G R Infraprojects Limited (GRINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to G R Infraprojects Limited Q4 and FY '24 Earnings Conference Call, hosted by HDFC Securities. [Operator Instructions] Please note that this conference is being recorded. From the management team, we are pleased to have with us Mr. Ajendra Kumar Agarwal, Managing Director; and Mr. Anand Rathi, Group CFO. I now hand the conference over to Mr. Parikshit from HDFC Securities. Thank you, and over to you, sir.

Steve, can you also speak about the disclaimers?

Okay, sir. Sir, actually, you can go with the disclaimer, if possible.

Okay. So this call may contain some forward-looking statements [indiscernible] risks associated with that. So without any further delay, I would now like to hand over the call to Mr. Ajendra Kumar Agarwal, who's the Managing Director of the company, who will give you a brief overview about the industry trends and followed by detailed financial presentation by Mr. Anand Rathi, the Group CFO. So over to you, Ajendra.

Thank you, Parikshitji. Good afternoon, ladies and gentlemen. I welcome you all to the fourth quarter earnings call of G R Infraprojects Limited for financial year '24. We are accompanied by Mr. Anand Rathi, the CFO of the company. I will now take you through the key highlights of the quarter and recent developments in the infrastructure sector, followed by a question-and-answer session. On financial highlights of the company, during Q4 financial year '24, the company has recorded revenue from operation of INR 2,255 crores as against INR 1,995 crores during the same period of the previous financial year. The EBITDA margin for the current quarter stood at 17.69% as against 14.53% during quarter ended March 31, 2023. During the quarter, company has transferred 7 operational HAM assets to Bharat Highways InvIT in exchange of units in the InvIT, which resulted into 43.56% stake in the InvIT. The result gain on the transaction has been shown as exceptional item in financial statements. During the quarter, the company has received COD for 2 highway EPC projects. And subsequent to year-end, the company has received another pre-COD for a HAM project further. We have also received the COD for our bid in power transmission project in the month of April 2024, within scheduled time period, and we have bagged our second transmission project, which is adjoining to our existing project. One of our HAM projects, Belagavi Bypass in the state of Karnataka, having EPC value worth INR 797 crores has been terminated due to nonfulfillment of condition precedent by authority. Further, NHAI has not been able to provide requisite interest-free ROW for construction work in one of our HAM projects in the state of Punjab. And hence, we have communicated our intention to terminate the project. The response of authority is still awaited. As on the date, the company had a decent mix of 28 BOT projects, of which 5 are operational, 14 under construction and 9 projects are awaiting appointed date. Coming to the order book, as on 31st March '24, value of order book stood at INR 16,781 crores, out of which INR 9,735 crores are executable order book. Further to update, in the month of May 2024, the company has also emerged as the lowest bidder for the 2 EPC road projects in the state of Maharashtra worth INR 4,346 crore, to be awarded by Maharashtra State Road Development Cooperation. As on date, the company has submitted 12 highway and railway projects, which -- amounting INR 10,228 crores, which are expected to be opened soon. Pleased to inform you that the GR Logistics Park Indore Private Limited, a subsidiary of the company; and PSA Ameya, a subsidiary of PSA India have formalized an agreement to establish an inland container depot at the multimodal logistics park in Indore. PSA India, a leading company in cargo handling, would look after the operational and maintenance of ICD. Now moving on the sector highlights. Elections are around the corner. And during election year, the rolled -- roll out of infrastructure projects is generally affected due to political consideration and administrative challenges, which was the case for last year. Election results will be out very soon. Regardless of election dynamics, the growth momentum to be continued for the next 2 to 3 years because of sound economic fundamentals and same has also been endorsed by the leading global rating agency. S&P will upgrade the country's rating agency. The Ministry of Road Transport and Highway in India is planning to construct 50,000 kilometers of new access-controlled expressway by 2037. This expressway will enhance connectivity, improve transportation, efficiency and contribute to India's overall development. Government has done record high allocation of INR 11 trillion for infrastructure space during the current financial year. This strategic move aims to sustain India's position as one of the world's fastest growing major economy and present abundant opportunity in the sector. We are also constantly working towards diversifying our portfolio, thus reducing vulnerability of functioning in any single market or sector, enhance long-term stability for the company. Recently, we have entered into power transmission, hydro tunneling, multimodal logistic parks and ropeway projects. We continue to tap on different opportunities emanating from the aggressive infra growth plan of the government. The company is targeting order pipeline worth INR 250,000 crores in various sectors, like highway, road tunnels, metro, power and transmission, railways and ropeway, et cetera. We are sure to adding distance here to our order book in financial year '24-'25 to take the company back to double-digit growth in financial year '26. That's all from my side today. Over to you, Anandji, for updated financial position of the company. Thank you.

