Dilip Buildcon Limited (DBL.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Dilip Buildcon Limited Q2 and FY '26 Earnings Call. [Operator Instructions] I now hand the conference over to Mr. Gautam Jain from Dilip Buildcon Limited. Thank you, and over to you, sir. Thank you very much.

Good morning, everyone. Welcome to Dilip Buildcon's Q2 FY '26 Earnings Conference Call. From the management, we have us today, Mr. Devendra Jain, Managing Director and CEO; Mr. Rohan Suryavanshi, Head of Strategy and Planning; and Mr. Sanjay Kumar Bansal, Chief Financial Officer. Before we proceed with the call, I would like to mention the standard disclaimer the presentation that we have uploaded to the stock exchange, including the interaction in this call, contain or may contain certain forward-looking statements concerning our business prospects and profitability. which are subject to some uncertainties and the actual results could differ from those. Now I request Mr. Rohan to take us through the key remarks. After which, we can open the floor for a question-and-answer session. Thank you, and over to you, Rohan.

Thank you, Gautam. Good morning, everyone. On behalf of the entire DBL family, I welcome you all to this conference call. The results and presentations have been uploaded to the stock exchanges, and I trust you had a chance to review them. To provide a brief overview of the industry, we've observed some positive developments in terms of order activity. It is still lacking the momentum that we expect, but then usually, first half is always lighter and the second half is when the momentum really picks up. In the road sector, NHAI has awarded 300 kilometers of orders up to date this year, which is just 5% of the overall target of around 6,000 kilometers that they want to do. In the past few months, we are witnessing good progress in the balance 124 projects of over 6,000 kilometers, which is valued around INR 3.5 lakh crores. So based on these, we are hopeful to achieve significant traction in quarter 4 of this fiscal year. What is also very heartening is that the government has increased the qualification criteria which has led to reduced competitive intensity. This increased competitive intensity was what had caused significant damage to the industry. And I think the government has finally woken up to that because progress and quality has both suffered. In the water distribution sector, particularly with the government's flagship Jal Jeevan Mission, the government has extended the execution time lines to 2028 in the last budget. Similarly, in the metro rail sector, there are plenty of new projects in the planning and approval stage. The aim is to improve last-mile connectivity to support urban growth and offer cleaner, faster and more inclusive public transport across emerging and established cities. Some of these upcoming projects are Pune, Metro Rail Phase II, Delhi Metro Extension, Metro, Bangalore Metro, water, and these are different, different projects across different cities. From our perspective, we have the highest level of [indiscernible] in all these growth segments, a strong balance sheet, our own equipment fleet and a proven track execution record. So we will continue to work in all these areas and the areas that we have expanded into already. Now focusing on DBL performance in the last quarter. I'm happy to report that out of our total guidance of order inflows of INR 15,000 crores, we have successfully managed to secure orders of around INR 5,500 crores in the year-to-date. This has been despite a challenging environment where NHAI ordering has been weak till date. However, we are very optimistic to achieve the total order inflow of INR 15,000 crores on a full year basis, which will set a good pace for next year revenue growth. As a business development strategy, we continue to remain committed to our long-term strategy of profitable growth, which obviously has resulted in lower order book in the past 2 years, where multiple headwinds were prevalent such as lower ordering activity and intense competition. However, we are optimistic about the market scenario in the long term, and we had utilized this slow period as an opportunity for strategic refinement where we reduce fixed costs, optimizing resources and cutting CapEx. From a peak of 38,000 employees when COVID hit, to now about 18,000 employees, DBL has made significant cuts in its own employee fixed cost. However, revenues have continued to be in the same range. Similarly, we have also reduced and almost brought to 0, our CapEx, which was earlier INR 500 crores range every year to now INR 50 crores to INR 100 crores, and that to only going in smaller and replacement CapEx. In our HAM project portfolio, I'm also delighted to inform you of our own InvIT in partnership with Alpha Alternative Fund named Anantam Highways got listed on the NSE in October 2025. From DBL perspective, it's a landmark achievement and a long-term dream as this platform will provide a monetization source literally on a tap basis for all the projects that we do and will also provide our