Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IRB Infrastructure Developers Ltd (BOM:532947, Financial) successfully issued and allotted USD 540 million in senior secured notes, oversubscribed by 4.25 times.
- The company received multiple ISO certifications, including ISO 9001, ISO 14001, ISO 45001, and ISO 27001, marking significant achievements in quality, environment, and information security management.
- Toll collections for key projects like Mumbai-Pune and Ahmedabad Vadodara increased significantly, with a 17% growth year-over-year.
- The company declared an interim dividend of 10% face value, amounting to INR 60.3 crore for Q4 FY24, with a cumulative dividend of INR 181 crores for the year.
- The total order book stands at almost INR 35,000 crores, providing strong construction visibility for the next two years.
Negative Points
- Interest costs increased by 65% year-over-year, from INR 373 crores to INR 615 crores in Q4 FY24.
- Depreciation expenses rose by 23%, from INR 222 crores to INR 274 crores in Q4 FY24.
- The company faced a setback in the arbitration award for the Ahmedabad Vadodara project, with no compensation awarded for the competing road.
- The share of profit/loss in JV and associate remains volatile, impacting financial stability.
- The Reserve Bank of India's proposed guidelines for higher provisions for under-construction infrastructure projects could impact future financials.
Q & A Highlights
Q: Can you provide an update on the ordering pipeline for the new financial year?
A: The pipeline of BOT projects totals almost INR2 lakh crores, and there are 35 TOT projects displayed on the NHAI website. The bidding process should start by mid-June, and we expect to win orders worth INR20,000 to INR25,000 crores given our market share and financial position. (Virendra Mhaiskar, Executive Chairman of the Board, Managing Director)
Q: What is the reason for the increase in interest expenses, and how do you see this moving forward?
A: The finance expenses on the construction side include a one-time expense of INR239 to INR240 crores. Netting out this amount, the normal run rate should be considered for future quarters. (Anilkumar Yadav, Director - Investor Relations)
Q: Can you elaborate on the volatility in the share of profit/loss in JV and associate?
A: The fair valuation gain or loss is due to arbitration awards and other factors. Going forward, the fair valuation gain or loss should remain in the range of INR40 to INR45 crores per quarter. For FY25, this number is expected to be close to INR150 to INR260 crores. (Anilkumar Yadav, Director - Investor Relations)
Q: What is the outlook for EPC revenue growth given the current order backlog?
A: We expect a 15% growth in EPC revenue for FY25 and a similar growth rate for FY26. However, depending on the timing of new project wins, the growth rate for FY26 could be higher. (Anilkumar Yadav, Director - Investor Relations)
Q: What is the gross debt number for the company?
A: The gross debt on a consolidated basis is close to INR14,700 crores, with INR8,600 crores attributed to the asset side, SPE side. (Tushar Kawedia, Group Chief Finance Officer)
Q: What are the key reforms you expect in the NHAI program, and how will they impact the projects?
A: Key reforms include guaranteeing 90% of the debt by NHAI in case of a concessionary event of default and reducing the period for selling down the project post-completion to one year. These changes will improve bankability and asset rotation for developers. (Anilkumar Yadav, Director - Investor Relations)
Q: Will IRB Infrastructure Developers bid for HAM projects given the current pipeline?
A: We plan to stay clear of HAM projects due to the abundant number of BOT and TOT opportunities coming up in the near future. (Virendra Mhaiskar, Executive Chairman of the Board, Managing Director)
Q: How do you see competition for the upcoming BOT and TOT projects?
A: We expect three to four domestic players and two to three international players to compete for these projects. The competition is expected to be sensible, with players who understand the risks involved in long-term projects. (Virendra Mhaiskar, Executive Chairman of the Board, Managing Director)
Q: What is the impact of the arbitration ruling on the Ahmedabad Vadodara project?
A: The arbitration ruling requires premium payments as per the premium deferment scheme, which balances cash flow mismatches. We do not see any negative outcome from this ruling. (Virendra Mhaiskar, Executive Chairman of the Board, Managing Director)
Q: What is the expected fair valuation gain or loss for FY25?
A: The fair valuation gain or loss is expected to be close to INR150 to INR260 crores for FY25. (Anilkumar Yadav, Director - Investor Relations)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
