Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to ITD Cementation India Limited Q1 FY '22 Results Conference Call, hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Adhidev Chattopadhyay from ICICI Securities Limited. Thank you, and over to you, sir.

Yes. Good afternoon, everyone. On behalf of ICICI Securities, I'd like to welcome everyone on the call today for the ITD Cementation India Q1 FY '22 results call. Today from the management we have with us Mr. Jayanta Basu, the Managing Director; and Mr. Prasad Patwardhan, the Chief Financial Officer. I'd now like to hand over the call to the management for their opening remarks. Over to you. Thank you.

Thank you, Adhidev. Good morning, and welcome, everyone, to our Q1 earnings call. My name is Prasad Patwardhan. Let me first start with the financial performance for the quarter. And subsequently, Mr. Basu will brief you or take you through the operational performance of the company. This quarter was again impacted by the second wave of COVID-19. Of course, the impact this quarter was significantly lower than what we saw in the same quarter in the last financial year. And the improvement in our operational performance as compared to June '20 is quite visible in the numbers that we have reported yesterday. Our total income for the quarter is INR 828 crores, which is an increase of more than 105% as compared to last year. Our EBITDA has also improved. The margins have improved by about 160 basis points on a Y-on-Y basis. And in terms of profitability, we have reported a profit of INR 18 crores as compared to a loss of INR 17 crores in the April to June '20 quarter. Our debt continues to be within limits, and the debt-equity ratio as of June is a little under 0.5x. Our order book as of June end is about INR 12,036 crores. And this comprises mainly of urban, infra, metro and airports, which is about 31%; the marine segment contributes about 27%; hydro, dams and tunneling is 17%; industrial structures is 13%; and water and wastewater is about 8%. In terms of order means, we have secured orders worth about INR 1,600 crores during this quarter. There's 1 large project of INR 900 crores for industrial infrastructure works of road and train development in the state of Karnataka. We have received 1 order from Gujarat Metro Rail Corporation for development of some buildings in Surat. We have also received an order from Military Engineer Services worth about INR 250 crores. So these are the orders that we have secured during the quarter. Opportunities in the sector are -- there are a lot of opportunities up in the sector, but we'll speak about that a bit later. I'll now hand over to Mr. Basu for his initial comments, and then we'll take your questions. Thank you.

