GPT Infraprojects Limited (533761) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to GPT Infraprojects Limited Q3 and 9 months FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Tantia, Executive Director and CFO. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a warm welcome to the GPT Infraprojects Limited conference call for the third quarter ended 31st December 2024. I hope you all have the opportunity to review the financials as well as the presentation updated on our website and the website for the stock exchange yesterday. I will briefly cover the key highlights for the quarter. Joining us on the call today is also Stellar IR, our Investor Relations Advisors. Some of the significant milestones achieved during the quarter and the 9 months ended December 31, 2024. The external long-term credit rating of the company has been upgraded by CRISIL to A stable from A- table. This is a very significant milestone because it allows the company a lot of comfort in terms of banking limits, facilities that it enjoys, and also allows the company to reduce its cost of funds. In line with this and in line with our earlier commitment, the consortium members have also released part pledge of the shares with the promoters, which were pledged towards the working capital of the company from 31% to 35% of the total shares. We are in talks with them to gradually bring this down further. The order book backlog stands at a healthy INR 3,332 crores with an order inflow of INR 1,040 crores during the year including incremental orders from existing contracts. We're on track to achieve a 15% -- 15% to 18% kind of growth in FY '25. For the 9 months ended FY '25, we have achieved the highest ever revenue as well as profits in the company's history. The management has also announced a second interim dividend with a record date of February 10, 2025. Now moving ahead to our financial performance for the third quarter and 9 months ended 31 December 2024. Our revenues for Q3 FY '25 stood at INR 273 crores on a stand-alone basis, which compared to INR 246 crores last year, representing a growth of 11% Y-o-Y. On a consolidated basis, the revenue stood at INR 278 crores compared to INR 254 crores for the last year, representing a growth of 10%. On 9 months basis, the revenue were at INR 790 crores on a stand-alone basis, which were higher by 13% Y-o-Y as compared to INR 702 crores last year. And on a consolidated basis, the revenue stood at INR 807 crores compared to INR 723 crores last year, which is a growth of 12%. In both the stand-alone and consolidated numbers, we have set a revenue target growth 15% to 18% for the current fiscal, which should be achieved. This growth will be majorly driven by a significant execution in the Infrastructure segment, which accounts for close to 93% to 94% of our total revenues. Our stand-alone EBITDA for the quarter stood at INR 36 crores compared to INR 32 crores, representing a growth of 13% Y-o-Y, and EBITDA for the 9 months was at INR 110 crores compared to INR 91 crores that is a growth of approximately 21%. In terms of consolidated EBITDA, the same came in at INR 36 crores for the quarter compared to INR 30 crores last year, representing a growth of 18%, and EBITDA for the 9 months stood at INR 103 crores compared to INR 92 crores, which is a growth of 11%. As I said earlier, the company has declared interim dividend -- a second interim dividend INR 1 per share. The record date for the same has been fixed as February 10, 2025, maintaining our dividend policy. We are confident of maintaining a long-term EBITDA hurdle rate of 13%, which has been historical guidance by us as well. With the improvement in revenue, the operation opportunities have kicked in, which has helped us to ensure the long-term EBITDA is maintained, and we look at slightly improvement from there as well. The cash flows also continue to be strong with the reduction in interest cost. There has been a growth in the profit exceptionally for the as consolidated PAT at INR 21 crores for the quarter ended 31st December 2024, growing by 44% from INR 15 crores last year. Stand-alone PAT for the Q3 FY '25 was INR 22 crores that is rising by 45% from INR 15 crores last year. In terms of our segment, the Infrastructure segment contributes to almost 93% of our business, and stood at reported revenues of INR 748 crores for the 9 months ended 31st December 2024. The key contracts continue to perform well like NHAI Ganga Bridge, [ Thyagaraja ] and Pune Expressway, Mathura-Jhansi, Majarat, Mumbai and et cetera. This segment has an order backlog of INR 3,115 crores. The Sleeper segment has generated revenues of INR 60 crores during the quarter. During the 9 months ended 20 -- December 31, 2025, driven majorly by outstanding performance of the domestic business as well as some contribution from the South African business. The Ghana factory is also about to start shortly post the elections there. With the thriving order book and reduced debt positions, we are well positioned to navigate the dynamic landscape and continue to see good cash flows from our customers. As we are -- move forward, we are confident in our ability to capitalize on the positive momentum generated by these factors. Our focus on maintaining a robust and healthy order book coupled with our continuous efforts to optimize our financial structure, lays a good foundation for our growth. The order book of INR 3,332 crores is represents almost 3.3x our FY '24 numbers, which is a healthy order book for giving good representation to the management for the future projections. With this, I would like to open the floor for any questions-and-answers, and I request the moderator to kindly queue the questions, please. Thank you.

