Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the ITD Cementation Q4 FY '23 Earnings 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. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.

Thank you, Darmick. Welcome, everyone. On behalf of ICICI Securities, I welcome you all to the Q3 FY '23 -- for Q4 FY '23 conference call of ITD Cementation. 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. The meeting will start with a brief remarks 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, CFO of ITD Cementation, and I thank you all for joining us on the Q4 FY '23 results concall. I will start with a brief introduction on the financial performance of the company during this quarter and for the year ended March '23. And thereafter, I will hand over to Mr. Basu for his initial comments, and then we'll take questions from you. This quarter and this year, we have posted a very strong financial performance for the company with highest ever turnover profitability order flow during the year and order book as of March '23. Our revenue for the quarter ending INR 1,631 crores as against INR 1,174 crores a year that which represents an increase of about 40%. EBITDA has come in at INR 147 crores in this quarter as against INR 93 crores on a year-on-year basis, that's a growth of 58%. And PAT for the quarter is INR 38 crores against INR 17 crores, a growth of 128% on a Y-o-Y basis. For the year ending March '23, our consolidated revenue has crossed the INR 5000 crore mark, as against INR 3,809 crores in FY '22, with sequential growth of about 34%. EBITDA is at INR 463 crores as against INR 338 crores, again, a growth of about 37%. And profit after tax has crossed the INR 100 crore mark this year. We have reported a profit of INR 125 crores as against INR 69 crores a year back, which represents a growth of about 80% this year. Our balance sheet continues to remain healthy, or we are included upon it to some extent and the debt-equity -- net debt to equity ratio at about [ 0.2% ]. During the year ended March '23, we have secured new orders of over INR 8,000 crores. And that really bodes well, it gives us visibility for revenue in the next year or 2 to come. That is all from my side at the moment. I will now hand over to Mr. Basu for his initial comments.

Good evening to all, and welcome to this concall. Thank you, Prasad, for sharing the financial numbers of last quarter and the year. It is evident that we have made substantial progress in last quarter. Our revenue has crossed INR 1,600 crores, which used to be around INR 1,000 crores a few quarters back, so around 60% growth in the work in progress. With that, we also have good work in hand close to INR 21,000 crores. The mix of the work in hand also is good because underground metro and marine components are most. If I touch upon the major contribution last quarter, Ganga Expressway has contributed a lot in the progress. And then a few metro jobs underground that is at Bangalore and Chennai. Marine jobs, Udangudi, Sea Bird, Ennore, Colombo has just started, and Sivok Rangpo a tunnel job at North Bengal also going on well. So overall, all the segments, including a few buildings, we have done very good last quarter. We have got -- apart from the work in hand what we have, there are a few big jobs under tender in marine and underground sectors, some international jobs. So things are also looking good. So I'd be happy to answer any questions [indiscernible] of last quarter and last year. Thank you.

[Operator Instructions] The first question is from the line of Nikhil Abhyankar from ICICI Securities.

Congrats on a very good set of Q4. So sir, going forward, how do you -- what will you guide for FY '23 in terms of revenue, EBITDA, margins, PAT and order inflow?

Well, I think we would maintain the same run rate in terms of the top line. And because we have got work in hand and those need to be executed within the given time, so revenue [indiscernible] we can say the same run rate INR 1600 crore, INR 1700 crore per quarter. EBITDA will be around this, maybe we'll cut double-digit end of the year. And order inflow, last year, we have secured around INR 8,000 crore job. This year also it should be at least INR 8,000 crores, that is the [ alternative ].

INR 8,000 crores. Sir, and you just mentioned that we might touch double-digit margins in FY '24 itself. So what exactly has changed in the last 2 years? It is almost 200 bps.

Last 2 years, we had some legacy jobs like elevated metro at Bangalore and some other places. So those we could not do better, now those just are behind us. So that will contribute to the bottom line. In fact, for Bangalore Metro, we didn't declare any margins for 2 years. So we have done around INR 1,500 crores revenue during this period.

So all the legacy orders are behind us now?

