Ircon International Limited ($IRCON)

Good afternoon, ladies and gentlemen, I'm [indiscernible], the moderator for this conference call. I thank everyone for joining us today for Ircon International Limited Q4 and FY '26 Earnings Conference Call. Please note that this conference call is being recorded. [Operator Instructions] Today, we have with us the senior management represented by Mr. Hari Mohan Gupta, Chairman and Managing Director; Mr. Ragini Advani, Director Finance; Mr. Alin Roy Choudhury, CGM Finance and CFO; Mr. Ram Kumar Goyal, GM Finance; Mr. Sachin Garg, CGM Finance, Investor Relations. I would like to remind you that some of the statements that may be made in today's discussion may be forward-looking in nature. It is subject to several risks and uncertainties, and actual results could materially differ. I would now like to hand the conference over to Mr. Hari Mohan Gupta, Chairman and Managing Director for the opening remarks. After which, we will have the forum open for the interactive Q&A session. Thank you, and over to you, sir.

Thank you, [ Matt ]. Good afternoon, ladies and gentlemen. I am Hari Mohan Gupta, Chairman and Managing Director of Ircon. On behalf of the entire Ircon team, I extend war welcome to each of you, and sincerely thank you for joining us today for our earnings call for Q4 and financial year ended 31st March 2026. Now I request my Director of Finance, to give brief about the financials performance of the company over to Ms. Ragini Advani, Director of Finance.

Thanks, sir. Good afternoon, everyone. I'm Ragini Advani, Director of Finance Ircon. On behalf of my team, I extend a warm welcome to all of you, and thank you for your presence today at Ircon's earnings call for Q4 and year ended 31st March 2026. Let me first introduce my team. I have with me Mr. Alin Choudhury, our CFO, CGM Finance; Mr. Ram Kumal Goyal, GM Finance, in charge of Compilation and Accounts; and Mr. Sachin Garg, CGM Finance, taking care of Investor Relations. The company is facing a challenging environment marked by significant sectoral headwinds and intensifying competitive pressures. While these factors weigh on our margins as well as order book, we did manage to maintain the order book at about 2x of the annual revenue. We remain optimistic about the outlook and are implementing measures to strengthen our position. Financial results as well as presentation have already been uploaded on the stock exchanges. I'm sure that all of you have had the opportunity to review these documents. Now let me take you through a glimpse of our financial performance for FY '26. The company has reported a total revenue of INR 9,502 crores in FY '26 against INR 11,131 crores previous year. PAT of the company stood at INR 592 crores against INR 724 crores previous year. EBITDA margins remained in similar range about INR 1,279 crores in FY '26 as against INR 1,276 crores in FY '25. Core EBITDA margin in percentage terms have increased to 9.35% in FY '26, an improvement of about 94 bps over the last year. Earnings per share stands at INR 6.33 per equity share in FY '26 as against INR 7.73 per equity share in FY '25. Our share price -- our face value of the share is INR 2 per share. Board of Directors have also recommended a final dividend of [ INR 7 ] per equity share on the face value of INR 2 per share, subject to the approval of the shareholders and the ensuing our Annual General Meeting. This is in addition to the interim dividend, which we have already declared of INR 1.20 per equity share and has also been paid in FY '26. Order book of the company as at 31st March '26 stood at INR 24,984 crores, we're in 50% -- 54% orders were on a competitive bidding basis. And a balance, 46% were on a nomination basis. If we were to split domestic versus international, 92% of our order book is domestic and 8% internationally. Ircon has 11 subsidiaries and 7 joint ventures. As you all are aware, the subsidiary is comprised of FPD for road highways and renewable card companies. The JV is mainly comprised of coal-related PPP profit. Without taking much time, I would now like to open the floor for Q&A session. Thank you.

[Operator Instructions] Here's the first question from the line of [indiscernible].

[Technical Difficulty].

I'm sorry, [indiscernible], can you use your handset more, please?

Your voice was breaking slightly.

Okay. [indiscernible] new dedicated at [indiscernible] cargo terminals are announced whether we have bid any of this? And what is the technical order size terminal?

