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

Ladies and gentlemen, good day, and welcome to the J. Kumar Infra Projects Limited Q3 and 9 Months FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Before we begin, a brief disclaimer. The presentation which J. Kumar Infra Projects has uploaded on the stock exchange and their website, including the discussions during this call contain or may contain certain forward-looking statements concerning J. Kumar Infra Projects business process and profitability, which is subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. I now hand the conference over to Mr. Kamal Gupta, MD, J. Kumar Infra Projects Limited. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of J. Kumar Infra Projects, I welcome everyone to the Q3 and 9 months FY '20 earnings conference call by the company. And joining me on this call is Mr. Madan Biyani, our CFO; Mr. Arvind Gupta, VP Taxation and our IR team; and Mr. Nalin Gupta, MD of J. Kumar. 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. We are excited to deliver another quarter of heavy performance with stable EBITDA margins and debt level. We are witnessing strong execution momentum across all our projects and our focus to create value to all our stakeholders. We are honored to have played our part EPC construction of Metro -- Mumbai Metro Park Project 2A and Line 7, compromising of 35 kilometers or wider than 30 stations concepted into Phase III. The project was recently dedicated to Mumbaikars by our Honorable, Shri Narendra Modi ji, our PM. Secondly, we have also opened the Kalwa Bridge, which is at Thane on 30th November 2022. We also received the fundament date of Vadodara Mumbai Expressway project of 19th Jan 2023. Further, we are in process of constructing a further 61 kilometers of metro rail network across India. The recent Union budget with highest ever capital outlay of INR 100 lakh crores clearly replace government focus towards building a world-class infrastructure in the country. The multiplier effect which the infrastructure sector plays is in overall economic growth has been exercised. J. Kumar, with its execution track record and sound financial health will be clear beneficiary to the government's continued impetus. Coming to the performance highlights of Q3 FY '23, the revenue from operations for Q3 FY '23 has gone up by 10% to INR 1,062 crores as compared to INR 966 crores in Q3 of FY '22. The operating margin, that is EBITDA for Q3 FY '23 stood at INR 152 crores as compared to INR 139 crores of the preceding year. The EBITDA margins for Q3 stood at 14.3%. The PBT for Q3 has gone up by 17% to INR 97 crores as compared to INR 82 crores of the preceding year. And the PBT margin stood at 9.1% as compared to 8.53% in Q3 of FY '22. The PAT for Q3 FY '23 grew by 21% to INR 71 crores as compared to INR 59 crores in Q3 FY '22. PAT margins for Q3 FY '23 stood at 6.7% as compared to 6.1% in Q3 FY '22. Coming to the performance highlights of 9 months ending FY '23, revenue from operations for the 9 months has gone up by 27% to INR 3,069 crores as compared to INR 2,413 crores in the preceding year. The EBITDA for 9 months stood at INR 438 crores as compared to INR 345 crores of the previous year. PBT for the 9 months has gone up by 53% to INR 73 crores as compared to INR 179 crores of the previous year. And the PAT for 9 months of FY '23 has gone up by 52% to INR 201 crores as compared to INR 132 crores of the previous year. Our order book -- total order book as on 31st December '22 stand sat INR 1,209 crores. The order book includes metro projects, elevated and underground contributing to 52%, while Kalwa Bridge's roads contribute to 34% and the others contributing to 14%. While we are optimistic on India growth amidst the continuing geopolitical uncertainties. Before taking the Q&A, I would like to reiterate the vision of the company. One, with strong financial and technical merits, we envisage becoming $1 billion revenue company by FY '27. Our endeavor is to reduce gross debt level to in minimum terms, and the object is continuously to improve shareholders return ratio, divesting in people, technology and process. Thank you so much.

[Operator Instructions] We have the first question from the line of Mohit Kumar from DAM Capital.

My first question is on the order inflow guidance. If I remember correctly, I think the order inflow guidance given was INR 5,000 crores, and till date we have done INR 1,600 crores, if my numbers are correct. So how do you see Q4 -- Q4 in general? And also can you comment on some orders from -- there are some order function in metro just picking to get finalized, I think nothing has come so far as of now, right?

