AVP Infracon Limited (AVPINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to AVP Infracon Limited H1 FY '25 Results Conference Call hosted by Kirin Advisors [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ganesh from Kirin Advisors. Over to you, sir.

Thank you, and good evening, everyone. On behalf of Kirin Advisors, I welcome you all to the conference call of AVP Infracon Limited. From management team, we have Mr. Prasanna, Chairman and Managing Director; Mr. Vasanth, Director; and Ms. Priyanka, Company Secretary. With this introduction, now I hand over the call to Mr. Prasanna. Over to you, sir.

Very good evening, everyone. Thank you all for taking time to join us today. It's a pleasure to welcome you to AVP Infracon Limited's H1 FY '25 Conference Call. Before we get into the details of our performance, I'd like to give you a brief overview of who we are and what we have achieved so far. AVP Infracon Limited started its journey in 2009 with a simple but ambitious mission to create world-class infrastructure that drives India's growth. Over the years, we have earned a reputation for taking on challenging high-value projects across various sectors, including expressways, highways, flyovers, bridges, urban development and commercial projects. We have worked closely with both government bodies and private clients, building a solid foundation as a trusted partner in infrastructure. Though Tamil Nadu is where most of our projects are based, we are constantly expanding our horizons from roads and bridges to irrigation and industrial development. We have a proven track record of delivering projects on time while maintaining strict safety and quality standards. Our in-house capabilities allow us to manage projects from concept to completion, which ensures smooth execution with a focus on maximizing the value for our stakeholders. Integrity, teamwork and a passion for excellence lie at the heart of everything we do at AVP. We firmly believe in transparency and accountability in all our projects. Our team is deeply committed to not just meeting but exceeding expectations by delivering high-quality, on-time solutions that make a lasting impact. Over the past 15 years, we have successfully completed numerous projects and are currently working on contracts worth over INR 250 crores. A strong asset base including batching plants, compactors, pavers, loaders and mixers, give us a competitive edge in terms of cost and efficiency. Our client list features prestigious names like the National Highways Authority of India, the Ministry of Road Transport and Highways, Tamil Nadu Government's Public Works Department and other corporations, which reflects the trust we have built in this sector. Now I'd like to highlight some recent achievements. We have made significant progress in the past few months despite the challenging environment in the market. First, I'm proud to share that we secured 2 key contracts from NHAI. The first involves strengthening an overlay of the Thirumayam - Manamadurai section, which is valued at INR 33.93 crores, excluding GST. This project is a testament to our technical expertise and commitment to delivering critical infrastructure. We are targeting completion of this project within the next year -- I mean, the coming financial year. The second contract is for the O&M of the Pondicherry - Tindivanam section of NH32. The project value is approximately INR 7.32 crores, excluding GST, further strengthens our presence in Tamil Nadu and Pondicherry. I'm also pleased to announce that our credit rating has been improved. CRISIL upgraded our long-term rating from BB stable to BBB- stable and the short-term rating from A4+ to A3. This improvement reflects the financial discipline and operational strength we have maintained. Additionally, we recently inaugurated our third ready-mix concrete plant in Dharapuram, Tiruppur District with a 90% stake in this partnership. We are well positioned to meet that growing demand for concrete in surrounding regions like Dharapuram, Palani and Udumalpet. We have secured 2 back-to-back contracts, one for construction of bypass from Bagalur town, and another for widening of Kallakurichi-Tiruvannamalai, the value is totaling to INR 270 crores. Both these projects are expected to be completed within a year. To support our long-term growth, we have also invested strategically in Kanthan Blue Metals, securing a 90% stake with a capital contribution of approximately INR 3.6 crores. The investment aligns with our broader vision of sustainable expansion and value creation. The financial performance of the company, let me now walk you through the financial highlights for the first half of FY '25. Our consolidated revenue for FY '24 stood at INR 109.22 crores, reflecting a strong year-on-year growth of 63.5%. Our EBITDA grew by 63.19% which is -- to INR 23.95 crores with the EBITDA margin improving slightly to 21.92%. Net profit for the year was INR 12.76 crores, an impressive 75.37% growth over the previous year, with a net profit margin of 11.69%. Our earnings per share came in at INR 5.11, a 26.39% increase year-on-year. On a stand-alone basis, we reported revenue of INR 95.89 crores, up 51.84% year-on-year. The stand-alone EBITDA rose by 71.36% to INR 23.15 crores with the margin expanding to 24.14%. Our stand-alone net profit stood at INR 12.75 crores, with a net profit margin of 13.30%. This number reflects the progress we have made and our ability to stay resilient even in a challenging environment. Looking ahead, as we move forward, we are excited about what lies ahead. We are actively pursuing larger, more complex projects to grow our presence beyond Tamil Nadu, with a specific focus on states like Madhya Pradesh, Andhra Pradesh and Telangana. We are also exploring opportunities for joint ventures and strategic investments to strengthen our capabilities further. Our order book for financial year '25 is expected to grow with fresh inflows of orders worth INR 750 crores with most of the projects coming from the road sector. We have also expanded into Telangana through a joint venture, which will be soon in operation. We remain focused on sustainable growth, maintaining financial prudence with tools like bank guarantees and escalation clauses to protect our interest. As a part of our long-term strategy, we are targeting INR 500 crores turnover by FY '26 that will be backed by a strong order book of INR 1,000 crores. Now before I open the floor for questions, I want to express my heartful thanks to all our employees, clients, partners and shareholders for their continued trust and support. Your belief in our vision motivates us to aim higher and achieve more every day. With that, I'd now like to invite any questions or comments you may have. Thank you all.

