Capacit'e Infraprojects Limited (CAPACITE.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Capacit'e Infraprojects Limited Q2 and H1 FY '26 Conference Call. [Operator Instructions] Before we begin, a brief disclaimer. The presentation which Capacit'e Infraprojects Limited has uploaded on the stock exchange and their website, including the discussions during this call, contains or may contain certain forward-looking statements concerning Capacit'e Infraprojects Limited business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Katyal, Executive Chairman, Capacit'e Infraprojects Limited. Thank you, and over to you, sir.

Good morning. On behalf of Capacit'e Infraprojects, I extend a warm welcome to all participants on our Q2 and H1 FY '26 Earnings Conference Call. Joining me today are Mr. Rajesh Das, CFO; Alok Mehrotra, President, Finance; and Nishit Pujary, President Accounts, along with our Investor Relations team from Marathon Capital. I trust that you'll have had a chance to review our results. The presentation and press release have been uploaded on the stock exchanges and are also available on our company's website. FY '25 was a truly transformative year for the company. It was a period in which we not only achieved record growth across key parameters but also proved the strength of our strategy, our execution capabilities and most importantly, our team and our people. The momentum we built during that year was carried forward powerfully into FY '26. And I'm pleased to share that our performance in the second quarter has won against -- surpassed expectations. Despite the challenges of a heavy monsoon season, our teams delivered the highest ever Q2 results in the company's history. This achievement reflects our unwavering focus on operational excellence, disciplined project management and a culture that thrives on accountability and collaboration. Each milestone we reach is a reflection of the passion and commitment that our people bring to work every single day. Our growth story is just not about numbers. It's about building a resilient, future-ready organization. Our strong balance sheet, robust order book and well-diversified portfolio gives us the confidence to continue on our path of sustainable value creation. The project pipeline for the coming quarters remains very healthy, providing strong visibility and setting the stage for accelerated execution in the second half of FY '26 and thereon. On the order front, we have already achieved INR 3,464 crores in bookings year-to-date, thereby nearly achieving our full year guidance with several months still to go. This performance driven by repeat businesses from marquee clients and new strategic wins is a clear reflection of the trust we have earned and the growth recognition of our technical and execution strengths. We also remain deeply committed to strengthening our financial foundation. Over the last 18 months, we have successfully released promoter pledged shares by nearly 30%, and we expect this number to decline significantly further in the coming quarters. As we look ahead, we stand at an exciting inflection point. Our company is entering a high-growth phase powered by innovation, strong governance and a clear vision for the future. We are just not building projects. We are shaping the legacy of trust, performance and value creation for all stakeholders. Consolidated performance highlights for Q2 FY '26. Total income for Q2 FY '26 stood at INR 650 crores, up by 24% as compared to INR 523 crores in Q2 FY '25. EBITDA for Q2 FY '26 came in at INR 108 crores, up by 14% as compared to INR 95 crores in Q2 FY '25. EBITDA margin for Q2 FY '26 stood at 16.8%, well within our guidance range. EBIT for Q2 FY '26 stood at INR 89 crores, up by 11% compared to INR 79 crores in Q2 FY '25. EBIT margin for Q2 FY '26 stood at 13.6%. PAT for Q2 FY '26 stood at INR 51 crores, up by 14% as compared to INR 45 crores in Q2 FY '25. PAT margin for Q2 FY '26 stood at 7.9%. Gross debt as on September 30, 2025, stood at INR 405 crores, down from INR 417 crores as on 31st March 2025 with gross debt to equity at 0.22x and net debt to equity at 0.11x. Net asset turnover of core assets stood at 5.4x for H1 FY '26. The company continued its focus on increasing execution across projects. Order book on stand-alone basis stood at INR 11,991 crores as on September 30, '25, public sector accounting for 60%, while private sector for 40% of the total order book. I now leave the floor open for questions, please.

[Operator Instructions] The first question is from the line of Vansh Solanki from RSPN Ventures.

My first question is on the auditor's report. In auditor's report, the auditors are showing...

You are not audible please. I cannot hear you properly. Please repeat your question through a handset.