Well, so Mohit, this order book, we have done an order book of INR 1,680 crores, as you rightly said, and we have also bagged in additional order for -- as the variation for our Delhi project which is INR 500 crores, which we received recently. So altogether this will take something like INR 2,200 crores. And the order book as of today stands at INR 11,200 crores, including that INR 500 crore variation order that we have received. So I think the current status and with regards to Chennai Metro, the date of submission has been extended. So we are awaiting the fresh rates when it will be submitted. And we have also -- we are already at the verge of the final submission for 2 tenders for MCGM, which is one of the Goregaon-Mulund link road and the other of the Bhayandar Coastal Road, which is INR 3,000 crores and INR 7,000 crores approximately. So close to like INR 10,000 crores approximate orders that we are going to bid for. So that is, again, a very -- we will be very keen on that project. And again, there are various orders that's coming up to the tune of around INR 11,600 crores that we have already bided. So -- and out of which we are also in 1 tender of Vht2 [indiscernible] STI, which is again a sea bridge tunnel for MCGM. And so the order pipeline looks to be quite strong. So in Q3, we should be able to achieve the target even by Q4 what we have mentioned. And maybe 1 month here and there if there is any change.

So we have maintained the guidance of [ $1 billion ], right, for the entire year, right?

In the Q1 also, like maybe because of the processing...

Sir, one thing was on the Dahisar coastal road [indiscernible] this to happen in Q4.

Goregaon-Mulund Link Road.

Goregaon-Mulund Link Road and Dahisar coastal road do you think or both of these can get finalized in Q4 or it will spill over to Q1?

It should be Q3 -- or Q4 or it can also go to April. That is...

The bid submission happened or you're still waiting?

So when you say extension, which is as of now, which the submission date is 10th of February. So there are some minor internal changes happening in the department for scope. So that's how the tender is getting delayed for its due process.

And sir, on the INR 116 billion the loan process where the bids have been submitted, what are the kind of projects they are? Are they still in Maharashtra or they are across Pan India. So just throw some -- give some color?

They are across pan India. It's not only Maharashtra. We reported something Bihar, Bangalore, Pune and Mumbai.

We have the next question from the line of Rahil Shah from Crown Capital.

Just a question about the guidance for the next financial year in terms of...

Mr. Rahil Shah, your audio is very low. Could you go off the speaker phone and come closer to the microphone?

Hello, is it audible?

Yes, this is better.

Okay. Just asking about the guidance, if you can provide something in terms of revenue growth and EBITDA margins for the next financial year, how does it look? I see your order book is quite strong. So can we maintain these numbers?

The guidance for this year will be mostly surpassing our guidance of INR 4,000 crores what we have given for FY '23. So we feel it will be around INR 4,000 crores to INR 4,200 crores, and we'll be able to maintain the similar EBITDA margins of 14% to 15%.

We have the next question on the line of Parth Kotak from Alpha Plus Capital.

Congratulations on a good set of numbers. Sir, you talked about in your comments before the concall about a $1 billion target, what kind of CapEx do we envision to do to reach this target? And what kind of gross block should we look at an approximate ballpark number that you would have in mind?

So around INR 100 crores to INR 150 crores of CapEx that incremental CapEx as well as some for the existing maintenance of the existing machineries and some for buying the new ones. So INR 100 crores to INR 150 crores is what we are expecting. And it would also depend upon the geography in which area we bag the order. So depending on that, the CapEx will vary. But -- and also like -- one is geography and the other is nature of... So it is like INR 100 crores to INR 150 crores of CapEx we'll be incurring every year. So like for that $1 billion by '27, it will be for the 3 years as it is what we have, yes.

Right. So INR 500 crores of CapEx, fair enough. And secondly, sir, I also want to understand your thought process. Is my understanding correct that in terms of qualifications for the projects that you're bidding you're up there, in the sense we've done so many prestigious projects. So in terms of qualifications, there should be no -- there should be no stoppage. So then why can't we achieve this $1 billion top line slightly earlier. I'm saying by FY '27 is also a great target to achieve. But I'm saying there are infra companies who probably have this problem of qualification for bidding for large orders, which shouldn't seem to be the case in our company.

So we always believe in giving a figure which is more realistic and the growth that we look for is a stable growth for our company because we always -- if you look at the financial numbers of J. Kumar, you will see that we have been growing at a CAGR of almost like 16% to 17% for the last 5 years. And looking at this, I think 2027 is more realistic number. And of course, with the amount of the projects that are being planned by the government, If it happens earlier, always it's only good sign. But 2027 is more realistic what we would -- what we are trying to put it here.

[Operator Instructions] We have the next question from the line of [ Raj ] from Arjav Partners.

Looking at your FY '24, how were to be the sales look like -- looking at the strong execution you have?

So like there will be growth of like 15%. This is what we have said before also. By FY '24, also, like there will be growth of 15% from the existing numbers.

We have the next question from the line of Aman Agarwal an Individual Investor.

Is there a buyback plan on promoting to the stake on the cards?

Not on immediate basis, Mr. Aman. We don't have any buyback plan on immediate basis, let's see how it goes.

