Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KNR Constructions Ltd (BOM:532942, Financial) reported a year-on-year growth in EBITDA for Q1 FY25, reaching INR192 crores compared to INR173 crores in Q1 FY24.
- The company achieved an EBITDA margin of 21.8% for Q1 FY25.
- Net profit for the quarter increased to INR134 crores from INR125 crores in the same period last year.
- The company has a strong order book position of INR6,122 crores, which will be executed over the next 1.5 years.
- KNR Constructions Ltd (BOM:532942) continues to maintain a sound balance sheet with a net debt to equity ratio of 0.41 times as of June 30, 2024.
Negative Points
- The company experienced a slow start earlier in the year, impacting overall performance.
- Revenue for the quarter was flattish at INR880 crores, indicating limited growth.
- The working capital days increased to 78 days, reflecting potential inefficiencies in managing receivables and payables.
- The company faces significant delays in project execution due to external factors such as the rainy season and bureaucratic approvals.
- There is uncertainty regarding the timely receipt of payments from the Telangana government, which could impact cash flow and liquidity.
Q & A Highlights
Highlights of KNR Constructions Ltd (BOM:532942) Q1 FY25 Earnings Call
Q: Can you provide details on the order inflow and revenue expectations for FY25 and FY26?
A: We are targeting an order inflow of INR 6,000 to INR 7,000 crores by the end of FY25. For FY26, we expect to see growth based on the new orders and the execution of current projects. However, the exact revenue growth will depend on the timely execution and receipt of new orders.
Q: What is the status of the pending projects and their expected timelines?
A: We have pending projects worth INR 1,200 crores awaiting appointed dates. We expect to start work on these projects by mid-September or October. The completion of these projects will significantly impact our revenue in the coming quarters.
Q: Can you elaborate on the financial performance and margins for Q1 FY25?
A: Revenue for the quarter stood at INR 880 crores, with an EBITDA of INR 192 crores, reflecting a margin of 21.8%. The net profit was INR 134 crores. On a consolidated basis, revenue was INR 985 crores, with an EBITDA margin of 28.3% and a net profit of INR 166 crores.
Q: What are the key challenges faced in project execution, particularly in the irrigation segment?
A: The irrigation projects faced delays due to extended rainy seasons and associated challenges. We are working closely with the government to address these issues and expect to complete the pending projects by June next year.
Q: What is the company's strategy for participating in BOT toll projects and other high-margin sectors?
A: We are focusing on EPC contracts for BOT toll projects and exploring opportunities in high-margin sectors like irrigation and metro projects. We aim to maintain EBITDA margins of 15-16% by targeting projects that require higher engineering skills and offer better profitability.
Q: How is the company managing its working capital and debt levels?
A: As of June 30, 2024, the company's consolidated debt stood at INR 352 crores, down from INR 1,220 crores as of March 31, 2024. The net debt to equity ratio is 0.41 times. We are focusing on maintaining a sound balance sheet and optimizing working capital days, which currently stand at 78 days.
Q: What are the expectations for toll collection and order book position?
A: Toll collection for Q1 FY25 was INR 518 crores. The total order book as of June 30, 2024, is INR 6,122 crores, with 58% from EPC and HAM projects, 20% from irrigation projects, and 22% from pipeline projects. We expect to execute the current order book over the next 1.5 years.
Q: What is the status of the Telangana government payments and the impact on cash flow?
A: We have certified receivables of INR 600 crores from the Telangana government, with an expected total of INR 900 crores. We are in discussions with the government for timely payments and expect to resolve the issue by September end. This will significantly improve our cash flow.
Q: What are the company's plans for monetizing HAM projects?
A: We are in discussions to monetize four HAM projects, with an expected completion by September 2025. The valuation discussions are ongoing, and we anticipate a favorable outcome that will enhance our financial position.
Q: Can you provide guidance on CapEx and cash levels for FY25?
A: We have planned a CapEx of INR 80 to INR 100 crores for FY25, with INR 10 crores already spent in Q1. The standalone cash level is INR 33 crores, and we are focusing on optimizing our cash flow and maintaining liquidity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