Good afternoon to all. This is Jayanta Basu. Thanks to all of you for joining this con call. As you have just seen, our financial performance is declared yesterday for the Q1 of this year. It's partly hit by the COVID second wave. And in fact, in the last con call, which was in June -- 1st June, as because already we were in Q1 that time, during the con call, we anticipated that there will be a decline of 15% to 20%. And exactly, that has happened. So our revenue is a little bit down compared to what you expected in the beginning of the year by 15%, 16%. Otherwise, this is in line with the industry. As you see that in other company also the revenue and the other performance parameter has been hit due to the second wave of COVID. As it happened, you see that most of the work we are doing today in Karnataka -- I think around 60% of the work we are doing in Karnataka and Bengal. And unfortunately, these 2 states were hit most during the lockdown. Project Seabird at Karnataka, Bangalore Metro and in Kolkata Metro and some job in the north of Bengal, all projects were totally locked down for more than a month, including 1 marine job in Andaman. So that has affected a lot in our revenue and other parameters. Otherwise, generally, we have done well. And if I want to highlight the major project what we have done during this quarter and their performances, starting from the MRTS, underground metro at Bangalore, as promised last con call, we have already started the tunneling with both the tunnel boring machine, TB1 and 2. And we have done a little bit of progress in that tunneling at Bangalore Metro, and already, I think, have achieved around 14% progress so far as you have expected. Kolkata Metro, we all know that tunneling have been completed. During the last con call, we have been intimated that. And so the balance work going, maybe by the end of next year, we need to complete the whole work, which includes stations, [Technical Difficulty] and other mechanical electrical activities. Mumbai Metro also under control. One of the activity in Mumbai Metro is NATM, that is drilling and blasting of the stations just done by different method, which was very critical once upon a time. Happy to inform that around 85% of that activity has been completed. And maybe by the end of this next, we'll be able to complete the whole work. Similarly, in the elevated sector, Bangalore Metro, 4 jobs. As I have mentioned last time, all the 3 jobs is actually completed, maybe 1 and 1.5% is left out, which is finishing activity. Except 1 job, which is we have done around 83%. So altogether, if you see, around INR 180 crores of job is left out in Bangalore Metro, which will eventually take us to the next year -- middle of next year. Nagpur Metro virtually completed: 1 job, 100% completed; another job is 96%. So this is all about our urban and infrastructure. Marine also hit by COVID. As I said, Port Blair and 1 job in Seabird, that is in Karwar, both the jobs are badly hit by COVID. Otherwise, performance-wise, it is quite okay. Udangudi going well. Surprisingly, Yangon job at Myanmar despite of all the odds like flu and the COVID, it has done better than what we have expected in last quarter. Pamban bridge at Tamil Nadu has picked up a lot and progressing well. There are some new jobs also we are expected, which we have secured, that is we have just got a job in -- yesterday, we got a job in -- for Ultratech, their JTDPR was small job, which is going on for some time for discussion. So marine as a whole is doing well, and there are a lot of prospects which we'll discuss later on. Harbor is also are doing well. In terms of the industrial structure, Trichy Airport, Pune Airport, progress also hit by COVID, but we have done around 50% to -- 50% in Trichy and 44% in Pune. This is all about our major jobs progress as I've explained to you. Now going forward, our work in hand is consistently around INR 12,000 crores. So that is a good thing, and we have secured around INR 10,300 crores job during the first quarter, but there are plenty of jobs in pipeline. Maybe it will be around INR 35,000 crores of jobs, which you are passing through various stages, either under tendering or we have submitted the bid. And if you see the breakup for underground because there a lot of prospects, Delhi Metro, there are 4 tender will be submitted next week comprising around INR 9,000 crore to INR 10,000 crore value. Nagpur Metro, Chennai metro and Agra Metro just come today. So all these 5 or 6 metro jobs together itself is around INR 18,000 crores. Similarly, marine also we have got around INR 8,000 crores visibility and some of them have already put out tender. The airport sector, INR 3,000 crores to INR 4,000 crores. So put together, around INR 30,000 crore, INR 35,000 crores of job we are pursuing now. The idea is to minimize the number of projects and try for the big ticket job to optimize the cost and look suitably overseas opportunities which are coming through the Exim Bank India line of credit. And today, if you see the job mix, we are in a good job mix like marine, we have got 30% and urban infra around 25% to 30%, the airport is around 10% to 15%. So this is a situation about our present work in hand. And with that, we hope that this second quarter will be a little bit down because of monsoon, but from third quarter onwards, we'll be able to pick it up. That is in a nutshell about the operations. I'll request you to come out with your questions. We'll be happy to answer them.

[Operator Instructions] The first question is from the line of Vibhor Singhal from PhillipCapital.

[Technical Difficulty]. Sir, before basically to get an idea...

Sir, your voice is breaking up. We are not able to hear you clearly.

Is it better now?

Much better. Thank you.

Yes. Sure. Sir, my question was on the overall performance. I mean we've had a very strong performance this quarter despite the COVID impact. So any kind of guidance that you could provide that we're looking in terms of top line and margins for this year?

Well, I think we have touched upon these too last time also. And see, this quarter, that is quarter 2 also will be similar to quarter 1 because all we know that monsoon will affect. There are some effect of COVID still going on. I hope that we'll be able to increase performance in terms of revenue by about 15% to 20% from quarter 3 onwards. You can figure it out. Quarter 3, quarter 4 will be around 15%, 20% more than quarter 1 and 2. EBITDA margin, we try to maintain whatever we are achieving just double-digit margin. So that is what I can say at this stage.