Thank you, sir. Good afternoon, all. Let me take you through financial highlights of the company for the financial year ending 2024. So our stand-alone revenue from operations decreased by almost INR 359 crores, is a decrease of 4.4%, from INR 8,147 crores in fiscal 2023 to INR 7,788 crores in fiscal 2024. This decrease was primarily on account of delay in getting the appointed dates for various projects. Consequently, our consolidated revenue from operation has also decreased by INR 501 crores, from INR 9,481 crores to INR 8,980 crores in fiscal 2024. Stand-alone EBITDA margin has decreased to 14.58% in the year ended March 2024 from 16.12% in the year ended March 2023. This decrease, again, is mainly due to degrowth in our revenue. EBITDA margin at group level also decreased to 23.63% in the fiscal 2024 from 26.93% in the year, fiscal, 2023. During the quarter, company has transferred 7 operational HAM projects to Bharat Highways InvIT in exchange of the units in the InvIT. The resultant gain of INR 1,372 crores on this transaction has been shown as exceptional items in the financial statements. Our debt at consol level has also reduced by INR 3,533 crores due to this transaction. Our PAT margin at stand-alone level after excluding net of tax exceptional gain of INR 1,372 crores, a decrease by 11.29% to INR 755 crores in the fiscal 2024 as compared to INR 851 crores in this fiscal 2023. Similarly, our PAT margin at consol level has decreased by 27.69% to INR 1,052 crores in fiscal 2024 as compared to INR 1,454 crores in fiscal ended March 2023. Our standalone net worth is -- stood at [ INR 7,096 crores ] at the end of fiscal 2024, which was INR 5,215 crores at the end of fiscal 2023. Net worth at consol level is INR 7,602 crores at the end of fiscal 2024. Our total stand-alone borrowings outstanding at the end of fiscal '24 is around INR 739 crores with a debt to equity of 0.10x. Total consolidated borrowing outstanding at the end of fiscal 2024 is INR 3,803 crores with debt to equity of 0.51x. During the year, company has made addition to the fixed asset amount of INR [ 108 crore ] And at the end of financial year, the amount under this head was INR 1,371 crores. Investment in our subsidiary companies in form of loans and equities, INR 1,669 crores at the end of fiscal 2024. Balance promoter contribution or equity contribution required to be made for our operational or yet to start HAM projects, this is INR 2,137 crores, of which we are expecting contribution of about INR 800 crores to INR 850 crores in the current financial year. Our working capital days at the end of fiscal -- at the current fiscal -- at the end of current fiscal year is 112 days as compared to 104 days at the end of fiscal 2023, which is increased, again, primarily -- this increase is primarily on account of increase in STV debtors. Trade receivable at the stand-alone basis are INR 1,723 crores at the end of fiscal '24, and trade receivable at the consolidated level are INR 308 crores at the end of fiscal 2024. Our unbilled revenue at stand-alone basis is around INR 763 crores at the end of current year as compared to INR 484 crores at the end of fiscal '23. And our unbilled revenue at the consolidated level is INR 149 crores at the end of fiscal '24 as compared to INR 134 crores at the end of fiscal '23. Our inventories are INR 768 crores at the end of fiscal '24 as compared to INR 884 crores at the end of fiscal 2023. That's all. I sincerely thank to all the partners, stakeholders for their support to our company. I may request moderator to please open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.

Yes. Sir, HAM debtors on stand-alone is how much?

[indiscernible] INR 1,532 crores.

Okay. Okay. Sir, now 2 things, both on inflow and the execution going forward. So first just to get a clarity, how much value of order inflow excluding GST we have received in FY '24? And how much more are we looking to bag in FY '25? Given definitely the -- whatever we were initially thinking, INR 20,000-odd crores in FY '24, definitely not achieved, so how much we are looking actually in FY '25?

FY '25 [Foreign Language].

[Foreign Language] I wanted to understand [Foreign Language] EPC, excluding GST value [Foreign Language].

[Foreign Language] less than INR 1,000 crore [Foreign Language] HAM [Foreign Language] major portion [Foreign Language] 50% HAM [Foreign Language], 25% EPC [Foreign Language], 20% BOT [Foreign Language].

