Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to ITD Cementation Q4 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being conference. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.

Good afternoon. On behalf of ICICI Securities, I welcome you all to the Q4 FY '24 Earnings Call of ITD Cementation India Limited. Today, we are pleased to host the management of ITD, which is represented by Mr. Jayanta Basu, Managing Director; and Mr. Prasad Patwardhan, CFO of the company. Without much delay, I'll hand over the call to management for their opening remarks, which will be followed by Q&A. Thank you, and over to you, sir.

Thank you. Good morning -- good afternoon, everyone, and thank you for joining us in this Q4 FY '24 result con call. Before I begin, let me mention that there could be certain statements from the management today during the call. It would be forward-looking that would be subject to certain risks and uncertainties, so we'd like to bring this your attention before we move ahead. We have declared our result yesterday and I'm sure that everyone has got the chance to look at the numbers. We have had a very satisfying performance during the quarter and a very stellar performance has been reported for the year ending FY '24. For the quarter ending March '24, our total operating income was INR 2,258 crores as against INR 1,631 crores in Q4 of the previous year, representing a growth of about 38%. EBITDA of INR 242 crores as against INR 147 crores, a growth of 64%. PAT of INR 90 crores as against INR 38 crores a year back, which represents a growth of about 138%. For the full year, we reported a top line of INR 7,700 crores, which represents a growth of 52% on a year-on-year basis. Our EBITDA has also grown by about 75% during the year. And PAT margin has grown by 120% from INR 125 crores to INR 274 crores. Our balance sheet continues to be extremely healthy and the net debt-to-equity ratio is under 0.2x. During the year, we have secured new orders of about INR 6,900 crores. And our order book as of March '24 is a little under INR 20,000 crores. This is as far as our financial performance is concerned, I'll now hand over to Mr. Basu for his initial comments, and then we'll take your questions.

Thank you, Prasad. And good afternoon to all for joining this con call. And I'm very happy to share the numbers what we have just heard from Prasad. The substantial growth in top line and bottom line as well during this last year. And we have grown from INR 5,000 crores to close to INR 8,000 crores in top line. And in PAT level also, it is almost 3.6% of the revenue, which is, I think, the best PAT we have in recent past. I'm sure that this momentum will continue further because we have several jobs opportunity. Some of them, we have already tendered. Some of tender work is going on. And some, we are yet to receive the tenders that we have identified, and those are mostly in the segments that are doing good, like Marine, Underground Metro, Bridge, so the kind of jobs where we normally perform better. Going forward, our focus is to have some more jobs from the overseas market because as we find that there are new developments happening in Middle East, West Africa, a lot of investment from Indian government, but they are also investing money. So there are a lot of new projects are coming that we would like to participate. So our endeavor [indiscernible] there to get some new work from the overseas market as well. Now this year, we have seen the revenue growth and margin growth. So -- but there are a few jobs which have secured towards the end of the last year, big jobs where we can only [indiscernible] the margin declaration. So we have taken the revenue. So margin is yet to be declared, which we'll definitely add to the bottom line second or third quarter onwards. This is what I have to say within the statement. Now I'll be happy to -- we'll be happy to answer any questions you may have going forward. Thank you.

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

Congrats on a very good year. So my first question is regarding -- at this juncture, will you be able to provide some kind of a guidance for FY '25 in terms of revenue growth, margins and the order inflows?

Revenue growth, as we have been maintaining, it will be 20% plus in terms of revenue. Margin also will be commensurate to that. And order inflow, we're expecting the order [indiscernible] close to INR 8,000 between to INR 10,000 crores, say INR 9,000 crores, our target is to have this year's order inflow.

So around INR 9,000 crores. And the margin, is there any scope to improve the beyond 10% going forward?

It's difficult. You see, construction industry has got their own standard margin and revenue. So 10% plus is, I think, okay. If we can do something better, we'll be happy, we'll try that. But I think we have to live with this margin, 10%, a little bit more than 10%.

Sure. And sir, you mentioned in the opening remarks that you will be looking at overseas orders going ahead. So what kind of opportunities are we looking at? And what will be the share of overseas orders out of this INR 9,000 crores?

