Dhruv Consultancy Services Limited (DHRUV.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Results Conference Call of Dhruv Consultancy Services Limited, hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this call is being recorded. With this, I now hand the conference over to Mr. Harshil Ghanshyani. Thank you, and over to you, sir.

Good evening, everyone. On behalf of Kirin Advisors, I welcome you all to the Q1 FY '26 conference call of Dhruv Consultancy Services Ltd. From the management team, we have Mr. Pandurang Dandawate, Chairman, Ms. Tanvi Auti, Managing Director. Now I hand over the call to Ms. Tanvi Auti for opening remarks. Over to you, ma'am.

Thank you, Harshil. Good evening, esteemed ladies and gentlemen. I extend a warm welcome to each one of you who have joined today for Dhruv Consultancy's investor call where we will discuss the financial results for first quarter of fiscal year '26. Your continued interest and engagement in our company's performance are truly appreciated. During this session, we will provide an overview of our Q1 FY '26 financials. We will highlight our achievements and strategic developments and the growth outlook. But before we delve into the numbers, let us take a moment to reflect on our progress and the milestones that have set the tone for the year ahead. The company was founded in 2003, headquartered in Navi Mumbai. Dhruv Consultancy has grown into a leading name in the infrastructure consultancy, offering end-to-end services that include design, engineering, procurement, construction and project management. Our expertise spans detailed projects reports, feasibility studies, operation and maintenance work and technical subsidy audits, positioning us as a trusted partner for complex infrastructure initiatives, both in India and international. Quarter 1 FY '26 began on a strong note marked by strategic wins and operational progress. This quarter, we made a notable entry into the international private sector with our first project in the Saudi Arabia, a move aligned with the Vision 2030 of KSA. This is a testament to our technical expertise on a global stage. In India, we strengthened our presence in core infrastructure consulting with major wins in railway and expressway projects, including INR 1.94 crores detailed engineering contract under the Sagarmala initiative by IPRRCL and Jhansi Expressway and Bundelkhand, Ganga Expressway extension project of preparation of DPR by UPEIDA. These achievements reflect our ability to expand both geographically and sectorly while maintaining our focus on operational excellence and timely project delivery. They also reinforced the resilience of our business model and our capacity to capture opportunities in high-growth sectors. Coming to our financial performance. For Q1 FY '26, we reported a consolidated revenue of INR 21.4 crores with a year-on-year growth of 6.89%. EBITDA stood at INR 3.58 crores, marking a strong growth of 30.18% with margins improving to 16.72% from 13.75% as against quarter 1 FY '25. The net profit surged by 81% year-on-year to INR 1.6 crores, translating to a healthy margin of 7.46%. The diluted EPS also grew by 52% to INR 0.84. These results are a clear reflection of our consistent execution, cost efficiencies and strategic project diversification, both in terms of geography and sector. They lay a robust foundation for the remainder of the financial year. Before we move to the interactive segment, I would like to express my sincere gratitude to our stakeholders for their unwavering support, trust and confidence in our vision. A belief in our capabilities continue to inspire us, push us to our boundaries and deliver excellence. With this, I invite you all for a Q&A session. Your thoughts and questions are of great value to us, and thank you once again for your presence and continued encouragement. Thank you.

[Operator Instructions] The first question comes from the line of Thomas Jones, an individual investor.

I just wanted to know, with regards to these projects now, I know that we were in line for some international orders. Can you give me an update on them. Have you received anything apart from the Saudi Arabia one? What is the status of it?

Yes. At present, we are working on the Saudi Arabia project. We are working in Mozambique right now. We have just received our work permit last week. And we have opened a branch office there in the name of Dhruv consultancy. So now once the work permit is there, further orders would come in. We are presently also -- we have submitted EOI and has been shortlisted in Ghana, in Zambia, in Tanzania, in Nigeria. Also a few Middle East private sector assignments in UAE as well. So once the orders are there, we would inform our investors first. We are also deploying a business development team in Vietnam. Recently, we had sent a delegation there. And in Vietnam, there's a lot of giga funding that is happening there for infrastructure projects, lot of expressways coming up. So with the efforts of our business development team, we are hopeful of getting giga funded projects there as well.

Okay. So just to help me understand this. Now what would be the order size of some of these projects now because typically in the presentation, what I'm seeing currently, everything is in the INR 2 crores to INR 6 crores range, but then the Saudi one is around INR 18 crores. So can you expect orders that can go beyond that, maybe INR 25 crores, INR 30 crores, INR 40 crores? Is that possible?

Yes. It can go up to INR 100 crores also. There are a few bids that are submitted to the tune of INR 100 crores also. So even a single order of INR 100 crores can be expected from the international market. Yes. And it is a big range. It is from INR 3 crores, INR 4 crores, INR 5 crores to INR 100 crores, INR 150 crores also we have bidded.

