Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to ITD Cementation Limited Q2 FY '25 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 Ms. Nidhi Shah from ICICI Securities. Thank you, and over to you, ma'am.

Thank you, [ Nidam ]. Good afternoon. On behalf of ICICI Securities, I welcome you all to Q2 FY '25 Earnings Call of ITD Cementation India Limited. Today, we have with us from the management, Mr. Jayanta Basu, the Managing Director; Mr. Prasad Patwardhan, the CFO. We will begin with opening remarks from the management followed by a Q&A. Thank you, and over to you, sir.

Good morning, everyone. This is Prasad Patwardhan, and thank you for joining us on this Q2 FY '25 earnings con call. Before I begin, I would like to inform you that the discussion that we have during this call may contain certain forward statements about the company and its prospects, which are subject to several risks and uncertainties and the actual results may differ materially from the statements that we make during the course of this call. Let me first start with the financial performance for the quarter and subsequently, our MD, Mr. Basu, will take you through the operational performance of the company. We have declared our results yesterday, and I'm sure all of you would have had a chance to go through the results. The brief highlights of our performance in this quarter are [ in there ]. We have reported total income of INR 1,991 crores, which represents a growth of 24% on a year-on-year basis. Our EBITDA margin at about INR 204 crores, represents a growth of 18% on a year-on-year basis. And profit after tax of INR 72 crores in the quarter has shown a growth of about 34% on a year-on-year basis. Looking at our half yearly numbers, the total income at INR 4,372 crores represents a growth of 27% on a year-on-year basis. The EBITDA at INR 442 crores has grown by 27%. And profit after tax at INR 172 crores represents a growth of 63% on a year-on-year basis. Our balance sheet continues to be -- to have very low leverage and the debt-to-equity ratio is about 0.4x. During the 6-month period and thereafter in October as well, we have secured orders worth about INR 3,850 crores so far. This is all I can -- as part of the opening comment, this is all I will say as of now. I'll now hand over to Mr. Basu for his comments, and then we'll take your questions.

Yes, Prasad, thank you, and welcome to this con call for quarter 2 of '24, '25 years. Our revenue this year -- this quarter is around INR 2,000 crores, which is almost 25% more than last year for second quarter. So this shows that we are growing. This quarter, revenue is a little bit affected due to monsoon. And monsoon does not affect all kind of job, but the kind of job what we are doing in [ Ganga ] Expressway, the roadwork, we can't do anything because roadwork is totally dependent on the good weathers. So that has affected a little bit. At the same time, in general, Bangladesh, we are working for -- on transmission line. And because of the political scenario, we could not do much during last quarters. So that also has some effect on our revenue. Otherwise, it would have been a little bit more. So that is in terms of the work, which are effective, otherwise, progressing all the projects are okay, quite steady. Ganga Expressway, we are actually about 50% progress so far. And balance what is now mostly out of the local issue that is the [ hard ] work is almost getting completed, which is the key component of the road work. So it will be less dependent on the local issue and better top-ups that we can do. We expect by June, July next year, it all will be completed [ funcionally ]. [indiscernible] Metro [indiscernible] is going okay. All the PDMs are running now. We have completed substantial for some of [ Kamal ] portion. So 40%, 41% [ we have 6 ] so far. Then another one [indiscernible] part of completion, entire tunnel has been completed. So the finishing work is on progress. Project [indiscernible] we have in 2 jobs, 1 in Eastern, 1 in West Coast. [indiscernible] part for the new one is picking up quite well. Around 10% what we have done so far. The other project in West Coast that is a [ seawater ] completion. A few other [ development ] jobs like JNPT also almost done and so small just [ coming ] under control. We have been [ at work in ] [indiscernible], progressing better than the budget, better than the target. So the industry jobs, which are going, are all in good shape, and I hope that from this quarter, it will be better than this quarter, which is a normal trend we have seen that third quarter, fourth quarter is better than [ last same ] quarter. Coming to the prospect. It is a similar type of what I have said last time. We have close to INR [ 30,000 ] crores [indiscernible] in various stages. Some of the tenders, some tenders is issued, some we have submitted the bid. So we expect that some good jobs we will be securing in the last few months of this year to fulfill our target of work to be secured. That is all in long and short about the progress and performance that we have. I'll now kick it open for you to discuss, any questions are welcome. Thank you.

