Q4 FY24 Concall notes
Diversification and Sector Overview:
- Diversification into solar power plant projects.
- Indian infrastructure sector booming, with significant funding boost.
- Vision 2047 aims for extensive highways and high-speed corridors.
- Interest in Namami Gange program and water infrastructure projects.
Project Highlights:
- FY '24 new project projection: Initially aimed for INR8,000 crores, achieved INR4,350 crores (due to all time low NHAI awarding).
- Q4 FY '24 secured three new railway projects in EPC mode, totaling INR1,872.33 crores.
- Two new highway projects awarded in Q4 FY '24: Chennai-Tirupati Package 2 and Kalimandir-Dimna Chowk.
- Entry into solar segment with KUSUM-C project for 543 MW DC valued at INR1,307 crores EPC.
- Collaboration with Stockwell Solar Services for Jodhpur solar project worth INR2,300 crores.
- Future guidance: Aim for INR11,000-12,000 crores order inflow in road, railway, solar, and water sectors.
- Expecting 15-20% growth in top line with steady margin of 15-16%.
Operational and Financials:
- Order book stands at INR12,434 crores, diversified across EPC, HAM, railway, and solar segments.
- Challenges faced in Neelmangala-Tumkur project due to land availability.
- Railway projects progressing well, with DMRC Metro projects at 50% completion.
- Varanasi-Ranchi-Kolkata Package 13 and 10 in initial stages of land acquisition.
Solar Segment:
- Solar segment contracts under KUSUM scheme: Split project with consortium, HG responsible for 65% of INR1,300 crores.
- Majority of solar project (85%) involves procurement, with HG’s existing EPC team handling civil work.
- Margins maintained at around 15% for EPC contracts, with equity at 14-15%.
- INR1,300 crores project purely EPC, excludes maintenance.
Namami Ganges and Water Projects:
- Namami Ganges projects in initial discussion phase, focusing on water sector projects like desalination and treatment plants.
Order Inflow Breakdown:
- INR11,000-12,000 crores order inflow projected.
- Breakdown by sector:
- Highway: Around INR8,000 crores.
- Railway and Solar combined: INR2,000 crores.
- Water: Approximately INR1,000 crores.
Revenue Projection and Run Rate:
- Anticipated revenue for FY '25: Around 50% of INR12,434 crores order book, i.e., INR6,000 crores plus.
- Similar run rate expected for FY '26.
- FY '25 revenue breakdown:
- New railway projects: INR700 crores.
- Solar projects: INR500 crores.
- Additional revenue from Jharkhand, Jamshedpur, and Tirupati projects.
Solar EPC Project:
- Majority of project EPC tied up with prominent supplier at rock bottom prices.
- No expected price escalation for electrical ancillary components.
- Equity investment around INR520 crores, approximately 40%.
- Monetization plan for project post-completion.
Railway Projects:
- New railway projects initiated despite peers’ exits from railway segment.
- Railway projects structured similarly to NHAI projects, ensuring milestone-based payments.
- Positive changes observed in decision-making and payment schedules by railways.
- Expectation of timely payments to mitigate working capital cycle challenges.
BOT Opportunity:
- Current focus on subcontracting for BOT projects.
- Not pursuing BOT toll projects directly.
- Collaborations with companies like Adani and IRB for BOT projects.
Overall Strategy:
- Continued focus on profitable projects despite industry challenges.
- Monitoring working capital closely, anticipating timely payments from railway projects.
- Seeking growth opportunities through strategic collaborations and subcontracting.
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