[Operator Instructions] The first question is from the line of from [Agatsya Dave from CAO Capital].

Congratulations on a great set of results. Sir, I have 3 quick questions. First question is that the margins have surprised again on the upside this half. So what would be your margin guidance on a sustainable basis going forward?

No, this will be sustained, sir. We are working hard to sustain all these margins. We cannot project any higher margins over and above all these things. We are already on a higher PAT and a higher EBITDA. We are sustaining -- we are working hard to sustain all this margin. And we assure that these margins will be sustained at any point of time.

Excellent, sir. Sir, second question, you gave a list of projects that you have won. So what's the unexecuted order book as of now?

It's approximately around INR 250 crores plus, unexecuted.

And sir, this includes L1 -- where you are L1 -- projects where you are L1?

No, this is all which is in currently running projects. We are waiting for a few projects which are to be opened, the tenders has to be opened. And we don't have any unexecuted order as on date. We have received one order yesterday. That is not added in any of these order of INR 17 crores. That was not added in any of these things.

Understood, sir. And sir, one final question. What is the progress on the solar EPC side? Any progress that you can share, sir? Or is it still too early to talk about?

No, it is very new to talk about. We are working on it. And we are targeting -- as I mentioned in the previous con-call itself, we are targeting anything in solar EPC in the next financial year only. If anything happens in this financial year, it will be an added benefit.

So this financial year, nothing. And then next year onwards, we'll have something.

Yes, yes. Next year, we will have a good number. But this year, we don't have -- we don't add anything to our calculation from that company in this year.

And sir, the pickup from the government side on the tendering side post elections and monsoons, that is as per your expectation?

Yes, it is very good. It is now. They have started going with their pace. And we have applied for many projects. We are waiting for results of around 4 or 5 projects. And hopefully, they'll go in full swing in shorter term.

The next question is from the line of Tara Kaur from [EY Cap].

So first of all, congratulations on a great set of numbers. My question is that what is the status and expected revenue contribution from our new Tiruppura (sic) [Dharapuram] plant toward H2.

Which plant? Dharapuram?

Yes, Dharapuram, correct.

Yes. Okay. See, it's a new market. We have just ventured into it. We are expecting 10% of the contribution of the total turnover from that plant.

Okay, sir. And my next question is that what factors contributed to the 75% Y-o-Y growth in H1 FY '25 and in next...