Sure, sir. And sir, in terms of margins, we have seen the commodity prices shoot up recently. So I know most of our projects would be -- would have pass-through contracts in which the commodity prices are taken into account the latest one. But would there be any impact on our margins because of that? And related to that, if you could just share that what percentage of our order book would be fixed price contracts?

Look, commodity prices increase is a concern to all of us in our fraternity. I think this we have discussed last time also. More or less, it is impacting around 1.2% to 1.3% from the budgeted price, but those are the jobs which have secured pre this year. So after whatever thing we are securing now, we have to be cognizant of this number in our estimate. So more or less, we will be okay with our provisions what we have in contingency, we'll be able to manage it.

So you mentioned 1.2% to 1.5% of the project cost. That is the escalation, is it?

If you see today, we have to execute around on INR 12,000 crores jobs. In INR 12,000 crores, say, the cost will be around INR 140 crores in a span of 3 years. So in that way, it's coming to 1.28%. If you see the top line number...

Correct, sir, broad numbers.

Because the indices are also having -- today, we have calculated based on today's rates. So we expect them to go up. That means the escalation paid to us will be more. But just for a guideline purpose, these are the numbers we can presume now.

Great, sir. I really appreciate that. Sir, and my related question was what percentage of our order book would be fixed price contracts, which do not have these raw material price to benefit?

Well, most of the concepts are I mean, escalation is payable, I think around 65% to 75% escalations are payable, 30%, 35% will be fixed price contract.

And these would probably be in the marine segment, sir, I would assume, the fixed price one?

Basically, the job which we do for the private sector, they must be able to cover the escalation which we have to include during our bidding price. But otherwise, the metros and any other government jobs where normally escalations are payable.

Right. Sure, sir. Sir, just my last question I wanted to pick your brain on the bullet train project. I know we've spoken about this in the past. Last year, we were quite hopeful, but of course, you saw almost all the packages went to the L&T Group. Now is there any more, basically, packages left in that because what we understand is I think more projects in -- packages in Gujarat had been bid out. And in Maharashtra, I don't think so there is clarity on the land acquisition part. So is that an opportunity that we are still pursuing or that is something which is kind of gone and probably not much left in that?

So we are very much there. I think our focus was all from the tracking of contract, which is something new to India, and we have already some sort of tying up with the Japanese company because it will go to Japanese. But those things will come not now, maybe after 1 year or so. So that is our focus job high speed rail. Apart from that, the other thing which is probably we don't know because it is the Maharashtra, the big tunnel work between [indiscernible] and Thane. Some of the big city from outside will do, and we'll try to tie up with them, also we'll keep eye on that.

But sir, is there any clarity in Maharashtra.

Not yet, not yet.

The next question is from the line of Mohit from DAM Capital.

Congratulations on a decent set of numbers given the challenging situation. Sir, my first question is, sir, has the work now commenced in Karnataka and Bengal, with some normalcy? Are all of it is working now?

Yes. I think from second week of July, in Karnataka, we could be able to start the work. And in Bengal, I think it's already started in the month from June. So now all the firms, all the projects are open going on in both the states.

My second question is we had 2 or 3 marine orders. One is -- which we are chasing especially on the JNPT side, and secondly, on the Sri Lanka side, where Adani has on the Colombo terminal. Is there any progress on those contracts?

Well, coming to your last one, that is Adani Colombo, that we have already submitted our preliminary proposal, which is basically a technical one that how these jobs would be done. And based on the feedback from the contractors, and we are one of them, the tender preparation is underway from Adani. And we expect by any time, maybe by end of this month, we'll get the tender document. And we have up to another 3, 4 months to submit bid and finalization. And BMCT, of course, it will go beyond these monsoon times because they are not in hurry to do the work now because traffic is less. But as I understand from them, sometime during third or fourth quarter, the tender will again revive. So that is about BMCT.

