J. Kumar Infraprojects Limited (JKIL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day. And welcome to the J. Kumar Infraprojects Q3 and 9 Months FY '20 Earnings Conference Call, hosted by Anand Rathi Share & Stock Brokers. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rachit Kamath from Anand Rathi Share & Stock Brokers. Thank you, and over to you.

Thank you, Stephen. Good day, and welcome to all the participants to J. Kumar Infraprojects Q3 and 9-month FY '20 Earnings Conference Call. Today, we will start with a brief update from the management for the past quarter and then proceed to a Q&A session. From the management, we have Mr. Kamalji Gupta, Managing Director; Mr. Nalinji Gupta, Managing Director; Mr. Arvind Gupta, Chief Financial Officer. Without further ado, I now hand over the call to the management. Thank you, and over to you, sir.

Thank you, everyone, and a warm welcome to everyone on this con call of J. Kumar for Q3. Along with me, I have Mr. Arvind Gupta, CFO; and our Investor Relations team. I hope everyone has an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchanges and our company's website. Before I take you through the operational and financial performances, I would like to highlight a few points. We are very happy to maintain consistent growth momentum in revenue and profitability despite changing environment. We are delighted to report yet another remarkable quarter as we clocked 16% year-on-year growth in our revenue operations and 26% in PAT. Our careful project selection criteria, strong bidding and estimation capabilities, efficient project planning and management coupled with asset ownership and -- are our key to success. Our robust and well-diversified order book gives us confidence to deliver our growth targets in the foreseeable future. With our expertise and track record -- of our track record, we are hopeful to -- of being awarded more such Urban Infra Projects across the country. The recent budget had laid emphasis on our urban infrastructure and increased budgetary allocation, which should help our organization. Now allow me to give you an overview of our operational performances during the quarter. With regards to order book, our total order book as on 31st December 2019, stands at INR 12,433 crores, wherein metro accounts were approximately 55% followed by flyover and bridges, which accounts to around 31% of our order book. Our stand-alone financial performances for Q3 and 9-month ended FY '20 is as follows: revenue from operations for Q3 FY '20 grew up by 16% to INR 793 crores as compared to INR 686 crores in FY '19 Q3. Revenue from operations for 9-month ended FY '20 has grown up by 15% to INR 2,093 crores as compared to INR 1,819 crore in 9 months ended FY '19. And the EBITDA has also grown up by around 6% to INR 118 crore as compared to INR 111 crore in Q3 FY '19. EBITDA for 9-month FY '20 has grown up by 11% to INR 337 crore as compared to INR 302 crores in 9-month ended FY '19. The PBT has also grown up by 10% in the Q3 of FY '20 to INR 74 crores as compared to INR 67 crore in Q3 FY '19. The PBT for 9-month ended FY '20 has grown up by 7% to INR 193 crore as compared to INR 181 crore in 9-month FY '19. The PAT for Q3 FY '20 has grown up 26% to INR 56 crore as compared to INR 44 crore in Q3 FY '19. The EPS, which is not annualized though, for Q3 FY '20 stood at INR 7.36 per equity share as compared to INR 5.84 per equity share for Q3 FY '19. PAT for 9 months has grown up by 27% to INR 153 crore as compared to INR 120 crore in 9-month FY '19. EPS, again, not annualized, for 9-month FY '20 stands at INR 20.16 per equity share as compared to INR 15.83 per equity share for 9-month FY '19. With this, now I leave the floor open for questions. Thank you very much.

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

Sir, in 9 months, we have done good in terms of the execution, INR 2,092 crore. So we guided for FY '20 INR 3,200 crore revenue and for FY '21 INR 3,600 crore. So I just wanted to know, are we able to do INR 1,100 crore revenue in the last quarter of this year? And is there any change in the guidance for this year and next year for revenue?

Shravan, we expect that we'll surely be able to maintain the guidance given by us for the current and the next year as we are quite on toes. And if you look at the top line that we did for the Q4 of last year also, which was around INR 900 crores, so we are sure that we should be able to match up the guidance given by us.

