Q4 FY24 Concall notes
Domestic Operations
- Total Domestic Revenue: Rs. 1,077 crores
- Growth: 7.4% YoY
- Domestic Product Business: Rs. 261 crores
- Growth: 19% YoY
- Order Book: Rs. 348 crores
- Domestic Project Business: Rs. 816 crores
- Growth: 4% YoY
- Record Order Execution: Rs. 343 crores in Q4
- Order Book: Rs. 3,054 crores
- Notable Development: Madhya Pradesh Jal Nigam contract termination, 8 other projects on track
International Operations
- Order Book: Rs. 458 crores (as of 31st March 2024)
- Gruppo Aturia: Strong demand in MENA region, robust aftermarket revenues
- WPIL South Africa: Focus on water sector, aftermarket contracts from Eskom Power
- Sterling Pumps and United Pumps Australia: Robust order books, strong growth expected
- WPIL Thailand: Record revenues in FY24, continued momentum expected
Strategic Developments
- Navy Order Execution: On track, contributing to revenue growth from FY25 onwards
- Product Division Outlook: Improved due to new products for oil, gas, sewage, and drainage
- Inorganic Opportunities: Pursuing acquisitions, positive outcomes anticipated by mid FY25
- Focus on Core Industrial Pump Business: Following successful divestment of Rutschi’s nuclear business
Challenges and Disputes
- Madhya Pradesh Jal Nigam Contract: Disputed termination due to delayed land allotment, exploring contractual remedies
Future Outlook
- Strong Revenue Visibility: Positive outlook for FY25 with growing order book and successful project executions
Profitability
- Domestic and International: EBITDA margins approximately 17%-18%, within the band of 15%-20%
Navy Order
- Framework Agreement: Rs. 17-18 crores
- Completion Timeline: Expected within the next 6 months (ongoing for 12 months)
Cash Balance
- Current Balance: Rs. 630 crores
- Planned Deployment: Focus on inorganic growth opportunities (actively pursuing acquisitions, results expected from mid-FY25)
Sundry Debtors
- Increase: Rs. 288 crores due to high invoicing in March
- Collection: Expected to be collected in the normal course during the first quarter
Madhya Pradesh Jal Nigam Contract
- Terminated Contract Value: Rs. 155-160 crores
- Remaining Contracts: 8 contracts in various stages worth Rs. 1,100 crores
- Order Book Status: Terminated contract value removed from the order book
- Reassignment Status: Contract not awarded to anyone else yet
Working Capital
- Increase: From 79 to 120 days
- Reason: High invoicing in the last quarter, particularly in March
- Normalization: Expected to normalize by the end of the first quarter
Project Business
- Scope: Turnkey EPC projects covering water, irrigation, industrial, and municipal sectors.
- Order Book: Includes AMRUT and JJM projects, majorly in Assam, West Bengal, and Madhya Pradesh.
- Project Sizes: Rs. 200-600 crores.
Competitive Landscape
- Competitors: Range from large players like Larsen & Toubro to smaller companies.
- Tender Participation: Varies; larger projects attract fewer participants.
Margins and Financials
- EBITDA Margins: Targeting 15%-20%.
- Order Book Impact: Mitigated loss of Rs. 155-160 crore contract through other projects and bank guarantees.
Market Trends
- Segment Dynamics: Increase in rural water supply projects, offsetting decrease in irrigation projects.
- Future Opportunities: Continued demand with significant pipeline projects worth Rs. 1-1.5 lakh crores annually.
Execution and Payments
- Consistency: Similar execution and payment conditions compared to the past.
- Sector Diversification: Selective participation in sewage projects; balanced focus across water sectors.
Financial and Operational Outlook
- Revenue Growth: Current revenue at Rs. 800 crores; ample business opportunities for growth.
- Long-term Sustainability: Sector anticipated to sustain and drive revenue growth.
Product Segment Overview
- Execution Timeline: Orders typically span 4 to 8 months, depending on product type.
- Revenue Growth: Diversified product portfolio yielding strong growth and profitability.
- Segment Focus: Strong order book from growing segments like Navy and sewage drainage.
- Profitability: Margins remain robust, targeted between 15% and 20%.
Recent Orders
- Nature of Orders: Framework orders with long-term implications.
- Significance: Represents potential recurring source of orders over 20-30 years.
Domestic Order Book Analysis
- FY23 vs. FY24 Order Book: Decrease from Rs. 36,410 million to Rs. 30,543 million.
- Reasoning: Slowdown attributed to recent elections.
Revenue Growth Trajectory
- Expectations: Anticipating good growth in both project and product segments.
- Execution Challenges: Earlier challenges, like supply chain constraints, gradually addressed, paving the way for streamlined execution and growth.
Pipeline and Opportunities
- Execution vs. Booking:
- Balancing focus on both execution and booking new orders.
- Inquiry Pipeline:
- Significant inquiries in various sectors, ensuring no challenge in replacing current revenue levels.
- Opportunity Scale:
- Tenders in water segment alone range from Rs. 5,000 to Rs. 8,000 crores, providing ample opportunities.
- Geographical Expansion:
- Exploring opportunities in multiple states and sectors for a more balanced portfolio.
- Order Book Growth:
- Expected to align with revenue growth and industry norms.
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