Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the ITD Cementation Q3 FY '23 Post Results Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashwani Sharma. Thank you, and over to you, sir.

Thank you, Seema. Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the Q3 Post Results Conference Call of ITD Cementation India Limited. Today, we are pleased to host senior management of the company, which is represented by Mr. Jayanta Basu, Managing Director; and Mr. Prasad Patwardhan, CFO of the company. The meeting will start with a brief by Mr. Basu and Mr. Patwardhan, after which we will open the floor for Q&A. Thank you, and over to you, sir.

Good evening, everyone. This is Prasad Patwardhan, and I would like to thank you for joining us on this Q3 FY '23 earnings call. We'll start with our financial performance during this quarter. Thereafter, I will hand over to Mr. Basu for his initial comments on the operational performance, and then we'll be happy to answer any questions that I'm sure you would have to ask us. We are very pleased with our operational performance in Q3. We have posted a robust performance, and we are hopeful that this will be a precursor to a better performance during the next quarter and in '23, '24 as well. I will briefly touch upon the highlights of our performance in this quarter. We have posted the highest ever quarterly revenue of INR 1,327 crores during the quarter as against INR 998 crores a year back. So that represents a growth of about 33% revenue. Our EBITDA has come in at about INR 118 crores as against INR 87 crores a year back, again, a growth of 36% and profit after tax of INR 37 crores as against INR 20 crores a year back. So a growth of 87% in our profit this quarter. In terms of our performance for 9 months as well, we have posted a robust performance this year. The 9-month revenue has come in at INR 3,459 crores and against INR 2,625 crores, which represents a growth of about 31%. EBITDA has also grown by nearly 30% on a year-on-year basis and is coming at INR 316 crores. And our profit after tax is at INR 87 crores as compared to INR 53 crores a year back, again, a growth of 65% on a year-on-year basis. Our new order booking in this year, in the 9 months ending December '22 has been nearly INR 8,000 crores. And our order book as of December stands at a little over INR 21,000 crores. So that is all from my side. I'll hand over to Mr. Basu for his initial comments now.

Thank you, Prasad, and thank you all for joining this con call. As you have seen that our performance in last quarter, that is Q3 was quite good. We have achieved close to INR 1,400 crores of revenue. And all the segments, whatever we are working have done very well. And I hope that the same tempo and run rate will be maintained the coming quarters as well. To brief you about the few key jobs what we are doing, underground metro at Bengaluru Metro as usual going very well. We have done around 44% of progress so far. Chennai Metro is progressing well, and hopefully, by another 3, 4 months' time, we'll be able to start the tunnel job, that is from May or June. Mumbai Metro, as you know, is almost verge of completion. Coming to the Marine, Udangudi, we have done substantial progress. Around 80% job has been done. It's one of the iconic jobs we are doing in marine field. As you know, I've been telling it for many times. Apart from that, Sea Bird for Indian Navy at Karwar; BMCT for Port of Singapore at JNPT port; IOCL at Ennore Port and Breakwater at Vizhinjam. All the jobs are going very well. Beyond that, we are doing few jobs in other segments like industrial projects and building like Sikkim University, CPWD Kasturba Nagar at Delhi, Guwahati Waterfront, Surat Metro, industrial projects for ArcelorMittal at Surat, Aerospace Museum at Delhi, Ganga Expressway and Ganga Bridge. All the jobs are going well, and I hope that in this quarter also, it continues to be better. So operations are under control. A few jobs we are L1 to the extent of around INR 2,700 crores. We are expecting order maybe in a couple of months hopefully by end of this year. And there are some big jobs under pipeline in Marine and Metro. So that is all about the operational performance and our job in hand. We are opening for the questions now onwards. So kindly go ahead.

[Operator Instructions] The first question is from the line of Mr. Mohit Kumar from DAM Capital.