Thank you, gentleman. As far as dedicated freight corridor new project is concerned, it has just been announced. And since this is a mega project, spanning from the eastern part of the country to the rest of side. The initial processing for calling the tenders takes some time and the process is on in dedicated freight corridor corporation of [indiscernible]. Once they are in the tendering mode, they will float the tenders and then the situation will come for bidding. So entire industry is waiting for that moment. We have already executed one project of delegated freight corridor investor sector. Certainly, our company has the credential capabilities. So as soon as that situation arises, we will rise to the UK. Thank you.

[Technical Difficulty].

I'm sorry, your voice is not clear.

Sorry, if I'm right, it's INR 750,000 crore [indiscernible], right, sir?

Exact cost of the corridor will be determined once the final alignment and the cost of the land acquisition according to the finalized alignment is known, then only it would be known that what is the equal cost of the project. So the initial time taken in preparation of the plan and profile and the costing will still yet to be freezed by the project authority. So whatever data you are saying maybe an approximate value which you might have heard. But we are not aware about the exact value, which will be known only after some time.

Okay, sir. Sir, on the consolidated noncurrent financial liabilities increased from INR 4,750 crores. So is this a working capital or for new prospects?

Yes. Could you -- you are saying on a control level?

Yes, yes.

Yes. Just a second.

Yes, in INR 589 crores you are talking about?

Sorry, increased from INR [indiscernible].

Which one are you saying?

Can you repeat your question, please? Once again.

No, sir, actually, the noncurrent financial liabilities increased to nearly 33%. So is this because of the working capital or projects?

Noncurrent financial liabilities. Other financial liabilities [indiscernible] [ INR 824 crores to INR 821 ] crores. So -- I'm sorry, I haven't got your question yet.

Next question is from the line of Vishal Periwal from PL Capital.

Okay. And in terms of new opportunities, there was a couple of months back. There was a PIB release, which talks about like in FY '26, we have seen almost like 100% increase in the railway projects, which are sanctioned by government. So -- I mean, can you can you give some color like will this lead to a better ordering for the sector? And how exactly to look at it?

As per budget '26, around INR 2.93 lakh crore funds have been sanctioned by government of India and huge and bigger projects in railways are in the pipeline. They are being floated. During '25, '26, we could secure orders of the order of around INR 5,000 crores, and we bid it for 107. We submitted 107 bps for around INR 48,000 crores. And many of them are still under evaluation. The results would be known in time to come. We are aware about the new projects working hard in their direction. So it's a dynamic process. Since our domain expertise is mainly in railways, highways, bridges of any kind. So we are certainly looking to get some opportunity in that pie for balance.

Okay. Sir, can you give some color like in FY financial '26, what were the total projects that were awarded by Indian Railway and how much we could have secured?

No, how much were awarded by Indian Railways that figure would not be available with us in the company because that would be the domain of Indian Railways. They uploaded in the [indiscernible] tenders for civil, for electrical, for signaling some complex or mechanical, some integrated. So that figure I don't have right now available with me, but we secured for around INR 5,000 crores in total for the financial year. And I guess -- now I told you that 107 bps have been submitted for around INR 48,000 crores, which are mainly under still evaluation at different stages. So we are hopeful that we should be successful in some.

Just to add on to this. Basically, the railways, when they take out their tenders, their multiplicity of the nature of transactions. So one is, of course, they have coaches, sleepers, wagons, an depart, those kind of claim sets. So that itself is a significant amount for which they have been taking out tenders. Then there are station development tenders. And then there are certain CapEx which are rolled over or there are increase in already sanctioned projects which are taken also as a part of this limit, which was mentioning that in current year, the overall budget is about INR 2.39 lakhs crores from government. And then there are new projects, which could include doubling new lines, expansion, electrification, some works of Indian and telecom, et cetera. So by and large, railway by itself has so many different domains and so many different kinds of tenders or orders that they're taking out, that peseta data and detail would be available with them. But yes, whatever tenders we feel we are fit to bid we do keep a track of them, and we do with them as and when those opportunities come.