We aim to do around 30% of revenue from overseas by another 2 years' time or 3 years' time. Now today, the kind of job which we're pursuing, if we get some of them, I think it will be around 20% plus on our overseas business.

20% plus from overseas. Okay. And just a final question. And recently, there's a lot of group tenders which were opened in Maharashtra, almost around INR 90,000-odd crores. So did we participate? And if not, why?

See, we have -- see -- I don't know which one you're mentioning. There are many jobs, particularly coastal road and tunnel job between this [indiscernible] Sanjay Gandhi Park. We have not participated because we found that it requires a lot of investment, particularly tunnel job, where the TBM side, the tunnel boring machine side is quite big, and requires a lot of investment. And if the stage that we have today, we have to contain our CapEx within a limit. That is the main reason. And in some cases, to all these, there is a qualification issue as well. So we have not participated because these reasons.

Next question is from the line of Parikshit Kandpal, HDFC Securities.

Congratulations on a good quarter. I just wanted to understand from you, you highlighted that you had about INR 8,000 crores to INR 10,000 crores of orders for the next year. So this factors in the election related and delays in the government formation, which may take some time and also ordering to pick up. So have you factored these while giving your guidance?

Well, see it is not only depending on the government order. We hope that most of the time, in marine, our customers are mostly private clients, like [indiscernible], like Port of Singapore, like A.P. Moller and we have [indiscernible] as well; JSW. So those -- all of them have got big marine jobs, which we are pursuing. And yes, there are some jobs we have submitted our bid like few Metro jobs which are already there, which will definitely after July, August when they mature. And few jobs, it doesn't depend on the election. The overseas job, has nothing to do with our election result. And around 4 such jobs we are pursuing, we are quite hopeful to get at least 1 or 2, and they are big-ticket jobs.

What is the current pipeline in the Marine segment? Because that is what is the most profitable segment for you. So if you can highlight what is this pipeline there? And also, in terms of the upcoming [indiscernible] opportunities, do you think that you'll continue to work as contracted towards larger players, especially Adani you've been doing their Ganga Expressway. So do you think you're open to exploring opportunities and sticking subcontracting at least on the NHAI road projects for leading contractors or developers?

No. We don't have -- at the moment, we don't have such plan to the road work from NHAI. But if we get 1 more Ganga Expressway, probably we'll be happy to do such work.

And on the marine side, sir. And then directly from NHAI, let's say, Adani win [indiscernible] projects or some developers and is okay [indiscernible] and he takes the support. So are you okay to give support bids to the leading developer when your scope of work will only be limited to EPC for the developer? Are you open to those opportunities?

Yes, yes. Definitely, there is a developer -- and, basically, it depends on the due diligence of the project. Basically, you have to see whether the funds are available and the developer has got money and [indiscernible]. So obviously, why not? If we are able to do in Ganga Expressway, we can do anywhere. And in marine, of course, marine is one of our strong areas. So as we just mentioned, pipeline, yes, there are at least 7 jobs in front of my table, which we're pursing now. Then all of these are INR 1000 crores plus/minus, if not minus/plus. If we get at least 2 of them, then that is a good deal for us.

And just the last thing on the JV profit. So I just wanted to understand from you that this year the numbers on the joint -- profit from joint venture has declined. So if you can highlight and help us understand that what is the residual value of cash because I know we are very conservative. So I just wanted to understand how much of the profit there yet to be realized from underground Metro projects, when do you expect it to get commissioned? And even from Calcutta Metro, if anything is pending, which when the TBM issue got -- happened? So anything there which can be realized. So carrying value of unrecognized profit from the JV companies. So if you can give some color on that.

Yes. One thing is that JV jobs are almost now on the finishing stage because if you see Calcutta Metro is completed, I think it's completed, leaving 2 or -- few works. Bombay Metro is almost completed. And there is no other JVs that we are doing. So all at the fag end. And there will be a little bit of margin and cash will remain there. I don't have the number exactly -- I can talk to you later on. But I can say that there is not much substantial consideration, either plus or minus on cash on JV jobs going forward.

