Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- H.G. Infra Engineering Ltd (NSE:HGINFRA, Financial) reported a significant 34% increase in its order book, reaching INR15,642 crores as of June 30, 2024.
- The company has diversified its order book beyond roads and highways, with substantial contributions from railways, metro, and solar energy sectors.
- Strong financial performance in Q1 FY25, with standalone revenue increasing by 18.4% and consolidated revenue by 13.1% year-over-year.
- The company has secured new projects worth INR4,142 crores in highways EPC, INR763 crores in highway HAM, and INR409 crores in solar projects.
- H.G. Infra Engineering Ltd (NSE:HGINFRA) is actively pursuing opportunities in new segments like water treatment plants and desalination projects, aiming for further diversification.
Negative Points
- The Neelmangala-Tumkur project is facing significant delays due to land availability issues, with only 23.9% completion.
- The company's gross debt has increased to approximately INR2,015 crores on a consolidated basis, partly due to working capital requirements and mobilization advances.
- The solar projects, while promising, have a high liquidity requirement of INR6,092 crores, with significant capital infusion needed in FY25 and FY26.
- There are uncertainties regarding the timely receipt of appointed dates for several HAM projects, which could impact project execution timelines.
- The aggressive bidding strategy, particularly in the solar sector, raises concerns about maintaining high margins in future projects, especially with potential changes in government policies and market conditions.
Q & A Highlights
Q: In terms of your solar power business, can you run us through the equity IRR you are targeting?
A: We are targeting an equity IRR of about 15% at the SPV level and an EPC margin of about 18%.
Q: What changes are you planning to make in the memorandum of association, particularly regarding solar and international business?
A: We are not planning any international ventures currently. In solar, we are looking into larger portfolios, including solar parks and captive projects. We are also exploring rooftop solar but will grow gradually.
Q: Can you provide data points on the balance sheet, including inventory, trade receivables, and mobilization advances as of June?
A: Inventory is at INR421 crores, trade receivables including retention are INR1,051 crores, and contract assets are INR1,130 crores. Mobilization advances have decreased by INR130 crores.
Q: What is the guidance for revenue growth and order book for FY25?
A: We maintain our guidance of INR11,000 to INR12,000 crores in order inflows and expect revenue growth of 18% to 20% year-on-year.
Q: What is the equity requirement for the MoRTH project in UP?
A: The equity requirement for the MoRTH project in UP is approximately INR95 to INR100 crores.
Q: Can you elaborate on the recent Ultra Vibrant Solar order and its impact on your solar portfolio?
A: Including the Ultra Vibrant Solar order, our solar portfolio now stands at 700 megawatts. We expect a PLF of 23% to 27% for these projects.
Q: What is the status of the MSRDC projects and their expected start date?
A: Negotiations are complete, and we expect the letter of acceptance by August end or early September. Construction is likely to start post-elections or by December.
Q: What are the expected margins for your solar EPC projects?
A: For current projects, we expect an 18% margin. Future projects, especially from public sectors like NTPC, may have margins around 12%.
Q: What is the status of the Neelmangala-Tumkur project?
A: The project is facing land acquisition issues. We are in discussions with NHAI for either faster regulation or a settlement agreement.
Q: What are your plans for monetizing HAM projects?
A: We are in advanced discussions for monetizing five HAM projects and expect to complete the process by March, with some exceptions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
