Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hindustan Construction Co Ltd (BOM:500185, Financial) reported a standalone net profit of INR22.7 crore for Q1 FY25, up from INR19 crore in Q1 FY24.
- The company has a strong order backlog of INR9,534 crores, diversified across various sectors and geographies.
- Completion certificates were received for multiple projects, including the Numaligarh Jorhat Road Project and NH-34 Package 3 project.
- The company is the lowest bidder for projects worth INR4,633 crores and has a future bid pipeline of INR40,000 crores.
- Finance costs have decreased compared to the previous year, reflecting successful debt repayments.
Negative Points
- Consolidated revenue decreased to INR1,116 crores from INR1,926 crores in the previous year.
- The company reported a consolidated net loss of INR2.5 crore, compared to a profit of INR43.6 crore last year.
- EBITDA margin remained flat at 12.6%, showing no improvement from the previous year.
- The company did not secure any new order inflows in Q1 FY25, with pending awards yet to be issued.
- Steiner AG, a subsidiary, reported a loss of INR17 crores, impacting consolidated financial performance.
Q & A Highlights
Q: Can we conclude that in Q1 we didn't have any order inflows? What is the expectation for the next three quarters?
A: We are L1 in INR4,600 crores worth of orders, but they were not converted into awards yet. We are working on a strong project pipeline worth INR40,000 crores and expect better conversion rates in the future. Historically, our conversion ratio has been 15-20%, but in Q1 it was comfortably above 30%.
Q: Any update regarding the spin-off of our subsidiary, Steiner AG?
A: The company is moving ahead with its plan of finding an investor. The RED portfolio is being separated from the parent company, and the process is ongoing.
Q: Can you give us a sense of how you plan to achieve more aggressive deleveraging apart from the QIP?
A: The bulk of the QIP proceeds will be used for business growth, not deleveraging. We have substantial liquidity to address upcoming debt repayments. The goal is to deleverage HCC completely, which will be accelerated by strong order backlog growth in the next 18-24 months.
Q: What led to the loss on a consolidated basis?
A: The loss came from Steiner's results, which showed a loss of INR17 crores.
Q: What are the opportunities in hydropower projects, and why is there a sudden burst in PSP projects?
A: PSPs take a shorter construction period compared to greenfield hydro power plants and are often built around existing reservoirs. There is a push for green power, and many companies are looking to generate power through green sources. The CA plan requires India to add over 20,000 MW of hydropower by 2030, driving the current activity.
Q: What is the average execution period for the current order book of INR9,000 crores?
A: The current order book should be executed within 2 to 2.5 years, depending on the stage of the projects.
Q: Will the promoter participate in the QIP?
A: The QIP will see participation from institutions, mutual funds, and large family houses, not the promoter.
Q: What is the status of the INR40,000 crores pipeline?
A: The team is already working on this pipeline, with bids being submitted regularly. A significant portion of this pipeline is expected to be converted within the next 45-60 days.
Q: What is the reason for the decline in EBITDA margins compared to the last quarter?
A: The decline is seasonal. A fair comparison would be with Q1 of last year, where margins are more or less the same.
Q: What is the status of the land bank in Powai, Panvel, and Vikhroli?
A: There are no further developments in terms of land disposition. We have disclosed one land sale, and there are no significant updates on the remaining land bank.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