Okay, sir. Sure. The only thing is I was looking at your orders, the guidance looks to be a little bit on a muted side because now the book-to-bill, I mean, this year, maybe, if you do -- I think you had earlier guided close to about INR 9,500 crores of top line for FY '26 -- FY '25, so which means that we're just replacing our order book of INR 9,000 crores and we are still at closing maybe at about INR 19,000 cores, INR 20,000 crores of backlog, which is 2x book-to-bill. So we do -- see, we need to grow from here on into FY '26 to at least get more than INR 15,000 plus crores of orders to deliver that kind of a growth. So I just wanted your -- a little bit more color and sense on that, how do you see the growth beyond FY '25 given kind of muted inflow guidance for FY '25?

Yes, we are thoroughly aware of the situation and we are working. And there are plenty of opportunities because I have told you that we are not continuing in India. We are going overseas as there is a good overseas market as well. We have plans in place and future will tell.

Next question is from the line of Pratik Kothari from Unique PMS.

So my first question is on the competition. In the last call, we highlighted that, be it underground Metro, be it marine, it seems that more number of players have started participating in bidding for the projects. If you can highlight any change. And also in the context that currently, the order inflow seems to be muted across players given elections over there. How has the behavior been versus peers in terms of how they're pricing? Are they dropping their margins to go out and get orders? And how are we reacting to that?

Well, I think this is a very constant phenomena in any business. Today, if you are doing good margin in one segment or one particular type of job, tomorrow there will be crown, you have to go to new places. That is how business goes and that is what we do really. We have realized that a few segments like small marine jobs is no more a profitable segment. So one thing that we have gone to bigger marine jobs or bigger jobs. If you see today, our work in hand, we may have 50 jobs in hand. And out of that, about 8 contribute to 80% of our revenue. So the moment you go for the bigger jobs, you have less players. And fortunately, because of our past, we are able to get qualified as well as for the bigger jobs. That is one thing. Second thing is that we are going to overseas market because last 2 or 3 years, we have demonstrated that we can do overseas jobs, which is a new ball game, and we have established a team, and so our market footprint is now big. And third thing is that we have got a few clients and we are delighted because basically, they want us to do the job. We are trying to maintain the good relationship with them to get more and more jobs for them. These are the strategies and the way we work to get out of this [indiscernible], whatever you can say.

Correct. And sir, regarding what you mentioned that top 8 customers contribute 80% of revenue. I mean, I understand that we do a few large projects, and we are able to concentrate on it much more, but [indiscernible] create a much larger risk that it's something, historically something what goes wrong at some point of time. So if something goes haywire and it completely affects our company as a whole. I mean, just your thoughts on how do we balance between concentration and diversifying across the bit.

Yes, I think the basic has to be right. I mean, if you take a big job with a poor margin and if we go wrong, then you are gone. That's true. So unless that is there out from the euro debt. So that has to be first ensured that we are matured enough now to realize which job we will do or [indiscernible]. And if you have less amount of jobs, I mean less number of jobs, then you can control much better. So it will be the balance and your maturity and experience playing, such things.

Right. And sir, there is some INR 40 crores of provision this year. Specific to any project or this year is [ ECL ]?

[indiscernible] and provide for it [indiscernible]. So it's not related to any specific projects [indiscernible].

Correct. And sir, last 2 data points. One, what is your CapEx plans for FY '25? And if you can share what was our order pipeline? Currently, what is the order pipeline?

CapEx will be less than last year because last year -- we had to invest for the tunnel machines and trench cutters, so it was more than INR 450 crores plus, I think last year. This year, it could be around INR 250 crores, in that range. And our order pipeline means, as we have mentioned that -- it's an overseas job and -- job we're pursuing. I can see around INR 25,000 crores to INR 30,000 crores jobs in different stage, either in tender or we committed or tender to come, they come in 6 months', 12 months' time. Yes.

Next question is from the line of [ Vipul Kumar Anupchand Shah ] from Sumangal Investments.

Congratulations for a great set of numbers. So my question is regarding overseas biddings. So will it not that our parent will also be participating in those opportunities? So how will you manage that conflict of interest? So is there any understanding that certain projects you can bid in certain areas? So how it works?