Okay, okay. And maybe just a little bit on this, when CMBs said like the new opportunities of almost INR 14,000-odd crores yet to be opened. So in terms of the projects that we are building, is there any change in that? I mean, earlier, we were doing electrification railway change, the game change which is happening or probably new line, which is coming, are we going into manufacturing side or so anything -- any color that can you provide here?

Presently, we are into electrification, signaling telecommunication, coverage, civil engineering, tunneling, bridges, no manufacturing right now other than we are executing on project is formation of coverage towers in central railway. Otherwise, there is no manufacturing type of work we are executing at the moment.

Okay. Okay. Sure. Maybe some of the bookkeeping question, if I can ask, sir. So order book, I think nomination will have largely a price variation clause, any competitive bid order that we have, is there a price addition clause, given spurt in commodities internal that we have seen?

Yes, there is a formula which is given the commodity. It is a standardized formula, which is given in all bids because these are long duration, registration projects. So that is there. But having said that, if one was to look at some extraordinary situations like we have the impact on electoral and diesel as well as related products. Those are things which probably don't get completely covered those formulas. But then this was something which at a nation level, everyone is bearing with it. And to some extent, government are taking out circles here and there. Like recently, NHAI has taken out some circular on bitumen. So otherwise, yes, the formula are there in the contracts irrespective of whether they're on nomination or on competitive.

Okay. So there is no like fixed price contract that we have even in a competitive bidding?

No. There will always be a formula or certain changes in the procurement side and even with the cost.

Okay. Okay. And then nomination also the order book breakup that we provide, we have seen overall the strain in the order book size? So will it be fair to say that this is largely a scope change, not a new order that we are receiving under this?

That's right. It is only a book change and an increase in cost over a period of years, which is on the cost plus project. [indiscernible], Ministry of Railways is not giving any assignment or nomination basis.

Okay, ma'am. And in terms of a cash balance, I mean, we have reported a decent cash of almost like INR 4,200-odd crores. What will be our own cash, excluding advances in this?

Our own cash is about INR 950 crores. The rest, as we mentioned, are either pertaining to specific projects, those are advances given from clients. Our own number is again to the tune of about INR 950 crores.

Okay. Got it. And in terms of CapEx and investments that we plan to do in FY '27, any color that can be provided?

Around INR 400 crores, we will be investing in '26, '27 on our SPV projects mainly to road projects than coal connectivity railway projects.

So we basically have our money locked towards equity investments or quasi equity investments that we do in our the total requirement we anticipate is about INR 700 crores to INR 800 crores. The bulk of it will be spent in this year. As CMD mentioned, we are expecting about INR 400 crores to INR 500 crores to be spent in our PPP projects. Then we also expect some amount of CapEx within the company. Those would be our routine CapEx as well as some purchase of machineries. This, we expect to be in the nature of about INR 30 to INR 50 crores or -- and so that is where our plan for using our cash is.

Okay. Maybe last 2 questions from me, man. I think after a couple of years of like weak order book, I think in FY '26, we have seen an increase in order book vis-a-vis FY '25. And given this as a background, I mean, how do you see our revenue going to be for FY '27, any ballpark thing that you foresee? Because last 2 years, we have seen a bit weaker revenue. And how do you see secular for us.

FY '27, we plan to kind of maintain the numbers that we have in FY '26 on revenue because the order book that we have right now is almost about 2x of the revenue. And some of these orders may be heading over the next 2 to 3 years and not be ending in year itself, which is FY '26, '27. So of course, if we get some good major orders in the beginning of this financial year, then we may have some changes. But as of now, the guidance would be similar levels of FY '26.

Next question is from the line of [indiscernible].

Sir, my questions are a bit on the order book side, what is the current order book and the execution time line for sale?

Current order book is of the order of INR 25,000 crores. And some of the projects would be lasting for around 2.5 years and some maybe maximum 3 years. And we -- yes.

Yes. Second question was on the international order book side. We haven't won any big order in 1 or 2 quarters lately. How does that scenario looks like?