[Operator Instructions] The first question is from the line of Darshil Pandya from Finterest Capital.

Am I audible?

Yes. Yes, please go ahead.

So I just wanted to know what are the current debt levels as of December, and what would be the future interest cost that would be paying? Will it be similar to as what we paid for this quarter? Or how it will be -- because we guided for around INR 20 crores of interest cost going forward post the QIP is done. So I just want to understand that.

Sure. The debt level is currently about INR 100 crores, which includes long-term and short-term debt in terms of this post the QIP. In terms of interest costs for the 9 months, we have incurred interest costs almost INR 19.5 crores. Obviously, the first half was 3 QIP. The second half is including the QIP numbers. So we expect we are still firm on the number of INR 20 crores annual interest cost, which will be for FY '26 or slightly lower.

Got it. And sir, since...

Because our -- so honestly, what has also happened is that the improvement in the credit rating, our interest costs, like I said earlier, has also come down. So average borrowing cost is below 9% now.

Got it. 1And sir, since post QIP, you have been saying that we could bid for big orders for more than INR 1,000 crores as well. So since then, have we bidded for any projects? Or are there any pipelines of bidding any big projects.

We have built almost 7 or 8 contracts recently, which the prices are not open because of the budget. Now that the budget going by, the prices will be open. And then once we are L1, then only we'll get to know the outcome.

Correct. What the election is going to be completed in Africa region because Ghana facility has been -- we have been hearing it for a while now that the passenger [indiscernible]?

Elections in Ghana have been recently completed. They are in line with the U.S. elections. So we should get the factory there up and running in the next couple of months.

And final question would be on sir, since we have reduced the guidance now from 2025 to 15% to 18-odd percent, just want to understand what led to this lower in the guidance? Or is it an execution issue? Or what is the issue currently?

It's not actually lowering the guidance. What has happened is because of this Kumbh in Thyagaraja and UPA a lot of restrictions were there. So that is why a slight dip in the operations there, but we are still on track to achieve to an 18% kind of number for the year, which is a good number.

Of course, it's a good number. And for next 2 to 3 years, what we have been saying, is that impact because of the that [indiscernible].

For the Kumbh Mela, it was almost a 2-month kind of effect on that. Next, going forward, it should be there. However, the profit guidance would remain what we had given earlier.

The Next question is from the line of Hardik Gori from Alpha Plus Capital Associates.

Sir, with lower budget allocation towards road infrastructure projects. So do you foresee a slowdown in new order inflows?

So does not, I would say, significantly lower allocations. The allocations are increased. So it's almost at the INR 2.5 lakh crore number, which was there last year as well. So we don't expect a slowdown in the order inflow. We expect order inflow to be the -- for us to be around the INR 2,000 crore mark going forward as well, 1,000 plus.

Got it. Got it. Could you also provide an update on current pipeline and how many projects are in the tendering stage and how many are in realigned L1?

L1 we will announce, as you know it is done, like I said to the previous gentlemen, we have bid some 7 or 8 large contracts recently. However, due to the elections, the prices were not opened, and we expect that to happen shortly.

[Operator Instructions] The next question is from the line of Atharva from [indiscernible].

Sir, am I audible?

Yes, yes.

Sir, actually, I want to ask you about the H1 FY '25 cash flow results. Your net cash flow from operation is negative INR 20 crores. So can you explain, sir?

How did you get that number?

Sorry? Sir, from your -- in cleaner September column, that PDF says.

September?

Yes, sir. One second, sir.

Net cash from operations is not negative.

Okay. One minute.

So net cash from operation is negative because we have made a lot of the payments in terms of the -- we had answered this in the last quarter itself. With respect to the trade payables, we reduced that a lot post the QIP. So that is why from operations, it becomes negative temporarily.

Okay. Okay. Sir, I'm talking over the September 2024 quarter that you...

Correct. So if you see the trade payables and other adjustments have reduced by almost INR 90 crores, which is despite the increase in the operations. This is because of the QIP we were able to reduce other payables.

Okay, sir. And second question is what about you are [indiscernible] PAT conversion for FY '25 because first half is negative INR 20 crores. So can you give guidance on that?

No, no, no. It will be positive. It is positive. CFO to PAT would be close to 80%.

[Operator Instructions] The next question is from the line of Bhavik Bajwa, an Individual Investor.

Am I Audible?

Yes. Yes, please go ahead.

Yes. So sir, first of all, congratulations for a really good set of numbers. Sir, I have a couple of questions. The first question is with respect to the order book. So as you said that the government's focus on this project has not been primarily toward the CapEx. So are we confident of maintaining our order book, which is 3 to 3.5x of our revenues. And I'm asking this question because firstly, our order book is concentrated towards mainly RVNL and NAHI and the spending has slowed a bit, and also in the last 2 quarters, we've not had significant order wins and our executable order -- book has been a decline since then, especially in the last 2 quarters. So I wanted some update on that.