Congratulations on a very good set of numbers, especially on the execution side. My first question is on the FSO. As we enter FY '24, I think we are -- how do you see the -- and you are sitting on a very large order book. So how do you see FY '24 panning out given that you may end up doing roughly around INR 4,500 crores revenue for FY '23. Can you expect INR 6,000 crores kind of run rate in FY '24?

Yes, yes. You can expect that.

So how do you see the margins going forward as margins are slightly still on the weaker side. [indiscernible] of course, has improved Q-o-Q. And it is better than I think last year? It is similar last year. So can you expect some improvement here given that it has some operating leverage?

Yes. If you see our -- if you recall our last con calls, we expect that margin will improve from next year, that is quarter 1, quarter 2 of next year, and we expect to touch close to double digit or double-digit EBITDA.

Sir, the legacy order book from Bangalore, is it over? Is there something still left?

Bangalore is almost done. Physically, we'll be able to complete the job by another 2 months' time, which is by end of March or April, yes.

Understood, sir. Secondly, of course, if you can just throw some color on the order which you are chasing in Q4 or let's say next 6 to 9 months, some large orders. You said that metro is one of the opportunity. Which of the metros you're looking at. And anything else you can paint a color on?

Well, metro now, we are focusing mostly on the underground metro. We have one tender due for Kolkata Metro, which is the end of this month. And then there are around 4 or 5, maybe 6 underground metro job at Chennai spreading over this month and next month to be submitted. So those are from metro and marine also, we have got 2 big jobs to be submitted by this quarter, I mean, by March.

Anything else, sir, on the port side that you see?

Yes. Marine, as I said, the port that is...

And where are you L1, sir. L1, I think you spoke about the L1 in couple of orders. Can you please detail it out.

On marine job, which is basically river-based job at Bangladesh, where we are L1, INR 2,000 crore-plus job. So we are expecting order by March or April.

We take the next question from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a strong quarter. So we have seen the revenue ramp up, I mean shaping up quite well, but margins still remain under pressure. So will the gross margin reduce this quarter? So by Q1, do you think we will be back to a little high single-digit or early double-digit margin -- EBITDA margin?

Yes, yes. That's what I have told. I mean rightly said high single digit or double-digit margin you should get from Q1 onwards.

Is there any other legacy in the order book, which could be of a pain point for us for the next year?

Legacy orders, see, Bangalore Metro is physically almost over. So by March or maybe up to April this year. The physical work will be completed. Of course, thereafter final bill submission, persuasion of our claims, arbitration will go. So I don't think there are any other legacy orders which may affect our bottom line.

But this elevated -- Bengaluru elevated, we have provided for all the cost over and [indiscernible] office, right? So no negative surprise will come by the time we complete this project, right?

No, I don't think anything will come. And in top of that, we are also pursuing some claims, which we feel genuine. So those will be in arbitration.

Just a question to Prasad. Prasad, what would be the gross debt and cash on the books? And also what we -- as Jayanta said that the Mumbai underground project is now almost complete. So what could be the residual profits to be recognized from that?

Parikshit, to answer the first part of your question, the gross debt on the books as of December is about INR 640 crores, and there's cash of roughly INR 175 crores from the book. So the net debt is about INR 460 crores, INR 470 crores. We expect the debt to go up a bit in this quarter because of the CapEx that we have incurred and the machines are likely to be delivered -- some of them are likely to be delivered in this quarter. So there will be some increase -- marginal increase in our debt levels by March. I could not get the second part of your question. Can you repeat that, please?

So all the JVs and -- which we consolidate, so what will be the, let's say Kolkata and Mumbai. So what will be the residual profits to be recognized? Because the Mumbai underground is coming for closure now. It's substantially completed. So what could be the upside on LD reversals or profits?

Parikshit, we have been recognizing the margins on a percentage of completion basis. So I don't have the exact numbers with me right now. But as the work progresses and it is nearing completion, we will see the residual margin getting recognized, but I won't be able to share with you the number off hand.