investors with comfortable way forward on how our assets will move from DBL to another buyer. As of now, 7 assets of the total of 18 assets have been transferred to the InvIT. The balance assets will be transferred in the next 2 years based on execution time lines. And all the balance projects, the execution is progressing as per the contractual schedule. Now on our call, MD operations, I'm happy to report that we are progressing ahead of schedule. In our Siarmal MDO, we've achieved a sales volume of around 10 million metric tons in first half of FY '26. And we are on target to meet our full year target of 25 million metric tons for the full year of FY '26. Similarly, our Pachhwara [indiscernible] has achieved 3.6 million metric tons in H1 FY '26, positioning us well to reach our full year target of 7 million metric tons for FY '26. So in total, we'll achieve a production of 32 million metric tons of coal in FY '26, putting us in the lead of one of the top producers of coal in the country. This trend will keep on increasing in the next few years as with the profit. We're expecting to do 57 million metric tons of coal by 2 which will be -- in both these 2 mines, which will total to almost 8% to 9% of the total coal output of the country. Along with this, we are also looking at other projects. And whatever we are able to secure, we will keep our partners and investors updated. Now towards our vision for DBL 2.0, we are still committed to becoming debt-free at a stand-alone level. Now although it has been delayed -- now let me talk about why that has happened. It has primarily happened due to the steep reduction in order inflows in the past 2 years, which in turn has led to reduced revenues and reduced free cash flows for the company. Now as you are all aware that DBL prided itself on its in-house fleet and people. Our current capacity gives us the capability to execute INR 10 crores plus of revenue easily, which is our optimum scale of operations. And that is what we have done in the past as well. However, in the past 2 years, with the multiple headwinds that I spoke about, we have been suffering from a lower order book. Because of which, we have not been able to achieve our revenue optimum number. Now these external factors have obviously impacted our cash flows, which has led us to not being fully able to deliver on our debt reduction commitments. We had originally promised that this year, we will reduce INR 500 crores of debt. However, in the current scenario, it has increased a little bit. But by the end of this year, we will come to the same number as last year, which is around INR 1,500 crores of debt. This is happening because even our revenue guidance, which we have given for earlier of INR 8,500 crores for this year is getting reduced further as the pace of project that we expected has not come in, in terms of new orders. So we are expecting now our full year revenue guidance to be only around INR 8,000 crores. So obviously, that will reduce -- that will result in reduced EBITDA and reduce cash flows, which enables -- which leads us unable to fulfill our debt reduction commitments. However, the new orders of this year, which will be around INR 15,000 crores like I mentioned, will end up leaving our next year revenue for around INR 10,000 crores. Now at that number, when we get that, we are sure that we will reduce our debt by another INR 500 crores, which will be around INR 1,000 crores in FY '27 once you complete that. So in total, the good news is that the worst is over. We have a good order book pipeline. There will be a significant jump in next year's revenue as this year revenue is coming down, we will be able to generate good free cash, which will help us in reducing the debt. Our commitment remains on [indiscernible] even if slightly delayed because there's a policy, the management has decided that we will remove all stand-alone debt, and that is the way forward for us. On our 2 long-term revenue-generating business, the core MDO and HAM portfolio, we are progressing very robustly. We will see good cash flows coming from both the HAM InvIT and coal. These are predictable cash flows, a more balanced risk profile and, in turn, help us improve our return ratios. Now also in the EPC business, with the uptick in order inflow, this growth engine will also start firing and supporting the overall growth journey of DBL. Now as I mentioned before, evaluating DBL from a consolidated perspective, essential to fully appreciate our various business verticals, advances, strengths, performances and potential. The last bit that I would like to inform all our participants and investor is that we've also continued our diversification journey and entered into another new area, which is solar energy. So renewables is also going to be one key area for the company going forward. We won a 100-megawatt project already, and we are hopeful to secure another 1 gigawatt of solar in the coming -- in the coming 2 year or so. Now with that, I would like to hand over the call to our CFO, who will provide a detailed overview of the financials.

