GPT Infraprojects Limited (GPTINFRA.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the GPT Infraprojects Limited Q3 and 9M FY '26 Earnings Conference Call hosted by MUFG Intime. [Operator Instructions] I now hand the conference over to Mr. Omkar Bagwe from MUFG Intime for opening remarks. Thank you, and over to you, Mr. Omkar Bagwe.

Thank you. Good afternoon, everyone. I welcome you all to the earnings conference call to discuss Q3 and 9 months FY '26 results of GPT Infraprojects Limited. On behalf of GPT Infraprojects Limited, I'm delighted to welcome you all to this call. Thank you for taking the time out on this call to discuss our latest financial results and performance. To discuss our results, we have with us from the management, Mr. Atul Tantia, the Joint Managing Director and CFO. He will take you through the results, and then we will proceed to Q&A session. Before we proceed to the call, a small disclaimer. This conference may contain certain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. The actual results may differ materially. These statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is also given in the company's investor presentation. Now I would like to hand the call over to Mr. Atul Tantia. Thank you, and over to you, sir.

Thank you, Omkar. Good afternoon, everyone, and a warm welcome to the GPT Infraprojects Limited Earnings Conference Call for the third quarter and the 9 months ended December 31, 2025. I hope you all have had the opportunity to go through our financial results and the investor presentation released yesterday on the website of the stock exchanges and on our website as well. I will briefly take you through the key highlights for the quarter and the 9 months. Before I move to the financial performance, I would like to highlight a significant strategic development during the quarter. During the quarter, GPT Infraprojects Limited entered into a share purchase agreement to acquire 100% equity stake in Alcon Builders and Engineers Private Limited, a well-established signaling EPC contractor with over 3 decades of execution experience in the Indian railway ecosystem. Alcon is among a limited set of technically qualified players in the country that are eligible to independently bid for large value contracts for signaling exceeding more than INR 100 crores for Indian Railways, IRCON and RVNL. Alcon provides end-to-end EPC solutions covering design, procurement, installation, integration and testing and currently has an unexecuted order book of approximately INR 200 crores, providing strong forward revenue visibility. The signaling EPC segment is a highly specialized space with significant entry barriers and only around a handful of contractors nationwide who possess comparable qualifications, certification and execution capabilities. This acquisition provides GPT a plug-and-play platform with an experienced technical team, established OEM relationships and a ready execution ecosystem, which would otherwise take several years to build organically. Strategically, this acquisition marks GPT's entry into the high-margin signaling EPC system and complements our long-standing relationship of over 4 decades with Indian Railways. The opportunity is substantial and the current signaling EPC market is estimated at around USD 1.5 billion, and the Indian Railways is planning a capital outlay of nearly INR 1 trillion over the next 6 years towards signaling modernization. With GPT's strong governance framework, balance and strength of balance sheet and execution discipline, we believe the signaling business has the potential to emerge as a meaningful contributor to both revenues and margins over the medium to long term. This transaction is an all-cash deal of INR 154.19 crores with a structured holdback and the closing is expected on or before March 31, 2026, subject to condition precedents as per the SPA. Now moving forward to our financial performance for the third quarter and 9 months ended December 31, 2025. For Q3 FY '26, on a stand-alone basis, the revenue from operations stood at INR 273.3 crores. And on a consolidated basis, revenues for the quarter ended at INR 283.9 crores, a growth of approximately 2%. For the 9 months ended FY '26, stand-alone revenues were at INR 852.4 crores as compared to INR 790.3 crores in the same period last year, while on a consolidated basis, revenues stood at INR 875.2 crores compared to INR 807.3 crores in 9 months FY '25. Our stand-alone EBITDA for Q3 FY '26 was at INR 39.9 crores compared to INR 35.8 crores last year, while EBITDA for the 9 months ended stood at INR 123.6 crores compared to INR 110.3 crores in 9 months FY '25. On a consolidated basis, EBITDA for the quarter stood at INR 41.8 crores and for the 9 months ended December 31, 2025, EBITDA was at INR 130.3 crores. We continue to maintain our long-term EBITDA margin guidance of over 13%, which has been our hurdle rate historically. With improvement in revenues and better absorption of fixed costs, operational efficiencies continue to support strong margin stability, and we expect to enhance these levels going forward as well, especially with the acquisition of Alcon and the Africa operations contributing better going forward. Profitability has also remained healthy. Consolidated PAT for Q3 FY '26 stood at INR 20.2 crores, while for the 9 months, consolidated PAT was at INR 65.4 crores compared to INR 55.8 crores during the same period last year. On a stand-alone basis, PAT was at INR 19.6 crores compared to INR 63.2 crores for the 9 months FY '26. Cash flows remained stable, supported by strong execution, disciplined working capital management and reduction in -- continued expectation of reduction in interest cost. The execution was muted during the quarter on account of extended monsoon and festival season in October month. Now coming to the segmental performance. The Infrastructure segment continues to be the backbone of our business. For the 9 months ended December 31, 2025, the Infrastructure segment reported revenues of INR 800 crores, which is approximately 94% of the company's total revenues. Key projects such as Prayagraj, Ganga Bridge, Kona Expressway, Raniganj Bypass and other ongoing contracts continue to perform well and drive execution. The Infrastructure segment order book backlog was at INR 3,942 crores as on December 31, 2025. The sleeper segment in Panagarh generated revenues of INR 55 crores during the 9 months ended December 31, 2025, and the African operations generated revenues of approximately INR 12 crores during the 9 months. It has an order book of INR 473 crores as on this date. The performance was primarily driven by the steady demand in the domestic market, along with contributions from our South African operations. We continue to work towards improvement -- improving the utilization levels across geographies. The Ghana factory has also started operations recently and will contribute to the revenue and margins in Q4 onwards. Now coming to our order book position. The highlight for the quarter has been the new orders backed by the company. We have received new order inflow of approximately INR 1,072 crores in Q3 and were further declared L1 in a large contract of INR 1,201 crores yesterday. Our share being 40%, that is INR 480 crores. As on December 31, 2025, the company has a net unexecuted order book of INR 4,415 crores, excluding the L1, representing approximately 3.75x our FY '25 revenues, providing strong medium-term revenue visibility. During the year till date, we have achieved an order inflow of INR 1,770 crores, excluding the L1, and this has enabled us to bump up our full year target for the order inflow from INR 2,000 crores, which was our previous guidance, to INR 2,500 crores. This will be the highest order inflow in any financial year for GPT Infra. With a strong order book, diversified project portfolio, stable margins and improving balance sheet metrics, we believe we are well positioned to sustain growth momentum while maintaining financial discipline. As we move forward, our focus remains on timely execution, selective bidding, strengthening our balance sheet and improving return ratios while continuing to maintain -- to build a robust and healthy order pipeline. Added to this, we will focus on developing the signaling business manifold given the plug-and-play platform with the acquisition of Alcon Builders and Engineers. With this, I would now like to open the floor for any question and answers. I'll request the moderator to kindly queue the questions. Thank you.