Okay. Am I audible now?

Better.

Yes. So my question is on auditor's report that in Q1, auditors reported long outstanding receivables as INR 63 crores, which is reduced to around quarter 2 for INR 55 crores. So it was a reduction of INR 9 crores. So this reduction is due to just the normal receivable? Or it is in other income or recovery or something like that?

No, we had a recovery from Neelkant client, which was being shown in Q1 as receivable. Since then, it was realized in Q2, and therefore, that amount stands reduced by INR 8.69 crores. Such recoveries against those balance, INR 55 crores, will continue in the coming quarters as well. So it was a slow-moving asset, which has now been recovered.

Okay. So the recovery is not done against the return of amount in Q2 or Q1, right?

This recovery has happened in Q2 of the current financial year.

So does the recovery was against the written off amount, which we have guided of INR 65 crores of recovery throughout the financial '26.

Absolutely. That includes slow-moving assets and realization of properties, which the company has received post-COVID period against these receivables. Against the properties, currently, we have sold out properties worth INR 31 crores, and we expect that money to be realized within the current quarter.

Okay. So just a follow-up question on this. That if my recovery is INR 8.69 crores or something, but why my other income is only stood at INR 4 crores, sir? Like there is any mismatch or something like that? Why it is not shown in my other income?

It is a pending debtor, which has been recovered. Not a bad debt, which has come back. If you -- if we had written this off as bad debt, then on recovery, it would have appeared under other income. Hope we have answered your question.

Okay. Yes. And just one other, the INR 65 crore recovery is -- will come through other income or it will also just a reduction in debtors?

Some part will be in other income and some -- and most of it will be under debtors or sale of assets.

Okay. Yes. Just on my second question on gross margin and EBITDA. That if I see Y-o-Y in quarter 2 of FY '25, my GP is around 35%. And as of now, it is around 31%. So it's around 500 bps of reduction in GP and also 200 bps reduction in EBITDA. So is this because of the new policy, we have changed accounting policy change?

Whatever accounting policies were informed and now they are uniform, and there is going to be no change. We have given a guidance for the full year of EBITDA between 16.5% to 17.5%. We expect the year to end at the higher trajectory close to 17.5%. Quarter-on-quarter the construction company should not be compared. However, having said that, whatever guidance, whether it is top line, bottom line or the EBITDA range, is being added to and will continue to be entering to into the near future as well.

Okay. And the 16.5% and 17.5% range is including the other income, right, EBITDA?

Excluding the other income.

Excluding other income. Okay, yes. Okay. And the last question on the share of JV and associates that we have not recovered much from the JV and associates in H1. So there will be more profit from JV and associates in H2? Are we looking at something like that?

So as I explained in the last quarter as well, it is a 5-, 6-year project, and these revenues on a stabilized manner will continue to come over the next 5 years. However, they will pick momentum in the next financial year. I'm talking about the MHADA JV. All right? So apart from that, there will be uptick from the Bhandup Hospital project JV, and that will be reflected in the quarter 4 of the current financial year.

[Operator Instructions] The next question is from the line of Nirvana Laha from Badrinath Holdings.

Congrats on great execution in the monsoon quarter. Sir, my first question is on the fund and nonfund-based credit limits and the utilization. If you can give the numbers there. Also, I think you were about to tie up with SBI to increase your nonfund-based credit limit, if I remember correctly. If you can update on that aspect?

Yes. So the total assets limits within the consortium are INR 1,420 crores for the period starting August of this financial year till July of '26. The total limits have been tied up with new banks, Punjab & Sind, Jammu & Kashmir joining the consortium, increase in limits sanctioned by Bank of Maharashtra, PNB. The final sanction of YES Bank is pending, but that will be -- sorry, from State Bank of India is pending. But in the interim, the entire financial tie-up has been completed. Additional limits from State Bank of India may be utilized going forward for project-specific incremental requirements. So answering your question, the financial tie-up has been completed. The unutilized bank guarantee limits will be -- or LC limits will be close to about INR 300 crores or thereabouts. This does not include the project-specific limits of State Bank of India of close to about INR 150 crores.