Thank you, Rohan. Good morning, everyone. I welcome all our stakeholders to our earnings call. Let me present the results for the quarter and half year ended September 30, 2025. During FY '26 YTD, the company completed 3 same projects, aggregating to INR 2,500 crores and company secured 6 projects aggregating to INR 5,665 crores. Now let me move to business to financial performance. First, on stand-alone performance. The revenue in second quarter remained at INR 1,417 crores. And on first year first half, it is INR 3,427 crores. As far as EBITDA is concerned, in quarter 2, the EBITDA margin increased by 60 basis points to 10.80%. And in absolute terms, INR 133 crores. On a half yearly basis, EBITDA margin is 10.40%. EBITDA in absolute terms on first half is INR 356 crores. At the PAT level, first 3 months, the [indiscernible] profit after tax remained at INR 41 crores. And first half basis is INR 164 crores. Now from standalone to consol, the revenue remained at INR 1,926 crores. And first half basis, it is INR 4,546 crores. EBITDA margin for first quarter -- second quarter, it is 24.5%, which is INR 471 crores, absolutely. And on first half, the EBITDA margin is around 22% for the consol and [indiscernible] INR 991 crores. Profit after tax for is INR 214 crores. And for first half, it is INR 485 crores. Debt. Net debt has increased by INR 500-odd crores. This is mainly due to the faster payment to the creditors. So the company creditors reduced by INR 450 crores. This is the only reason the increase in debt from March to September. With this, I now open the floor for questions and answers.

[Operator Instructions] Our first question comes from the line of Shravan Shah from Dolat Capital.

So a couple of questions. So you have already highlighted that now we are looking at INR 8,000 crores revenue this year and next year, INR 10,000-odd crores revenue. Just to understand the current INR 18,600-odd crores kind of order book is that how much value of projects where the AD is spending or the work has not started? And when can we expect whatever the balance of AD is there?

Shravan, the AD spending for all the new projects that we've just won, which we are expecting AD to come by Q4? Thanks.

Okay, by Q4. Got it. And on the order inflow, so another INR 10,000-odd crores kind of INR 9,000 or INR 10,000 crores. So that -- primarily, we are looking at from the HAM perspective in the road space. And there also, if you can, because that's the one pain point for the entire industry. just wanted of the vendor's view, do we think that the NHAI can award and how much of -- in terms of perimeter or value of that also if possible? Where do you see in terms of the HAM would be and maybe toll projects?

Shravan-ji, even if you look at our current order book orders that we've won this year, they are all from very diversified sectors, from an industrial corridor to road to irrigation to metro to solar. So we're doing across this thing. The same trend will continue even going forward. We will have all the different sectors, giving us different orders. The new one that I mentioned is solar. We're expecting good orders to come from there as well. If you want to know what is the NHAI and what pipeline, is that what you are keen on knowing right now?

No, it is pipeline is there, but in terms of how do we see the kind of confidence that how much of you think that awarding is likely from the NHAI perspective and the 2, how much would be the kilometer and the value and in terms of HAM and [indiscernible]?

About when if I talk about the total bids, about 16,000 right now only which is both HAM and BOT projects, everything as much is already there. Now we are very confident of doing good hit, but our agenda is to get profitable projects. We will not be going and winning something at a stupid rate. The good part is the government -- because of the government's new qualification criteria, competitive intensity and reduced [indiscernible] and we will -- we're expecting to win good orders here also. So if all goes well, we might exceed that INR 15,000 crores of order inflow guidance that we have for ourselves. But even if not, we are very confident that there is enough of projects available across all these sectors that we're working in for us to achieve that INR 15,000 crores. There are some more projects that we expect to materialize over the next few days. So I think that will also give us a good idea of the pipeline that is being built by DBL.

So till now, how many value of projects we have already bidded and where bid is yet to open?

About INR 15,000 crores, we have bid for right now [indiscernible].

Got it. On the EBITDA margin front, [indiscernible] odd percent that will be there for even the second half and for next year also?

Yes. Yes. Next year. This year, that will be around 10.5 to 11 max because of the reduced sort of revenue, sir. As I mentioned earlier also, our fixed costs and all that we are unable to do the revenue that we expect, it obviously eats into our margins. And even if we have reduced our cost drastically over the last 3, 4 years when I mentioned reduction. So almost 20,000 have been reduced out of 38,000. So more than half have been reduced. Equipment, we have not -- you've seen the CapEx has reduced significantly so the gross block has continued to remain in that range while the net block has been coming down. So our focus very much is only on making sure that our return ratios improve that we do not increase in debt and that we keep reducing it and that we are able to execute the most that we can efficiently through our people.