Yes. Sir, primarily because why I'm asking is because I just wanted to understand 2, 3 projects, particularly Dwarka I, where -- Package 1 where we have already received the appointed date, where in this quarter, there was no revenue. Secondly, on Line 9 Mira Bhayandar, I think there is no revenue in this quarter; and Line 4A Gaimukh, there is also no revenue in this quarter. So I just wanted to know how much of revenue are we factoring in the fourth quarter for these 3 projects: Dwarka Package 1, Line 9 and Line 4A?

Well, for Line 9 and Line 4A, the orders have been received in the month of September 2019. So it's only 3 months now. And in 3 months, there are a lot of -- means, even the agreements got signed only in the month of October. So once -- the initial 6 months are always the time where we have to do a lot of preparatory works right from documentations, design basis report submissions, all your quality assurance plan, safety plan, and there are a lot of documentational work and site survey work, wherein we have to -- we do a lot of physical work in terms of making the alignment survey, soil investigation works, barricading, taking traffic permissions. So all these things don't count into the revenue part of it. So -- but for sure, in the Q4, we'll have a contribution coming in from Line 9, Line 4A as well as Dwarka Expressway. And the exact numbers can't be given because it's just part of the work, so I think you'll appreciate that.

Yes, yes. No issues. Because I actually see a lot of -- as you are rightly saying, a lot of preparatory work, particularly in Mira Bhayandar, but there is no revenue, so that's what particularly I asked because I saw continuously there are -- work is going on. So that's what I wanted to ask. Secondly...

You'll start seeing it in this quarter.

Okay. And sir, on Package 2, Dwarka, when -- because last time, we were expecting 15 December appointed date. So now what is the status when the appointed date will be there?

As we had mentioned that we have told them that we need a clear site, for which within a month's time from now, we should -- we have told you even last time around Feb is what we are expecting. So within the next 30 days' time, we should get the start date from -- for Package 1 as well. Package 2, we have already got.

Okay. And sir, on the -- last time, we said we bidded for INR 1,000 crore Worli-Sewri. So what is the status? And what kind of -- also you have mentioned, in terms of the Mumbai Metro Line 10, 11, 12 and, also, which are on the DPR stages and also Delhi Metro Phase 4. So what kind of a tendering we can see? What kind of opportunities are there in next 6 months?

Yes. So Shravan, with regards to Worli-Sewri, we have learned that we are the lowest bidder. But we have not been informed anything, so we cannot comment much on that. But it's on the positive side. So there is nothing to worry about it. And with regards to Package 10, 11, 12 for the metro lines that you are talking about, the DPR is in progress. And once they get a nod from the government, they will float these tenders in a short span of 4 to 6 months' time. This is what we are expecting.

And Delhi Metro, how much tendering we can see in next 6 months?

We are expecting close to like around INR 20,000 crores of underground metro works that will be coming up very shortly in Delhi Metro for the Phase 4, as well as also in Delhi, NCRTC has started tendering for underground projects and currently a INR 1,600-crore project is already into bidding stage, as well as Gujarat has come up with new tenders, Ahmedabad Metro, wherein they have floated tenders for Gandhinagar Metro, which is around close to INR 2,000 crores for the civil jobs as well as Surat Metro is about to be bidded. At the same time, there are a lot of other projects from -- means for this, what you call, I mean to say, the GMLR project, which is a tunnel from Goregaon to Mulund. So that tendering is around INR 5,000 crores. So there are a lot of opportunities. In short, if you talk about Maharashtra alone or if you talk as a pan India basis, there's a lot of opportunities that is there for all the infra companies. And I think this is the time where people can really think of working in a comfortable scenario.

Yes. That's good to hear. So considering all this, now how much more -- if I include this Worli-Sewri INR 1,000 crore, apart from that, how much more are we expecting in terms of this year and the next year order inflow?

