Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dilip Buildcon Ltd (BOM:540047, Financial) has a strong order pipeline, expecting an inflow of INR 15,000 crores to INR 16,000 crores for the full year.
- The company has diversified its operations across multiple infrastructure sectors, reducing dependency on a single sector.
- Successful completion of the Shrem annual deal and progress in the Alpha InvIT asset deal, indicating effective asset management.
- Significant production achievements in the coal MDO business, with Siarmal and Pachhwara projects on track to exceed contractual requirements.
- The company aims to achieve zero net debt in the next two years, indicating a strong focus on financial health and stability.
Negative Points
- Revenue decreased by 9.61% year-on-year in Q1 FY25, from INR 2,609 crores to INR 2,358 crores.
- EBITDA decreased by 21.62% year-on-year in Q1 FY25, from INR 335 crores to INR 262 crores, with a corresponding reduction in EBITDA margin.
- Profit after tax decreased by 43.17% year-on-year in Q1 FY25, from INR 83 crores to INR 47 crores.
- The company experienced payment-related challenges, leading to higher debtors and stretched working capital.
- Guidance for FY25 indicates a potential 5% revenue degrowth due to weak order inflow and execution challenges.
Q & A Highlights
Q: First, on the order inflow front, so now we have seen a higher order inflow of INR15,000 crores to INR16,000 crores versus last time we say INR10,000 to INR12,000-odd crores. So just trying to understand for that how many value of projects we have already begin and which is yet to open. That is one. And second, how much more we are planning to bid. And broadly, if we break up this INR15,000 crores, INR16,000 crores order inflow, so how much we are looking in the hand and any other sectors which you want to highlight?
A: Thank you, Shravanji, for your question. Yes, you're very right. In the last quarter, we had given a more muted guidance. But as the year has progressed and as you are well aware, the sector has seen a depleting order book because of weak ordering from last year to ensure a steady growth going forward. We have reassessed our numbers. And that's why you see the numbers of INR15,000 crores to INR16,000 crores that we've done. We are quite confident of reaching these numbers across all the sectors that we are working in. That's the sector that we know that we are in. Beside that we've besides the sector that you are aware that the company works in, we've also gone in the optic fiber segment and about INR50,000 crores worth of orders were floated in that. So we were participating there as well. Those bids also we have also already been done. So let's see, we are hoping to have some good news there as well and start that. I can't give you very specifically sector-specific breakup of orders, how it will flow. But like I mentioned, we look across all the sectors, and it has been our endeavor in the last few years to move away from a single sector dependency to a more robust multi-sector sort of order book, and that is what our agenda and aim will be this year as well. Talking about the HAM versus EPC. Our primary focus and our primary liking is always EPC projects. The HAM route has always been used by DBL to fulfill its EPC needs. But even since you are, I think we would still be thinking about at least INR5,000 crores to INR6,000 crores of HAMs in this total order book. So to break it up, two-third of the order book is straight up EPC, one-third would be about would be about bids would be HAM/BOT like any kind of PPP project.
Q: Second, in terms of the on the revenue front, so obviously, this quarter was muted one, and we were looking at kind of a flat for full year FY25 so now is there any upward revision in the revenue also this year or may be if possible for next year, given the order inflow will be higher this year, so FY26. Is there any kind of guidance that are we likely to give for '26?
A: Shravanji, it would be too early to give you an indication for '26, but I'm very confident that it will be much better than this year because once the order book formulates, this year, in fact, we've given you a flattish guidance earlier as well. But I think looking at how the ordering is still being weak, till now, we would actually be looking at a 5% degrowth from last year's numbers. I think that would be a better assumption to make at this stage given the order flow sort of phase that has happened. We are expecting it to start much faster. But given that, we think that is a better number. But '26, I think, would be a good year, but we can only we'll only be able to comment on that once the end of the year numbers are in hand where we know how the order book looks and stands. Anything earlier than that would be premature.
Q: And in terms of the margins also, so this quarter was 11.1%. So we are looking at 12% to 14%. So given now we are seeing a 5% lower revenue growth or degrowth rather this year. So in terms of the margin also, will it be a kind of 11%?
A: Yes. I think given that we've geared up more and the margins should as I think, as a good prudent strategy, it will be good to take the current numbers as the EBITDA numbers which is around 11% to 12%. I think that would be a good way to think about it. I think earlier we'd indicated 11% to 13%, but I would say 11%, 12% is a good figure to kind of think about, given the like I said, some of the challenges around the depleting order book.
Q: Okay. And sir, on the base front, correct me if I'm wrong. You mentioned this year though this quarter INR700 crores the gross rate has increased because of the working capital. So I want to understand 2 aspects whether this working capital, particularly data? Have we collected post the June till now and how we look at the working capital by end of FY25. And broadly, you mentioned INR1,000 crore gross debt reduction in FY25.
A: We have collected some of after the June, listing. And I didn't mention in terms of like the target debt level you mentioned, so from it, we are looking at a reduction of INR1,000-plus crores of debt level from where we are standing right now. So you're right about that from the current level, the way we look at it. But I mean I've given you tag around INR1,000 crores by the year-end, which was INR1,500 crores as of last financial year. But to elaborate more on collection, I'll hand over to our CFO.
Q: And then the next year, this will be the entire will be kind of we will become a net cash kind of a company by FY26.
A: Yes, that is the agenda. Okay. So there, I just wanted to elaborate further. So how much in terms of the broadly the alpha alternatives, how much already, obviously, for four projects, we have mentioned that INR161 crores we have received. So how much more cash are we going to receive. So that would be a major driver in terms of the debt reduction and plus the working capital.
Q: So my first question is on the coal mining business. The revenue in coal mining business has actually declined despite like better production volumes. So is this due to lower realization or what has led to the reduction in revenue from INR163 crores in last quarter to INR150 crores in current quarter?
A: Let me answer this question. First of all, we have not given the coal revenue in the investor presentation. What we are saying
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