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

So, Atul-ji I just wanted to understand the rationale behind acquiring Alcon Builders. Technically, if you see this business is into signaling, telecommunication and [ glide ] works. And we are quite into infrastructure and a bit of railways that is into other parts. So I just wanted to understand how is this going to benefit us in a longer time frame? And what are we seeing in this company as we have acquired INR 154 crores valuation, the company doing sales of just INR 100 crores. So where are we seeing this company going in the next 2 to 3 years? And how is it going to contribute to us in GPT Group?

Sure. Thank you. So Alcon does railway signaling and telecommunication work for Indian Railways. We are bidding for a lot of these EPC contracts wherein signaling is almost a 15% kind of portion for the entire EPC contract bid that we generally do submit to the Indian railways. With this acquisition, we will be able to do similar works in-house compared to outsourcing it to other agencies who were charging a 20% kind of margin. This business with Alcon has an EBITDA margin of approximately 22%, and that will be directly available to us. The order book there is approximately, like I said, is INR 200 crores. So that, again, order book will contribute heavily to the margin. With us stepping in, obviously, we'll be able to bump up the order book given our relationship with Indian Railways and other EPC business as well. As regards the valuation of INR 154 crores, the company is sitting on cash of almost INR 45 crores, which is available to the [indiscernible]. And therefore, the net acquisition value is close to INR 100-odd crores compared to INR 154 crores, which is the headline acquisition value. So -- which represents almost 1x the revenue. The acquisition is not dilutive to our valuation, and it will be accretive to our valuation as such.