And any plan to increase order book up to INR 20,000 crores? And what is the timeline to achieve INR 20,000 crores order book?

Yes. So like when we have said that we want to be a $1 billion revenue company by FY '27, we also emphasized that by that time our order book will be minimum INR 20,000 crores.

Okay. So it will be [indiscernible]

We expect that it can happen in 1 to 2 years' timeline, we should be able to achieve this INR 20,000 crore order book also. But we always like to emphasize, J. Kumar likes to book order always with margins that are -- that we have been maintaining. So bagging orders and taking the order book on a higher side is, I don't think a big challenging job. But if you take orders of the right, I would say, technically expertise job -- expedite job and where you can make margins what we have been making of 14% to 15% is something which is what we are looking at. So already sitting at an order book of INR 11,000 crores plus to back INR 9,000 crore order at the right time and at the right location is what we are looking at. And we are very hopeful that in a year or so time we should be able to come very -- reach this INR 20,000 crore order book target.

So majority of the project will be metro project only or it will be an addition of Metro and road and irrigation project?

So as of now, if you see, we are at 54% approximately, we see order book and revenue 50% to 55% that's coming from metro sector. So we expect looking at the huge amount of metro works and the real jobs that has been planned by -- in the current budget as well, we should be able to -- it would be like a 50%, 50% sort of mixture that we should be having in the order book.

We have the next question from the line of [ Bhavin ], an Investor.

Congratulations for a good set of numbers, sir. Just a quick question on the debt position as on December, if you can elaborate on that? And a follow-up question would be on the return ratios. I'm sure on annualized maybe if you can throw some light on that as well?

I guess your first question was regarding debt. At INR 450 crores to be precise is the current debt with a debt ratio of around 0.2 gross debt. And what was your second question? I didn't get you.

Sir, if you can -- related question was on the return ratio on an annualized basis, ROE and ROCE.

So ROE, ROE has been 12.7% as on December '22 to vis-a-vis 10.4% as of March '22. There has been increase of 2.3% in ROE and ROCE has been approximately 17.8% in -- as of 9 months FY '22 vis-a-vis 15.5% as on FY '22. So there's also an increase of almost 2.5%.

We have the next question from the line of Prem Khurana from Anand Rathi Shares.

Thank you for taking my questions, sir, and congratulation on good set of numbers. So I think -- I mean, when we interacted the last time during the Q2 results call, we had bid by kind of almost INR 300,000-odd crores. But when I look at the way it's been for us in this quarter, we could have only 1 project of almost of INR 320 odd crores. So possible to share what happened with the balance INR 27,000-odd crores of order backlog, whether -- I mean the bids are yet to be opened or we couldn't have success with some of these or are these are yet to be kind of be bid out. If you could help us understand the competitive intensity is what basically I want to understand.

Mr. Prem, the big pipeline what we said of INR 30,00 crores, all the tenders have not come for tendering stage. So they are like into the process. So whatever tenders have come, like INR 11,000 crores, we already bid for. So that are in process and like we'll be putting in this coming quarter as we are they like mature.

Sure. And sir, any comments on competitive intensity, how is the competitive intensity? And we had some bids in Chennai and all and we participated that we couldn't have success and does it mean the competition is getting aggressive? Or that someone could have and we could not have it?

So competition has always been there. It's not that it's not there. But we put our numbers with EBITDA margins like 14,000, 15,000 and try to get it. So like we had, of course, reached that Kochi work with a very close margin. But there's many more to come, so there's no issues. So competition is existing very much in the market and the specialized jobs which are there. So we try to focus on that. Nationalizing, you can see that there are -- the amount of competition is pretty high. So we keep bidding at our price, but we are very hopeful that to achieve the order books that we are targeting, maybe 1 quarter here and there, but we will be able to achieve the target that we are looking at very comfortable.

Sure. In terms of INR 11,000 crores number that you already bid for, could you break down in segments and then how much would be in metro and how much would be your other segment, like the flyover, bridges or civil?

So metro is constituting to around only INR 1,000, INR 1,500, so majorly other flyovers and bridges.

Okay. Okay. Just some bookkeeping question if you could help me with, please. I mean, how much of the CapEx that we've incurred during the 9 months or, let's say, Q3?

Sorry, come back, explain.

CapEx, capital expenditure that you have incurred during Q3 or 9 months, whatever is readily available with you?

CapEx for like 9 months is INR 115 crores. And like for this quarter it was INR 54 crores. We are looking for as we have guided like INR 150 crores on the year-end, which includes INR 115 crores.

So another INR 35-odd cores roughly.

We have order for 1 TBM, which is costing around INR 50 crores additional.