And what is the net worth as of Q3 and -- consolidated net worth -- what is the consolidated net worth as of Q3?

As of Q3, the consolidated net worth is about INR 1,100-plus crores.

And just last thing on Jayanta. So Jayanta, what would be the total prospect pipeline segment wise if you can help us here.

Total prospect, I can divide it in two categories. I mean [indiscernible], but we are not pursuing all the jobs considering the work in hand. But we are definitely pursuing some jobs, which is underground. Underground job will be close to INR 6,000 crores to INR 7,000 crores from Kolkata and Chennai Metro. And for marine, it will be INR 5,000 crores plus. So these two definitely are pursuing -- I mean, we are actively under consideration for tendering, say around INR 12,000 crores.

Just one last thing, you have [indiscernible] project to a particular group. So are you taking any challenges there in terms of [indiscernible] project? And also if you can quantify what is the total exposure in terms of order book to the group?

See. As we mentioned, two big jobs, I mean, under that group, which we have just started. One at UP and one at Colombo. So it is just our initial site mobilization has taken place. In fact, we have received the mobilization advance also. Last week also, we got paid. This week also, we got paid. So in terms of exposure, these 2 new jobs, we have practically nothing. The old jobs, those are very small jobs and are material free. So I don't see have got much exposure on them, and we have not had anything from the group to either slow down or to stop the job. So it is going as usual.

And what is the total order book of the group in our order book?

Yes, total order book will be around INR 6,800 crores, But out of that, we might have executed hardly INR 1,200 crores, because bulk of the order is from the one road job.

So out of INR 6,800 crores, INR 1,200 crores is executed. So net order book is -- do you think net order book is 68 minus 12, so about INR 5,600 crores is the current order book as of September -- as of December end then?

Yes, around something like that, yes.

We take the next question from the line of Bajrang Bafna from Sunidhi Securities.

Congratulations for a great set of numbers. Sir, my first question is pertaining to again to that group only. If you could just say that both of the orders, which we just talked about UP and Columbo, they are financially closed. So could you sense that -- what sort of -- in the financial closure, the amount which is going to come from the group level and what is tied up with the banks. So if you could just give us some clarity on that, it will be really helpful. And as you pointed out that you have not heard anything to slow down because UP is a prestigious project which needs to be completed in a record time. So just enlighten us your current ongoing and [indiscernible] that will be really helpful.

One moment, sir. Management, sir? Participant, the line for the management is disconnected. Ladies gentlemen, we have the line for the management connected.

Was my question was audible to you, sir, or should I repeat it?

I think it's better if you repeat the question.

Sir, the first question pertains to the group again. The financial closure of the UP project and the Colombo project has already happened as per my understanding. And can we share the breakup, the amount which is going to come from the banking channels and the amount, which needs to come from the group? If you could just guide us in that sense, it will be really helpful. And your sense in terms of -- since UP is a prestigious project and it needs to be completed in a record time. So just some your ballpark judgment on that.

Bajrang, we don't have the details of the financial closure. While we are aware that the financial closure has more or less been completed, the details of the financial closure as far as the group is concerned, we are not aware of that.

Okay. And till date, I think since this is a nascent episodes which has happened. So there is no negative surprises as such as of now, right?

No, no negative surprise. In fact, we have been paid also during last one week [indiscernible] against Colombo and some other in marine sectors.

Even in the UP side, right? The UP -- the Ganga Expressway project, which you have just started?

Yes.

So can we expect the revenue booking of this Ganga Expressway project from this quarter onwards?

We have a system of achieving a certain threshold limit of this thing. But definitely, we expect that there will be no disruption and progress will definitely happen.

Okay. So either this quarter or maybe next quarter, if the threshold is not achieved, right?

Yes, yes, yes.

Okay. And what about Chennai Metro projects. When can we expect the revenue recognition to happen beyond that threshold of, let's say 10%?

