Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rail Vikas Nigam Ltd (BOM:542649, Financial) has a robust order book of INR 83,000 crores, ensuring a steady stream of projects for the next four years.
- The company has diversified its project portfolio, including metro projects and overseas ventures, which could lead to higher margins.
- The GST issue affecting SPVs has been resolved, potentially saving the company significant costs and improving future profitability.
- Rail Vikas Nigam Ltd (BOM:542649) has successfully entered new markets and sectors, including manufacturing and transmission lines, showcasing its adaptability and growth potential.
- The company has a strong cash position with around INR 2,000 crores in the bank, providing ample working capital for ongoing and future projects.
Negative Points
- The company's revenue and profit have declined in the first quarter due to geopolitical issues and election-related delays affecting project execution.
- Several metro projects have faced delays due to pending approvals and election-related disruptions, impacting the top and bottom lines.
- The first quarter is traditionally weak, and the company has faced a significant decline in turnover compared to the previous year.
- Overseas projects have been slowed down due to geopolitical situations, affecting planned turnovers and profitability.
- The contributions from JVs and SPVs to the bottom line have either stagnated or declined, partly due to the GST issue, although it has now been resolved.
Q & A Highlights
Highlights of Rail Vikas Nigam Ltd (BOM:542649) Q1 FY25 Earnings Call
Q: Can you explain the reasons behind the decline in revenue and profit for this quarter?
A: Sanjeeb Kumar, CFO: The decline was due to several factors, including geopolitical issues affecting overseas projects, delays in metro project approvals, and the impact of elections on labor availability and project permissions. Despite these challenges, we have a robust order book of INR 83,000 crores, ensuring a strong pipeline for the next four years.
Q: What is the status of the Vande Bharat project?
A: Sanjeeb Kumar, CFO: The project is progressing well, with the first prototype expected by September 2025. The manufacturing plant has been handed over, and we aim to produce 25 train sets in the current year. The project also includes a comprehensive maintenance component for 35 years.
Q: Can you provide a breakdown of the current order book?
A: Sanjeeb Kumar, CFO: The total order book stands at INR 83,241 crores. Major segments include new lines (INR 7,500 crores), gauge conversion (INR 500 crores), and building projects (INR 30,000 crores).
Q: What are the investments made in subsidiaries and SPVs?
A: Sanjeeb Kumar, CFO: We have invested around INR 1,520 crores in various SPVs and subsidiaries. The GST issue affecting SPVs has been resolved, which will positively impact our financials.
Q: What is the outlook for the rest of the financial year?
A: Sanjeeb Kumar, CFO: Despite the challenges in Q1, we are confident of achieving a top line of INR 22,000 crores for the year. The election impact is temporary, and we expect improved execution in the coming quarters.
Q: How are you addressing the challenges in overseas projects?
A: Rajesh Prasad, Director of Operations: We are actively managing geopolitical risks and mobilizing resources efficiently. We have also established subsidiaries in multiple countries to diversify and mitigate risks.
Q: What is the status of the bullet train project?
A: Sanjeeb Kumar, CFO: Rail Vikas Nigam Ltd is not directly involved in the National High-Speed Rail Corporation Ltd. However, we have conducted pre-feasibility studies for high-speed rail projects and expect to play a significant role in future implementations.
Q: What are your plans for diversification and new verticals?
A: Sanjeeb Kumar, CFO: We are diversifying into manufacturing, transmission lines, and municipal projects. We have also entered into new markets like South Africa and Oman, and are exploring opportunities in green energy projects.
Q: How do you plan to maintain margins given the current challenges?
A: Sanjeeb Kumar, CFO: We are focusing on high-margin projects and efficient execution. While some projects may have lower margins, others will compensate. We are confident in maintaining a healthy bottom line.
Q: What is the current cash position?
A: Sanjeeb Kumar, CFO: We have around INR 2,000 crores in cash, which is used as working capital to support ongoing projects and operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