So we have bid for certain large contracts, like I said earlier, these contracts are around the INR 800 crore to INR 1,000 crore mark. There are 7 to 8 such contracts. We expect them to open shortly. And hopefully, we should -- in 1 or 2 of them, we should get an L1 status and then convert that to order. So the -- in terms of the -- what you call the order inflows or the execution from the government. We don't expect a slowdown. This is a sector which is a key focus of the government. And overall CapEx, if you look at it, has been announced in the budget at INR 11 lakh crores, which was what was last year as well. So government has not reduced its outlay on CapEx in the -- for the country.

Correct. Correct. And sir, my second question is that after QIP we have significantly reduced our debt. So in future, maybe in the next couple of years, is there a plan to make a GPT Infra, debt free or maybe something like that? Or we continue to hold INR 100 crores of debt on the balance sheet always.

So we have INR 100 crores as of now, which includes equipment finance and other long-term debt as well. We are reducing the debt for the quarter, and we expect -- I would not say debt free, but I think we have a target that by FY '26, we should bring it down below INR 75 crores.

Okay. That's great. And sir, my last question is that the market sentiment has not been good, and even though stock has corrected by more than 40%. So are we thinking of lifting the sentiment maybe in the form of buyback because we still have room to increase the holding to 75%. Like after the QIP, I think the promoter holding is now down below 70%? So is there any such thought by the Board?

Board. I think that we have done recently QIP, so I'm not sure whether the SEBI LODR allows you to do that or not. And the Board doesn't have any such proposal on its table right now.

Right. Because despite a good quarters and despite highest ever profit, the stock has not been doing that well. So I just wanted some guidance on this.

I cannot comment on the stock price. That is up to the Board.

[Operator Instructions] The next question is from the line of Hiten Boricha from Sequent Investments.

Yes. Sir, my question is on the revision of the guidance. You mentioned largely, it is because of the Kumbh Mela. Sir, if you can give the breakup of the order book, like what percentage of our order is in central region or maybe UP specific region, which has impacted our guidance?

Out of INR 3,300 crores, close to INR 1,500 crores is from that region, so almost 45%.

From UP particularly, right?

Yes.

Okay. Okay. And also you can throw some light on sir order inflow, which we are targeting in FY '25. Any what kind of tender which is going to come next year? And what is the order inflow target for next year?

Like I said, close to INR 2,000 crores is the target for next year.

INR 2,000 crores of inflow for next year?

Correct.

And about what tender size, sir?

So typically, it is INR 300 crore plus. There would be 1 or 2 large contracts close to INR 1,000 crores, balance would be INR 300 crores plus.

The next question is from the line of Atharva from [indiscernible].

Sir, actually, I want to ask you about pledge. So how much pledge is reduced from the banks?

Like I said in my earlier remarks, from 51% of the total shares to now 34% of the total shares.

Okay. Okay. And sir, when it will be nil, sir, that you said I want to just nil it going forward?

Pardon? I can't hear you.

Sir, you said that I just want to completely finish lays in going forward. So what is the time, sir, time horizon?

So like I said, with the improvement in the ratings, we are in talks with the banks to also reduce it further, I would just like to clarify here that the pledge is only for the working capital of the company and no other borrowings by the promoters. It is in a continuous discussion with the banks to further go down from the current levels.

Okay, sir. And sir, final question, are you on track to achieve the INR 2,000 crore guidance for FY '28 -- FY '27, sorry?

Yes, we should be close to INR 2,000 crores by FY '27.

The next question is from the line of Taha from Tara Capital.

Am I audible?

Yes.

Yes. The first thing is sir with the recent rating upgrade and repayment of debt what kind of improvement we can see in FY '26 PAT? Currently, it is around 7.5%. I have -- I can see 9 months? So what kind of margin we can see in FY '26?

I think 7.5%, 8% is a good number for an EPC company and we expect PAT to be around 8%, 8.5%, not higher.

Okay, 8%, 8.5%. Got it. And on the working capital side, are we on track to achieve the target of -- you said around 90 days something, 70 to 90 days? So are we...

I said 90 days in the last call, and I think we are on track to do that.

The next question is from the line of Shivom from V. S. Revankar.

Atul, can you hear me?

Yes, please go ahead.

Yes. Atul, correct me if I'm wrong, but I mean, this is more sort of a clarification the first one. When we did the QIP I think we raised about INR 175 crores and about INR 125 crores went to debt repayment. And that time, the debt levels are about INR 190 crores. So I just heard that the current debt levels are at about INR 100 crores. So were there any new borrowings?