I'm not clear. Can you be a little bit slower and audible?

Okay. My next question is that what factor contributed 75% of Y-o-Y growth in our half yearly results also in the bottom line? And can we expect the same growth to continue for the future quarters and our results?

Growth of 75% over the previous H1 in the net profit, that is because of the turnover increase. Normally when the turnover increases and when compared with the slope in lesser turnover last year, that have added advantage for us. And also most of the machineries, the loans have been closed and the interest what we are paying on the bank loans of the machineries have come down drastically. And this is what influenced the increase in profit percentage. And hopefully, we'll have this maintained in the coming year also.

[Operator Instructions] The next question is from the line of [Ajinkya Pawar], an individual investor.

Congratulation for great set of numbers. I have 2 questions sir. First question is regarding our guidance, sir.

Sir, if you don't mind, can you be a little bit louder? It's not audible for me.

[indiscernible]

Sir, you are not audible. Can you please use the handset mode?

Sir, as per our guidance for next year, we are targeting for INR 500 crores of sales. For the half financial year, as per my calculation, we were around INR 120 crores of order we won. So for next year to clock a sales of INR 500 crores, we should have at least INR 700 crores, INR 800 crores of order book. So how it will go in H2? Are you looking for more number of order wins? What percent or what amount of bidding we already did? This is my first question. And second question is regarding loans, sir. I can see short-term loan has increased drastically. As per my understanding, it is due to that you guided earlier that amount of money that we stuck in the receivable and as per your business that the billing happens in Q3 and Q4. So whatever the assumption I am doing, it is right or no?

So to your first question, as of now, we have done around INR 110 crores in this H1. H2, we have a substantial amount of work orders with us, which will complete our H2. And for the next year, we -- as you rightly said, we will be focusing to have at least order book of INR 750 crores to INR 1,000 crores with us to complete the next FY '26 with what we have planned and what we have -- I mean what we are aiming to achieve. That will be taken -- these tenders will be taken in due course of time. We are applying for tenders and we are getting some also. And this will be happening in every quarter so that there will not be any lag or there will not be any -- I mean, there will not be any delay in procuring the works. So this work on hand will be surplus to execute what we have targeted. And your question number two, our short-term loans have increased because we are increased in terms of the top line also. So we are pumping in most...

Sir, can I just answer this?

Yes, yes, please.

Yes. So actually, the short-term borrowings is nothing, but we have availed the factoring and bill discounting since we have a debtor days of around 60 to 90 days, that's the reason the company has done for factoring and bill discounting. That's the reason the short-term borrowings is in a higher compared to March '23.

Okay. Okay. Okay. So there is no worry in long term, I guess, about loan.

Yes, nothing. No, no, no, it's not long term, sir.

And also, we have brought down our creditors when compared to FY '24.

Okay. Okay, sir. Sir, can you give me the -- now we are targeting for INR 600 crores, INR 700 crores of order book for next year? So I guess our win rate is about 30% to 40%. So what is the approximate estimate that we bidded?

Approximate?

What is the amount -- for how -- what is the total amount that we already bidded?

So we have bidded for around INR 300 crores to INR 400 crores -- we have bidded for around INR 400-plus crores.

Sir, we are not supposed to say that being a listed company, so we can do that once we get the L1 status, we'll make the announcement, sir.

But he's asking about the tender participation only. That can....

Yes, sir, but I don't think -- we should not actually disclose it. So we can do it once we get the L1 status and make an announcement in LC portal, sir.

Okay. No problem, sir. I'm a long-term investor looking for next 2 to 3 years.

The next question is from the line of Amit Bhatt from Mit Engineers.

Yes. First, congratulations for the good set of growth in the H1 to H1. Now sir, actually in H1 of FY '25, you clocked INR 109 crores top line. And normally, most of the EPC companies, they are giving good numbers in the H2. H2 is always seasonality comes into the picture. So this year, suppose we come with the INR 250 crores top line. Now your order book right now is INR 250 crores. So build-to-book ratio is only 1. Now you said that we are going to target INR 750 crores. But actually, we talk to many other companies in the same factor. They are very large, Siegel and other companies. And what this company...