Got it sir, in the solar, when we say that we want to have a 1 gigawatt of award in the next 2 years, just wanted to understand, so this will also will be a BS also better it will also be there. So there, obviously, we need to put in the equity. So in that sense, how much are we in terms of looking at in terms of the equity investment that whatever the projects 1 gigawatt that we are planning to win. So over the next 4, 5 years, that will translate to how much kind of equity that will need to invest? And there, do we see that the in terms of the IRR level, can we see a 13%, 14% kind of equity IRR? Or that also depends on the kind of market is so dynamic on the battery pricing front. So once you get the project and once you go for actual debt, so is there a scope of further in terms of the pricing going down on the battery front?

So very interesting that you wash away detailed question around it. So our agenda for the solar and let me give you idea why DBL is looking at that sector. We mentioned that our stated goal is to build more consistent long-term cash flows. And while we do that, DBL is known for its execution capability. Solar projects are much less complex and sooner execution time lines as well than any of the other large infrastructure projects that we take on. The good part is now that once we build these projects, we have a way to monetize it through an InvIT platform. There is 1 InvIT platform, which is already there. If this on its own becomes a large enough thing, who knows, we might come up with another InvIT platform, very specifically targeting energy sector. Now you asked about equity. Equity we already have partners who are committed to investing in this along with us as their interest also lies in creating platforms. Just like the road platform that we've created, we would want to create more platforms where because these are all 25-, 30-year projects where long-term investors can come in and participate in the growth journey of the country. The energy needs are only going up. And with the advent of AI, data centers, electric vehicles, the energy needs are -- will continue to go up, which is why we want to be participating in this whole process and which is why we are looking at renewable space. That's the broad idea for why DBL is doing this. Equity, like I mentioned, commitments are already there. In terms of IRR, we target broadly mid-teen IRR returns from here. And now the obviously, once we flip an asset into an InvIT. See, there are 2, 3 areas where we look at that we, number one, the EPC margins that we make, that is also IRR for us. Then the equity that we have committed, what is the IRR that we get on it straight up, what we make. Then secondary, when we flip it into an InvIT or when we said it, what is the IRR that we make. So that is where we'll do. Our focus, like I mentioned, is on cash flows, and we will continue to remain focused on our return on capital employed on every project. Even if you look at our strategy in the coal MDO and the InVIT strategy, we have demonstrated that the InvIT assets, the amount of money that we had invested in the road asset. Even if you look at it currently in the Anantam InvIT, we have about INR 1,200 crores, INR 1,300 crores of InvIT units there valued at INR 1,400 crores or so. If you look at the total sort of value enhancement that has happened from the equity invested in those projects, I think the total equity invested was about INR 950 crores.

And we realized INR 1,050 crores in case.

Earlier, we've already done that, and then there is this additional. So there is a significant so I think INR 950 crores cash of investment has translated into. INR 1,400 crore or INR 700 crores.

INR 700 crores in all one assets remained.

Yes. So above INR 2,500 crores of sort of value addition, for DBL. So that is the idea that we want to create value creative. What they will also do is if you look at my consolidated balance sheet, our idea is more than 3/4 of our profitability should continue to come from long-term sources. So while EPC will continue to fire, but year after year, our profitability, even if not in terms of revenue but in terms of profitability and the amount of free cash that DBL is generating, 75% plus will come from long-term assets. And that is the goal for us as a company that whether there is because we are in a cyclical industry, whether the cycle is up or down or whatever is happening, we want to continue remaining as, however, risk we can reduce, that is the goal.

Just one clarification on the net debt as per the presentation, is INR 2,102 crores. But if I look at the gross rate minus the cash, that number is significantly lower around INR 325-odd crores difference is there. So can you help us in terms of where the [ cash ] is. So as the reported the cash shows around INR 67 crores, INR 68-odd crores. Where is the balance to INR 30 to INR 40-odd crores cash is there a stand-alone [indiscernible]?

So Shravan-ji, the net debt is INR 2,102 crores which is given in the presentation -- well, just a second. So basically, my cash credit is INR 262 crores. Some loan, INR 131 crores, and I have cash equivalent INR 392 crores.

