Antony Waste Handling Cell Limited ($AWHCL)

Ladies and gentlemen, good day, and welcome to Antony Waste Handling Cell Limited Q4 FY '26 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Subramanian. Group CFO from Antony Waste Handling Cell Limited. Thank you, and over to you, Mr. Subramanian.

Thank you, Gus. Good afternoon, everyone. Thank you for joining us for our Q4 FY '26 earnings conference call. I'm joined today by our Investor Relations advisers, [indiscernible]. Our investor presentation for Q4 FY '26, which is now available on the stock exchanges and on the website. Before I turn to our performance, I want to step back and acknowledge the singular significance of FY '26. The year that marks 25 years of Antony Waste journey in transforming India's waste management landscape. What began as a modest vision a quarter century ago, has evolved into a scaled purpose-driven platform serving millions of citizens enabling cleaner cities and contributing measurably to India sustainable future. That transformation was not built in a boardroom. It was built by the trust of our customers, the partnership of our clients and the relentless commitment of our 10,000 employees, vendors and support staff across the country, to each one of them, I extend my best gratitude. In the [indiscernible] of this milestone, the Board has recommended a [ maiden ] dividend of INR 0.5 per equity share. That is 10% of the [indiscernible]. This reflects our confidence in our financial position and our commitment to rewarding shareholders by preserving the capital needed to fund our next phase of growth. Across FY '26, we made deliberate high-quality additions to our platform that meaningfully expand our longer earnings power. We entered the EPR business and monetized nearly 20% of our latest EPS in the first year of PCCW operations, a strong initial proof point. We secured 2 waste-to-energy projects in [indiscernible], 2 new collection and transportation contract in Mumbai and the preprocessing solid base facility in [indiscernible]. Our strategic partnership with Japan's JV Engineering for [ WT Development ] in [indiscernible] further deepens our technology edge and the successful merger of [ AG Enviro infra ] projects into the company has strengthened our operational integration and long-term capability base. FY '26 was a year of broad-based volume growth across our platform. The CMT volumes grew approximately 9% year-on-year to 2.12 million tonnes while processing volumes expanded approximately 19% to 3.6 million tonnes, driven by new project additions, contract renewals and the continued scaling of our biomining and ID population. Total MSW managed for the year rose by 15% to 5.6 million tonnes. In Q4, the momentum was particularly strong in processing volumes rose by 32% to 1.15 million tonnes, reflecting improved utilization at our bio mining and MRO facility. Total quarterly MSP handle grew 23% to 1.67 million tonnes. Our CMC that [ Pitchoun Corporation's ] waste-to-energy facility delivered 69.3 million units of green power in FY '26 adjust over approximately 10,000 tons of carbon dioxide emissions during the year, equal emissions during the year. This consistent performance validates our technology and execution capability a critical foundation as we scale into the 2 large WD projects. During the year, the company had approximately 90 days of planned and liberated shutdown, which reflected in a lower [indiscernible]. Towards the maintenance period, our plant has been operating at approximately 86% PLF consistent. Our construction and demolition recycling facility continued to lead the sector with a 96% recycling rate. Annual RBF sales reached a record [ 1,77,000 ] tonnes, up 20% year-on-year, further diversifying our nonmunicipal solid rate revenue base. FY '26 operating revenue reached INR 920 crores which is up 9%, while Q4 operating revenue came in at INR 254 crores, up 14%. Growth was underpinned by higher volumes, contractual tariff escalation and consistent execution across our project portfolio. A milestone worth highlighting our core operational revenue, including project revenue crossed INR 1,000 crores for the first time, a meaningful threshold that reflects the scale we have built over the last 25 years. From a broader operational perspective, the C&G revenue is up for the entire year is up by 11% [indiscernible] INR 646 crores. processing revenue is up by 5% at INR [ 24 ] crores. The Q4 performance was equally solid, [indiscernible] INR 160 crores, up 14% and processing at INR 94 crores, which is up by 15% year-on-year. EBITDA margins held at around 82% of both Q4 and full year, in line with our stated guidance, reflecting disciplined cost management, even as we invest in scale. Our profitability for the fourth quarter stood at INR 37 crores. And for the full year, the reported profit after tax was INR 92 crores. It is important to note that with Q4 FY '25, that's last year and for FY '25 for the full year of last included a onetime income of INR 24 crores. Adjusted for this exceptional line item, the Q4 PAT is up by approximately 67% year-on-year. And for the full year, PAT has driven by 20%, demonstrating strong underlying earnings momentum. On the balance sheet front, as of March 2026, the group's gross debt stands at approximately INR 426 crores. Cash and bank balances is around INR 23 crores, resulting in a net debt of approximately INR 302 crores. Our net debt-to-equity stands at 0.3x and the weighted average cost of debt is around 9.9%. The DSOs for the quarter was around 18 days. Our order book as of March 2026, cash at an all time high of INR 18,000 crores, covering exceptional revenue visibility, underpinning our confidence in sustained component growth ahead. Before we open for Q&A, I want to flag a significant development in Q1 FY '27. The [indiscernible] Supreme Court dismissed [indiscernible] operations, specialty petition in the long-standing given the arbitration matter, which thereby directing the corporation of disperse a settlement amount of INR 15 crores within 3 months with an interest of 9% on any delay. This favorable ruling reinforces our track record of contractual compliances and gives us added confidence in the resolution of remaining administration matters. Looking ahead, we remain focused on driving sustainable growth through disciplined execution, operational excellence and continued innovation, supported by a record order book, a growing project portfolio and expanding opportunities across the waste management value chain, we are well positioned to capitalize our sector's long-term potential. We remain confident of delivering 15% to 20% revenue CAGR over the next 5 years, backed by a record INR 18,000 crore order book, 2 large scale [indiscernible] and expanding API platform and India has secular tailwind in [indiscernible] infrastructure, all while deepening our sustainability impact and creating long-term value for all our stakeholders. We will now open the floor for questions.