Chennai Metro, this quarter, I think we'll be able to achieve the threshold limit that is Q4. So we should be able to recognize the margin from this quarter.

Okay. Okay. So sir, you in the -- some media appearance guided that this year, probably the run rate will be closer to INR 1,400 crores, maybe in Q4. And we'll be growing 20%, 25% next year. So will that assessment holds true? Or you want to revise it slightly upwards because you anyway pointed INR 6,000 crores. So can you just pinpoint in terms of growth that you are going to experience in the FY'24? Some clear guidance on that will be really helpful.

Well, INR 1,500 crores per quarter is the -- we are winning and which should happen, and we may expect a little bit more than that. But I think whatever I have told last time, I will maintain the same.

Okay. Okay. So roughly that you are guiding that close to maybe INR 6,000 crores kind of number, which you just talked about in your first question and answer session?

Yes, yes, yes.

Okay. Okay. And sir, because if I rightly pointed out, you are already at INR 21,000 crores. And the execution period is roughly around on the higher side, 3 years. And then we are also going into order intake of, let's say, last time you talked about the pipeline is around INR 17,000 crores. So can you sense that maybe in 2 or 3 years' time, can we expect the run rate to go to closer to INR 9,000 crores to INR 10,000 crores on a yearly basis, if you will talk about maybe, let's say, FY'26?

I mean that is too far from now. We are discussing this quarter. But as I've told last time, we should grow for another 2, 3 years at the rate of 25% net on that.

Okay. Okay. And this pipeline, has it got revised to any number, this INR 17,000 crores which you talked about last quarter?

Rightly, it will be around INR 12,000 crores now because some of the jobs which was there in our pipeline, we have decided not to beat for because we already have got substantial quantity of jobs now. So it is INR 12,000 crores to INR 13,000 crores which are tendered again.

Yes. Okay. Those are predominantly in the metro and the tunneling side, that you just talked about -- marine side. Hello, Seema? Seema, your voice is breaking out.

Hello, Mr. [indiscernible].

So my first question would be -- my first question would be how much order tender we have done for this quarter specific? And what are the winning ratio we have been accepting?

Tender for this quarter?

Yes.

We have -- do you have this number with you? Because our percentage of success is around 20%. That much I can tell you, YTD '22, '23.

Yes. But I just want that number because the order book -- the new order book -- in the total order book, if you see that is around INR 21,000 crores. It is hovering, I think, from like 2 quarters also. So I just wanted to know how much order book wins we have been expecting to on a yearly -- on the next quarter -- on a yearly basis so that we can get a true judgment on the growth of the book?

Well, as I said that around INR 12,000 crores to INR 13,000 crores of tenders we are pursuing now in addition to close to INR 3,000 crores order, which were L1.

Okay. And sir, my second question would be on the Ganga Express project, which is the Adani project. So are we seeing any stress on the -- for the specific Adani thing or all the -- the order book and the execution is on time we are seeing the recurring revenue from the Adani, exactly what we have been thought of?

Ganga Expressway, I don't expect any problems. So for whatever interaction I have with the customers. And we have got payment also recently, and they have asked us to go in full swing. So there is no indication from the customer side otherwise.

The next question is from the line of Kaushik Poddar from KB Capital Markets Private Limited.

Yes. See, we see -- I'm from Kolkata. So we read some problem with the Kolkata Metro and you people are one of the contractor. So can there be any liability on you with all the problems that are there?

No liability. It is a matter of time. As you know, this -- the metro line which we are supposed to go from Sealdah to -- directly to Mahakaran, that has been rerouted through Esplanade. And so as you know you are from Kolkata, so you have faced some problem. It is a problem we have encountered and that was quite challenging, but I'm very happy that we could overcome them. It took some time because in a public area, we cannot do hara-kiri. And there are some delay in the project. So apart from that, I don't see any liability happen now.

And whatever rerouting you have done, that should take care of the problem you are facing -- you had faced so far?

