Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved highest ever annual consolidated revenue of INR19,626 crore and EBITDA of INR1,628 crore.
- Order inflows reached a record high of over INR30,000 crore, with significant projects secured in India and overseas.
- Net debt on a standalone basis decreased by 29% compared to the previous quarter, reaching INR1,833 crore.
- Strong performance in the T&D business with a 30% YoY revenue growth and a robust order book of INR20,678 crore.
- Successful merger with JMC, leading to strategic initiatives and significant synergies.
Negative Points
- Exceptional item of INR35 crore in Q4 due to impairment in the value of investment in the Indore real estate project.
- EBITDA margin remained stable at 8.3% despite rising costs and resource augmentation.
- Freight costs increased significantly due to supply chain disruptions.
- Exchange loss and expected credit loss (ECL) provisions impacted other expenses.
- Challenges in the railway business with lower margins and selective order bidding due to increased competition.
Q & A Highlights
Q: Can you provide insights into the prospect pipeline and the impact of large international order wins on building scale and scope?
A: Our focus remains on core businesses like T&D, building and factories, water, and international oil and gas. We see significant traction in these areas, especially in domestic T&D and international oil and gas. Despite the competitive environment, we are confident in our ability to deliver and expand margins by 25 to 50 basis points.
Q: What are the expected EBITDA margins given the increase in international orders?
A: Our current EBITDA margin is around 8.1% to 8.5%. We guide primarily on PBT margins, aiming for 4.5% to 5%. We expect a 25 to 50 basis points improvement in margins, driven by our diversified order book and efficient cost management.
Q: Can you provide revenue and profitability details for Linjemontage and Fasttel?
A: Linjemontage achieved INR1,000 crore in revenue with a 3.5% EBITDA margin. Fasttel had INR700 crore in revenue but was negative INR16 crore at EBITDA. Both subsidiaries have secured profitable orders and are expected to grow by 20-25% with improved margins in the next fiscal year.
Q: What is the execution timeline for the large oil and gas pipeline order in the Middle East?
A: The execution period is 36 to 42 months, with significant delivery expected over the next two years. Actual site work will commence in Q3 of the current year.
Q: How do you see the competitive landscape in the domestic T&D market?
A: The domestic T&D market is robust with an estimated INR50,000 crore in annual tenders. Competition is limited to a few major players for large projects. We anticipate substantial growth driven by increasing power demand and grid infrastructure development.
Q: What are the key segments contributing to margin improvements?
A: Except for railways, all segments, including T&D, B&F, and international businesses, are expected to maintain EBITDA margins of 9% to 10%. Railways will have lower margins due to selective bidding and project closures.
Q: What is the outlook for order inflows and revenue growth in FY25?
A: We are targeting over 20% revenue growth with a focus on strengthening our balance sheet and efficient working capital management. We have already secured INR850 crore in orders and have an L1 position of INR5,000 crore.
Q: Can you elaborate on the divestment plans for non-core assets?
A: We aim to divest non-core assets like the Indore real estate project and one large road asset. We expect to realize INR170 crore from the Indore project in the current year. Divestment of other assets will be evaluated based on market conditions and strategic priorities.
Q: What are the key factors driving the increase in other expenses?
A: The increase in other expenses is primarily due to expected credit loss (ECL) provisioning, higher freight costs, and exchange losses. These are considered one-offs and are not expected to impact future profitability significantly.
Q: What is the current status of promoter pledging and future plans?
A: Promoter pledging has reduced from a peak of 59% to 31%. The target is to reach 30% by March 2025, and we expect further reductions, although no specific number has been set.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