Got it. So unutilized you're saying is INR 300 crores plus INR 150 crores project specific, right?

Yes.

And the fund-based credit utilization?

Sorry?

Fund-based credit limit utilization, what -- where do we stand currently?

So fund-based total assets limit is INR 240 crores, and we continue to carry a cash balance at any given point in time of more than INR 65 crores, INR 70 crores.

Okay. Got it. My next question, sir, is on the receivables and contract assets that you have. If you can give a breakup on how much is from the Maharashtra government or government-funded agencies. And also of the unexecuted order book, what is the same split, Maharashtra government and agency -- funded agency-related breakup? The reason I ask this question is many state governments have been under pressure in terms of their budgets with respect to election promises. So a lot of investors do worry about this. So if you can clarify this, will be a good number to know.

Yes. So let me first clarify that CIDCO, MHADA and MCGM, Multiple Corporation of Greater Mumbai, these 3 are the main clients of the company in the state of Maharashtra, and nearly 50% of the revenues going forward will be coming from these 3 clients. In these 3 clients, our outstanding is only for work done as against certified bills. I repeat, certified bills work done for the month of October 2025. So that is a very convenient and comfortable position. The finance -- the projects are fully funded and suitable line of credits from State Bank of India are available with CIDCO like other clients as well. Yes, you are right. There are issues with state finances across India. And that is why we have restricted ourselves to Maharashtra and central government-funded projects. So in Delhi NCR, we are executing an INR 1,120 crore project for NBCC, which is monitored by Supreme Court. The current outstanding of that project is INR 40 crores, which also is well within the company's projections. Having said that, the only project we faced delays is PWD of Maharashtra JJ Hospital. The total pending receivable is close to INR 45 crores. However, we have been successful in making presentations to the medical education department and getting funds allocated as it's a hospital project and of national importance. So we will not be bidding for any state government projects, which are not funded. It has been our policy and our strategy from very beginning. We have suffered enough in the COVID period. We wouldn't like to land ourselves into another known danger of bidding and then not receiving money from projects, which are not fully funded. So this is the state of our receivables from government, at the moment, very comfortable. And I don't see why it shouldn't better in the coming quarters.

Got it, sir. Just a couple of follow-ups on that. The JJ Hospital is how many days overdue the receivables? And second is -- actually, that's the first question, if you can answer that.

So JJ Hospital average billing is INR 15 crores per month, so you can say it's a total 90-day outstanding. So something is under 30 days, something 60 and something above 60, number one; and number two, that we expect these funds to come up -- to be released, 50% of that sometime in December of the current quarter.

Got it. And sir, you said the 3 Maharashtra agencies, which comprise 50% of revenues, I think you said. You said the only bill outstanding from them are certified bills of October. So if I understand correctly, then of your entire contract assets and receivables, these 3 projects comprise very, very little. Am I correct in understanding, if you can quantify that also how much is that?

So this is a very detailed answer. Please try to understand, certified bill contract assets includes WIP, PAT rate, which will be only billed once they are fully completed and the milestone is achieved. And certified bill is what has already been achieved. So that is what you call as WIP, part rate and work done not billed. So that is a different thing altogether. When I say certified bill means what milestones have already been achieved and submitted to the client and eligible for payment under the contract are known as certified bills. So I said work done, work done. That is debtors, certified debtors for these 3 projects, our payments are pending for the last month, work done October 2025, bills of which have been raised in the current month and should be received by the end of this month or early next month.

Understood, sir. Very clear. Just to finally round it out. So overall, you're saying that from your past experience, you've learned enough and you're confident that the current projects will not land you into similar cash flow challenges.

So you have seen a reduction in overall debt level by INR 90 crores, 21 days.

The next question is from the line of Parvez Qazi from Nuvama Group.

So would be great to get an update on the status of the MHADA and CIDCO projects. And how do we see execution going ahead on these projects in the second half and also FY '26.