The first question comes from the line of [ Ran Asha ] with Equity Securities.

Very solid set of numbers. Sir, my first question is regarding the top line performance. So when we are guiding 15-odd percent top line CAGR expectation, I feel, based on the contractual term, you will see a significant bump in FY '28, 29 with the new risk to energy plants coming in. So from the working capital perspective, and the debt component perspective, how you are seeing that aspect? Secondly, considering the current macro environment wherein the fuel cost is rising up very rapidly on top of that in certain states, the minimum wage hikes are there. So I do consider that we apply for the escalation in all, but considering the near-term pressure, how we see -- how we are going to see our operating profitability wherein we are selling a long-term aspiration of 20% to 22% EBITDA margin. So these are my first questions.

Thanks, [indiscernible]. So on the ability to raise debt and working capital for our upcoming projects, our net debt to equity today, is just 0.3x. So that gives us firepower to borrow more for upcoming projects, which have assured revenue streamlines and also are backed by long-term contracts. Both the [ WTE ] projects come with a firm commitment from JP technology vendor and comes at a fixed term cost contract for us. So thereby the cost overrun element has been captured well and time over in is also there within the nature of the business in this case. So financially, I think we are in a much sweeter spot today than what we were in [indiscernible] during the pre-COVID times and our ratings are strong. We have an A- rating at the key downstream subsidiary level via BB+ at the listed entity level. So those gives us added strength and our cost of borrowing today is sub 10%. Going forward, we will be able to leverage more for prospective projects. So that should take care of our requirement. Coming back to your second point on the rising fuel cost, additive cost and labor cost. All my projects, 100% of my revenue has escalation built into the system. So if minimum wage changes has been changing the labor port that we have seen recently. It just had an implication of just INR 5.2 crores from our entire books as compared to other large infra companies. So we have a [ well cushion ] in that front. And our escalations are time bound. And though there is a delay in realization for the same is expected and acknowledged by the clients. So there might be a delay in realizing the cash flows, but the debt is acknowledged the liabilities acknowledged by the clients. As for the tender conditions and is contractual, and that comes to us in due course of that. So that kind of helps us maintain this margin profile of 20% to 22% for us.

Yes. So that's something I'm asking for. So in near term, are you sensing any margin pressure on a reported basis, though I do consider that on a rollover basis, you will get approvals and have a one-off impact on that?

So we don't expect a timing mismatch significantly because these are set projects and set tenders. So these are -- the reason for a delay in the past was in the absence of outstanding committees and elected members. That led to a significant delay in recognizing the escalations. Now most of the municipal corporations have elected members. So this is a procedural aspect of the project line. So if you were to look at the books pre 2000 -- pre-COVID times the escalation was recognize every quarter or every half year as [indiscernible] and when it was due. And now that has been rectified. So we are -- we don't expect significant delays on relations going forward.

Understood. My second follow-up on the -- your base 2 energy plant. So what is the status of the escalations as what we have outed for? And secondly, are there any updates on the [ Waste to Energy ] at your Mumbai operations?