Sir, that's only wanted to know -- so the cash in reported balance sheet so INR 67 crores cash and bank balances is the INR 67 crores, INR 68-odd crores where the raised cash lies. So that's the only I wanted to understand.

So basically, the MD, which is more than 12 months, this goes into investment, the other investments.

So that is a noncurrent investment you think?

Yes, yes. noncurrent investment.

Our next question comes from the line of Deepak Purswani from Swan Investments.

Sir, just wanted to take it out on the recent listing of Anantam highway trust what is the unit currently we have at the current juncture? And what is the value of that unit based on the current valuation?

So let me tell you, the DBL directly holds around INR 9.5 crore units. And we have another units 30 units. We have placed with Alfa alternative fund. So in total, companies, INR 1,332 crores worth units. Basically, these are at the INR 100 issue price, but the total valuation against this is around INR 1,400 crores.

Okay. And once if you can also give the sense once -- I mean, once all these 11 projects will be transferred to this and the net what would you...

Basically, balance because out of 8 assets, we transferred 7 and we got around INR 1,400 crore units. Now with balance, we will be close to INR 3,400 crores, INR 3,500 crores overall units.

Okay. Okay. And secondly, sir, just wanted to get the sense about the debt part. I do understand in terms of the slowdown in the order inflow and everything. But if you can also give a sense in terms of the -- I mean, last year, there was some stock payment from the [indiscernible]. Where we are at the current venture on that projects, whether these are getting completed and payment has been released and what are the current outstanding? And would that be enough to compensate and probably look into the debt reduction if this materialize and probably at the year-end, again, we would be at INR 1,000-odd crores? Or how should we look into -- if you can share your perspective on that part?

So in terms of the debt increase from March to September, the debt increased by INR 526 crores. If you can see my current asset -- current liability items. So my inventory demand almost same by INR 30 crores, it is lesser, but I would say the same. Then receivable and basically receivable basically -- invested around INR 512 crores. So receivable plus other current asset item, including GST and others. And you can see I have basically reduced the creditors faster because the creditors though our revenue remained at a low level, but my creators were basically paid through LCs. So basically, those LCs cement made on due dates. So basically, the INR 591 crores [indiscernible] creates reduced during. So we expect these 2 -- basically these -- because of these 2 items, the debt got increased by INR 526 crores.

Okay. Okay. And what about the receivable from the [indiscernible] if you can [indiscernible].

Only 1 month, the receivables are coming on time.

Okay. And progress on the existing project has been as per the schedule or...

It is as per schedule.

[Operator Instructions] Our next question comes from the line of Amit from Enam Holdings.

Yes. Just wanted to check from a debt perspective and also from our growth guidance that you just gave, Rohan. So we -- should we assume that this will be a peak debt and from here on, the growth requirements of 85 -- 8,000 to 8,500 to 10,000 next year. And from there on and for all the new HAM projects, this will be a peak debt and there will be a significant reduction, and we are on a self-funding mechanism and they won't -- from a capital requirement perspective, how do you see that?

Yes, Amit, you're right. This is the [indiscernible] debt level. If you see in the last year, we've only kept on reducing. And if the external environment had been supportive if we had not seen a reduction in our top line in the last 2 years, we would have obviously made strides and been able to make even a larger sort of reduction in our debt. Now if I look at -- the other things that you mentioned, yes, there is we are at almost a self-funding level for different assets. We also have large assets in terms of the InvIT units that we hold. So there is -- even if I look at the -- if I look at that, that is something now almost as cash which the company can always use even if we ever need to raise capital for the new projects. So we have a lot of additional currency that the company has. And that's basically the way going forward. We, on a stand-alone level, our revenues while will increase next year. We continue to want to have them at a level where we don't have to take more debt at a standalone level, but we can grow it profitably. That is the goal for us. And on the consolidated basis, the cash flows will keep on growing year after year. Just because the cash flows from coal MD operations will keep on increasing, not just the scale and size of those operations are increasing every year, but also the rates keep on increasing every year because of inflation. So that will keep on increasing, then we will have the cash flows from InvIT that will keep on increasing. And as this new solar sector comes online, that will also start firing long-term cash to -- from this. Even in terms of what you asked me earlier, is this the peak number -- this is a peak number, and this is already, I mean, INR 200 crores less from the last peak number of June '24 -- September -- sorry, September 24. So this is already INR 200 crores less than that time. So this number should not go up here. We will only keep on reducing. And now with a very good sort of visibility in our order book and next year's revenue. While this year's revenue is, again, not how we anticipated the year will start. We anticipated more projects will come earlier. But that is what the external environment is, and we can't control that. But next year now gives us a good runway for growth.