See, as you would appreciate that we are already in the middle of February. So there is nothing big in terms of order book that we can expect in this quarter, some couple of crores here and there, it's okay. But as such, whatever tendering process will happen, the order book should flow in only in the next -- Q1 of next year.

Okay. So for the full year, how much are we planning to add in the next year?

Sorry, come again?

For full year FY '21 next year, sir, how much more fresh orders are we planning to add?

See, for the next quarter -- I mean, for the next year, we are expecting order book grabbing of around INR 5,000 crores. With the whole year, we should expect at least INR 5,000 crores orders to flow in. This is what is our internal target.

Yes. And lastly, sir, on some balance sheet numbers, what is the gross debt, cash, inventory, debtors and payable?

The gross debt is INR 703 crore. Hello?

Yes, yes. Yes, sir. Go ahead.

Gross debt is INR 703 crore, inventory is INR 821 crore and FDR -- the INR 387 crore is FDR.

Okay. So -- and including FDR, what is the total cash?

This is totally INR 420 crores.

INR 420 crores. And sir, what is the debtors and payables?

Debtors is INR 782 crore and creditors is INR 300 crores.

The next question is from the line of Aniket Kulkarni, an individual investor.

Hello?

Yes, Aniket.

Sir, I need to know about the Delhi-Meerut RRTS project. So are we bidding for that project?

Yes, it is not NRCS, it is NCRTC. And for that, we will -- we are surely looking forward to bidding for that project.

Sir, and what's the opportunity size in that project?

Opportunity in the sense?

I mean how much order inflow can we expect from that project?

It's a project of around INR 1,600 crores, that's what I mentioned.

Okay, sir. Sir, and I just missed the order book guidance for next year. So can you please repeat?

Well, we are expecting around INR 13,000 crores to INR 15,000 crores somewhere is what we are looking at.

So the total order book will be around INR 15,000 crores by next year?

Yes, INR 13,000 crores to INR 15,000 crores, anywhere between that because we will be having around an execution of close to INR 1,200 crores in the current quarter -- in coming quarter. So we expect to stay anywhere between INR 12,000 crores to INR 15,000 crores.

Sir, and just looking at your presentation, why has the EBITDA margin dropped by 1.35%? Any specific reason for that?

See, EBITDA margin, if you see on a year -- on a 9-month basis, you will see that we are already around 16%. So every -- in a work of infrastructure work that we are carrying out, it totally -- every quarter cannot be the same. But what is more important to be seen is on a year-on-year basis, what margin you're making because the nature of work is such that there are certain times where the margins get fluctuated here and there. But as a project and as a -- on a year-on-year basis, if you see, the margins are well maintained at 16%, and we are sure to maintain that.

Sir, and what's the status of CIDCO Coastal Road Project and NBCC project? So are they going on?

Yes, yes. They have been -- the CIDCO work has already been awarded to us. And -- means, again, it is on the preparatory stage because it's been recently awarded.

So have we received the appointment date for CIDCO project?

[Foreign Language] Yes, CIDCO, we have already declared.

The next question is from the line of Shubham Jeswani from Mittal Analytics.

Sir, Yogansh here from Mittal Analytics. Sir, a quick question on your order book. So you have a fairly good order book and you anticipate some more orders coming in. So can you also throw some light on how are we planning to fund these orders? Do we see debt going up further? Or -- and do we have any debt equity in mind that we would like to maintain?

Well, we are not looking at any major change in debt ratios because as of now, our gross debt is INR 703 crores, which is just 8.39% debt-equity ratio, which I guess you -- everyone will appreciate that it's much better than the peers. And with the internal cash accruals of the project and with the mobilization advances which are available to us, we are quite confident that we'll be able to -- there will be no major increase in the debt.

Okay. Understood, sir. That's great. Secondly, sir, if you could also just broadly highlight the execution time line that you will have for this INR 12,000-crore, INR 13,000-crore order book, so what kind of annual run rate do you see going forward, say, in FY '21, how much are you expecting?