Well, rerouting was not in our hands. So we had to do the job in the new routing. So basically, between the two tunnel, that is one is up, one is down, there needs to be some passage for the ventilation and the safety purpose.

Evacuation in purpose.

And those passages are done by normal tunneling method, not by any sealed method. So it is very difficult to do given the town condition. So that is the problem we have been facing now. So there are technical solutions we have found out, and hopefully, that will be resolved, either reducing those numbers and then whatever number left out within proper manner.

Okay. But there is no liability on the contract whatever happens. That's what I wanted to know.

No, no, no, there is no liability. And so there is no issues that are...

Okay. See, a lot of the contracts you are getting mostly are in the metro as well as marine. So these, I guess, are your strong points. Other than metro and marine, are there any other things that you -- that are the strong points of the company?

Airport. As you are from Kolkata, you have seen Kolkata airport.

Okay. Was it constructed by ITD?

Yes, yes. Very much. And then we are now doing at Trichy -- Trichy Airport, Pune Airport, Ahmedabad Airport, the airport is another strong point, and special buildings like Sikkim University, Ropar IIT, and Bose Institutions at Salt Lake, Sector 5, all are done by us. So that is also -- we are getting stronger in that sector.

Okay. And recently, you were saying that you have got a contract from Bangladesh, right?

Bangladesh transmission line, yes, we got -- we have not got, we are L1. So we are expecting order any time by end of March or so.

Okay. Now -- so your parent company is a Thai company. So are you restricted from getting into any other country? I mean, which are the countries that are in your remit?

So there is no line like that. We are allowed to go anywhere if the business -- you see that is a business and prospect. But mostly, we are restricting out into the neighboring countries, number one. Number two, mostly we are restricting ourselves where we find that funding is by Government of India like Project Export by Exim Bank.

Okay. And both Bangladesh and Sri Lanka projects, the fund is from government of India. Is it?

Yes. I mean, Bangladesh, of course, funded by Government of India and Colombo is a port job by Adani Group.

That is also by Adani group. Okay. Okay. So as of now, in your INR 21,000 crores order book, how much is connected with Adanis? How much of the order book is connected with Adanis? And the other one, of course, is the UP highway.

Well, if you see that UP highway, if you remove that, then our order book from Adani will be around INR 1,500 crores.

Sir, INR 1,500 crores plus INR 4,000 crores, right?

INR 1,500 crores.

Plus the INR 4,000 crores of the UP project?

INR 4,800 crores to be precise.

INR 4,800 crores plus INR 1,000 crores. So that is around INR 6,300 crores. So nearly 1/3 of the order book is from Adanis as of now.

Yes, yes.

We take the next question from the line of Mr. Ramanan Venkateswaran from [ Emkay Ventures ].

Congratulations on a wonderful performance. I have just basically one question -- two questions, but one main. Last quarter, we discussed that about approximately INR 200 crores worth of revenues. Projects did not reach margin recognition stage, okay. This quarter, what would that number be?

It's a similar number, about INR 230 crores, INR 240 crores is the number.

Okay. And what would -- which would be the major projects on which this number would be?

These are the projects that were awarded to us in the last year or so. There is Chennai Metro, there is Ganga Expressway, there are a couple of other projects as well. We could form part of this number.

And the second question following from this is, in the coming quarter, would some of these reach the revenue recognition -- I mean the margin recognition stage?

Yes, yes. Some of them will reach that threshold in this quarter or there may be some slippage into the following quarter. But we are hopeful that we'll be able to reach that threshold in the March quarter.

We take the next question from the line of Mr. Prem Khurana from Anand Rathi Shares and Stocks.

Congratulations on good quarter. So sir, I think in your opening remarks, I mean, you detailed us about some of these key projects for us. I mean if you could also help us understand how the progress has been on the tunneling jobs that we had managed from IRCON sometime back in West Bengal. Where are we in terms of construction? I mean, are these going good? Or are you facing any terrain related issues there.