Okay, [Foreign Language]. And sir, FY '24 [Foreign Language] order inflow, excluding GST, [indiscernible]?

INR 2,000 crores.

Only INR 2,000 crores.

INR 2,000 crores. [Foreign Language] I think could be INR 7,500-odd crores, correct me if I'm wrong. [Foreign Language] exiting order book [Foreign Language]? So broadly, total revenue [Foreign Language] FY '25 [Foreign Language] breakup [Foreign Language].

[Foreign Language] We will be planning September, October onwards [Foreign Language]. So maybe balance 6 we are targeting in third quarter, October to December, right? [Foreign Language] if we are targeting [Foreign Language] 15% to 20% revenue we can target for the current year. And [Foreign Language] 3rd quarter [Foreign Language] 10%, probably at max we can target in the current year.

Yes, sir. So total for FY '25 [Foreign Language] last time, I think we were looking at kind of a flattish kind of a growth for FY '25. And then [Foreign Language] considering now we are confident [Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

13%, 13.5% [Foreign Language].

The next question is from the line of Nikhil Abhyankar from ICICI Securities.

So sir, I just wanted to understand what is the equity investment as on date in the operational assets.

Equity investment in operational assets?

Yes.

Okay. Let me figure it out. Just hold on. Yes. Operational asset -- so you are saying which are under construction [indiscernible], right?

Yes.

It's around INR 450 crores.

INR 450-odd crores. So are we planning to offload all these...

INR 450 crores or INR 500 crores, right? INR 500 crores or something.

INR 500 crores.

Okay. So are we looking to offload these projects to the InvIT in this year? Do we have any timelines? And also just a follow-up on that, the ballpark transaction that happened for the InvIT was somewhere around 1.9x of equity invested. So should we assume a similar number for the next tranche as well?

See, as on date, we are having 5 operational projects with us, right? In which, 1 is basically transmission project, which probably will be transferring basis because we have got one more transmission project, which is adjoining to that existing project. We will be clubbing these 2 projects, and then, we'll be transferring. So that is -- we don't believe that we'll be transferring during the current year. That is one aspect, right? And then there are 2 more operational projects. One is state HAM project, which we have never intended to transfer to InvIT because it's a different dynamics, right? It's not NHAI project. And then 1 is BOT projects, BOT Annuity, right? And the construction period remains for that particular project around 4 years. So that is also out of question for transfer. Now it is only 2 projects, which probably -- I mean, which is probably we can transfer, right? 1 project we can immediately transfer, that is Aligarh-Kanpur, maybe in another 1 or 2 months. We are just waiting for NOC of NHAI. And then there is recently -- there is a project recently we got the COD in the month of April, which probably can get transferred to InvIT in next April because it's -- 1 year of operation has to be completed, right, for any project to be transferred to InvIT. So yes, in current year, we are expecting that Aligarh-Kanpur is our project which can be transferred to InvIT. And so for value is concerned, certainly, it would be 1.9, 2.5 or 1.5 because that's, I would say, where we will go for fair value and all that. And I think safely, we can assume that it should be more than 1.25 or 1.3. Right now, I can't comment on this, right, unless until -- I mean we have to -- we have set process of price [ discovery ] for those projects. So we have to go through that process.

The next question is from the line of Veenit Pasad from Investec.

I have a couple of questions. The first one being, sir, in the MSRDC project, if you look at the bidding details of all the packages. Number one, there are only a limited number of players who participated in those bids. So would it be fair to assume that competitive intensity was relatively lower and margins in these projects would be much better?

[Foreign Language].

Understood. Understood. And sir, if we analyze the bidding details, there are almost 40 packages which were awarded. Why did GR only bid for 7 out of those? Were there any restriction in terms of amount or number of packages you can bid?

[Foreign Language].

And, sir, can you please elaborate a bit more on which type of packages where we were not qualified for, there were the issues?

[Foreign Language].

[Foreign Language].

[Foreign Language].

Understood. Okay. And, sir, the last question is, sir, do we see any other state governments coming up with such large magnitude of expressway orders? Or this was only one-off wherein Maharashtra had come out with such -- so many number of packages and such large orders?

[Foreign Language].

So Government of India has also incentivized state basically. They have also expanded their budget allocation to the state who so is coming up with infrastructure development and all that. So [Foreign Language] year-on-year, they are increasing their allocations. So state [Foreign Language]. So we'll be focusing on other states as well.