Yes, some like some claims and some certifications always the part of this business that will keep on going. But more or less, they are under control now.

Understood. And sir, you mentioned order inflow target of around INR 8,000 crores again. So do we have any preference regarding the segments where it will come from? And what -- where do you -- what is the pipeline as of today?

We expect that we may get some job from overseas, nearby neighboring countries in Marine division, and underground metro at various places, as you know, the tender being quoted. So that is what the 2 areas we are focusing most at this stage. Specifically, underground metro, as you know, been tendered at many places like Chennai and Kolkata and Kanpur. So we are trying to get some of them. Marine jobs also, 3 marine jobs in Maldives, Bangladesh we are targeting.

Okay. And sir, you mentioned that Ganga Expressway was a significant contributor for revenue in the last year. So how much did it contribute last year? And how much will it contribute this year? And can you give us the major revenue contributors in terms of projects for the next year?

Ganga Expressway last year, I think very, very, very limited. Last term is the year which has just got completed around INR 300-odd crores have contributed. But the important issue is that they have started the job in the month of January. So during this last quarter itself it has contributed INR 300 crores, in the beginning of the project, which is quite significant. And this year also Ganga Expressway will contribute quite substantially in the top line. Yes. And then Chennai Metro, Bangalore Metro and few other marine jobs in Colombo and [ Bangladesh ] they are the main contributors this year. Hello?

Hello?

Mr. Nikhil Abhyankar. Does that answer your question?

Yes. Just a final question. We had announced an order of INR 8.8 billion for Thal Sena Bhawan, but it is not included in the order book as of now. So is it [ L1 ] still?

No. I think we have secured this order in last -- this last quarter. It is included in the order book number what you are seeing.

Okay. Because in that notification, it was mentioned, INR 8.8 billion was the total order. And so, and in this presentation, it is 80L.

No, no. That's been included. It is included in the order book.

The next question is from the line of Dhananjay Kumar Mishra from Sunidhi Securities.

Congratulations for the very strong performance for Q4 as was FY '23. Just, my first question is with respect to order inflow. So till December itself, we have INR 8,000 crore order inflow, and we were allowing 2 projects, including this Bangladesh transmission project. So what is the status of Bangladesh project, as of now, that is INR 2000 crores?

Bangladesh project we are still L1, that is still not been awarded to us. So it continues to be L1 as of date.

Okay. So 27 million, L1 still there apart from INR 20,000 crore order book we have on closing basis, right?

L1 position is about INR 1,500 crores, INR 1,600 crores.

So L1 is INR 1,600 crores -- that is Bangladesh transmission line?

That is mainly Bangladesh. That's correct.

Okay. And last year -- last 2 years, we are having a good profit in JV, close to INR 32 crore. So this year, I think these JVs are -- because the metro project is over. So these kind of profits will not come in FY '24, is it the right understanding?

No, I don't think you are understanding it correct. It depends on the order mix and where is the orders that we are getting from. So, if the JV orders are getting completed, we have got new orders in the stand-alone company as well. So I mean the JV projects are -- they are our own projects, they are under our management, and we are executing those projects. So I mean, it just depends on where the orders come from, if order is coming from JVs, then that is disclosed separately in our results. And if the orders having the main company, then they are disclosed separately. So it's just a matter of presentation. Otherwise, there is no difference.

Okay. So 10% EBITDA margin, this is excluding of JV profit, right? Because, last -- this quarter itself, we have done about 9% EBITDA margin. So 10% is...

You're talking about the overall profitability here. We are not differentiating between the JV projects and other projects. Whatever numbers, the PAT is being reported and we are going based on the reported numbers.

Okay. And this Chennai and Kolkata Metro, which were under pipeline. So when do you expect this order to be, I mean, tendered? Or these marine jobs, I mean, next 6 months or next 3 months, what is the time line?

Time line depends upon how the client take it forward. We have submitted our bid, and technically, if these are all accepted and evaluated then the evaluation of the price bid will happen once the tender is open. But generally speaking, it should be [ under ] by 2 to 3 months' time.