Understood. And what is the PAT margin that this company is doing?

The PAT margin, so they don't have any debt. So after 22% -- at 22% EBITDA level, it would translate to almost a 15% kind of PAT. That is an adjusted PAT because the promoters were drawing a salary, which was quite high. So that would obviously fall off once the acquisition is complete.

And what is the plan for next 2 to 3 years? Where do we see this INR 100 crores of revenues coming from?

So we see this in the next 3 years, the revenue will double from here. So it will be a INR 200 crore kind of business for us in the next 3 years.

Okay. Understood. The second question is with regards to our execution part. Sir, as on date, as we sit on almost INR 5,000 crore order book, we have got tremendous high orders in the last 6 months. I wanted to understand one thing that in the results, we do not see -- we didn't see the kind of execution that we should be -- probably we were anticipating. And for our 20% guidance as well, we need to do a tremendous hard job for Q4 if we're able to meet that guidance. So what is the plan in that? And what is something that is stopping us to aggressively grow on this order book that we have now? Because earlier order book was around 3x. Now we have around 4.5, 5x. So just to understand how aggressive are we for now?

Sure. So the incremental orders that we received are largely in December and L1 in January itself, which is approximately INR 1,500 crores out of the INR 5,000 crores. So you have to appreciate that those orders don't add to the revenue on day 1. It takes about 4 to 5 months to start adding to the revenue because a large part of the thing is also in terms of design of the contracts and handing over of the land, et cetera. So those INR 1,500 crores of order book has not really contributed to the revenue. Secondly, Q3, like I said in my opening remarks, the execution was depressed due to the extended monsoon in October. This year, I'm sure you are aware, India has faced heavy monsoon and which was also extended till mid of October. October also represents the entire Durga Puja Navratri and Diwali period, which traditionally leads to a lot of disruption due to the workovers, et cetera. So that has also affected Q3 in this -- for us. Generally, Durga Puja Navratri happens in September and the Diwali in October. But this time, October had both festivals. So we are still confident of maintaining our guidance in terms of INR 1,400 crores of orders -- INR 1,400 crores of revenues this year compared to INR 1,180 crores last year, which would represent a growth of almost INR 220 crores, that is close to 20%, 18% to 20% given the strong performance that we're seeing in Q4, and I'm sure that we'll come back with a bang for Q4.

[Operator Instructions] The next question comes from the line of Pranav from Prudent Equity.

Yes. So you said you're maintaining your guidance of like 18% to 20%. For that in Q4, you will have to do like more than INR 500 crores, which is like almost a 50% year-on-year growth. So do you actually see that happening in Q4?

So it's not more than 50% growth in Q4. Last year, Q4 was significantly higher. So we see the INR 500 crores -- close to INR 400 crores to INR 500 crores kind of number happening in Q4. For us, last year, Q4 was approximately...

And will drive around...

INR 380 crores.

INR 380 crores.

So from INR 380 crores to INR 480 crores is not a 50% kind of growth, INR 400 crores to INR 500 crores. So that's almost like a 30% kind of growth. So we see that 30% kind of growth happening for this year -- for this quarter. S.

Right. Okay. And my next question was like as of this moment, you had the highest order book.

Just to stop you there.

Yes. Go ahead.

To achieve that, there are 2 or 3 things which will also contribute. One is the acquisition of Alcon, which will give us revenues in Q4. Second is also the operations in Ghana, which will also contribute. So these things have not happened in the last 9 months. So both these things will also contribute to the INR 500 crore kind of number that we're looking for in Q4.

So wouldn't that Alcon consolidation happen in FY '27.

No. So the acquisition is effect from 1st January. We have gained transitory control as per the share purchase agreement signed yesterday and the acquisition is effect from 1st January.

Okay. My next question was like you have the highest order book ever in the company's history, I guess. So that's almost like 5x order book to revenue ratio. So what do you expect in FY '27? And to finance that, do we expect any fundraising happening in the region?