[Operator Instructions] The first question is from the line of Sunil Kothari from Unique PMS.

Yes, sir, are you getting my voice? Hello?

Yes, go ahead.

Congratulations for good set of numbers. And I just wanted to acknowledge one thing here to Mr. Basu and your team, Mr. Prasad. During last almost 20, 25 years, after I think 2005, this is the moment where again, we are going to see our new owner. So the way you've handled last 3, 4 change in ownership and the way you navigated this company is a commendable job, sir. So congratulations for that. My question, sir, is with now Adani being the owner, it's going to become a new owner, how do you see the competitor? How competition or other players will be looking at Adani? Because [ just remember ] now they both are in a similar type of business segment in [ ports ] and so many other things. So how this change, can it affect our business getting from the JSW-like players, your thoughts will be really helpful. And 1 more thing on this new ownership, how do you feel, how do you see? I think I've heard Mr. Patwardhan on TV interview, today, Mr. Basu on TV interview, you feel positive about Adani's entry as a owner. So it will be just combining these things, if you will talk something more on.

Well, your first question was that how our other clients will view this merger or acquisition. I don't see much on that because this is an independent listed company, and we'll be working in a similar pattern what are doing. Maybe we will be a little bit of more job for Adani. Otherwise, there should not be any problem because there are many [ investors ] like that, like you ask them to go, they have got like the design [ elements and goals ] and many companies like that. So that does not mean that they don't do work for others. So this is purely professional business scenario. I don't think it can be affected. But let us see what happens. In terms of Adani, I mean we have to do much more work than what we have been doing so far, including whatever work we are doing, apart from other that will remain, that will grow. And maybe we'll be getting some more from Adani. So that is a positive side. We have favorable capability, that part I can say at this moment.

Sir, the second question is, looking at your last 2, 3-year track record, the way we are performing, it seems that because of, say, little bit not order good inflow. As you required by '23 end March, we were having an order book of INR 22,000 crores, now we are below INR 18,000 crores. I am looking at the way you want to grow, maybe 15%, 20% for the next 2, 3 years, how challenging it will be for you to get as early as possible the orders? Or will it hamper a year of maybe lower growth? How do you see next 2, 3 years, looking at order inflow pipeline and your ambition to grow?

Yes. I think that sometimes the stats are misleading because if you consider last year this time, our order value work in hand was a little bit more than now. But what we need to do is to do our -- I mean, progress [ our plan ]. Today, we can merge the over INR 5,000 crores we are completing 2.5 years. In earlier days, over INR 1,000 crores could take 4 years time. So the execution [ debt ] has increased. Obviously, because of the nature of the job and the pressure from the requirement of the client. So whatever job we get now, we do it fast. So we cannot compare with the last year or second last year, what was the order book and what was our revenue. Yes, we need some jobs. And as I have just mentioned that there are plenty of jobs in pipeline. We are not too worried about that. And we still maintain that 20%, 25% growth is possible.

[Operator Instructions] Next question is from the line of Dhananjay Mishra from Sunidhi Securities and Finance.

Congratulations on good set of numbers. Am I audible?

Yes.

Yes.

Yes. So you talked about INR [ 30,000 ] crores prospect. So out of this, how much we bid already submitted and when do you see these bids will be financed?

I think some did already 2 to 4, plus [ 1.5 ], plus [ 1.6 ], plus [ 1.7 ], plus [ 11.5 ], around INR 30,000 crores bids already submitted, and [indiscernible] the stage of evaluation have been submitted. So we are quite hopeful that whatever we have committed, a few of them we'll get I don't want to comment on the project as a number now. But as I said, at the end of the year, total job, I think [indiscernible] included this year that we are confident that.

