Release Date: August 12, 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 total income of INR 20.02 crores in Q1 FY '25, reflecting a strong year-over-year growth of 73.83%.
- The company's EBITDA reached INR 2.82 crores, showing a modest increase from INR 2.12 crores compared to the previous year.
- Dhruv Consultancy Services Ltd (BOM:541302) has been shortlisted for several significant international projects, including the Dhaka Water Supply Resilience Project and consultancy services for the government of Mozambique.
- The company has a robust order book of INR 646 crores, including an unexecuted order book of INR 303 crores, indicating a strong pipeline and promising future.
- Dhruv Consultancy Services Ltd (BOM:541302) is strategically shifting its focus to international markets, targeting large-scale projects above INR 50 crores, which is expected to significantly enhance revenue growth.
Negative Points
- Profit after tax stood at INR 0.88 crores, indicating a dip in profitability due to higher mobilization expenses in the initial project period.
- Earnings per share remained stable at INR 0.55, showing no growth compared to the previous year.
- The company faces delays in payment receipts, with an average payment cycle ranging from 45 to 120 days depending on the client.
- Dhruv Consultancy Services Ltd (BOM:541302) has no current export contribution in its total order book, with international projects yet to be secured.
- The company has experienced slower evaluation processes for international bids, particularly for World Bank-aided projects, which could delay potential revenue from these projects.
Q & A Highlights
Q: Can you elaborate on any specific partnerships or collaborations initiated at the conference with other international stakeholders? How might these relationships influence your future projects?
A: Yes. We definitely need a collaboration when we are bidding internationally, because the condition says that you have to take the local partner. In few of the cases, we have to deal with the local currency and local language. So local partner strategically is needed, and we are very much careful while selecting the local partner. - Pandurang Dandawate, Non-Executive Director
Q: Given the Board participation from delegations across Africa and Asia, how does Dhruv Consultancy plan to leverage the insights gained at this conference to enhance its market presence in this region?
A: We are attending series of conferences happening internationally. Mainly, we are thankful to FICCI, who are inviting us. In few of the cases, we were the only Indian representative, recently happened in Tanzania. And in that, B2B meeting happened with our team. Also, we had one meet at Sri Lanka, wherein High Commissioner of India in Colombo himself took initiative to open the dialogue with various stakeholders or clients to enable us to grab the opportunity. - Pandurang Dandawate, Non-Executive Director
Q: Given the scale and duration of high-speed corridor project, how does Dhruv allocate resources to ensure successful execution without affecting other ongoing projects?
A: High-speed corridor projects, right now we are doing expressways. We have already 8 expressways projects under our belt out of 12, which are in India. And high-speed corridors, it is, you can say, multimodal corridor project, wherein the development doesn't happen in one go. - Pandurang Dandawate, Non-Executive Director
Q: What is the execution period for our order book?
A: Our order book as of now stands roughly to the extent to the amount of INR 300 crores plus. And the timelines almost with all the clients are 36 months. That is the main construction period. And after defect liability period, wherein very few, I can say, percentage of amounts, maybe 10% to 15% of our fees is payable in another three years, so I can say, with EBITDA of 20% plus. - Pandurang Dandawate, Non-Executive Director
Q: What is the export contribution in total order book?
A: As on now, zero. But I can say, it will start adding definitely with current calendar year-end. Maybe two projects we are aiming at government level and one or two projects at private level and one or two projects at EXIM Bank level as a consultant in various capacities. - Pandurang Dandawate, Non-Executive Director
Q: Any delay in payment receipt?
A: Our payment cycle for supervision work, that is we call authority engineer's work, for NHAI, it is 45 to 60 days; for Ministry of Road Transport and Highways, it is from 90 to 120 days. For other clients, it is, I can say, 60 to 90 days. So average receipt of the supervision work is 60 to 75 days, which is 100% guaranteed. - Pandurang Dandawate, Non-Executive Director
Q: What are company's strengths and competitors?
A: Company's strength, I can say, it is a technical strength wherein the consultancy projects are awarded. When we entered into business in a large way in 2014-'15, we were scoring 85 marks technically out of 100, and financial marks are 20. So if I'm the lowest financial quoter, then I will get 20 out of 20. Now technical weightage is given 80%. - Pandurang Dandawate, Non-Executive Director
Q: Given the expected increase in top line, and you mentioned that not a lot of employees will be added. So can we expect margins to go back to 20%, 25% EBITDA level?
A: Definitely. Two reasons for that: Number one reason is, international market, we don't bid below the 35% EBIT. Because we are batting on unknown pitch, we are working in unknown conditions, and it will be our first assignment. So we are not going to take any heavy financial risk. - Pandurang Dandawate, Non-Executive Director
Q: Given the current order book, what is the amount of revenue that we expect to recognize in FY '25? What kind of growth over FY '24?
A: Order book will definitely be double. And EBIT also will be increased. So you can imagine the top line current year and next year also. - Pandurang Dandawate, Non-Executive Director
Q: Are we looking for others in overseas market to handle projects there?
A: No, no, no. We directly handle the overseas projects. We don't outsource anything. - Pandurang Dandawate, Non-Executive Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
