Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IRCON International Ltd (BOM:541956, Financial) reported a total revenue of INR2,385 crores in Q1 FY25, with a PAT of INR224 crores, marking a 20% increase compared to the same quarter last year.
- Core EBITDA increased marginally to INR259 crores from INR251 crores in Q1 FY24.
- Earnings per share rose to INR2.38 in Q1 FY25 from INR1.99 in Q1 FY24.
- The company has a robust order book of about INR26,000 crores as of June 30, 2024, with 51% of orders on a competitive basis.
- IRCON International Ltd (BOM:541956) is actively bidding for new projects and expects to secure orders worth INR4,000 crores to INR5,000 crores soon.
Negative Points
- The company experienced a decline in revenue in Q1 FY25 due to the nearing completion of large projects and adverse geographical factors like excessive rainfall.
- International revenue has declined, particularly due to issues in countries like Bangladesh.
- The order book has decreased from INR44,000 crores to INR26,000 crores, indicating a significant drop in new orders.
- The company may need to engage in aggressive bidding to secure new orders, potentially impacting future margins.
- Nomination-based orders from Indian Railways have ceased, which could affect the company's order book in the long term.
Q & A Highlights
Highlights of IRCON International Ltd (BOM:541956) Q1 FY25 Earnings Call
Q: What caused the decline in revenue for Q1 FY25, and what is the revenue growth outlook for FY25?
A: The decline in revenue was due to the nearing completion of large projects like USBRL and Dedicated Freight Corridor, geographical factors such as excessive rainfall, and international issues in countries like Bangladesh. Despite a mild Q2 expected due to monsoon, the company is hopeful of achieving similar revenue levels as FY24 for the full year. (Ragini Advani, Director Finance)
Q: What is the status of order tendering post-elections?
A: Post-elections, a significant number of tenders and bids are expected in both railways and highways. The company is actively bidding and anticipates securing orders worth INR4,000 crores to INR5,000 crores soon. (Ragini Advani, Director Finance)
Q: How does the company plan to maintain its EBITDA margins amid increasing competition?
A: The company aims to maintain a PAT margin of 7% to 7.5% in the short to mid-term. While aggressive bidding may be necessary in the future, the company is focused on executing projects at profitable margins and will keep investors informed of any changes. (Ragini Advani, Director Finance)
Q: What are the order inflows for Q1 FY25, and what is the guidance for the full year?
A: The order inflow for Q1 FY25 was about INR1,000 crores. The company expects to secure another INR4,000 crores to INR5,000 crores by Q2 and aims for a total order book of INR10,000 crores to INR12,000 crores for the full year. (Ragini Advani, Director Finance)
Q: What is the company's strategy for expanding its global footprint given the current challenges?
A: The company is cautious due to political turmoil in Myanmar and Bangladesh and slow funding from the Government of India. However, it is exploring opportunities in countries where it has a strong credibility and expects to increase its international domain by year-end. (Ragini Advani, Director Finance)
Q: What types of orders is the company targeting, and what is the status of nomination-based orders?
A: The company is targeting EPC projects in railways and highways, as well as PPP projects. Nomination-based orders from Indian Railways have been stopped, and future orders will be secured through competitive bidding. (Ragini Advani, Director Finance)
Q: What is the status of the company's solar project, and are there plans for further expansion in renewables?
A: The solar project is on track, with 80% land acquisition completed and 50 MW commissioned. The company aims to complete the 500 MW capacity by September 2025. Future participation in renewable projects will depend on the success of the current project. (Mugunthan Gowda, CFO)
Q: What is the company's cash position and investment commitments?
A: The company has a cash balance of INR4,000 crores, with INR820 crores as its own funds. It has committed INR1,100 crores in equity and loans to its SPVs, with 50% expected to be disbursed this year and the rest next year. (Ragini Advani, Director Finance)
Q: What is the status of asset monetization and the process involved?
A: The company has received in-principle approval for the strategic sale or monetization of four operational road projects. The process requires further approvals from the Ministry of Railways and DIPAM. (Ragini Advani, Director Finance)
Q: How does the company plan to maintain its core EBITDA margins amid increasing competition?
A: The company aims to maintain core EBITDA margins at FY23 and FY24 levels for FY25. While there may be a slight dip in FY26, the company expects to maintain margins within the range of 6.5% to 7.5%. (Ragini Advani, Director Finance)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