Okay. So these all bid will finalize in this year itself or it will go in next year also?

Some may spill over this year out of INR 30,000 crores, but most companies will be very we hope by depending on what will be finalized.

And most of the bids are in domestic market or these posters are in oversea market also?

Yes, the ratio of around 25% out of this is from overseas market.

25%. And going forward, what will be our strategy in terms of sector and in terms of bidding strategies going forward? I mean, in terms of metro, marine job and all that?

As we have maintained, we'll do the same thing. We will focus more on what we do best, particularly marine. And if we are able to do marine [ a little better ], that will spill into other segments as well. That is the strategy. And internally, also the [indiscernible] capability to do some more jobs, infrastructure developments like airports or buildings or infrastructure [indiscernible]. So that is the second priority now [ what has been posted ] in India.

Okay. And lastly, on margin funds, sir, this quarter margin is a little bit down. So what will be the margin guidance for next year?

Yes. I mean that for [indiscernible] we could reduce the stock to otherwise 10% plus.

So 10% plus is doable going forward also?

Yes, yes. Possible.

Next question is from the line of Noel Vaz from Union Asset Management.

Can I be heard?

Yes, yes, go ahead.

You are audible now, please go ahead.

Yes. Sorry about that. So in the first half of this current financial year, we've seen working capital increase very dramatically compared to first half of the previous year. Is there some particular reason -- I know receivables have increased a lot, but is there anything else that there is a mix of something which as a response...

Noel, again we are not able to hear you. Can you please speak a little louder?

Hello? Can I be heard?

Yes, go ahead.

Yes, I think you said our working capital compared to last year and this year, isn't it?

Yes, yes, Correct.

Yes. What happened, it is not very uniform distribution. Sometimes, you will find that at a time we have a lot of working capital invested, the rest of the year, almost nothing. Because some of the news of what is secured, and we have secured some new building of plants, some more industries have been done. Prasad, am I correct?

Yes, that is absolutely correct. And the other reason is if you look at our March numbers, typically, we see a lot of government clients releasing payments to us in the month of March. And that is why the working capital in terms of number of days in March may be a little lower. So this is nothing out of the ordinary, this is the normal course that we are seeing the buildup of working that will add even the revenue and the execution also ramps up. There has been some increase in the working capital. As Mr. Basu said, it all been controlled and it is in line with what is our plan.

Okay. Understood. Does this also explain why the margins were a little bit lower, or this is because of a seasonal factor?

Marine as I told you that -- see, follow the marine job in [ Anga Desh ], which was supposed to be done. We could not do much because of the political issue. So revenue has affected and accordingly margin also. [indiscernible] would not normally be permitted. So that is one factor. Similarly, because of the monsoon, generally the progress on margin, that gets affected. So that is what is the situation now.

Next question is from the line of Aditi from CD Equisearch.

Sir, my question is like, I was just curious to note, do you have any plans of getting into D&B, APC or [ project ] that needs to be [ completed ]?

No, no, we don't have any plans for that. Sometimes we do the [indiscernible], as I said that, which involve the structure, concrete structure for the purpose of transmission business. There we are [ doing, we have always been ] doing that. But as a whole [ thing ], as I said, we don't have any plans.

Okay. No plans in the near future or no plans at all?

So far, there is no plan. Future, I can't say.

Okay. And sir, my next question is like how do you think that onboarding of Adani Group is going to impact ITD?

Definitely, it will impact positively. That's what I can say now.

Sir, can you please elaborate on this? Like what positive impact will ITD witnessed?

See, we haven't had any discussion with Adani so far because it is still in the stage of work in progress. But generally, the perception is that they have got plenty of work, and they have got their presence all over the world. So those things will help us to go do more abroad, more overseas job and maybe diversification of our portfolio of 2 segments. So those were the positive things we are [ posting more of ].