So the waste financing project, which is ongoing, which is a [ Waste to Energy ] at imprecise. The escalation has already been computed. We already got an escalation due for FY '25, FY '26. The next round of escalation is due from March 2026 onwards for which we have already submitted at documents and that is -- that will be approved in the upcoming meeting of the plant. So that is coming to us every quarter. So that is not an issue for -- on the [indiscernible] front. On the Mumbai waste part, I think this matter has been taken very seriously at the Bombay High Court, which has been looking at a long-term sustainable solution. So I believe the client -- the corporation here would be coming back with a proposal of setting up the WT in the near future.

[Operator Instructions]. Next question comes from the line of [ Ketan Candida], an individual investor.

My question is, sir, when we look at the volumes, the volumes have increased significantly but the revenue increase is not equivalent to that. So can you help to explain the difference?

Yes. So if you look at the volumes jump, that's mainly coming from the [indiscernible] mining project, which is a fixed term contract. So the entire revenue jump is not commensurate to the volumes up as the growth in revenue was mainly because of the [indiscernible]. But if you look at the non-[indiscernible] revenue zone, that has been up by around 8%, which is what the underlying revenue growth is.

Just a follow-up on that question. How much proportion would be of your entire volumes from the [indiscernible]?

That would be close to 22% in the last quarter.

Okay. Okay. All right. And the other question is this monetization of APR credit that you have done, how much is the value for that from the sale of the [indiscernible] credits?

So we recognized close to INR 2.2 crores of the EP trade that was eligible for us earned in FY '22 that come out. So it's not a significant amount today. But once the pattern is said and we are able to quantify that, that will add close to 10% of our PCM revenue.

10% for PCM here WT revenue?

Yes.

Okay. And last question is your long-term debt has reduced by a good amount. So can you help us -- what helped us ready feet? Is it the cash flow that we related from the business or some other reports?

Yes, yes. So normally, the paydown comes from our operations only. So if you look at the cash flow from operations before working capital, we earned around INR 220-odd crores. And we use part of it to repay our debt during the year. So the total financing was INR 93 crores. So we have a very aggressive policy in paying down this debt so that we can then have a healthy cash cushion for future upcoming projects.

[Operator Instructions] Next question comes from the line of [indiscernible], [ MIB ] Securities India. Because there is no plan from the [indiscernible] of Mr. [indiscernible], we'll move to the next participant, and that is from the line of [indiscernible] Agarwal with [ FDA Advisory ].

Am I audible?

Yes.

So I have 2 questions. My first question is could you share the contribution of the C&D business for the quarter as well as the full year? And also, what kind of contribution do you expect for this segment in FY '27? And my second question is, currently, a large portion of our revenue comes from like [ Monster Corporation]. Are there any plans to diversify the revenue mix over the coming years? And if yes, what areas or segments are you focusing on?

All right. So going -- for the C&G revenue for FY '26 was up 11% at INR 646 crores and for processing, it's up 5% at INR 274 crores. For Q4, the [ CNG ] was 160, processing was 94. Going forward, the [indiscernible] revenue streams for us strongly skewed towards IDF sales composed getting into recyclables and [indiscernible]. That's the revenue streams that we are seeing. We also have a new business line called [ click to clean], which is part of the Antony recycling which is more into the B2B segment, which is into small-scale [indiscernible] reset and deep housekeeping clients and has currently got clients like Paris, Asian Paints, your [indiscernible], wines, beam of the world. So that is another small revenue stream that we are looking at. So these are our attempts to improve our non-MSP stream. Going forward, revenue from sale of power to discounts from the AP projects will also add into this bucket.

[Operator Instructions]. Next question comes from the line of Neerav Dalal with [ MIB ] Securities. India.

A couple of questions from my end. The INR 18,000 crores of order book that you mentioned, could you give us a split in terms of the 3 segments? That is number one. And the second thing related to that would be -- what would be the CapEx requirement for achieving that INR 80,000 crores revenues?

So INR 18,000 crore revenue spread will be broadly 60% would be processing the balance 40% would be C&P businesses for us -- that revenue split at that time. The incremental CapEx would be the CapEx related to my processing contracts largely. So that's around INR 750-odd crores of CapEx that I would need to invest to achieve this group because bulk of the E&P operations, excluding the BMC 2 contracts have already been funded and the revenues is already coming in. So the incremental CapEx is mainly for the new projects, which is the [indiscernible] processing, the 2 WTE projects are EP and the BMC CNP contracts.