Sir, your voice is distorted. Your voice is distorted. If you're on speaker, can you take it in the phone.

Yes. Sir, actually, on TTM basis, the top line of the company is INR 250 crores approximately. And our order book right now is of INR 250 crores. So build-to-book ratio is 1 right now, okay? Now the company is targeting INR 750 crores order book to deliver the desired growth. Now sir, as for the other players in the same sector, the bigger players, they are guiding and they are telling in their conclaves that after the election, government focus is not that much on the infra spending. And that's why the new orders are not coming that easily. So can you throw some light, sir, what is your experience and your inputs about that?

Sir, I'm not into what you are talking about. I don't go with your views. Actually, we are receiving many tenders, we are bidding many tenders. It is -- the ratio of the tenders floated is normal. And I don't think any slowdown in the tenders being called for. And we are also bidding quite a good number of contracts. And your build-to-book value, what you are talking about, we have already completed INR 110 crores something. And this INR 250 crores of turnover will be what we have forecasted, INR 250 crores will be this INR 110 crores already executed on our current order book of INR 250 crores plus. We don't have the exact number in that. INR 250 crores plus, even if we take out INR 150 crores, we'll be having INR 100 crores surplus order for the next financial year. And we are confident of securing a good number of orders in the coming 2, 3 months itself. And that will not be -- there will not be any problem in having the order book substantiate. And doing the number of INR 500 crores, what we have planned or estimated will be done in an easier way. And we have a habit of maintaining our order books this 1:2 ratio. This we have been doing it for quite a long time, and we have been succeeding in that.

Okay. And sir, now to fuel your growth, you require capital, okay? You require fresh money. So is there any plan that company dilute its stake by preferential allotment or in this coming year?

No, we have not any immediate ideas about that, sir. We have just 6 months after our IPO, and we are planning to complete the year with what we have done. And anything will be planned after that maybe after the year -- after a year of completion of this IPO.

The next question is from the line of Bhavya Doshi from Kriis PMS.

So just wanted to understand like what are our current nonfund-based limits? And how much are we currently utilizing it? And also with the current nonfund-based limits, which we have, what is the maximum order book which we can cater to?

So we have a nonfund limit of INR 55 crores, sir.

Okay. And what is the utilization level? And how much maximum can we bid through this?

No, we have utilized around INR 20 crores only. We have around INR 35 crores of nonfund-based limit. We can bid around INR 35 crores, we can bid. Normally the bidding value will be 1%. So INR 350 crores we can bid. And we have also our surety bonds, which we are bidding, which are used for bidding. And as of now, we don't use our nonfund-based limit for any bidding. As we have got our surety bonds sanctioned, we are using that insurance surety bond, which is way much cheaper than bank guarantees. So all NHAI projects have been backed by insurance surety bonds.

[Operator Instructions] The next question is from the line of [Jairaj Jain] from EY Capital.

Congrats for a very good set of numbers. So my first question is like can you mention your regional diversification in the reported quarter as well as any plans for the next 2, 3 years?

We are planning to diversify in the other states also. So we have bidded for a project in Karnataka, now we are waiting for the tenders. I mean we are waiting for the commercial opening. We are succeeding in technical round, and we are hopeful of getting that project to our company. And apart from that, we are bidding in other Hyderabad also. We are bidding on project in the recent future. And Maharashtra also, we are planning; Uttar Pradesh, we are planning. So there is no any boundary or there is no any restriction on the state. It is just about the project. If the project is good to be executed, if we are ready to go, we are ready to go anywhere.

Okay. Great. So sir, can you like tell me about like what is your RMC unit working at like at an optimum utilization or underutilization?

So no RMC units work at optimum utilization because what capacity we have is 75 cubic meters per hour. If it is going to work for around 20 hours, say, day and night, it will be producing 1,500 cubic meter of concrete. That is not -- that will not be salable and that will not be usable. So we have a free capacity always. And we are market leaders in the areas where we are set up RMC units.