Okay. Okay. Sure. And sir, currently help me with the bookkeeping number in terms of mobilization advances, trade receivables, payables, inventories.

Mobilization advances has been INR 560 crores as on December '23.

Trade receivables, unbilled revenues. Trade receivables has been INR 1,190 crores as of December '22. And unbilled revenues of almost that number? Unbilled revenue.

Has been INR 546 crores so as of December.

Okay. And sorry, one more last, rate payable if you could help me please.

Rate payable was at INR 598 crores.

We have the next question the line of Shravan Shah from Dolat Capital.

Sir, just continuing the previous question, so what is the inventory number and retention money?

Inventory, I told you work in progress, the INR 546 crores and raw material inventory was INR 377 crores. And take payables as I told you INR 598 crores.

Retention money?

Retention money has been INR 238 crores receivable.

Okay. Got it. So 2 things. First, even for this year, so now the start of fourth quarter, so last time we said that we are looking at close to INR 4,200 crores revenue for this year. So that means for the fourth quarter we need -- maybe we will be looking at a degrowth. So can we see a slightly higher number in terms of our guidance? So can we see INR 4,350 INR 4,400 crore kind of a revenue for this year?

Mr. Shravan, it's like last year, it was INR 1,114 crores. So of course, we will surpass this and we believe in saying less and doing more, Mr. Shravan. So when we are giving you the guidance of INR 4,000 crores, INR 4,200 crores, so that will be around INR 1,200 crores of revenue.

Okay. Okay. Because even then also the growth should be lower even if I look at INR 1,200, so it will be close to 2%, 2.5% growth. So normally till now we have done at 27% this quarter.

INR 1,200 will not be 2% growth. The last number was INR 1,114, so INR 1,200 crore would be around INR 85 crores more and will be around 7%, 8% or so. It will not be 2%. And if you see, Shravan, like year-on-year it will be around 20% growth. Okay. Okay. Okay. Got it. Year-on-year growth and not the quarterly, in some quarters, you get as more and less. So what is important is on the year which is what we are making at the total top line. So that quarter represent us.

Okay. Got it. Got it. So -- and in terms of the working capital core, whatever the numbers you are saying. So broadly it remains the same at 78-odd days. So do we expect some improvement by year-end or will it remain at the same level?

Yes, there has been continuous efforts to improve the working capital cycle. There also, if you see in comparison to last quarter it's a minor increase by 1 or 2 days only as on December. But by year-end the cycle improves much better, the collection efficiency and all and the plan in terms of -- so we are on track, and we want to bring it out to 120 days.

Okay. Okay. Got it. The other thing is that in terms of the date also would like to remain at the same or current INR 450 crores, INR 454 crores. So -- or do we see a INR 40 crore, INR 50 crore kind of a reduction by year end?

So we will -- we are looking to maintain the debt levels of around INR 450 crores to INR 500 crores.

Okay. One more thing in terms of the -- when we said we are one [indiscernible] tunnels for project from the MCGM, what's the value and when can we see it.

So it's a INR 220 crore job and wherein J. Kumar share is around 60%.

Okay. So we will be only doing a 60 or for the technical qualification we have taken a bidding the JV.

So 60% is for J. Kumar.

Okay. Okay. Got it. And so apart from the INR 1,600 crores that we have bided. So this entire in terms of opening the bids by March and this will be open?

Yes, more or less it should be opened by March.

Okay. So any specific big -- any big projects that you want to either -- you mentioned the INR 1,500 crores is a metro, INR 1,000 to INR 1,500 crores. So any other these projects that you want to highlight?

No, it's really highlighted when we become.

Okay. Got it. So -- and apart from that, what's the pipeline in terms of the -- by March and how much more we are planning to bid?

As we told around INR 30,000 crores.

Sorry, sir?

The bid pipeline is as we said around INR 30,000 crores. So INR 11,000 is already done. So maybe another INR 15,00 crores to INR 20,000 crores are in pipeline, so which may be bided by Q1 of the coming year. Something will be in Q4 and some will be in Q1.

We have the next question from the line of Ankit Babel from Shubkam Ventures.

Sorry I joined late, so pardon me if I'm asking a repetitive question. Sir, 2 questions from my side. First was that I read in some of the media reports, wherein J. kumar was disqualified in one of the high-speed rail orders. So that was a surprise to us. So just wanted to know what was the reason and why we got disqualified?

So even the reasons are not been satisfied to us till now. So we have gone to the court, it’s subjudice for the moment.

So you have not been told that either, they just disqualified you?

Yes. So it's not been specified, so we are in court and the matter is subjudice at the moment.