Okay. So with the help of Adani Group, you are planning to secure more of international business, right?

Yes. That will help us to grow the oversea more because of their footprint.

Not much in [indiscernible] in domestic market?

[indiscernible] also because they are also growing, so they need some people. [indiscernible], we also will grow with them.

[Operator Instructions] Next question is from the line of Aditya [ Sahu ] from HDFC Securities.

I hope I am audible?

[indiscernible] Can you hear us?

Yes. Yes. I hope you can hear me.

We can barely hear you.

Can you speak a bit louder?

Sure. Sure. I just had a small question. I'm aware -- I understand you've provided the EBITDA guidance -- margin guidance of about 10%. Could you please help us on the revenue guidance part, too? What sort of revenue are you looking at for '26 and -- '25, '26 in the near term?

'25, '26 you can find, as I have mentioned before also, around 20% plus/minus should be.

So over the next 2, 3 years, we can expect 20% of the revenue growth happening?

Yes, it will slightly step down. [ Once ] we become big, so 20% next year, maybe 15% [indiscernible].

Understood, sir. Understood. And also on the INR 30,000 crores order pipeline that you are planning, what is the annual orders you're expecting in the current financial year of this INR 30,000 crores to be received?

Maybe of INR 5,000 to INR 6,000 crores order we should book out of the INR 30,000 crores.

Okay. Okay. So more INR 5,000 crores, INR 6,000 crores of order we can expect in the second half of FY '25?

Yes. Yes.

Next question is from the line of [ Abhishek Shah ] from Ambit Capital.

Just a couple of questions. So firstly, you touched upon briefly the Bangladesh marine order. Can you give some more color on what is pending in terms of revenue from Bangladesh? And going forward, how you're thinking about it and whether the situation has improved? And the second question was on CapEx. Can you just update on the guidance for the current FY '25 and FY '26?

Okay Bangladesh. Two months, within 2 months because of the situation we all know. But we have been in close talks with embassy, Indian embassy and our similar patronage with [indiscernible] and other companies, those are working from India in Bangladesh. So now that things have been resolved, we have discussed with the embassy, have discussed internally with other companies. And all have moved and as well, we have also moved there. So work has started. Mobilization already -- some of the mobilization is just not there. We have already mobilized that. So hopefully, from December, August, we'll be able to start the one. And as a local competition, so far, we are okay. I mean, we don't see much of problem. So let us keep finger crossed. I think things will be okay. going forward. And regarding your other CapEx issue, so far, our CapEx is around INR 67 crores this year. Going forward, next year, we had said that the CapEx will be under control because what we have invested, just we have done the last 2 years, we don't see that for investment coming [ year-over-year ]. Hello?

Next question is from the line of [ Nandi ] Singh from ICICI Securities.

Am I audible now?

Yes.

So my first question will be on mobilization advance. How much do you have currently on book as mobilization advance?

As of September, we have about INR 1,300 crores.

INR 1,300 crores. Okay. After post the order book that you have mentioned for September ended, have we received any more [indiscernible] or orders in this quarter in Q3?

We have received an order in October. It's about INR 1,600 crores that we received.

Okay. And are there any [ L1s ] that are pending to be awarded?

Sorry can you come again?

Are there any [ L1s ] that are tending to be awarded?

No. No.

Okay. And the INR 5,000 crores that you mentioned previously that we expect to book in H2, that is INR 1,600 crores form a part of it or it's just over and above, the INR 1,600 crores?

INR 1,600 is not part of that. That is beyond INR 1,600 crores.

Okay. So over and above this, you expect another, say, INR 5,000 crores.

Yes.

Now some macro questions I wanted to ask in terms like Bangladesh, this order we saw issue with mobilization in the beginning. But now as you have said, the issues have been resolved. So we think that there is appetite now in Bangladesh for more orders. Is that something that we can aspire to get international work from?