Yes, that we've sorted out. If you have noticed that 2 to 3 years back, we never have been to overseas, and then we have discussed with our parent. It is not that they have interest. It is they wanted to see our ability to do what we want. And that we have demonstrated that, yes, we can do and we can do well. So that is the first case. And when we discuss, of course, if they have interest, we don't go. Or if we saw more interest, they will go away. So that is common understanding. So there is no conflict as a whole to go for overseas business with our parent company.

And sir, what is the order intake to date in this current financial year? Can you give that figure, please?

This '24-'25?

Yes, sir.

So far, we have not -- I don't think we have secured any job...

Sorry, sir?

I mean in the first quarter, I mean, this is May, in this year, we have not secured any job during the last 2 months.

And sir, last question is regarding margins. So one of our Bombay-based peers is continuously reporting 14%, 15% EBITDA margin. We are very strong in marine, which naturally carries high margins. So why there is such a big gap with the peers? So what they are doing right which we are not doing? Your comments will be welcome, sir.

Yes. If you see the gap is coming down. I mean we are increasing, and another around also correct. So as I said that it is not only marine jobs we do because if you only depend on marine jobs, it's a big risk. So we do 30%, 35% from marine jobs. Other segments like the airport, or even road what we do, we have to compete with the local players. So you must have seen the increase in revenue margin from last year to this year. We'll try to do better to reach more margin. But today's scenario is that, that we don't have much overseas jobs. That is one of the reasons we want to go to overseas because we believe overseas will be better. But in India, whatever job we secure, whatever job, we have to secure through competition. And there, if we have to competition for 10% margin, then that is difficult.

[Operator Instructions] Next question is from the line of Nidhi Shah from ICICI Securities.

I wanted to ask what is the [indiscernible]

Sorry to interrupt, Ms. Nidhi, there is background noise from your end. Your voice is very...

Am I audible?

Yes, you are audible now, please proceed.

Okay. What is the depreciation policy for the TBM?

Sorry. I did not understand your question. Can you please repeat?

What is the depreciation policy for the TBM that you use?

The TBM depreciation, the current one that we have in use are being depreciated over a period of 5 to 6 years.

Next question is from the line of Jiten Rushi from Axis Capital.

I just wanted to harp more on the overseas diversification. So these overseas be process, which will be funded by the multinational agency [indiscernible]? Or it would be -- which will be directly from the -- from that particular country, which is something by the company?

Yes, our main focus is to go -- funded by Indian Exim Bank. That is -- Bangladesh, we have secured a job funded by Exim Bank, payment being made in India. And there are a few jobs where we want to go, not totally depending upon the foreign funding, where we have the associate who we know very well and payment will be guaranteed. So that is the first thing we have ensured that payment should come. So they are 2, 3 models we are working. One is Exim Bank, of course. The other models, we are working. So yes, it's like that.

So this payment terms would be like -- these are like fixed price contracts or you'll have some escalation. And how will be the payment terms here?

So see, basically, in foreign contract, escalation normally you have to cover in your price. That is what we see in foreign contracts, fixed price contracts.

And sir, payment terms would be what? like -- usually you get mobilizing advance also interest fee when you do overseas contracts. So I understand that we will be getting [indiscernible] within these contracts? And again the payment terms should [indiscernible] depends [indiscernible] becomes a challenge.

Yes, we get mobilization in advance like Bangladesh job is secured and we have a 10% mobilization in advance. We have got [indiscernible], we have got 15% regulation advance. Likewise, in the future, going forward also, we'll get mobilization advance. In addition to that, we have some preliminary items, this is almost like mobilization items. Again, [indiscernible] to get the payment early.

And sir, which segment you're targeting? Only marine or would be like non-marine, especially something like Metro or buildings?

It is mostly marine and there is another 2 jobs which is bridge and tunnel. I mean, tunnel also is involved, TBM.

Your Bangladesh project, so you're -- in your portion, which is river portion, right, for that Bangladesh transmission company, right, sir?

Yes, yes, yes.

So your order book would be how big and when are you targeting to complete the project, sir?

Our order value is INR 1,700 crores in terms of Indian rupees.

It is housing order book?

Yes, yes.

Yes. And your completion time line would be on December '25?

Completion time will be December '25 or maybe '26, early '26.

Early '26. Okay. And sir, this is your share, not the JV part, right?