Our next question comes from the line of Deepak Purswani from Svan Investment. A follow-up question.

Sir, just wanted to check it out since. You mentioned about the debt reduction and this creditors letter of acceptance has been reduced. How should we see the finance cost? Broadly, it will remain the same because again, the interest-bearing characters would also get reduced.

So my interest cost shown in P&L, it includes everything. Commission of LCs, BGs, LC discounting costs, interest on working capital and interest of term loan. So the interest, if you can see my quarter-on-quarter and first half versus first half, it is reduced because of even after increased utilization -- so there is a reduction in borrowing costs as well. So all the costs related to LCBG, it is already plugged in. For next year, we can target -- for this full year, we can target around INR 450 crore interest and finance costs. And next year, we can target around INR 350 crores.

Okay. Got it. And secondly, sir, if you can also give a broader sense in terms of the pipeline One, on the NHAI front and also some sense on the delay, there has been some delay in awarding. I mean how should we look into it? And secondly, extra road project, which are the key projects which we are looking at and what is the big pipeline?

[Foreign Language]

Okay. And finally, on the long-term asset portfolio which we are targeting, sir, can you also give a sense in terms of 3, 4 years down the line on a broader basis, how should we look into it on the MDO part? Would it be still we would be looking at some more projects to add in the portfolio? And then we had a separate annuity project here. And thirdly, we are looking on to be solar. So putting it all perspective, if you can also give a broader sense, what is the kind of the entity rental income, which we are looking at from the next 3- to 4-year perspective, but we have the target?

You mean annuity from road, sir, or -- From other sectors just annuity from road.

Yes, putting all together from the entire portfolio. What is the expiration we want to achieve.

[indiscernible] of cash every year. So that should be in that range. So the INR 300 crores to INR 400 crores of cash should come from the road sector alone. Solar because it's still early days, right now, we just have a megawatt. As that scales up, the solar market rates are well sort of socialized and the industry is well aware. So whatever that happens, that will be again in the mid-teen kind of returns that we'll be looking at. To give that number, I will work on detailed numbers with my team, and I'll give that separately. But because it's very small right now -- but coal now, if I talk about the third-party coal, coal cash flows both Pachhwara and [indiscernible] put together, we expect at least about -- not next year, sell down. So both those Pachhwara and [indiscernible] put together at full capacity, about INR 1,000 crores of cash coming from there. So that about INR 1,000 crores of cash from both of those 400 around from our annuity -- road annuity business, the current 18 assets and then whatever gets added via the solar as that portfolio also builds up. And yes. Irrigation HAM is also one part that we won in Rajasthan. So that will also come as a long-term cash flow. That is also for 10 years. So that cash flow will also come in. Besides that, the EPC business, like I mentioned, we'll be firing on its own and doing EPC margins. So that idea, which I explained earlier also that are right that 75% or so of our profit, at least will be coming from long-term fixed assets. Even if you look at it today, of our total debt, we already against our total debt when people just look at the company. We have our net block, which is there. Then we have the InvIT assets, about INR 1,300 crores, INR 1,400- crores, that is there, then there is more [indiscernible] and the coal sort of SPVs also. There is another INR 350 crores plus at the coal SPVs as well. So net-net, there is more sort of asset -- far more assets available even which are readily which can be immediately monetized by the company if we were to be a net 0 company today. We could immediately monetize a whole bunch of assets. But our idea is to build these portfolios because the cash flows coming in the years to come is looking strong, and we are optimistic.

Okay. And sir, finally, on the solar front, I think the recent which 100-megawatt we [indiscernible], what is our equity stake in this project?

Basically, the total equity requirement is INR 70 crores. Out of INR 70 crore because it is a captive by Jal Jeevan Mission. So they will be putting INR 31.2 crores equity. So DBL's equity in this project is only INR 39 crores.