So specifically for Bangladesh, we still want to see what how it goes coming months in reality. So through there are plenty of opportunities, we have to be to cautious to bid on that.

And in terms of other markets, are you seeing a slowdown -- an unexpected slowdown or unexpected pickup in speed in any of the international market? Do you think that there are some key geographies that we would be able to secure orders in the next 1 to 2 years?

Yes. I think the Middle East market has shown very good promises. A lot of things are happening. We are in knowing that infrastructure and the towns [indiscernible] building, et cetera, et cetera. So I don't want to comment on everything, but at the Middle East, market is going up.

Right. And my absolute last question would be on the different segments that we operate in, is there any segment that we are focusing on heavily or we would like to focus on in terms of what the market is giving us indications in orders?

Well, as a principle, we'd like to stick to the segments what are working and do both jobs going abroad into the [ footprint ], et cetera, et cetera. But we also can keep at it from the new segments like data center, like [indiscernible] energy, renewable energy. There are many new type of success that will to come. Even for the high speed, there's also going to be [indiscernible]. So those things, we are already talking to our [indiscernible]. Maybe someday have to [indiscernible] for this new segment.

So these segments, as you mentioned, is under renewable and we segment. We currently do not have any orders on these segments, as I recall, right?

No. I don't think that we have much presence on that. Maybe a little bit we are doing, but in a big way, no.

Next question is from the line of [ Rupesh ] Gandhi from [ Fonata ] Investments.

Sir. Am I audible?

Yes, yes.

My caution is relating to the manpower shortage we had witnessed in the industry. So what was the progress during the quarter and moving forward, the next half, what do we expect, any shortage?

Yes. Manpower again depends upon which segment they are working. If you see the way we are working in [ the metro ], on the marine, a somewhat specialized job. We do basically require good machines, high-tech machine and we become good operators, which is possible, which is under control. But there are some job -- kind of job like building where it is as manpower, there is a bit of challenge to everybody in India. So that is the regulator that we are trying to manage that.

So do we expect any shortage moving forward?

Yes. I will say that typically, labor-oriented jobs will always have some challenge because in [indiscernible] sector, but we don't expect any effect from that because we are already working in a continuous process.

[Operator Instructions] Next follow-up question is from Pratik Kothari from Unique PMS.

Sir, one question on the other income and also other expense. Just compared to Q1, both of them are higher even though revenue is not. So anything to highlight there?

No, nothing we need to highlight. In terms of other income, there were some increases that we had purchased for some of our projects, for [indiscernible] or 2 other, which we have been able to sell off during this period so that gain on sale is appearing in other income. In terms of other expenses, there is nothing. I mean that all the expenses are in the ordinary course of business. So there's nothing unusual that we want to -- that we would like to highlight a point of over there.

Right. Fair. And sir, with no [indiscernible] , I mean, not being a parent anymore of selling off this business. Does any market or any segment kind of open up for us? I mean, were there any restrictions earlier put in place at this geography or this segment we can't do?

Not really. A long time back, we were not encouraged to go overseas market because actually was already there, and we thought that actually thought that India has got a good market with to go outside. But that has been for the last 2 years that also been we are going overseas. And for this case, I don't think there will be any effect on us. We are -- whatever we are working in India as we grow here.

Got it. And sir, last question on this. New segments that we are thinking to enter or kind of scale up there, so do we have this technical capability in-house? Or are we developing that? Will we have to partner with someone?

See, for a company like us, engineering company, always developed, research and development is a part of our journey. So we always think about that. We have a team, but in which segment will work, what will be the skills required, that needs to be assessed. And so yes, we have the capability. We have the site as and when it is required.

As there are no further questions, I will now hand the conference over to the management for closing comments.

Thank you very much for taking time out and being with us on this Q2 FY '25 earnings con call. We look forward to interacting with you again next quarter. Thank you very much.

Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.