Okay, sir. And sir, like can you give me bifurcation of your government and nongovernment contribution to your revenue order book?

We have 100% government order book as of now. We don't have any other private orders in our order book as of now.

So do you have any plans to go and have a partnership in private firms?

We are also pitching our marketing team to go ahead for the private orders also.

Okay, sir. Great. And sir, can you tell me like in how many days do you receive full payment from the government?

Pardon me?

In how many days do you receive full payment like whenever you go for an order book?

Normally, it is 60 days. Normally, we receive it in 60 days.

Okay. So average collection period is of 60 days, right?

60 days, yes. So a few projects we reserve earlier, a few projects we get delayed. So on an average, it works out to 60 days.

The next question is from the line of Aryan, an individual investor.

[indiscernible].

Sir, you are not audible.

What about the competition in [indiscernible]? Is it easy to get orders or it is tough to get orders?

Sir, every field has its own competition, sir. It is easy as well as tough, sir.

What about competition in solar EPC?

Solar EPC is a real tough market. Now it is venturing everywhere. Many people are venturing into solar EPC. And we are pretty new to that, and we are in the initial stages of assessment of the market and market study. We are doing everything. Hope to make it easier to bag few orders, what is required to run the company.

Other than road setter, what are you seeing, sir, in the future?

So we are planning to venture into irrigation and as well as buildings and this plug-and-play things like high-rise towers and all.

[Operator Instructions] The next question is from the line of [indiscernible], an individual investor.

Congrats to you on this stellar performance for H1. My question would be, are we still in line to achieve INR 250 crores revenue in FY '25?

Sir, I don't get you.

My question is, are we still in line to achieve INR 250 crores revenue in FY '25 this year?

Definitely. Definitely, sir, 100%.

And as you have mentioned in the previous con calls as well that we expect to get an order book of INR 400 crores to INR 500 crores in this FY. And up until now, we have got almost INR 130 crores order book. So are we confident that we can cover the rest in H2?

Yes, sir, definitely. 100%, we'll be able to cover that, sir.

The next question is from the line of Viraj Yadav, an individual investor.

Could you please share your approach to managing cost pressures in the face of fluctuating raw material prices? And what specific strategies are being deployed to protect margins?

Sir, your voice is not clear. So can you please repeat.

Could you please share your approach to managing cost pressures in the face of fluctuating raw material prices? And what specific strategies are being deployed to protect margin?

So margins are always protected with the escalation clause with respect to the departmental works or government contracts, what we take. And as well as we have a rigid purchase team, which takes care of the purchase and the fluctuating market and they keep the study and they keep a watch over the market. If the market is going to rise or something, we procure the enough materials and we stock it, when it comes to steel or something. And other raw material, we have a good rapport around with the people who our suppliers and we have our cost cut out before the project is started. So whatever we do the estimation and quote before the tender, we very much stick on to that, and we get it done at that market price, what we have quoted what we have tendered or something like that. So -- touchwood, we have not faced any problem till date in this regard.

The next question is from the line of Deepika Singh.

Sir, I would like to know about the margin improvement achieved in H1. And are these levels sustainable?

What you said. The last line was not audible to me.

So I'm asking about the margin improvement achieved in H1. And are these levels sustainable going forward?

These margins are always sustainable, and we are maintaining that, striving hard and we are expecting to maintain this and sustain these margin levels at all point of time.

Okay. And what impact do you anticipate from the NHA of India contract on FY '25 financial performance?

Sorry, can you please repeat this? Your voice is distorted.

Okay. So my next question is, what impact do you anticipate from the National High Authority of India contract on FY '25 financial performance?

What is that? NHA...

Contracts on FY '25 financial performance. So what will be the impact you are expecting?

I'm not getting your question. It's not clear.

I'm saying what kind of what impact do you anticipate from the National High Authority of India contract on FY '25 financial performance?