Okay. And are there any other states that could come out with tenders or where such projects are in pipeline or such projects are under evaluations?

[Foreign Language].

The next question is from the line of Deepak Krishnan from Kotak Institutional Equities.

I just wanted to understand on the BOT pipeline [indiscernible] 24% of your orders will be BOT. Would you be bidding it on your own? Or are you looking to go ahead with any partner [indiscernible]?

So your voice was not properly audible. What I understood is that you are asking for is we can bid in JV -- will we be bidding in JV or something for which kind of projects...

Yes. Yes.

[Foreign Language] What for road projects or for...

Sir, can you hear me now?

You're talking project specific...

No. Yes, I'm talking about in general BOT road projects. Would you be bidding it on your own? Or would it be through a JV?

No. So, yes, BOT, we can bid on our own [Foreign Language]. So let's say, it will be -- if we are targeting -- probably if we find some JV, right, partner, probably we can go for a higher number in BOT. But, otherwise, also we can bid on our own. I mean, whatever number, which has been mentioned by our MD sir, that is almost INR 5,000 crores, can be bid by on our own. There is no need of JV.

And sir, with the InvIT structure coming through, are you looking at BOT asset monetization project as well?

BOT, right now, so far, we have not evaluated because of pure-play investment. And -- so right now, it is not in our mind.

And in terms of the order -- inflow guidance of INR 15,000 crores to INR 20,000 crores, what percentage would be non-road this year?

Non-road, we can say -- I mean, non-road, we include metro, right, tunnel, then power transmission. We are targeting at least INR 5,000 crores.

Sure. Any particular segment or any areas that you are specifically focusing on?

These all areas which I just recently mentioned...

Sure. Okay. Because it's roughly flat on a Y-o-Y basis, right? You could have won a similar sort of order number this year as well, right?

Sorry?

This year also you won a similar range, right, INR 5,000 crores. So on a year-on basis...

INR 5,000 crores was on road. Now you're talking about non-road, right?

Yes.

Yes. So last year, we won around INR 5,000 crores. [Foreign Language] it was for road only...

The next question is from the line of Jiten Rushi from Axis Capital.

Sir, from the current order backlog, what is the executable order book, sir?

INR 9,700-something-odd crores.

Sorry, sir?

INR 9,700 crores -- INR 10,000 crores [Foreign Language].

And, sir, in the opening remarks, sir said that there is an outstanding bid pipeline of INR 10,228 crores of projects, right, sir?

No, no, no. So INR 10,228 crores is basically projects which we have bidded. I mean that is yet to open.

Yes, sorry, we didn't yet opened this. So what is the breakup between the segments?

70 -- 70-odd percent is road, and the balance is rail and metro.

Balance is rail and metro. Okay. And this will open in the next June end, probably?

Maybe another 1 month, yes.

Okay. And sir, in terms of the inflow mix, sir, we have given a guidance of INR 15,000 crores, INR 20,000 crores, so of which we are saying INR 5,000 crores non-road. So assuming if you said INR 10,000 crores to INR 15,000 crores, so almost INR 5,000 crores -- almost 4,000-plus crores we have already resumed this year [indiscernible] project. So another INR 6,000 crore to INR 10,000 crores of road projects we are targeting. So this will include a mix of 50% HAM and 25% EPC and balance BOT projects. Is my understanding correct, sir?

So, say, depending on actually so far -- so generally it is or ideally, I would say, combination, right? But let's say, if we are getting all the projects under EPC mode, then also we are okay. And so far, we are already having that L1 status for EPC of INR 4,500 crores, right? So let's say, balance of INR 10,000 crores we are getting under HAM mode, then also we are okay. At least INR 4,000 crores under BOT and INR 5,000 crores under HAM, then also we are okay. So it's not a big issue for us as of now.

Sir, any upcoming bid pipeline from NHAI because the peer side is also talking about NHAI targeting INR 1.5 trillion of awarding and few of them have identified INR 1 billion pipeline. So any identified pipeline by us, which we are going to bid in c [indiscernible]? Or any other [indiscernible] highways, which you can articulate and break it down into like BOT [indiscernible] or HAM, sir?

That number right now, we are not carrying in our hand. But yes, as on date, when we are saying that there are INR 250,000 crores of pipeline, we have already identified, right? So -- road is INR 150,000 crores or INR 160,000 crores, right? Out of that...

INR 160,000 crores.