Sir, are there any opportunities available on the railway side like Sivok-Rangpo or Rishikesh-Karanprayag?

There are plenty of opportunities, plenty in the sense, there are a lot of tunnel -- railway tunnel is coming -- are coming for inquiries as well. We are not that much keen because we already have 3 big jobs in Sivok-Rangpo. So as it comes, we'll see that, but we are not interested at this stage to take up some.

Lastly, the airport side [Technical Difficulty] AI? Or are you baking in private opportunities?

I think AI, at this stage, we don't see any tenders that we are working. But there are private basically Adani will be definitely coming up with the renovation of all [Technical Difficulty]. So as it comes, we'll definitely be there.

The next question is from the line of [ Drew Galada ], an investor.

Adani Ports and SEZ has said that it will abandon its Myanmar project and dry down the project investments in full. If Myanmar is classified as a sanctioned country Under Office of Foreign Asset Control of the United States. Considering worst-case scenario, if Adani does abandon the Myanmar project, can you discuss the impact this will have on the company?

Well, I think many a times, we have addressed this issue even [Technical Difficulty]. The news whatever we got, it is not exactly correct because they are something based on [indiscernible] in terms of concern. Adani is following the remarks or not. But they have proved that they're not going against the sanction. Whatever they have done, they have done as per the -- within the amount of U.S. government. So there is no issue on that. And as far as we are concerned, we are working in full swing. Okay, it is due to COVID and the flu, which is totally a different issue. But as far as U.S. sanction is concerned, there is no impact on us. And as I said before, that in fact we have done better in Q1 than what we have anticipated. And number two, they have been paid properly. Still today, whatever we have done, all the amount has been paid to Adani. Of course, keeping very close to the Adani's top level, and there is no signal that there will be any effect on that.

Sure, sir. So you're saying that there's no major risk. Can you also give us an idea of how much of the project is completed in the Myanmar?

See, as of now it's around INR 560 crores. Out of INR 560 crores, we have so far completed -- just give me a moment. INR 235 crores till June or 41%.

[Operator Instructions] The next question is from the line of Vibhor Singhal, PhillipCapital.

Sir, just wanted to get your view on the payment cycle right now. How is the overall receivables are the government what you paying up? And also on the set of the private lines that we have, what is the general tendency? Is it better than what was 2 years here or is it abated in the overall sense?

There is not much significant variation than what it used to be earlier. And -- because -- yes, of course, Q4, Q3 last year, it was affected by the COVID because many of the government officials were not able to come to office. Now that situation has changed. And -- but some of the government agency like Airport Authority of India, their revenue has come down. So they are under a little stress to take the decision. So there is some delay in Airport Authority of India. Otherwise, we don't see any issues in terms of their mechanism is concerned, and we have been paid on time.

Sure, sir. And Prasad, sir, if I could just get a bookkeeping question, what was the debt at the stand-alone level at the end of the quarter and also the cash -- at the consol level, sorry? The total consolidate and the cash numbers.

The debt on the books as of June end was about INR 515 crores. And we had cash of about INR 60-odd crores.

INR 60-odd crores. Sure.

The next question is from the line of Ashish Shah from Centrum Broking.

Sir, just wanted to check on this Mumbai underground metro. There are some news that the government is yet to approve the increased project cost because of which probably [ Janata ] is unable to disburse any more installments. So any impact it is having in terms of our payment cycle or execution of the projects, if you have any sense on that, sir?

Not at all. I haven't heard it. And we are being paid on time. We have not seen any problems so far.

Okay. Sure. And sir, what could be the percentage completion, sir?

73%.

73%. And how does the time line look now ahead of full completion?

We'll be able to complete by end of sometime during end of next year, December 2022.

December '22. Right. All right. Sir, secondly, water segment, we have any intention to look into the drinking water budget Jal Jeevan Mission or we'll probably end [indiscernible] from that?