Yes. Yes. As far as the international projects are concerned, we are presently executing project in Algeria and Mama and Bangladesh also, and we are executing 2 projects in Nepal, presently some land is yet to be given by the government, but otherwise, project is on. Yes, for -- we are trying our best to get new orders abroad, but due to the present turmoil going on in the entire world, especially the Gulf, the sentiments are quite challenging and they are having adverse impact every day because of the energy crisis and the increasing prices of the energy. But we are trying our best to get some orders in a frequent continent in the domain in which we have the expertise. And we are very hopeful that something should come out.

Great. The third question would be on the margin of margins have been in the range of 4.2% to 4.57%, we expect it to remain the same? Or do we expect it to go higher from that?

You're asking about the core EBITDA margins? On a stand-alone basis?

Yes.

Okay. So yes, our core EBITDA margins on a stand-alone basis are expected to be in similar range because as we mentioned earlier also, that in EPC construction works, there are many competitors and the margins are getting stepped by the day. In fact, some of the bids is going much below the estimate. So at core EBITDA level, we expect it to be in the range of about 4% to 4.2%. But this was a stand-alone level. If we were to look at consol level, our core EBITDA levels are much better, the margins. And on an overall perspective, I think the guidance would be more of PAT. And I think we would be able to maintain PAT at consol level in the range of about 6.1% to 6.3%.

Next question is from the line of Sandeep Agarwal from [indiscernible] Investments.

Sir, in Q2 con call, we have given the guidance approx crore to INR 11,000 crores for the current year. So by -- what is the reason to behind the lower number?

It depends for any construction organization the revenue is directly related to the order book. Presently, order book is of the order of INR 25,000 crores. And in the present challenging situation, very tough competition, geopolitical situation despite our best efforts. We are doing the order book increasing is a little bit challenged, but we are very hopeful because we have already submitted our bid for around INR 48,000 crores in India, 107 numbers. mostly under evaluation. So the revenue and the profit, they are all related to the order. So depending on the existing order book, we are anticipating the numbers, which [indiscernible].

Also, there are certain things in a construction company, which is beyond us. For example, when we -- envisage that we have taken up of a project, we assume that the land and all the clearances would be in place or they would come in due course -- there are certain times or certain things which get unusually delayed even in the existing order book. So we've also faced certain issues on some of our projects where the speed at which they should have got executed, they kind of reduced because of certain factors which are beyond the control of the company. So both these factors combined, yes, we had given a guidance of INR 10,000 cores to INR 11,000 crores revenue, but we are presently sitting in the range of about INR 9,000 crores. So yes, there has been a debt slightly.

And for the next year, the number is similar across INR 9,000 crores? Okay. And just another one, as per you mentioned, we build a truck [ INR 41,000 ] crores order. And what is the success ratio has put the best estimates we can?

Gentlemen, it's really very difficult in today's highly competitive market that what would be the success ratio. But just to give you an idea that in '23, '24, we could get around 5.7% of what we bidded in terms of value. In '24, '25, we could get around 6% what we bidded. And in '25, '26, we got around 10% of what we bidded. So just an idea that, yes, but it's a hugely competitive market. And yes.

Yes, sure. Just last one. So our debt is approximately INR 5,700 crores approx or what is the color regarding this? How we -- what is our plan to reduce it or maintain the same level?

You're talking about the debt, right?

Yes.

At consol level, actually, as we meant we have the subsidiaries and JVs out of which, I think, 15 or 16 are PPP projects. So PPP projects, we do a project financing wherein typically the debt-equity ratio could be anywhere between 70-30 to 80-20. So all these debts are for PPP projects, not for Ircon stand-alone. And these will be repaid over the concession period of these projects. Now these PPP projects are mostly in roads and highway sector. And some of them are real coal connectivity rail projects. So wherever more debts are there, that is what is appearing in our books of accounts. And these will obviously get reduced over a period of time. This is at consolable. If you see this number is on the peer at a stand-alone level.

Next question is from the line of [indiscernible], an individual investor.

My first question is like we have taken like working capital loan of INR 103 crores this year. So what would be the tentative amount for next year? And like can you throw some light on how operating subsidiaries are performing?