Got that. So largely INR 750 crores plus the Mumbai, a couple of sets in [indiscernible].

Yes.

Okay. And in terms of the [ CNT ] projects in Mumbai, what will be the size of those?

So I think it's INR 1,000 crore revenue stream over spread over 10 years. So that's why INR 1,000 crores is what we look to achieve per year. That would be the annual run rate for the [ BMC ] contracts.

Got that. And the third question is regarding the deferred tax effect that has been created this year so we -- could we get an explanation in terms of how it was created. And is there any milestone related to this? Or how should we look at the tax rate?

Actually, the 2 things happened, which kind of led to this number, the INR 19 crores of tax reversal that you see is mainly because of INR 8 crore of tax on undistributed profit, which has to be written back due to the merger of [indiscernible] and were on to Antony Waste. So that's a onetime line item. The second would be the INR 83 crores tax provision that we have created at Section ATI, Antony [indiscernible], which is interest at an or incremental CapEx that was done. So there is a INR 3 crore of excess tax provision being written back. So those for the line items that led to us to the deferred tax thing coming in.

And then going ahead then what would be option?

I think 25% is our stated assumption of effective tax rate for the group companies.

[Operator Instructions] Next question comes from the line of [indiscernible] KB Capital.

[indiscernible] company's performance over the last 5 years, [indiscernible] EBITDA has grown steadily, while the PAT has remained relatively flat. Could you help us understand the 3 reasons [indiscernible] how can the PAT growth be going forward?

One of the key factors why the translation of the growth in EBITDA is not translation into the growth in PAT interest and depreciation because over the last 3 years, our WTE plants have kicked in the 3 large CNB contracts also fitting. So those were the reasons why the interest and depreciation were slightly larger than in the previous 6 years. Going forward, if status quo will be maintained, then the transaction EBITDA or higher price is definitely on the -- but with the 2 WTE projects that we are in this of AP will start contributing to revenue post FY '29. So that will be kicking in 2029. So the difference is mainly because of higher interest and depreciation for assets that were built, capitalize and now revenue generated.

Sir, lastly, can you provide any update -- like any recite tenders that the company has anticipated in?

So we have built for 3 collection and transportation contracts in the northern part of the country, and there is one waste-to-energy project that we are looking at in the second part of the country. So that's the projects in pipeline for us. I mean the building stays there.

[Operator Instructions] Next question comes from the line of [ Pasha Singh ] with MB Securities.

[indiscernible]. We have seen our employee expenses and other expenses increased by around 19% and 17%, respectively, during FY '26. So could you help us understand the key reasons behind the increase? And second was during some decline in EBITDA margins this year. So could you share some light on the factors, what impacted our EBITDA margins? And how should we think going forward about our EBITDA margins?

[ Prashant ]. So the 19% and 20% increase in labor and other expenses, the head count has increased at the labor count and also because of normal wage inflation that has occurred over our system and the minimum wage changes that happened. So that has led to a significant increase in the wage bill a bit on a year-on-year basis. Other expenses also include a major chunk of RV transportation costs and hiring expenses, which have increased over the last 2 quarters, because of higher transportation is volume driven. We sold around 177,000 tonnes of IDF. So that has resulted in higher transportation costs. And that sits in the other expenses line item. On the EBITDA front, I think there were 2 key factors which has kind of led to a slight softness on a year-on-year basis. One is the volumes and the construction and demolition waste sector is just picking up the monsoon in Mumbai was -- had a longer stage ended up only post November. So the volumes was a drag on the numbers because the cost factor is different in the construction demolition waste entity. And also, we have incurred certain additional vehicles being deployed at Nagpur, [ Meda ] and in PCMC because of higher tonnage, which is reflected in slightly higher cost and hiring costs which has left to a softer EBITDA because of these 3 factors.

[Operator Instructions] Next question comes from the line of [ Ronak Shah ] with Equirus Securities.

So sir, my question is regarding our [ C&D ] business. So what was the quantum of revenue we have recognized in FY '26 and how you are seeing the scale-up of that? And secondly, it's been long when we are aspiring for our scrap age or the recycling business. So what is the status of that?

Yes. So on the consumer and demolition, I think it contributed to around INR 9 crores of our revenue it is lower than what we had anticipated. We expect an uptick in the current year, from February onwards, the volumes have jumped. We are averaging around 480 to 520 tonnes per day as compared to 280 to 300 tonnes in the previous 8 months. So that has been a significant uptick at that end. In the auto tire recycling and the scrapping businesses, I think the kind of volumes that we are looking at, institution demand has not kind of captured our expectation. So I think it's more of a wait and watch for us till the time the industry stabilizes before we invest incremental capital into a revenue-generating mode.

