.75 crore (Q3) due to appraisals.
- Finance Cost: Increased from Rs.12 crore (Q2) to Rs.15 crore (Q3) due to short-term borrowings and bill discounting.
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Capital Expenditure and Balance Sheet:
- Capex during 9 months: Rs.142 crore, with Rs.74 crore for precast facilities.
- Long-term Borrowings: Rs.75 crore (including short-term maturities of Rs.50 crore).
- Short-term Borrowings: Rs.403 crore (excluding short-term maturities of Rs.50 crore).
- Gross Block of Assets: Rs.543 crore, Net Block Rs.325 crore (additions in Q3: Rs.34 crore).
- Net Unbilled Revenue: Rs.409 crore.
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Working Capital and Credit Facilities:
- Working Capital Days: Debtor - 63, Creditor - 60, Inventory - 35, Total - 38.
- Utilized Credit Facilities: Rs.1,030 crore; Rs.467 crore available for utilization.
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Fixed Deposits:
- Total Fixed Deposits: Rs.257 crore; Lien-free deposits: Rs.47 crore; FDs under lien: Rs.210 crore.
Business Growth:
- Order Book and Revenue:
- Current year’s target: Rs.3,000 crores order book.
- Next year’s projection: Rs.3,000 crores revenue, Rs.3,500 crores order book.
- Profit Margin:
- Targeted margin: 11% to 12%.
- Commitment to maintaining margins through tender criteria.
Promoter Shareholding:
- Reduced from 74% to 66% over 2-3 years.
- Reductions due to personal requirement.
- Commitment to maintaining current level (66.2%) for the next year.
- Reductions driven by personal needs.
- Approximately 10 employees beyond the promoter family earn over Rs.50 lakhs.
Revenue Growth and Projections:
- Nine-Month Performance:
- Achieved 15% revenue growth in the last nine months.
- FY24 Revenue Projection:
- Projected revenue between Rs.2,500 and Rs.2,600 crores for FY24.
Margin Outlook:
- Margin Range Adjustment:
- Margin range revised to 11-12% due to uncertainties in EPC projects.
- Fourth Quarter Margin Expectation:
- Anticipation of returning to the original margin levels after the completion of UP projects.
- Previous quarter’s lower EBITDA margin of 10.3% attributed to UP project expenses.
Equity Raising and Financial Strategy:
- Equity Enabling Resolution:
- Enabling resolution for potential growth capital needs.
- Not an urgent requirement, contingent on order book expansion and bank guarantees.
- Bank Guarantee Requirements:
- Anticipated bank guarantees for Rs.1,500 to Rs.1,600 crores order book.
- Potential need for Rs.350 to Rs.400 crores in bank guarantees, requiring a minimum margin of Rs.300 crores.
Project Updates and L1 Orders:
- L1 Order Clarification:
- L1 order of Rs.928 crores includes Science City and Gati Shakti, Vadodara projects.
- Exclusion of the dairy plant, Rajkot project, due to cancellation related to budget constraints.
- Dairy project expected to be re-tendered in March or April.
Bid Pipeline and Project Status:
- Delhi Railway Station Project:
- Status: Tender of Rs.4,800 crores has been cancelled.
- Overall Bid Pipeline:
- Total Bid Book: Stands at Rs.6,000 crores.
- Major Projects in Bid Pipeline:
Financial Strategy and Debt Management:
- Surat Diamond Bourse (SDB) Claim:
- Claimed amount: Rs.539 crores
- Section 9 proceedings initiated to protect funds.
- Outcome expected by end of February.
- Potential settlement of Rs.300 to Rs.400 crores.
- Equity Raising Consideration:
- Decision on equity raising contingent on SDB outcome.
- QIP option under consideration if needed.
- Monitoring the situation for the next 1-1.5 months.
- Debt Situation:
- Current combined short-term and long-term debt: Rs.478 crores.
- Rise in debt attributed to SDB and UP projects’ receivables.
- Anticipating Rs.300 crores from SDB by March to normalize debt levels.
- QIP Enablement:
- QIP enabled to address potential working capital needs.
- Ensures smoothness in working capital and reduces interest costs.
- Unbilled Revenue and CAPEX:
- Net unbilled revenue: Rs.409 crores.
- Nine months CAPEX: Rs.142 crores.
- Additional CAPEX of 2-3% anticipated for new projects in the fourth quarter.
- Upcoming Projects:
- Initiating 2-3 large projects, including Gatishakti (Rs.630 crores) and Dharoi and Sabarmati Riverfront (Rs.400+ crores).
- Anticipating minimal CAPEX for Dharoi and Sabarmati Riverfront initially.
Precast Revenue and Margins:
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Nine-Month Precast Revenue:
- No specific figure available due to orders being from various clients.
- Anticipated overall revenue from Precast by year-end: Over Rs.180 crores.
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Margins Expectation:
- Initial stages focused on market penetration.
- Targeting margins of 11% to 12% in the long run.
- Potential for higher margins (3% to 4%) when technology is universally accepted.
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Current EBITDA Status:
- Presently EBITDA-positive but not at the targeted margin levels.
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Current Utilization and Capacity:
- Present utilization: 40% to 50%.
- Total plant capacity: 30 lakh square feet per year.
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Potential Margins with Increased Utilization:
- At 80% utilization, expected margins of 11% to 12%.
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