Release Date: May 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Welspun Enterprises Ltd (BOM:532553, Financial) starts FY25 with the highest ever standalone opening order book of INR12,200 crores.
- The company has achieved the highest standalone EBITDA of INR439 crores in FY24.
- Welspun Enterprises Ltd (BOM:532553) has been recognized and certified as a Great Place to Work by GPTW Certification agency.
- The company has a strong balance sheet with a net cash of INR923 crores as of March 31, 2024.
- Welspun Michigan Engineers Ltd, a subsidiary, has shown significant growth with a 30% increase in revenue for FY24 and an EBITDA margin of 23%.
Negative Points
- Revenue in FY24 dropped by 8% year-on-year due to deferment of revenues to FY25.
- The pace of execution for some projects, such as the Sattanathapuram - Nagapattinam road project, has been slower than planned.
- Challenges in skilled manpower shortage have affected the pace of progress in the UP JJM project.
- The company's other income dropped by 64% in Q4 FY24 compared to Q4 FY23.
- Finance costs have dropped 67% year over year, indicating potential issues with managing financial expenses.
Q & A Highlights
Q: In the semiconductor industry, there is a growing demand for ultrapure water. Does Welspun Enterprises have the technology to build the infrastructure for that?
A: We are not into technology development ourselves but use existing technologies to deliver projects. We have relationships with Xylem and Veolia, which are leading water treatment technology suppliers. Currently, we are not targeting ultrapure water technology specifically.
Q: Can you provide details on the current bid pipeline for water and transportation verticals and the historical conversion rate?
A: Our conversion rate in the water segment is extremely high due to selective bidding. The short-term opportunity pipeline in water is about INR1 lakh crores, expected to fructify in FY25. There are no open bids in the water segment currently, but there is one in the transportation segment.
Q: How much of the INR3 lakh crores water project opportunity is addressable to Welspun Enterprises, and what segments does it cover?
A: The INR3 lakh crores opportunity includes transmission, treatment, and distribution. We see significant opportunities in Maharashtra, Madhya Pradesh, and Uttar Pradesh. The project values mentioned are those we can target on an EPC basis.
Q: What is the expected revenue execution timeline for the current order book of INR14,000 crores?
A: For FY25, we anticipate standalone revenue of around INR3,000 crores from existing orders, with an additional INR300 crores from new orders. On a consolidated basis, we expect around INR4,000 crores.
Q: What is the CapEx number for the year, and how should it be viewed?
A: The pre-committed CapEx for HAM projects is approximately INR200 crores, and about INR100 crores for oil and gas. The remaining cash reserves are available for further business growth.
Q: What is the status of the Bhandup project execution?
A: We are awaiting the notice to proceed, expected post-election. If it is close to the monsoon period, we will start the work post-monsoon.
Q: Can you provide guidance on consolidated margins for FY25?
A: We do not have a consolidated margin guidance yet. However, for standalone, we maintain a reported EBITDA margin guidance of 13% to 14%.
Q: How will the upcoming elections impact the order book and future prospects?
A: The current order book remains unchanged irrespective of any governmental regime change. We believe infrastructure development will continue to be a focus for any government.
Q: What is the working capital cycle outlook for the coming years?
A: We do not expect any increase in working capital days going forward and will maintain the same ballpark numbers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