[Operator Instructions]. Next question comes from the line of Neerav Dalal, [ MIB ] Securities India.

In terms of the CMD, what has changed, which has led to the doubling of the volumes and -- is this the volume that you should look at or that we will see incremental volumes -- volume increase over this? That is the first question. And the second question is in terms of the INR 750 crores of CapEx that we will do for the [ Andhra ] projects. So I assume that we will be booking those under contract revenue over the next 2 years. Any -- is my assumption right or there will be any changes?

Yes,. I think your assumption is right, the total CapEx of INR 700-odd crores will be captured to the contract revenue contract costing more than. So that's the pattern that will follow over the next 2, 2.5 years. So that's how we've gone. What has happened on the construction and demolition base has been a very strong policy change as the [indiscernible], they have made it mandatory that for all the developers to route their way through these professional or authorized correction and distribution of the C&D processing units. So that push has really changed the way the processing volumes have improved, and that is going to stay for long. So this was to be done almost a year back, but because of a lack of available elected members, the procedure delays, the volumes was not up to the mark. Now things are in place. There are rules and regulations around disposal of construction and demolition base that is translating into higher volumes, and that is what we can see today.

So it will be not be wrong to assume that in the current year, we would be doing about INR 18 crores to INR 20 crores on the CND business.

That's a very fair assumption, and that underlying volumes to definitely provide a comfort on that front.

That's correct. And just in terms of the INR 700 crores that will be booked on the contract revenue side. So it would be fair to assume that it will be largely back-ended. So I guess, FY '28 and first half of FY '29, if there is any delay in the commissioning. So that would be the right assumption.

Yes. So it's normally a 60 kind of a ratio in year on an -- and that should be the ...

That should be the way to put it -- and in the current year, we've also booked about INR 160 crores of contract revenues. So what should be our assumption on this number in the coming ...

So I think we are in the first quarter. So maybe by second quarter onwards, there will be a slight uptick in the numbers because post monsoon is where you'll see a lot of action happening at the ground level. I would say around -- so when you talk about the entire 40, 60 -- year 1 and year 2, we're talking about calendar year because we have 24 months of construction period. So maybe a part of that will come in the current financial year, a part of -- a large chunk of it can fall into the next financial year and therefore.

Right. And the INR 10 crores that we've booked in the current year FY '26, that would -- none of that will be for the new [indiscernible]?

No, none of that is for the new project.

That is I just wanted to understand -- would we see a similar quantum in the coming years on an annual basis? Or this number should frankly come down?

So the entire amount is not sitting as project costing. There's also a decent amount of revenue from sale of a compost and revenue from mechanical [indiscernible] which sits in part of this bulk number. So I would say around not more than 25% will be contract revenue. And that -- you are right, that will not be custom in the current financial year, but 70% of that will continue in the current financial year because they've gone to different revenue [indiscernible].

Next question comes from the line of [indiscernible], Capital.

Also, I just have 2 questions INR 18,000 crores of orders that we have is the execution in mind for that?

So I think this is spread over the next -- so most of [indiscernible] 7-years old or they are 20 years old. I would say 40% of the revenue will be executed in the next 5 to 7 years period of time because they are [indiscernible] operations. The balance will be spread over the period of time for the next 15 years.

Okay. And just a clarification. You mentioned that we book INR 700 crore revenue on contract side in FY '27, is that -- did I hear that correctly?

So that's a total CapEx that we need to spend on 2 years. So 750, we are splitting into 2 buckets, 40% maybe in FY '27, '28, part of it and balance 60% FY '28, '29.

[Operator Instructions] Ladies and gentlemen, as there are no further questions. We have reached the end of question-and-answer session. I now hand the conference over to Mr. Subramanian, N.G. for closing comments.

Yes. Before we conclude, I want to take a moment to express my heartfelt appreciation to my entire team, for the unwiring commitment and exceptional contributions. The work and hard work has been instrumented and achieving our success and sustaining our growth and also [indiscernible] of 25 years of work in this tough working environment. As we look ahead, we remain focused on executing our growth strategy, and I'm truly excited about the journey ahead as we continue to build a cleaner, greener and more sustainable future for our communities and stakeholders. Thank you once again for your continued trust and support, and I wish everyone a very pleasant evening. Thank you.

Thank you. On behalf of Antony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.