Yes. Okay. So we have taken a working capital demand loan this time of INR 103 crores as at 31st March '26. Out of -- now these are very specific loans that we have taken for specific working capital requirement of the project, which is mainly because of delay in some receivables once those receivables come, these WCDL loans get paid back. So in fact, I think almost 50% of that loan has already been repaid back and the balance was expected to be done soon. So this is a very case-specific thing. It is not that we plan that these are the kind of working capital only take. If you would have noticed, we had good amount of receivables or debtors sitting in our books of accounts. Some of them were awaiting some client clearances, especially in cost-plus products. And that is the reason we had to rail WCDL so per se, I mean, it will really depend on a quarter-to-quarter and our clients pay. But I don't expect it to be a very significantly high number even for FY '26, '27. That's your first part of the question, right?

Sorry. Yes.

I hope I have answered your first part of the question.

Yes. Yes, I just have a last question. Last question like how much are as invested in subsidiaries and in FY '26 and like what is the investment plan for like financial year?

We've invested about INR 3,000 crores already in our subsidiaries and JVs. And we expect to have another INR 700 crores to INR 800 crores, as I mentioned, out of which about INR 500 crores to INR 600 crores, we should be doing in the current year.

Next question is from the line of Nikhil [indiscernible], an individual investor.

Congratulations to a good set of numbers. So my first question is operating -- our operating revenue from international project has increased subside. So what has impacted competitively from the Q4? So what has impacted our operating revenue per sectors have made it increase?

So our operating revenue in international, as our CMD sir mentioned, we are currently operating in Algeria and my math, and we've just finished a project in Bangladesh, and we are doing a little bit of work in Sri Lanka and Nepal and Malaysia. So some of our -- because we completed the Bangladesh project -- so some of our profits come from there because these are long gestation projects. It's only towards the closure that we get to know what it is. And the second is that, yes, in all our international projects, these are mainly denominated in foreign currencies. And therefore, we have also had an advantage in the foreign exchange earnings that we've had. The third is that typically, international products tend to give us more profit margin. And some of them over the period of time, have improved in their profitability, especially Algeria. So all these have contributed to a better profit number on the international side.

And the efficiency of the people working on those projects, that is the culture of the company. That also is very, very important to save on unnecessary expenditure.

Sir, my second question is profit from GE has increased compared to FY '26, can you give us any guidance for how it will be for the next year?

Yes. So in our JVs, if you remember, we had mentioned earlier also that one of our joint venture companies, which is rail connectivity project, CERL, the Phase 1 of that project was giving us massive losses. Now those -- I wouldn't say it turned into profit, but the losses have declined substantially. -- and they're expected to further go down over a period of time. We expect it to break even in the next 2 years. So that has contributed to the overall heavy profitability. Also, one of our other JVs, which you are aware, which is Ircon-Soma Tollway that has been giving us good profits for the last few years. Though, of course, the concession period is ending this year, and this is something which will probably go from the balance sheet now. We do expect some of our other projects, JCRL MCR and CRL to start giving us lesser orders or at least start getting into the breakeven position. So over for the share of JV profit going forward because we will not have higher TPL also next year, should be in similar range about INR 70 crores to INR 80 crores. Does that answer your question?

[Operator Instructions] Next question is from the line of [indiscernible], an individual investor.

There is a small question with respect to the waste A crisis that's going on. There is a skepticism within the investor ability that because of this work, the balance sheet of the government of India is under is. And this might well take the infrastructure projects on the back seat. So do we run a risk of this INR 9,000 crore revenue getting briefed this year?

As far as India is concerned, India is very strong, and the honorable Prime Minister of India is very, very focused. The entire government is very focused that come what may the infrastructure of the country has to improve substantially. And everything is being done by government to ensure that the pace of execution of projects does not get affected. They are trying their best like NHAI has also issued on clarification and help to the road construction agencies in the form of giving extra amount of money based on the increased rates of bitumen because of the Gulf crisis. But yes, energy crisis has been created due to this Gulf war, and government is trying their best to minimize the impact of this crisis. I do not personally see any major negative impact on the infrastructure growth or the sector as such because I feel it's a temporary phenomena and the country, the people of the country, the system of the country, the culture of the country is so robust that we will win over this situation and this crisis.

