Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated revenues increased by 8.2% to INR 4,587 crores, with strong double-digit growth in four out of six business segments.
- Order inflows, including L1 positions, reached around INR 12,000 crores in the first four months of FY25.
- The T&D business reported a strong growth of 32% YoY, driven by a solid order backlog in domestic and international markets.
- The B&F business grew by 23% YoY, supported by a strong order backlog and a healthy mix of projects.
- The company expects margins to improve going forward, with PBT margins targeted at 4.5% to 5% for FY25.
Negative Points
- The water business reported a decline of 22% in revenue due to delays in collections from state utilities and manpower shortages.
- The company faced increased finance costs due to higher working capital intensity and an unrealized forex loss of approximately INR 17 crores.
- Net debt at the standalone level stands at INR 2,907 crores, with a commitment to reduce net working capital days from 124 to below 100 by the end of FY25.
- The railway sector saw a decrease in revenue to INR 240 crores, reflecting intense competition and a focus on project completion.
- The company had to provide an additional INR 30 crores in warranty guarantee provisions, impacting EBITDA margins.
Q & A Highlights
Highlights of Kalpataru Projects International Ltd (BOM:522287, Financial) Q1 FY25 Earnings Call
Q: My question is with regard to the margins, while you have given us the guidance at the PBT level, where do you see your EBITDA margins stabilizing? And do you see a recovery from the second quarter itself?
A: We believe EBITDA margins should stabilize at 8.5% to 9%. Recovery is expected to start in Q2, with significant improvement in Q3 and Q4 due to better collections and reduced interest costs. (Manish Mohnot, MD & CEO)
Q: Regarding the promoter pledge, it has inched up again. Is there any pressure on the real estate business because of which this is moving up?
A: The promoter pledge is currently at 28.8%, lower than the 31.57% on March 31. Promoters have repaid some loans against shares recently, and the pledge is expected to continue decreasing. (Manish Mohnot, MD & CEO)
Q: You spoke about some one-offs during this quarter, including additional provisioning and donations. Can you quantify these?
A: We provided an additional INR30 crores for warranty guarantees, which was budgeted. There were also some non-tax-deductible donations, but these were one-offs and should not recur. (Manish Mohnot, MD & CEO)
Q: On the promoter stake sale, does it impact any debt covenants? Have you secured new funding lines if needed?
A: Discussions with bankers have led to changes in covenants, and all banking lines are fully functional. The stake sale was primarily for filing the DRHP by our real estate business, expected soon. (Manish Mohnot, MD & CEO)
Q: What is the order inflow breakup segment-wise for the current quarter?
A: The current quarter order book is around INR7,000 crores, with T&D at INR3,400 crores, B&F at INR2,300 crores, and water business at INR1,350 crores. No orders were received for Fasttel in Q1. (Manish Mohnot, MD & CEO)
Q: What is your commentary on international order booking compared to last year?
A: For Q1, 65% of order inflows were domestic and 35% international. We expect the ratio to be around 60-40 for the year. Opportunities exist in both domestic and international markets. (Manish Mohnot, MD & CEO)
Q: Given the growth in T&D and real estate, do you think the balance sheet is adequately funded? Any near-term plans to raise funds?
A: Currently, we are adequately funded for our existing order book. We will re-evaluate the need for additional funding in the next few quarters. (Manish Mohnot, MD & CEO)
Q: What is the status of the VEPL and Indore real estate divestments?
A: We are in advanced discussions for VEPL and expect to sign an agreement this quarter. Indore asset sales and collections are ongoing, with majority expected to be sold this financial year. (Manish Mohnot, MD & CEO)
Q: Can you provide more details on the L1 position of INR5,000 crores?
A: The L1 position is dominated by transmission domestic (50%), transmission international (25%), and B&F (25%). (Manish Mohnot, MD & CEO)
Q: What is the expected execution timeline for the Aramco project?
A: Significant revenue from the Aramco project is expected to start from December onwards, with peak execution in FY26 and FY27. (Manish Mohnot, MD & CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
