Bigbloc Construction Limited (BIGBLOC.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bigbloc Construction Limited Q1 FY '26 Earnings Conference Call hosted by Ventura Securities Limited. [Operator Instructions] Please note, this conference is being recorded. Before we begin, I would like to point out 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 do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. I would now like to hand the conference over to Naman from Ventura Securities. Thank you, and over to you, Naman.

Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities, I welcome you all to the Bigbloc Construction Limited Q1 FY '26 Earnings Conference Call. The company is today represented by Mr. Mohit Saboo, Chief Financial Officer; Mr. Manish Saboo, Head of Marketing and Strategy. I would now like to hand over the call to Mr. Mohit Saboo for his opening remarks. Thank you, and over to you, sir.

Good afternoon, everyone. It is my pleasure to welcome you all to Bigbloc Construction Earnings Conference Call for the first quarter of the financial year 2026. I'll take you through our financial and operational performance for the quarter, along with some key updates on our ongoing initiatives. For Q1 FY '26, Bigbloc Construction reported consolidated revenue from operations of INR 564 million, an increase of 9.3% compared to the same quarter last year. The growth was driven by higher sales volumes, which rose by 25.3% year-on-year to 1,67,835 cubic meters. This volume increase was partially offset by lower average realizations during the quarter. Sequentially, volumes were lower by 4.3%, reflecting seasonal moderation following the festive period, the onset of monsoons and continued slowdown in the real estate sector as well as labor availability, which remains a key demand driver for our products. On the profitability front, gross profit was INR 304 million with a margin of 53.9%. EBITDA for the quarter was INR 13 million with a margin of 2.3%. The decline in margins compared to the previous year was mainly due to softer pricing, lower capacity utilization and seasonal demand patterns. Consolidated capacity utilization for the quarter was 53% with utilization of StarBigBloc building material at 62%, Bigbloc Building Elements at 58% and SIAM Cement BigBloc Construction Technologies at 36%. On the operational side, AAC wall panel production continues to scale up, and we are in the process of securing the remaining product certifications, which will further enable adoptions across a wider set of projects. Additionally, we are seeing an uptick in demand in the current period and expect utilization levels to improve from Q2 FY '26 as construction activity picks up post-monsoon. In line with our product diversification strategy, we remain on track to commence manufacturing of construction chemicals at our Umargaon facility shortly. This will expand our product portfolio and allow us to cater to a broader segment of the building materials market. From a sustainability perspective, the contribution of renewable energy to our total power requirements has increased to 26% from 22% in the previous quarter. This reflects our continued efforts to integrate clean energy into our operations and reduce our carbon footprint. Going ahead, our focus remains on improving capacity utilization, accelerating market penetration for AAC wall panels and bringing new product lines to the market. With the expected recovery in construction activity, we are confident of delivering improved performance in the coming quarters. With that, I conclude my remarks, and now we can open the floor for questions and answers.

[Operator Instructions] The first question comes from [ Sushilji Kausit ], an individual investor.

First of all, I must appreciate the fact that our management has the courage to conduct the call every quarter despite not-so-great numbers. So on that note, my first question would be regarding the current capital structure of our company. In the earlier call, you said that the debt-to-equity ratio in the range of 1.1 to 1.5 is the number we are quite comfortable with. So -- and as our capacity utilization keeps on increasing, our debt level will keep on going down. So -- but the numbers say that neither our capacity utilization is increasing nor the margins, of course, due to macros like monsoon, which are general issues. But we can see that the financial leverage we hold right now is working against us each passing quarter. So do you still intend not to make any changes in the current capital structure going forward given the current situation? And whether our further CapEx will be financed via taking on more debt?

So coming down to your question about the capacity utilization. So if you compare year-on-year, we have seen a 25% increase in our capacity utilization. And since this quarter, Q1 is generally a little bit slower, and we saw an early onset of monsoon for this financial year. Looking at that, the capacity utilization has been good. And in the running quarter, Q2 also, the capacity utilization has been better than what it was in the previous quarter. So as we mentioned that we are looking at achieving optimum capacity utilization going ahead on a quarter-on-quarter basis, that's what the target is. And once the capacity utilization keeps on improving, the margins should also flow in and whatever losses have been incurred, that should also be settled off. Coming down to your second query about our debt equity ratio and our expansions. So for the expansion, the land is already procured at MP, and we have gotten the necessary conversions or government permissions done, whether it comes to the pollution control board or the conversion of land from [ any ] to industrial purpose. All that is completed. And hopefully soon, we'll be starting work at that site as well. And the debt equity ratio should be comfortable going ahead as the performance of the company also improves.