Okay. So that will be significant in the first half, and then order inflow? Can we expect...

Yes. If we are lowest, if we get the job, yes.

That is first. Okay sir, that's all of my side.

The next question is from the line of Pratik Kothari from Unique Portfolio Managers.

Sir, my first question is on this loss which we reported in our JV. Can you just highlight what is it regarding?

Yes. Some loss have declared. What happened is, this job has been completed 2 years back and the certification process also almost done. During the process of the work, we did some additional work for which ad-hoc payment was received. But the certification is still getting delayed, and we thought to provide that amount as a loss. Yes.

So any more expected in here? I mean, and which projects would this be?

This is Delhi elevated CC26.

Okay. And this INR 28 crores of impairment that we see in our cash flows, this will be the same?

Sorry, come again?

In our cash flow, we see INR 28 crores of impairment allowance on financial assets, nonfinancial assets. So it is the same or it's something different?

It's not the same. The provision for doubtful debts on the stand-alone is basically expected credit loss provisions that we have given in the books.

Okay. But -- so this has gone up from, this amount is the [ gain ]?

That is why it is being disclosed separately.

Sorry. Come again, sorry, I missed that.

The INR 27 crore provision for doubtful debts is in the stand-alone entity, whereas this loss in the one of the JV projects, which was completed a couple of years back. So this is different from the PDD provision for doubtful debts.

Okay. Fair enough. But coming to provision for doubtful debts, I mean, it went from INR 9-odd crores to INR 28 now. Any reason we were expecting that a lot of our legacy provisions, et cetera, were all done and dusted. So why that's a large number?

No, this is largely coming out of the expected credit loss provision. It is a requirement under the accounting standards. So that is how we have provided for it. We don't expect this amount to result in a loss, but the accounting standards requires us to make this provision. And based on that, we have made this provision in the books, but we expect to recover the money in full. That is why it is at the provision. It is not the write-off.

Okay. Fair enough. Sure. And sir, in the last call, we had mentioned that by Q1 of FY '24, we should be closer to or almost doing double-digit margins. But I think now in the opening remark, we mentioned that it might be towards the end of the year. So what are we missing? I mean, are we dealing what double-digit margin guidance we had given earlier?

No, no, no. We have never said that we will achieve double-digit margin in Q1. We have always said that this will be a gradual process, and you will see the improvement during this year, that is FY '24. And when Mr. Basu made those initial comments, he said that we'll see that during the year. Now exactly in which quarter that will happen, it remains to be seen. But the trend is towards improvement in margins, and we should do -- we should be reaching that stage in some time during this year.

Fair enough. And when we say double digits, do we include the JV in that or we don't?

That's correct. We do.

We do include. Okay. Fair enough. And sir, my last question is on order inflow, I mean across various infra companies, the order booking for this quarter was substantially higher than what the booked, say last -- in quarter 3 or in the first 9 months. We have not seen that kind of order book. So is it that the competition has increased or currently, we have our plate full and hence, we don't want to go aggressive on that? I mean what's our process there?

No, I think it's a mix of everything and there is a time line issue, which company has bid for which job at when, that matters because in our segment like marine or underground segment, we might not have got in order in the last quarter, but prior to that they have got. We've seen totality. The totality is to see our order book has increased a lot in the year, INR 8,000 crore plus.

Fair enough. And sir, my last question on the Karnataka, [ the circular ] which has come out, they are not -- stopping all work, not releasing payments. So if you can just highlight what -- I mean, we have explained what our exposure there is, but how much is with the local government there? Is there any changes in the kind of work we do?

No, no, I don't think there is any issue with that. There is some statement, I also -- somebody told me. We are doing 2 major work in Karnataka, one is underground metro at Bangalore, which is totally funded by some either by ADB or JIKA or somebody, and it is a joint venture of state government and central government. So there is no way that this job -- because, in fact, the new government also trying to increase the progress to achieve some milestone, about the underground metro, so there is no issue. And the second job we are doing, that is a defense job, Indian Navy, our project [indiscernible], that has got no connection with the state government. So I don't think it is to be taken in the sense of what we are doing.