So FY '27, we are expecting more than 25% kind of growth given the strong order book that we do have. We will give the full year guidance in our annual results, which is in -- which we will do the con call sometime in May. And however, having said that, given the order book of almost 4x our revenues, we expect almost 25% kind of growth. Our revenue -- our execution cycle has always been strong, and we expect it to remain strong. In terms of financing the same, I think that we don't expect any dilution or equity fundraise at this moment. We are -- we do have strong internal accruals and cash flow to EBITDA has also been strong, almost at 80%. So we don't expect any equity fundraise to happen. Obviously, some working capital debt would be required, both in terms of funded and non-funded in terms of bank guarantees, et cetera, which we will approach our consortium bankers.

Right. Okay. So just an industry-wide question, like if you see across the industry, there was like a slowdown of orders in terms of government orders. So -- but in that scenario also, we bagged like quite a few orders. So would there be any margin pressure or like we'll continue to maintain the margins?

I said that in my opening remarks as well. We maintain the EBITDA hurdle rate of 13%, and we expect to be north of 13%, especially with the addition of Alcon as well as the operations in Africa also picking up.

Right, sir. And my last would be any update on the pledge and the release of the same?

So the pledge stands today at almost 35% of the promoter -- of the total company shareholding. We've already approached the consortium to reduce that further. We expect it to come down to 25% in the near term and then further reduce from there.

The next question comes from the line of Ritesh Bhagwati from Alpha Plus Capital.

Sir, last quarter, you mentioned short-term borrowings rose temporarily due to monsoon execution and invoicing delays, which led to working capital days increase. Now could you share an update as to what is our current working capital days as compared to like last quarter?

So the borrowings have come down slightly by almost INR 10 crores to INR 15 crores compared to the INR 168 crore kind of number that was there in last quarter. It has come down by almost INR 10 crores to INR 15 crores as of now. In terms of working capital days, obviously, if the borrowings has come down, working capital days has also kind of shaved off by 10-odd days. So we are now back to double digits in terms of working capital days.

The next question comes from the line of Parth Kotak from Plus91 Asset Management.

Most of the questions have been answered. Just you mentioned to the previous participant that debt has actually come down, meaning the acquisition that we did was fully from internal accruals, is it?

So the acquisition has not been completed. Acquisition is -- the share purchase agreement was signed yesterday. Like I said in my opening remarks, acquisition will close on compliance of certain condition precedent in the SPA. So that is expected to close on or before March 31, 2026.

Okay. Super. That's helpful. Sir, secondly, concrete sleepers, we are guiding for about INR 130 crores, INR 140 crores of revenue. So is it Ghana, which has not really picked up and we expect Q4 to be really strong?

So concrete sleepers till now, we have done close to -- we have done close to INR 78 crores in terms of revenues. We expect this quarter to do almost INR 45 crores to INR 50 crores in terms of concrete sleepers business. So we would be doing close to INR 125 crores for concrete sleepers for the full year, which is quite close to the overall guidance for the year at INR 130 crores.

Absolutely, sir. And sir, lastly, on the execution front, we like -- I think we've already seen we have a pretty healthy order book. Assuming the execution period for order book would be about 2 years, right? So maybe even with a slight delay by the end of FY '28, we should at least see this order book getting executed?

No, the entire order book of INR 5,000 crores doesn't get executed by FY '28. The order book would get -- this entire order book would get executed by FY '29 because a large part of the order book, like I said previously as well, has been in the last 45-odd days. So that will only -- that will take 3 years to get executed minimum. So by FY '29, this entire INR 5,000-odd crores of order book could get executed.

The next question comes from the line of [ Shivam Revankar ] an individual investor.

Most of my questions are answered, Atul. It's just about this new strategic acquisition. So are we able to provide some details on the phases of the transaction, if there are any because you mentioned you are going to pay it through internal accruals. I'm just curious to know like how that will happen because it doesn't look like there's that much cash at once.

We will pay approximately INR 125-odd crores in the next 45-odd days. The internal accrual is quite strong. We do have some investments sitting on the balance sheet as well in terms of future funds, et cetera. And we do have the working capital lines, which are not fully drawn down. We do have adequate drawing power, but the working capital lines from the banks are not fully utilized. So obviously, that will get also fully utilized if I say this internal accruals as well.

Okay. And with that, what would be your updated debt guidance because from last year.