Okay. So -- and any update on our expansion in Southern India and the financing instrument for the same?

So in Southern India, we are still contemplating the same. We are looking for the land for the same. And any updates on that will be communicated as and when something is finalized. I did not get your second question.

The financing instrument for -- I mean, the land acquisition and for the CapEx, whether it will be via taking on more debt or IPO or something?

So once we have this suitable opportunity of land in Southern India, we'll communicate the same accordingly.

Okay. Sure, sure. So my next question is regarding our -- can I ask 1 more question?

Yes, please.

Yes. So my next question is regarding our current order book and the revenue outlook for the coming 2 quarters.

So order book has started improving from the end of mid-June or end of June. And we are seeing better order inflows on a daily basis. The order book generally in this industry does not run for a very long period of time. Generally, it's around 5 to 7 days at the max. And when there's a slowdown, it goes down to 2 to 3 days because it's a bulky product and the site -- the space available at the construction site is also quite limited, looking at that constraints. Coming -- can you kept on your second question again regarding the order book?

Revenue outlook for coming 2 quarters.

So as we saw that this year also in spite of -- we have seen increase in turnover with 35% increase in volumes. In this quarter, again, we'll see further increase in volumes. And we intend to reach 70-plus percent capacity utilization in the next couple of quarters.

The next question comes from [ Maneesh ], an individual investor.

I have 3 questions basically. One, although the volumes increased in Q1, why did the realizations fall? Like are we aware as to what is the reason behind the overall realization? That is one. Second is I also wanted to understand as to what is the sales that we generated from the AAC wall panels and construction chemicals. Third is in one of the previous con calls, you guys had highlighted that the aim is to double revenues over the next 2 years. So I wanted to understand if that guidance remains intact. So these are my 3 questions.

So coming down to your first question of why the realizations have gone down because of a little bit of a slowdown in the real estate sector in Q1 as well as increase in competition, there has been a little bit hit on the realizations. And that's the reason that the volumes have gone up, but the realizations have decreased a little bit. Coming down to your second question. Can you repeat the second question again, please?

Yes. The AAC wall panel revenue and construction chemical revenue because I don't see any mention of that.

The revenue from construction chemicals is approximately around 10 to 12 percentage and the revenue from AAC wall panels is approximately at around 3 to 4 percentage. And this has been increasing on a month-on-month basis as we are taking more and more orders and seeing more penetration of AAC panels across India. We have some projects in various different cities, the likes of Delhi, Jaipur, Surat, Bombay, Ahmedabad, some in Southern India like Chennai, et cetera.

So similar to how you've shown what is the breakup in the PPT, right, on the AAC block, can you show it for the AAC wall panels and construction chemicals also? Because that would give us at least a rough idea from a shareholder perspective as to what is the volumes that the other 2 segments generate?

Surely. We'll start doing that from the next quarter.

Yes. My third question was on the guidance. So I think in the Feb 2025 call, you guys had highlighted that the target was to double revenues over the next 2 years. So is that guidance intact?

Yes. We are still in the thought process of doubling our revenues for the next 2 to 3 years because expansion has been a little bit delayed because of a little bit of slowdown in the industry. And in the next 2 to 3 years, we are looking at doubling our revenues.

The next question comes from [ Navneet ], an individual investor.

So my question is the company capacity utilization was reported around 53%. So what are the reasons behind that? And what steps have been taken to improve it?

So the capacity utilization for Q1 has been around 53%. Q1 is generally marred by labor shortages at the factories as well as at the construction sites. And that's the reason that the capacity utilization is much lower. We are seeing better capacity utilization in Q2, which has gone up to almost approximately 60% in July month. And our intention is to make the capacity utilization reach 70 to 80 percentage over the next couple of quarters. Thirdly, what other steps are being taken, we are trying to increase our market share and penetrate more in different markets. And the capacity utilization has been majorly lower for the panel division, where -- since it's a new product and the adaptation is taking time.

We have a follow-up question from Maneesh.