[Operator Instructions] The next question is from the line of Rajesh Kumar Rathi from Right Shopping Private Limited.

I have 2 questions. One question is about the provision for income tax. I think this quarter, the provisions in something like 45%. So what is the reason for that? And what is your guidance for next quarter onwards?

When the provision for tax is worked down, it's worked on not on the profit before tax that you see in the reported numbers, but there is an element of some losses that we have taken in the JV projects or the provision for the doubtful debts, the expected credit loss that we have recognized during the quarter. So that gets added back to the profit and hence, the taxable profit for [ computing ] the tax liability is higher. And the tax provision is made on that number, not on the PBT that you see on the face of [ other debts ].

Okay. So what is the guidance for next quarter onwards? Would it be something like 25%, 26% or more than that?

Gradually, it should come to that level. I think, in the next quarter onwards, it should be around 25%.

Okay. My second question is about the top line for '24. I think, you'll be doing substantial Ganga Expressway project next year, which should be something around INR 1,800 to INR 2,000 as added before. So if I deduct that from the top line guidance of about 20%, 25% growth, the rest of the thing, there is no growth at all, it seems. So how do you explain that?

But why should we deduct that [ rule ]. This is the order that we have won, we are in the process of executing the order, we must definitely consider when we look at the growth of the company's revenue this year versus the previous year. There is no reason for us to exclude the turnover from the Ganga Expressway project.

We have the next question from the line of [ Ramanan Venkateswaran from MK Ventures. ]

Congratulations for a great set of numbers. Just a couple of questions. Again, like last time, I don't know, our projects were threshold levels for margin recognitions have not been reached, one. Second is on the Bangalore Elevated Expressway, do we expect completion by the end of first quarter or probably second quarter of this year? That is the second. And last, of course, is what do we see as the project pipeline for us going forward?

I think I'll start from the last one. Project pipeline as we have been discussing, we have -- around INR 17,000 crores domestic tenders are in the pipeline. There are a few international jobs put together will be around INR 3,000 crores to INR 4,000 crores. And in the domestic part of them are marine and part of our underground metro and some building. And internationally, we have got 2 marine job in Bangladesh and one job in Maldives. These are the main job we are targeting, and we are actively working for in tender process. Now your second question was Bangalore Metro Elevated. Bangalore Metro Elevated in all respect, now it is completed. That is the physical work is completed.

Okay.

4 jobs. 2 jobs already have got the Taken Over certificate, that is as you know in the Whitefield area, the trains are already running. So they have taken over and other side also ones they have taken over. Last one, which is near, via -- what is the name, I forgot, anyway. So that job also the, last span of the bridge, which was under construction is over now. So in physical sense, all the work in Bangalore Metro has been completed. Okay. And so, what was the first question?

And for you to say that this is fully completed, where I mean everything gets sorted out. It will take 3 to 6 months for you post that?

Completed, in the sense, the physical work has been completed. Now our balance remaining part that is finalizing of the pre-final bill, final bill. Reconciliation of the material, winding up of the site. So those things will continue. Normally, what are the remaining jobs is completed within 6 to 7 months' time, minimum.

Okay. Okay. And my first question was projects where we have not reached threshold levels for margin recognition in the last quarter?

Among the larger projects are the projects that we are executing in Colombo and the Thal Sena project that was awarded to us last year. I think, other than that, we are recognizing margin for almost all the other projects.

Okay. So in terms of value, how much would that be? Because in the previous year, we had something like INR 200 crores of revenue, did not have margin recognition?

Mr. Ramanan, I don't have that number at the moment. Maybe offline, we can [indiscernible] those numbers.

[Operator Instructions] The next question is from the line of [ Vignesh Iyer from Sequent Investments. ]

Congratulations, sir on good set of numbers and strong execution. I just wanted to understand one thing on the accounting part of it. Is that, we have paid a very high tax at consolidated level as compared to the earlier year. I just wanted to understand, going ahead, what would be -- are we shifting to a lower tax rate of 25%, 26%?