So MHADA project, we have received additional 11 towers on the rehab side, taking the total handed over towers strength to earlier 14 plus 11 now 25. The total towers are in -- on the rehab side are 34, so nearly 75% or thereabouts of towers have been handed over. Work on 14 towers is in full swing, out of which 2 towers have been delivered and 5 towers will be delivered in early December 2025. On the sale residential, 320 meters tall buildings, we have received go ahead to commence work on all the 10 towers by the client. IOA for 6 towers is in place. Designing has been completed, and piling has started. So we should look at starting the actual construction of the structure from January, February of the current financial year, thereby giving us a strong indication of nearly doubling up the revenue at the LLP and the SPV level in the next financial year, point number one. The commercial tower, which was the only thing pending, we have just received the go ahead in the current week. And now the designs are being prepared and therefore -- and the land also is more or less clear, but we do expect that the designing will be completed in quarter 4 of the current financial year because it's a 66-floor highly modern commercial tower. This is the status of MHADA at the subcontractor capacity level. We will continue to execute 35% of all the handed over project. So you can safely conclude that by March or April, March of the current fiscal, April of the next fiscal, the entire MHADA project will be available to be recognized under the order book, which currently has been recognized at only 35%. Coming to CIDCO, including price variation, the first 6 locations comprise a total up to close to INR 2,600 crores. We expect to bill further INR 300 crores in H2. We will be billing INR 720 crores in next financial year, and we will be completing the 6 locations. Phase-wise, 2 locations are being handed over on 12th of December or thereabouts. That will leave us with 4 locations. The 4 locations space-wise will be handed over in FY '26, '27 and FY '27, '28. The seventh location is expected to be received by the company in quarter 4 of the current fiscal. That will amount to close to INR 2,000 crores of executable work plus price variation computed thereon. And that has not yet been included in our guidance for next financial year. Once that comes, you will see a substantial increase in the revenues coming from CIDCO because the execution period for that location would be 42 months.

Sure. Just one follow-up question. Many said that for the MHADA project we expect revenue to double in FY '27 at the SPV level. What would be that number in FY '27?

So we do believe that we should cross INR 1,000 crores plus revenue in FY '27 at the SPV level.

The next question is from the line of Subrata Sarkar from Mount Intra.

My question has been answered.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Yes, I'm audible, sir?

Yes.

Yes. Just wanted to understand first up, I mean, are we facing any kind of labor shortage issue or which we have said in the past, maybe and it's getting resolved? So is there any status on the labor problem?

So let's call it a challenge. The challenge is across the industry. And we are doing whatever best possible whether it is through facilities, whether it is through very good living conditions, whether through hygienic -- providing hygienic food to the workmen, blue-collared workmen who work under various subcontractors in our company. The total labor strength is in excess of 12,000. Obviously, we are short. We would love to have nearly 14,000 to 15,000 workmen to achieve the desired results for the next financial year. And the company has a separate LRD, labor resource department, who's working 24x7 to achieve these targets. Having said that, we should not keep the issue under the carpet. Labor availability is a challenge, right, from L&T to any other company, construction company because of dearth of qualified skilled workmen in our country. And we also face competition from UAE, Middle East as well as Eastern Europe. So yes, while this will continue to be a challenge, we will keep ourselves skilling to whatever best possible, adopt new technologies, which warrant lower deployment of workmen to achieve our targets or surpass them.

Understood. And so this will not hinder this year 20% growth target that we have said?

No, it will not.

Okay. Okay. So if I have to do back of the envelope calculation at 20% growth, ideally mean execution of INR 2,800 crores, right? So in the first half, we have done close to around INR 1,200 crores. So in the second half, INR 1,600 crores ideally means INR 800 crores kind of execution per quarter. I mean that kind of execution, we have not done in the past. So is that something which we are looking at? And what gives us confidence that we can scale up?

So we never did INR 650 crores in a monsoon season also earlier. We are targeting INR 725 for quarter 3. We have done INR 240 crores in October already. So we are well on target to achieve that. And in March, we are targeting INR 825, INR 850, and that takes us to INR 2,810. And therefore, as we have achieved or surpassed all of our targets in the last 2 financial years, there is no reason why we will not do that in the current financial year as well while reducing the debtor levels, while improving the financial metrics of the company and also reducing the gross debt.