We have many NHAI contracts. We have around 3 to 4 contracts running at the current level. And that will definitely help us to increase the top line of the company. And having as a premium client for us, they support us in all ways. So that will definitely have a positive impact on the balance sheet.

[Operator Instructions] The next question is from the line of Nandan, an individual investor.

First of all, congratulations for the very good set. Sir, my question is on the fresh new orders that you have guided for. So are you bidding for the HAM or EPC projects for this fresh new orders that you have guided for?

No, it's all EPC as of now. The one we are in the pipeline. It is not getting fruitful as of now. It's still in the pipeline only. And we are all bidding for the EPC sector only.

Okay. And will this be in the JV or on the individual capacity?

We are bidding in both the capacity even in JV and as well as in individual capacity.

Okay sir. And I mean, what will be, sir, our bid pipeline as of now, current bid pipeline, if you can share?

We have around INR 600 crores to INR 700 crores of bids in the pipeline.

Okay, sir. And sir, where are we concentrating more apart from Tamil Nadu since you said that we are trying to establish into.

We are actually targeting a few projects in Karnataka, one in Hyderabad and in North also in Madhya Pradesh also.

Okay. Okay, sir. So we can expect new INR 750 crores orders by FY '25, right, sir?

Yes, positively.

Okay. And all the solars and all other orders will be over and above that if and when they come.

Yes, yes, of course. Solar, we are targeting in a different venue. And I'm not talking anything about solar. Solar, we will be positively doing a good number in the next year. And this year, we are hopeful of getting a few orders. And I don't -- I could not commit anything on the numbers of what we are going to complete this year.

[Operator Instructions] The next question is from the line of [Nitin James], an individual investor.

I just had one question. I don't know if it was answered before. I kind of got dropped in between. Sir, as per your earlier con-call, you had mentioned that for FY '25, that is this financial year, you will be targeting a turnover of INR 250 crores. And for the next year, you would be doing INR 500 crores. I just wanted to know if these numbers are still the aspiration what we have.

Yes, sir, 100%, this will be achievable. Anything over and above that will be a bonus for the company.

Perfect. And you will maintain the margins, right, sir, the net margins around 13%?

It will be maintained. It will be maintained.

The next question is from the line of Tara Kaur from [EY Cap].

So my question is that is there any specific dividend policy in place for near future?

Pardon, madam?

Is there any specific dividend policy in the coming future?

Your voice is not audible. If you are on speaker, can you just change it to the phone mode?

I'm saying that is there any specific dividend policies in the future?

No, we have not thought about anything about the dividend since this being the first year after our listing. We have not given any thought about that dividend policy. We'll let you know about this shortly.

And sir, what is our debtors day?

Priyanka, can you answer this, debtors days?

Yes. So on average, it's around 81 days as of now.

Okay. And any improvement in the near future that we are going to see?

Ma'am, they're actually basically between 60 to 90 days. But for our industry, 81 days is good to go. So -- but they are trying to drop it down to 60. Hopefully, we'll do it by March.

The next question is from the line of [Ajinkya Pawar], an individual investor.

Simple question, sir. I wish I become a part of your company. If I see our company down the line in 3 to 5 years...

Mr. Ajinkya, you are not audible. Can you please use your handset?

Sir, I wish to be a part of your company. I just follow each and every activity you do on Twitter or anywhere. I just want to grow with you. And I just wanted a view from your side that how our company will share in 3 to 5 years down the time?

Sir, 3 to 5 years down the line, we will be in the main board, sir. Top line will be at least INR 1,000 crores.

Okay. Okay. So that will be my dream.

We are always happy to work with investors like you. You are most welcome any time.

As there are no further questions from the participants, I now hand the conference over to Mr. Ganesh for closing comments.

Yes. Thank you. Thank you, everyone, for joining the conference call of AVP Infracon Limited. If you have any further queries, you can write us at [email protected]. Once again, thank you, everyone, for joining the conference.

Thank you all. Thank you all for joining.

Thank you. On behalf of Kirin Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.