Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total income for Q1 FY25 increased by 16% year-on-year to INR1,017 crores.
- EBITDA grew by 17% year-on-year to INR123 crores.
- PAT increased by 18% year-on-year to INR60 crores.
- Order book status is strong with orders worth INR1,746 crores secured so far in FY25.
- International operations saw a 27% increase in O&M revenue compared to last year.
Negative Points
- Mechanical business revenue declined by 36% year-on-year.
- Net current assets excluding cash and cash equivalents increased from 112 days in FY24 to 142 days in Q1 FY25 due to delays in receivables and certification of works.
- Debt levels remain a concern with gross debt at INR581 crores and net debt at INR40 crores.
- MDO projects are facing delays, with the KBP project pushed by two months.
- EBITDA margins in certain segments like erection business (6%) and industrial construction (1%) are relatively low.
Q & A Highlights
Power Mech Projects Ltd (BOM:539302, Financial) Q1 FY25 Earnings Call Highlights
Q: Can you provide color on the EBITDA margin segment-wise, such as civil works, power segment, mining segment, and railway segment separately?
A: In the erection business, we are getting an EBITDA of around 6%. Industrial construction erection business has a low turnover volume, yielding approximately 1% EBITDA. Civil power is around 12% average EBITDA margin. Infrastructure, including sand mining and water division, is around 17%. Transmission and distribution is around 0.5% EBITDA. International operations in Q1 yielded around 20% margins. The SPU Water division generates around 19%, with a weighted average of 10% to 11% in infrastructure. Mining, specifically Tasra, had a 13% EBITDA margin in Q1, with a weighted average of 12.2%. (Nani Aravind, CFO)
Q: What is the proportion of civil opportunity within NTPC's total construction cost of around INR10 crores per megawatt?
A: The civil and structural portion typically accounts for around 20% to 25% of the total construction cost, which translates to approximately INR2 crores per megawatt. (Sudha Kodandaramaiah, Director, Business Development)
Q: Given the current vendor limitations in the thermal side, can BHEL handle timely delivery of equipment for NTPC and Adani's projects?
A: BHEL has a basic shop capacity of 15,000 megawatts and an order book of 80,000 megawatts over the next 7-8 years. While it is doable on paper, BHEL faces challenges such as working capital and margin issues. The government is pushing for other players like Thermax and L&T to enter the market to ensure timely deliveries. (Sudha Kodandaramaiah, Director, Business Development)
Q: Will the recent Supreme Court judgment allowing states to levy mine tax retrospectively from 2005 impact your MDO business?
A: This judgment will not impact our MDO business as we are only the mining excavator and not the owners. Any taxes applicable will be on our revenue, and there are clauses in the contracts to protect the offtake. (Rohit Sajja, President, Business Development and Operations)
Q: Can you provide more details on the Adani Mundra project for MGD?
A: The tendering process is ongoing, and we expect it to be finalized within two months. We are optimistic about securing the project, which could contribute INR300 crores to INR350 crores in revenue this year. (Sudha Kodandaramaiah, Director, Business Development)
Q: What factors will drive the projected 25% to 30% revenue growth for FY25?
A: Key drivers include opportunities in the power sector, O&M side, railways, and non-power sectors like steel and mining. We are tracking INR75,000 crores of opportunities, and the execution phase is expected to pick up in the second and third quarters. (Sudha Kodandaramaiah, Director, Business Development)
Q: When will your tax rate come down to 25%-26%?
A: This year, the tax rate will normalize to around 26%-27%, down from last year's higher rate due to additional costs incurred. (Nani Aravind, CFO)
Q: What is the status of the CCL project and other clearances needed to start the project by end of September?
A: We have received clearance from the Jharkhand Government for 585 hectares of forest land. We expect to start the tree-felling activity soon, followed by overburden excavation. Revenue from this project is expected by the end of Q3 or beginning of Q4. (Rohit Sajja, President, Business Development and Operations)
Q: What is the order inflow guidance for FY25?
A: We are projecting an order inflow of INR11,000 crores for FY25, with substantial contributions from O&M, ETC business, and civil and infrastructure projects. (Nani Aravind, CFO)
Q: Can you break down the bidding pipeline of INR75,000 crores?
A: The pipeline includes INR40,000 crores to INR45,000 crores in infrastructure and railway, INR1,200 crores to INR1,500 crores in ETC business, and INR12,000 crores to INR15,000 crores in power sector opportunities. O&M opportunities are around INR1,500 crores domestically and INR2,000 crores to INR2,200 crores including overseas. (Sudha Kodandaramaiah, Director, Business Development)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
