- Quarterly Revenue: INR 6,165 crores, a 23% sequential growth and 12% year-on-year growth.
- EBITDA Growth: 37% year-on-year, with EBITDA margins improving by 120 basis points to 6.3%.
- PBT Margin: Increased by 150 basis points to 3.1%.
- PAT Margin: Expanded by 120 basis points to 2.5%.
- Order Intake: INR 6,500 crores in Q4.
- Net Debt: Decreased to around INR 5,090 crores as of March 31, 2024.
- Net Working Capital: Reduced by 21 days to 112 days as of March 31, 2024.
- Interest Cost: Reduced to 2.5% of revenue, a reduction of 150 basis points from Q2 FY '24.
- Annual Revenue: INR 19,914 crores, a 15% growth year-on-year.
- Annual EBITDA Growth: 46% year-on-year, with EBITDA margins expanding by 130 basis points to 6.1%.
- Annual PBT: Increased by 2.6x.
- Annual PAT: INR 347 crores, up from INR 176 crores in FY '23.
- Annual Order Intake: INR 18,102 crores.
- Order Book: INR 30,000 crores, with an additional L1 position of over INR 7,000 crores.
- Dividend: 200%, INR 4 per equity share.
- T&D Business Revenue: INR 10,456 crores, a 21% growth year-on-year.
- SAE Revenue: INR 1,447 crores, a 9% growth year-on-year.
- Civil Business Revenue: INR 4,370 crores, a 32% growth year-on-year.
- Railway Business Revenue: INR 3,115 crores, a 17% decline year-on-year.
- Oil & Gas Pipelines Revenue: INR 626 crores, a 30% growth year-on-year.
- Cables Business Revenue: INR 1,645 crores, highest-ever revenues.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KEC International Ltd (BOM:532714, Financial) achieved its highest-ever quarterly revenues of INR 6,165 crores in Q4 FY '24, marking a 23% sequential growth and 12% year-on-year growth.
- The company reported a significant improvement in profitability, with EBITDA growing by 37% year-on-year and EBITDA margins improving by 120 basis points to 6.3%.
- KEC International Ltd (BOM:532714) secured orders worth approximately INR 6,500 crores in Q4 across various businesses, primarily driven by India T&D and Civil segments.
- The company achieved a reduction in net working capital by 21 days, now standing at 112 days as of March 31, 2024, compared to 133 days as of September 30, 2023.
- The Board of Directors recommended a dividend of 200%, reflecting strong confidence in the company's performance and strategy.
Negative Points
- The railway business experienced a revenue decline of 17% for the year, with continued challenges in execution and increased competition impacting margins.
- Supply chain bottlenecks, particularly in DI pipes for water projects and high-voltage transformers/GIS for T&D projects, affected revenue and margin growth.
- Despite improvements, the company's net debt, including acceptances, remained high at around INR 5,090 crores as of March 31, 2024.
- The company faced delays in revenue recognition due to supply chain issues, resulting in deferred revenues of approximately 400-500 crores.
- The order intake for FY '24 was lower than expected, partly due to deliberate slowdowns in certain sectors and increased competition in international markets.
Q & A Highlights
Q: How do you think about the opportunity in India T&D, specifically in FY '25? Can we expect a significant increase in orders?
A: We are seeing a large tender pipeline, especially with new renewable packages announced by the government. We expect another 40-45% growth in India T&D this year. Currently, we have a 25,000 crore tendering opportunity and are in discussions with key players like POWERGRID, who are very bullish. We anticipate continued strong growth in India T&D.
Q: Given the large opportunity and limited players, can we expect margins in the Indian T&D space to move to double digits?
A: Yes, we expect margins to move to double digits, likely in FY '25.
Q: What could be the T&D revenue growth in fiscal '25, given the current order backlog?
A: We are targeting around 30% growth in T&D, driven largely by India. Overall, including international and SAE, we expect over 20% growth in T&D.
Q: What was the approximate margin profile of the T&D portfolio in fiscal '24, and what are the risks to achieving double-digit margins in fiscal '25?
A: We are largely hedged on base metal exposures like aluminum, copper, and zinc. The main risk is steel price volatility, but we don't foresee major movements. We are confident in delivering projected revenues and margins for T&D.
Q: What is the strategy for the railway business over the next 2-3 years, given the current challenges?
A: We are being selective with railway projects due to increased competition and working capital issues. We expect a further de-growth in FY '25 but anticipate a turnaround in FY '26 as we focus on fast-tracking project closures and optimizing working capital.
Q: What is the CapEx outlay for the conductor manufacturing line, and what is the expected asset turnover?
A: We are planning a CapEx of 60 crores for the conductor manufacturing line, with an expected turnover of around 600 crores annually.
Q: How do you see the competitive intensity in the T&D sector, and what is the tendering opportunity for the year?
A: The competitive intensity for larger projects has slightly decreased. We expect around 60,000-70,000 crores in tendering opportunities for the year, with a significant portion from international markets.
Q: What is the expected debt level for FY '25, and how do you plan to address the recent credit rating downgrade?
A: We expect debt levels to remain around 5,000 crores, with potential peaks at 6,000 crores. We plan to improve our financial metrics and approach rating agencies for a review after a couple of quarters.
Q: What is the guidance for order inflows in FY '25, and what were the reasons for missing the target in FY '24?
A: We are targeting around 25,000 crores in order inflows for FY '25. The miss in FY '24 was partly deliberate due to cash flow and execution issues, and partly due to not accepting orders below our threshold.
Q: What are the margins expected for FY '25, and what is the segmental margin outlook?
A: We are targeting a 7.5% margin for FY '25, with an exit margin of 9-10%. T&D margins are expected to be higher than non-T&D segments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
