Release Date: February 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vascon Engineers Ltd (BOM:533156, Financial) reported a 10% year-on-year growth in consolidated total income for Q3 FY24, reaching INR282 crores.
- The company achieved a significant increase in its order book, which now stands at INR3,613 crores, the highest in its history.
- Standalone EBITDA margins were maintained at 10% in Q3 FY24, indicating stable profitability.
- The company has successfully reduced its total debt by INR47 crores over the past 30 months, improving its financial health.
- Vascon Engineers Ltd (BOM:533156) received a credit rating upgrade to CRISIL BBB+ for long-term and A2 for short-term facilities, enhancing its financial credibility.
Negative Points
- Despite the overall growth, the real estate revenue saw a decrease this year, which the company aims to offset through increased EPC sales.
- The net debt has risen to INR72 crores in the last nine-month period, primarily due to new joint ventures and recent EPC orders.
- The company anticipates a slow order inflow in the upcoming months due to the upcoming elections, which may impact short-term growth.
- There is a significant reliance on government projects, which constitute 77% of the order book, potentially exposing the company to policy changes and delays.
- The company is planning a QIB (Qualified Institutional Buyer) issue, which may lead to equity dilution and concerns among existing shareholders.
Q & A Highlights
Highlights of Vascon Engineers Ltd (BOM:533156) Q3 FY24 Earnings Call
Q: Can you provide details on the order inflow for Q3 and nine-months FY24?
A: In nine-months FY24, we secured INR1,808 crores in orders, with INR400 crores coming in Q3 alone.
Q: What is the expected order inflow for the upcoming quarter?
A: We are bidding for several projects, but due to upcoming elections, decisions may be delayed. We have already surpassed our order booking target for the year and aim to book another INR1,750 crores to INR2,000 crores by March 2025.
Q: Can you provide the ratio of government to private orders in your order book?
A: Approximately 77% of our order book is from government projects, with the remaining 23% from private projects. The entire order book of INR3,613 crores is for EPC, with INR549 crores being internal orders.
Q: What is the current status of your bank guarantee limits?
A: We have increased our bank guarantee limits by INR40 crores over the last six months. Additionally, SBI has increased our limits by INR200 crores, with INR100 crores already tied up and the remaining INR100 crores in process.
Q: Are you focusing only on redevelopment projects in Mumbai, or are you planning new joint ventures as well?
A: Currently, we are focusing on redevelopment projects. We have two redevelopment projects and one project in Powai, Mumbai. Our business development team is also looking for more niche redevelopment projects in Mumbai.
Q: What is the strategy for your real estate division?
A: We are not putting a stop on real estate. We have three launches planned for this year and two more in the next 12-15 months. We aim to push both EPC and real estate divisions to their full potential.
Q: When do you expect to conclude your QIB?
A: We have received necessary approvals and have started meeting potential QIBs. We hope to conclude the QIB this quarter.
Q: How do you plan to maintain a balance between government and private sector orders?
A: We aim to maintain a 70-30 or 65-35 mix between government and private sector orders. We are seeing a turnaround in the CapEx cycle and expect more commercial building projects in the future.
Q: Why are you raising funds through QIB instead of a rights issue?
A: We believe raising funds through QIB will attract bigger investors and create more interest in the company. This will be beneficial for all shareholders in the long run.
Q: What is the expected ROE for your development projects?
A: We expect an ROE of 25-30% for our development projects. Deploying INR100 crores into these projects should increase our profits by INR100 crores over the next three years.
Q: What is the planned CapEx for the upcoming year?
A: We do not have significant CapEx planned. We might need around INR15-20 crores for equipment and staging materials for new projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