On an average, it's just between 3 to 4 years because certain projects are like from 30 months to 50 months -- 48 months. So like Metro Line 9 is having a completion period of 48 months, having a combination of elevated and underground works. So on an average, 3 to 3.5 years is what we expect for these projects.

Okay. And sir, lastly, a couple of months back, there were some news articles when the new Maharashtra government was formed that the orders were again reviewed and there was a lot of disturbance on these orders. So are we seeing any kind of impact on business or any issues or any tussle with -- on some projects or something?

Yogansh, I think you will appreciate that immediately 2 days after that statement was being made by the Honorable Chief Minister, it was already being clarified by the next day that they just wanted to have a check on the awarding and whatever things were in there for the process. But in terms of award of the contracts, in terms of execution and getting payments, everything is smooth, and we have been receiving payments very regularly. And we don't see any impact as such on the change -- due to the changing political scenario.

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

Sir, I wanted to understand on the recently canceled orders in Mumbai Metro. We have seen some cancellation happening in Mumbai Metro because of the delayed execution. So what would be the next step? Will it come as a fresh bid? Or how it is going to happen, sir?

The tenders are already available online, and it's been -- it's on bidding now. So Line 7 contract has been, which was CA-01, that particular contract has been canceled, and it's already been put for bidding, and the submission is on 25th of -- 24th of February.

Okay. So there are 3 contracts in total, which were canceled, if I...

That is right. That was CA-01. And in Line 2B, there were 2 contracts: one of INR 1,000 crore and the another of nearly INR 500 crores. So all 3 tenders have been put for bidding, out of which Line 7 CA-01, which is the most priority work for them, that has already been put on bidding. And that's to be submitted by 24th of this month.

So this could be for the balance work. So what is the cost...

It's around 300, 150 and -- around INR 275 crores.

Balance work is INR 275 crores. Okay, okay. And sir, can you just tell me what is the order inflow so far in this year in terms of value and segmental breakup?

INR 4,289 crores, say, INR 4,300 crores is the order inflow in the 9-month ended FY '20.

And sir, 9 months revenue from metro and nonmetro in [ 3 ] and this quarter, if at all, it is possible to get a breakup?

In terms of revenue?

Yes, sir.

Okay. So around 73% of the revenue comes in from metro line and -- from the metro projects and around 27% from the others.

Okay. This is for the 9 months, right?

9 months. That's right.

And sir, what -- can you just highlight on the status of the Mumbai Metro 3 underground project? How much work has been completed? And at what stage are we at?

So around 50% of Line 3 project is completed and around 75% Metro Line 2 is completed and Metro Line 7 to the tune of around 90% has already been completed.

Okay. So now at least these are in the -- so Metro Line 3, we can -- can we expect it to complete by end of next financial year? What is the target?

Well, I think it would take around 1.5 -- 18 months at least from now because all the problematic situations which are there when you start the work has already been sorted because there are a lot of utility shifting and some unexpected issues, which were not expected or which are not known to even the government bodies, so that things have already been sorted. And now what -- the excavation works are completed and RCC has started, the structural work for the main structure. And also, the tunnelings are being completed in quite a good areas. So I think 1.5 years is at least what you should expect. One year is too short to complete it.

Okay. And sir, just finally, on the bank limits, nonfund and fund limit and utilization levels?

Yes. So we have a sanctioned limit of around INR 4,430 crores, out of which 78% is only utilized till now. That's around INR 3,500 crores approximately.

Sir, this is the total limit, but can you give me the breakup between nonfund and fund?

So fund-based limit, we have INR 700 crores, wherein only INR 500 crores has been utilized, that is 72%. And for term loan, it is INR 263 crores, out of which only INR 194 crores has been utilized, which is another 74%. So major fund -- limit is nonfund based, which is INR 3,450 crores, out of which INR 2,800 crores is what has been utilized.