Okay. Okay. Great. That's pretty clear. So in terms of margins, I think earlier, we had said 16.5% to 17.5%, including other income. But in the today's call, you mentioned excluding other income. So I'm just confused this margin is excluding or including.

It is excluding other income, the EBITDA guidance has been given between 16.2% to 17.5%. We are at 16.8% for the first half year, and we should end the financial year at the higher end of the top bracket.

That's great. That's great. And just last thing, in terms of order inflow, I think year-till-date, we have got around INR 3,500 crores of order as of now in this year.

Absolutely, yes.

And full year target is, what, INR 4,000 crores to INR 4,500 crores?

So the initial target was INR 3,500 crores. Obviously, we cannot, not take any orders for 5 months. So yes, we will cross our target quite decently in the current financial year, which could mean certain additional revenues happening in the next financial year.

So what's the target? I missed that. So this year...

The target is already achieved, sir.

So INR 3,500 crores was the target.

Yes.

The next question is from the line of Rajdeep Singh from Roha Asset Managers.

Am I audible?

Yes, please go ahead.

Rohitji, firstly, congratulations on a phenomenal pace of execution given the lean seasonal quarter we have and the monsoon. My question was more qualitatively, Rohitji. On -- other than the receivables, what are the 2, 3 critical aspects that you have outlined in terms of choosing or selection of projects?

So on the government side, we will only work for clients who have their own sources of funds like MCGM, MHADA and CIDCO, for example. On the other governments, we are yet waiting and watching. We will be actively participating for central government projects, which have funds allocated from the budget like the UD ministry and so on and so forth. And these projects are typically getting executed through clients like NBCC and other central PSUs. So that is our focus from the government perspective. The Maldives project is going on very good. We are billing approximately INR 20-plus crores per month, and therefore, we are open to looking at further Exim bank funded projects in Maldives as well. Apart from that, on the private sector side, we have those 10, 12 clients, and we have added the government, IIT Bombay. That's a drone research center, and that marks our third project in the industrial side of it. So the client quality is of paramount importance. That will not be compromised. And since we have already achieved our full year target, that gives us the liberty to pick and choose for the remaining 5, 6 months. Yes, we will add certain orders but not at the cost of taking an order from anyone.

Sure. Sure, that is helpful. And sir, is there a number in mind between the public and private or maybe you would prefer more larger size order, the larger execution time line or smaller size order?

Execution time lines are getting squeezed as we move forward. So it is not in our hand, the execution time line being given by the government earlier 5 years have come down to 3 years and now to 30 months. So okay, technology also has improved, and that gives them the comfort to squeeze the time lines. Having said that, I do believe that if you look at our last 5 orders, right, whether it is Downtown, whether it is NBCC, whether it is IIT Bombay, all orders are upward of INR 600 crores, 600, 1,000, 1,500. So the order ticket size has already increased, and therefore, we are more comfortable in that higher bracket upward of INR 500 crore until unless it's a private sector existing client where we cannot say no for obvious reasons because we treat a client as an account, and we would like to have repeat businesses, whether it is Godrej, whether it is Raymond, whether it is Oberoi or whether any other client.

Yes, yes. No, so commendable on securing the IIT Bombay order project and executing within 18 months of time line, it's phenomenal.

For 30 months, I correct you. Please be corrected. It is the total execution period of 24 plus 6. Okay? However, it's in 2 phases. There are 2 buildings. So one -- both have time lines and targets. We expect the execution to start from the fourth quarter of the current financial year. Currently, it's in design phase, and we should be completing the design by December end and getting it approved from IIT Bombay.

Sure. Sure. That is helpful. That is helpful. And one last question. Sir, on your target of INR 4,000 crores 2028, that is financial year 2028, which is 20%, 23% kind of revenue growth and fair to say, the profitability will grow at a much faster rate with improvement on the balance sheet side and that you already outlined. Is that correct?

Absolutely.

[Operator Instructions] The next question is from the line of Gunit Singh from Counter Cyclical PMS.