And you are also bidding for those INR 100 crore projects?

Yes, we are. Yes, we are, and we qualify.

Okay. And you qualify. Okay. Great. I just have a few more questions, if I can.

Yes, please, go ahead.

Okay. So the thing is we've been hearing about these international orders for a while, Mozambique and all, but nothing has come around that. I think we've been -- I've been hearing about it through the last 3, 4 quarters, still that's very stuck stage. Is there a reason why it's delayed?

The reason is an instability in these countries because our main market is Africa, okay? So Africa, if you see like we have heard all over the world. So there are no roads as such. So when we talk about an 8-lane or 10-lane expressway in India, a 2-lane or a single lane road is also an expressway in Africa. So the condition is that. The population is very less, the need is very less. But there's a lot of funding that is happening there, but due to -- so sometimes what happens that, once the government decides to do a project and when the person is actually appointed, the turnaround time is quite slow. It goes up to 2 years also. So the projects that we are getting or being shortlisted right now, we have submitted those tenders in somewhere in start of 2023. So it's a slow process, but yes, the margins are pretty good. That is why -- and once the orders start flowing in, like we are getting the -- we just got a work permit last week in Mozambique. So now taking up local opportunities also would be a good thing because of then the transactions and the taxation also eases out.

Evens out. Okay. And so just a question, I mean, I was recently listening to an interview with Vivek Oberoi when he was talking about a company called [Pentagon]. I believe they're also in the same consultancy services like you and he was talking about how they incorporate AI and they're working on the largest sea bridge construction that's happened right now. So do you use AI? And what are your views on this peer of yours, this [Pentagon] consultancy?

So at present, I don't know what the other company does, but I can speak about what we do in AI as an infrastructure consultant. So first thing is our surveys. So the geotechnical investigation reports, then there is traffic surveys that is happening. We have a network survey vehicle which actually scans -- which actually scans the road and identifies depth. So all these surveys and investigations are AI-driven. And we -- it generate reports through artificial intelligence. Secondly, design proof checking. So whenever as an authority engineer and as an independent engineer, drawings are sent to us by the contractor to verify and to check. So it was taking somewhere about 15 to 20 days for 1 drawing to be evaluated, whereas AI does it in 5 minutes. So we have that facility now, so we can take up more projects in less number of staff. Second -- thirdly, there for DPR preparation, we have estimation costing rate analysis to be done and that is also AI driven.

Okay. Okay. Just a few more. So you were saying the Vietnam is looking really big, right? You're looking at some giga projects. What exactly are you looking at? Can you elaborate on some of the projects.

Yes. So in Vietnam, what is happening is there is a lot of Chinese influence that is there in Vietnam. So it is a bit difficult to penetrate unless you actually have a presence there. So in Vietnam, there are 2 sectors that we are targeting. One in the highway sector that is construction of expressways. So between 2 towns, even if you say Hanoi or Hanoi to Halong Bay, if you go, the connectivity is good right now. But there are no networks. There are no wayside amenities that are being developed. So those roads are being developed to expressway standards. So the geography is very large for Vietnam and -- yes, yes, yes. So the road -- people prefer traveling by air, people prefer traveling by railway there, but the road connectivity is not so good. So with better alignment, with better amenities alongside the roads, I think that, that development is taking place.

Okay. And these again, these orders are -- maybe you're saying about INR 20 crores, INR 30 crores in that range, right?

Yes, yes. It ranges from INR 5 crores. So depending on what type of service they are expecting from us. We can offer services range from INR 5 crores to INR 100 crores.

Even there also? Even in the Vietnam?

Yes. Yes.

Okay. Right. And then one last question. Now apart from roads, you were also looking at airports -- I believe there was -- yes, other sectors. So maybe can you elaborate because when I looked at the presentation that you showed, I'm only seeing more of highways and the roads. So can you maybe give us what exactly happened with the other sectors?