There were some equipment finance borrowings, but very less and also, we have repaid that much, but temporary some working capital might have been utilized, but that will again -- has again come as on date. So at the end of the quarter, it might be we utilize which is why it was at INR 100 crores at that time.

Okay. Okay. Okay. And the second question I had was you just mentioned there's some 6, 7 large contracts that the company has been bidding for. So can you throw some light on like when you say large, are these like INR 1,000-plus crores of projects?

They are between 750 to 1,100.

750 to 1,100. Okay. Okay. And on last call, you also mentioned after QIP that the bidding capacity will also go up to INR 1,600 crores now on an individual GPT level. So are you also looking at that? Or have there been any obstacles from the government, so you're not finding such opportunities? What -- what's -- how's that outlook?

No, we are looking at similar opportunities. As on date also the management is evaluating certain opportunities. As and when we are successful in becoming L1, we will come back to the investors and announce that as well.

The next question is from the line of Darshil Pandya from Finterest Capital.

Can you just please confirm what is the EBITDA margins for railway business and our mobile business?

EBITDA margins for both the business is almost similar, so it is 13%-odd.

13%-odd. And sir, I just want to confirm, since we are now bidding for bigger projects. So does this come with a better margins, maybe 14%, 15% or 16%?

No. No. No, this kind of industry, I think that kind of margin is not -- is unheard of. And I don't think no one reports that kind of margins.

Okay. And I just want to confirm is Ghana facility 1 slide, should it do around what 20, 25-odd percent of margins, I guess, a few quarters ago, we had this discussion.

Ghana should do about 25%-odd kind of margin.

Ghana facility, right?

[Operator Instructions] The next question is from the line of Bhavik Bajwa, an Individual Investor.

Sir, I just wanted to ask one more question that -- currently we are bidding for projects that achieve 13%, 13.5% EBITDA margins. Is there any plan going forward to bid for certain complex projects that can give us slightly higher EBITDA margins?

Honestly, I think none of our peers or none of the contracts that are in the market, especially with government contracts give you a margin of 14%, 15% or beyond. So whether it is complex or not. I think we are doing still -- we are doing bridges, which has a lot of valuation in terms of engineering skills. That is why we're able to attract the kind of margins that we do attract 13% to 14% is a very good -- is a good -- decent number for this sector.

Right. And for a long-term perspective, I just wanted to understand like we started our business with concrete sleeper and in early 2000, we started into infra. So is there any plan to be venture or into some different segments to diversify the revenue pool, maybe into water EPCO something like that?

We are looking at certain contracts like [indiscernible] et cetera. But once we get that, then only we can announce that we have diversified.

The next question is from the line of Shivom.

Atul, it's Shivom again. So I quite agree with you and really impressive really to see that GPT is doing about 13%, 13.5%. And it's quite commendable. Nobody else is able to really achieve that. That said, like given the political complexities and difficulties that exist in operating in countries like the African countries that we operate in. What's the management stake there? Like are we still looking at continuing these concrete sleeper operations? Or are there any plans of divestment?

So the Africa business gives us a higher EBITDA margin of 20% plus, like I said earlier, Ghana will give about 25%. There is no plan to divest it because it is giving good returns on the investment. We have been in South Africa for now more than 15 years. And we have no plans to exit.

Yes. I ask because the infrastructure business has quite disproportionately grown compared to your concrete sleeper operation. So I mean if you're looking at continuing your operations in Africa and the concrete sleeper. So are there any plans to move your funds from the profit that you're making in infrastructure to perhaps expand the operations there, something some eye like that.

So we have done recently, like I said, like I'm sure your aware. Last year itself, we set a factory in Ghana. So we have used the internal accruals to set up that factory. There's no debt on the balance sheet in Ghana. So that is something that we've already done last year. Obviously, Africa is a very -- decision-making there is quite slow. So you can't invest overnight. And you need to find good bankable projects as well. Otherwise, you can get stuck with a lot of debtors and trade receivables, which is not desirable.

Okay. Okay. And would be practical for us to assume that ratio, say, 7 to 92, 93 that is currently for infrastructure and concrete to remain the same in the near future? Or do you expect that to change?

Maybe 90-10, that was what I call a broader number that we do expect going forward as well.

[Operator Instructions] As there are no further questions from the participants. I now hand the conference over to Mr. Atul for his closing comments.

Thank you, everyone for attending the conference call for Q3 and 9 months ended December 31, 2025 for GPT Infraprojects Limited. I hope we have been able to successfully answer most of your queries. In case you have any other further questions, please do get interact with us directly or with Stellar IR, our IR Advisors. Thank you, and have a great day.

On behalf of GPT Infraprojects Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.