To add to this, see, whatever turnover we are expecting next year, most of it would come from our existing order book. I mean when you take an order, typically, by the time you take an order and you start working on it, the kind of turnover it will give you is probably almost in the range of 5% to 7% initially of new order secure. And we will wait and watch. But having said that, whatever government has already announced as projects and the schemes that they're doing. Also, there are a lot of projects which would be coming from PPP. From a short to midterm perspective, we don't see that impacting us. But like as you said, I mean, it will really depend on the -- how long this crisis will continue, and we will accordingly be judging our change in, if any, and the turnover as well as revenue guidance. But as of now, we are confident that it should not impact us immediately.

Next question is from the line of [indiscernible], an individual investor.

I just have one question. [indiscernible] in the media, I don't know how it is, but can we see any merger between Ircon and [ RVNL ] going forward?

Gentlemen, we as the company do not have any official information about the merger of these 2 companies. whatever information you have seen in the media or the press, that formation is with us, but no official communication from the government to us at all.

We have a question from the line of Sandeep Agarwal from Naredi Investments.

Yes. As per the current crude prices and a tight insulation. So how much particular intra product cost increase some year-to-year on year-to-year basis on a 6-month basis?

Can you please repeat the question? Your voice was not very clear, so we could not understood the question fully.

Sir, just I want to know the impact of the price increasing in various commodities. So can we calculate, quantify how much the cost increase on a year-to-year basis or from this last 6-month basis?

I will put it this way that all the infra projects, which we are executing and the mega projects or the bigger projects, they do come with a price variation for Boland depending on the dices being published by government of India for was commodities. So price increase gets compensated through this PVC formula to a reasonable extent except the situations like war, which is presently going on. Government is doing their best, whatever they can do. And it's a challenging situation. Yes, there are some items or some situation may come when the actual increase in the cost may not get compensated fully with the price variation formula. And keeping that in mind, the government of India, the road ministry has already issued a clarification and a help to the contractors that the a normal increase in the price of the bitumen is being compensated by the Ministry.

So as of now, our projects, we do not foresee this to have a significantly adverse impact going forward.

No, no. I understand -- so just I understand that we have price action close an not fully impact us. Just I want to understand what the project cost increase due to this current situation?

But that would be known only because the impact would be known after some time, price vary formula, the publishing of indices. It's a dynamic process every month, the government of India publishers, the indices. So clear cut answer would not be coming right now. It will take some time.

[Operator Instructions] Next question is from the line of Vishal Periwal from PL Capital.

Yes. Though, I think it is clarified in terms of EBITDA margin trajectory for FY '27, but I think historically, we have been getting like 6% and maybe upward of 7-odd percent. So based on the new work that we are winning, is it fair to say probably the margins will be in your 4, 4.5 or probably certain orders, which are low margin and once they get concluded or things could be better in FY '28. So any color that can be provided?

So Vishal, as I mentioned, on a stand-alone Ircon balance sheet, as you rightly said, we are quoting at very, very competitive prices, there has been shrinking margins overall in the industry. which we had explained over the past 2 years as well. And therefore, to be realistic, we would say that it would stay in the level of 4%, 4.5% at core EBITDA on stand-alone basis. But at a consolidated level because we have invested in PPP projects, and we are getting decent margins there. That is where we are going up or, I would say, equalizing this negative to some extent and coming at the levels of about 9% at core EBITDA level. Overall, at the PAT level, therefore, we continue to be still at 6.1 to 6.3. So therefore, yes, at a stand-alone project level basis, our core EBITDA are expected to take a dip. But at a company level basis, at PAT level, the dip amounts expected to be that much.

[Operator Instructions] As there are no further questions. I would now like to hand the call to the management for closing comments. Over to you.

Thank you. Thank you, ma'am, for moderating the call. I would also like to thank our shareholders, business partners, analysts, investor friends who have shown continued faith on us and supported us throughout this journey. We would also be happy to connect with any and every one of you on one-to-one basis as and when required for any queries, clarifications and take it forward. I conclude today's con call, and thank you for the active participation. Thank you once again.

Thank you.

Thank you, members of the management team. Thank you all for being part of this conference call. If you need any further information or clarification, you may contact Mr. Sachin Garg or e-mail at [email protected]. Thank you for joining us.