Yes. So highways, yes, we are predominant and highways will remain dominant even going ahead because the connectivity that the highway sector offers, no other sector will offer. Okay. So going ahead also highway is going to remain our prime area of focus. But yes, we are increasing the other sector order book as well. With respect to railways, we are presently working on 3 projects. One for the Western Railway in Rajasthan, one for Southern Railway in Tamil Nadu and one in Jhansi, the Eastern Railway. So there are 3 projects that are going on. One, we are working as a general consultant, one as a PMC and one we are preparing a DPR. Next is the metro sector. We are already working for 4 lines for multimodal logistics development for -- in the MMRDA, Mumbai Metro. Coming to the airport sector, we have recently -- we have recently appointed a head for our airports and urban infra sector, who is an ex government officer from the airport sector. And with his connects, we are developing our team of airports, ropeways and urban infra under him. So if you must have heard in the news that Kedarnath ropeway; then there is a Vaishno Devi ropeway; in Maharashtra, there are many ropeway projects coming up. So recently, we have submitted our bids for 7 to 8 ropeway projects in state as well as central government. Airports, we have submitted 3 to 4 bids as a DPR and as a PMC consultant. The good thing about these 2 -- why these 2 sectors, the good thing is there's no competition as such. Only hardly 1 or 2 bidders are coming for these airports. There are very -- there are not -- no consultants and foreign consultants cannot easily penetrate here. They need to have a local consultant with them. So with the help of their technology, we are tying up with a few companies in Austria for the ropeway sector. And for airport sector, we are in talks with a few U.S. companies wherein, we form a synergy and we are bidding for these airport projects. So at present, 3 bids for airports and around 7 to 8 bids for ropeways has also been submitted, and we can expect the result in the quarter 2.

Okay. And is there any -- when it comes to Indian, is there any seasonality when it comes to orders? Do you expect more in the first half of the year or Q2, Q3 is where it typically picks up?

Q3, the orders pick up at the end of Q2, September, October and revenue flow comes in -- maximum revenue comes in Q3, Q4, that has been our trend for the past 22 years.

Okay. Okay. So the revenue, how does it work? As the construction gets completed, do you get your percentage on completion basis?

No. So it depends on the service. If it's a DPR project, then the project is -- the payment is -- the revenue recognition is milestone-based. And if it's a PMC project, it is monthly. But what happens is, if there are monsoons, then it is difficult to carry out surveys and investigation. So hence, there is a delay when it comes to monsoon in terms of revenue recognition. Otherwise, Q3, Q4, 60%, 70% of our revenue picks up in Q3, Q4.

Okay. And just one last question, and that is -- so the Metro and the airport, can you give me an average on what typically the order cycles are for those, if I can...

As an average, the order size is INR 5 crores to INR 7 crores, each.

The next question comes from the line of Abhinav Singh, an individual investor.

So my question is with contracts spanning multiple geographies, how are you building project management and resource allocation capabilities to avoid bottlenecks?

Okay. So at present, I'll tell you the current situation and then I'll come to the answer. So we are working close to 60 projects -- 60 construction projects right now. And all those are spread throughout the country, right from North to South and East to West. Okay. Now at each of these offices, each of these site offices, I would say we deploy a manpower of close to average 50, somewhere 20, 22, depending on the size of the project and complexity of the project. So we already have a strong presence in 27 to 28 states of India, including a few Union Territories. So India is already such a big geography to work with where I think we have excelled and we have recruitment or talent acquisition team who is identifying talent internationally and domestically on a daily basis. And they are the best in the industry. Apart from this, for now international sector, if it's a private sector, we have at our corporate office, we have 60 to 70 engineers who only monitor the projects that are going on in India, but each of them have projects going on worth INR 20,000 crores under them, in India itself. But they have a certain bandwidth to take up another 50, 100 projects is given to them because they are not actually deployed at site. So when it comes to design and engineering projects, I already have a big manpower present at my head office, who will deliver the project. If it's a PMC assignment, then we tie up with local companies outside -- the local companies in that particular geography, who takes care of the manpower and the resources.

The next question comes from the line of Dhruv Shah, an Individual Investor.

So like we have a significant exposure to the international project. So how do you plan to mitigate the foreign exchange, geopolitical and regulatory risk?

So we have already announced last year that we have formed a subsidiary, a wholly owned subsidiary of Dhruv in U.K. and all the international projects are being taken up from there. However, since the subsidy was just opened last year in 2024, February, the bids that are submitted before that are -- the transaction is happening through the Indian account itself. Wherever we get a project, we have to establish a branch office there and open a bank account as well. We are also operating through GIFT city model, which has been announced by our Prime -- Honorable Prime Minister. So that actually takes care of all the foreign exchange and the transaction that is happening. In Mozambique, for example, the expenses are done then and there itself. And whatever remains as a profit, then is transferred back to the -- it's transferred back to India, but since, all these transactions are in U.S. dollars and U.S. -- yes, so increase in U.S. dollar is actually a benefit for us.

Okay. How are you on -- like how are we safeguarding against delays in project execution. Especially in international jurisdiction?

In Africa, there is political instability and all those things, but only way of mitigating that is funded projects because we are going through Exim Bank or ADB or African Development Bank, World Bank. So they take care of our payments and not the local authority. So that is how our payments are not stuck .

We have recently procured our first sector projects in Saudi Arabia.

Yes. Yes.

What is the broader strategy for the Middle East market? Do we see any repeat business over there?