Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GPT Infraprojects Ltd (BOM:533761, Financial) reported a 2.5% growth in revenue from operations despite disruptions due to general elections.
- The infrastructure segment remains the primary driver of revenue, contributing 93% of total revenues.
- The company completed a bonus issue in the ratio of 1:1, reaffirming its commitment to reward shareholders.
- Standalone EBITDA for the quarter grew by 6% year-on-year, while consolidated EBITDA increased by 14%.
- Significant growth in profit after tax, with consolidated PAT growing by 27% year-on-year.
Negative Points
- Revenue growth was modest at 1.5% year-on-year, indicating potential challenges in scaling operations.
- Labor shortages due to general elections impacted performance in April and May.
- The Ghana facility faced delays, although it is expected to contribute to revenue within the financial year.
- Interest costs remain a concern, although they are expected to decrease post-QIP.
- The company’s ability to bid for larger contracts is currently limited, although this is expected to improve post-QIP.
Q & A Highlights
Q: Sir, just wanted to understand some more light on the fundraising part that we are raising and how it will be utilized and what are the plans of the company going forward?
A: So the idea is to raise up to INR175 crores. It will be primarily used to pay some existing working capital debt on the balance sheet. Up to 75% will be used for that and the balance will be used for long-term working capital and other general corporate purposes. This will boost the net worth of the company and allow the bidding capacity to improve, enabling us to get more contracts of more than INR1,000 crores each.
Q: Once this QIP is completed, what would be the debt and what will be the interest that we'd be paying on this?
A: Currently, last year, we paid a finance cost of almost INR31 crores. Post the QIP, we expect the same to come down to below INR20 crores.
Q: On the Ghana facility, the last we followed up was, you were having some issues. So have they resolved, or will we be getting the revenues from this financial year?
A: We were expecting the advance payment from the customer, and the swift message of the transfer has already been shared. We expect that to hit our bank account soon. Once that comes, we will start the factory in the next one or two months, and we expect revenue to be booked during this financial year from the Ghana factory as well.
Q: We reiterated our guidance of 20%-25% growth. Once the debt comes down, will we be improving our guidance?
A: We are reaffirming our guidance of 20%-25% growth in terms of revenues for this financial year and expect to maintain that CAGR over the next three years. With the QIP getting done, the finance costs will come down, so the PAT will grow disproportionately.
Q: On the QIP basis, you've given a clarification. I just wanted to know the execution period for the INR250 crores of order book that is lying in the monoblock or the concrete sleeper.
A: That INR250 crores in the concrete sleeper segment has an execution period of almost two years. We are expecting some new orders also to come in this financial year in that business, so we expect to grow that business year on year.
Q: Regarding the infrastructure business, the concrete sleepers, have you considered changes given the metro lines and bullet trains advancements?
A: We have supplied some to metro lines in and around Calcutta. Concrete sleepers being a heavy product to transport, we set up factories on a project-specific basis if the requirement is good. For example, in the dedicated corridor, we had set up two factories between Kanpur and Mughalsarai.
Q: Given our strong foothold in a few African countries, have you considered bidding for EPC projects in those countries?
A: In the past, we have done some contracts in Mozambique for bridge rehabilitation work. In South Africa, Namibia, and Ghana, we have not explored much, but recently, we have been discussing some contracts in Namibia.
Q: After QIP, are the promoter pledges also coming down?
A: The promoter pledges are already being reviewed by the lead bank, SBI, and post-QIP, they will further reduce. The pledge is purely for the working capital of the company and not for any other lending at the promoter level.
Q: What is the average interest cost at the moment in percentage terms?
A: About 10%.
Q: How is the order pipeline now? We have done pretty well this year itself. How is the pipeline looking like?
A: We have bid for some key contracts and are tracking a couple of good contracts from NHAI and Railways. We expect the order pipeline to be strong. The first quarter was slightly muted due to elections and the code of conduct, but we expect ordering activity to pick up now.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
