Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dhruv Consultancy Services Ltd (BOM:541302, Financial) reported a year-on-year increase of 15% in total income for Q4 FY24, reaching INR25 crores.
- The company's EBITDA grew by 49% year-on-year to INR2.8 crores, with an EBITDA margin of 11.15%, up by 257 basis points.
- Profit after tax (PAT) saw a significant year-on-year increase of 410%, reaching INR43 lakhs, with a PAT margin of 1.73%, up by 134 basis points.
- The company successfully secured several key projects, including LOAs for highway projects in Maharashtra and Bihar, and consultancy services for projects under Bharatmala Pariyojna in Manipur.
- Dhruv Consultancy Services Ltd is strategically shifting its focus to international markets, with plans to venture into African and Gulf countries, and has established a wholly-owned subsidiary in the UK.
Negative Points
- Despite the positive financial growth, the company's total income for the full fiscal year 2024 showed only a slight year-on-year increase of 0.13%, reaching INR82.41 crores.
- The company's revenue growth for Q4 FY24 was flat, attributed to delays in new orders due to the election code of conduct.
- Total expenses for the year ended March 31, 2024, increased due to higher employee benefit expenses, finance costs, and amortization costs.
- There were delays in payment receipts, particularly for final bills, although digitalization has improved the process.
- The company's profitability in Q4 FY24 was impacted by higher mobilization expenses for new projects and provisions for ECL, leave encashment, and gratuity.
Q & A Highlights
Q: Have you done any employee addition to take care of the rising order book?
A: Yes, employees are being added by our HR and BD team. We have a strong in-house recruitment team that handles this continuously. For government projects, we recruit employees as soon as the project is awarded. For private assignments, our in-house team manages without additional recruitment.
Q: Are we looking to invest in overseas markets to handle projects there?
A: We have opened a subsidiary in the UK, Dhruv International Private Limited, and will establish an office there this year. We are expecting orders from Tanzania, Ghana, and Mozambique. Once we receive work orders, we will establish offices in those countries as needed.
Q: What drove the high order inflow, and what is the execution period for the current order book?
A: The total order book is INR627 crores, with INR350 crores unexecuted. The unexecuted order book is to be executed over the next 2.5 to 3 years.
Q: Can you provide details on the improvement in profit margins despite flattish revenue growth for FY24?
A: The improvement in profit margins is due to the completion of major projects awarded in 2018-2020, leading to the realization of profits. The flattish revenue is attributed to delays in new orders due to the election code of conduct.
Q: What is the revenue and profit growth estimate for FY25 and FY26?
A: While specific figures cannot be disclosed, we expect overall growth in the range of 10% to 20%. We are bidding for projects worth INR1,000 crores to INR1,200 crores, aiming to double our order book.
Q: What is the working capital cycle for your projects?
A: For NHAI projects, it is 45 to 60 days, and for MoRTH projects, it is 90 to 120 days.
Q: Are the EBITDA margins of 18% for FY24 sustainable in the future?
A: Yes, we expect margins to grow further as we target larger ticket size projects and expand our client base both domestically and internationally.
Q: Can you address any delays in payment receipts?
A: Delays do occur, especially with final bills, but digitalization has improved the process. Payments from NHAI take 45 to 60 days, and from MoRTH, 90 to 120 days.
Q: What is the status of the international projects you were bidding for?
A: We are expecting work orders for projects in Tanzania (INR50 crore), Mozambique, and Ghana. These will be executed through our UK subsidiary.
Q: What caused the increase in other expenses and the decline in profitability in Q4 compared to Q3?
A: The increase in other expenses is due to mobilization costs for new projects and provisions for ECL, leave encashment, and gratuity. The flat revenue in Q4 is due to the election code of conduct affecting new orders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
