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

Ladies and gentlemen, thank you for patiently holding. The line for the management has been connected. Over to you, sir.

Thank you, Michelle. Good afternoon, everyone. On behalf of J Kumar Infraprojects, I welcome everyone to the Q4 and FY '23 earnings conference call of the company. Joining me on this is Mr. Nalin Gupta, MD; Mr. Madan Biyani, CFO; and our IR Team. I hope everyone had an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchanges and on our company website. The performance of FY '23 has been remarkable and we continue to accelerate the profitable growth and build our position as a leading urban infrastructure EPC company. We are excited to deliver another year of healthy performance with stable EBITDA margins and debt levels. We are witnessing strong execution momentum across our projects and are focused to create value to all our stakeholders. The recent Union Budget with highest level capital outlay of INR 10 lakh crore clearly reiterates government's focus towards building a world-class infrastructure in the country. J Kumar with its execution track record and sound financial health will be clear beneficiary of the government's continuous impetus. We have received appointed date of Vadodara-Mumbai Expressway project of NHAI on Jan 19 2023. Awarded projects of around INR 500 crores in Q4 FY '23. Also we are in the process of constructing a further 61 kilometers of Metro rail network across India. Coming to the performance highlights for FY '23. Revenue from operations for FY '23 grew by 19% to INR 4,203 crores as compared to INR 3,500 crores in the preceding year. EBITDA for FY '23 grew by 18% to INR 597 crores and the PAT for FY '23 has gone up by 33% to INR 274 crores. The PAT margin for FY '23 stood at 6.5% as compared to 5.8% in preceding FY '22. The order book position as on 31st March 2023 stands at INR 11,854 crores. The order book includes Metro project contributing around 53% while flyovers, bridges and roads put together is 36% and others are 11%. I'm also glad to share that the ROE has improved in FY '23 to 12.4% from 10.4%. Also happy to share that ROCE has also improved for FY '23 to 17.6% as compared to 15.2% in the preceding year. The Board of Directors has recommended dividend of INR 3.5 per equity share of INR 5 each subject to the approval of the shareholders at the ensuing AGM of the company. Before we begin the Q&A, we would like to emphasize that our robust execution capabilities coupled with strong aggregation of asset base and enabling efficient execution will translate to strong revenue growth in coming years. We are aggressively targeting projects which we believe will help us to maintain our current growth and margin profile. We are confident of being awarded projects in excess of INR 5,000 crores during FY '24. The company has sufficient cash as well as unutilized working capital facility to undertake large projects and also to ramp-up execution of current projects. Thank you. And now we can start the question-and-answer session, please.

[Operator Instructions] We have the first question from the line of Shikha Mehta from Equitree Capital.

Congratulations on a great set of numbers. I just have a couple of questions. Sir, can you can help us understand how FY '24 is going to look from a revenue growth perspective and from a margin perspective? That's number one. And number 2, can you help me with how our order book on the Metro side has moved up from FY '21 to '22 to '23 now?

Sorry, Shikha. You were asking the second point is order book position as on last 3 years, right, for Metro?

Only for Metros, right?

So if you see the order -- we'll have to exactly work out the Metro order book numbers, give us some minutes for that. And for this margin, we are expecting a -- we'll have to work out, Shikha, the metro growth that has been there in the order book. But if you look at the order book, which is INR 11,854 crores as of now, 54% of the order book comes in from the Metro sector as of now as on today.

Sir, I'll tell you why I was asking this question. From what I'm understanding especially in Maharashtra, the competition on the metro side is getting a bit stiff which earlier used to be kind of a monopoly situation for us. So if you can help me understand that a bit better, it would be helpful.

Well, I would say that metro sector is in area where there are limited contractors pan India though the competition level exists, I wouldn't deny to that, but it is a very core competency area where you have limited players executing that size of projects whether it is elevated or underground. So currently also as J Kumar, we are executing works in Bombay, Pune, Surat, Ahmedabad, Delhi, New Bombay. So metro projects, I would say there are certain areas where the local players who qualify into the smaller ticket size are more active. But if you look at the larger ticket sizes where [ 1,000 ] plus the size of metro projects, there are around 7 to 8 active metro players who are capable and who are qualifying into such sector. So though competition is there, but the metro sector the opportunity is pretty high and even now there is an allocation close to around INR 20,000 crores, which has been allocated only for metro sector. So the opportunity is quite wide and I think looking at the company's appetite, we are very confident of getting a reasonable size of orders from the metro sector though we have very diversified areas of operation as of now.

Sir, our key area of competence would be between INR 1,000 crore to INR 2,000 crore orders, right? That's the right way to look at it, right? Because INR 2,000 crore onwards again we'd need a partner to tie-up with, right?

No, I would likely differ with your point, Shikha, because J Kumar we have been bagging orders of INR 2,500 crores. INR 2,000 crore is Metro Line 9, which we have bagged on a stand-alone basis and with the execution of Metro Line 3 that we have already which is 86% completed, we will be entitled to take up the jobs of bigger magnitude up till INR 3,000 crore, INR 4,000 crore as well on a stand-alone basis.

Got it. Okay. And if you can just give guidance for FY '24 on revenue growth and what margins we should look at?

So we have been growing on an average at the rate of 15% CAGR and we expect that the revenue growth for the FY '24 and '25 would be around 15% on a year-on-year basis.

And margins will be around 14% to 15%.

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

Sir, before asking a question, just on the number front just trying to understand. It seems there is a significant increase in scope of work in our existing orders so as on December our order book was INR 11,209 crores; now INR 11,800 crores. So [ INR 665 crores] addition increase and we did a revenue of INR 11,134 crores. Order inflow in fourth quarter was INR 500-odd crore so significant difference. It seems that across the board we should have seen an increase in scope of work. So if you can help me. How much increasing scope of work we have taken in the fourth quarter and for the entire FY '23?

You're right, Shravan. So we do the correction at the end of the year every year and so we do announce whatever orders are directly awarded to us. There's like price escalation clause as we've always been saying like all our contracts took our price escalation clause. So there is some INR 660 crores of price escalation plus some variation and change in scope of the work that is additional work and utility. So that all combined comes to around INR 1,200 crores, which has been added in the year-end and this is a regular thing we do year-on-year.

Okay. Got it. Second thing is, sir, for this fourth quarter particularly so any specific project or contract where we have seen -- so actually the growth for this quarter is just at 2%, definitely for full year it is at 19%; but fourth quarter it is much lower. So any specific reason you want to attribute why we have seen a slow growth in fourth quarter?

So if you see the Q3 was really very good and Q4 also we have done nice. If you see year-on-year, as you have rightly noticed, there is a rise of almost 19% so even we have to see the aggregate figures only always, combined figure of the year which is very good in terms of top line also and bottom line margins also. And coming to the second point of -- second point was Q4? What was the second point, Shravan?

So that was any specific reason that you mentioned that one has to look at the yearly number and not quarterly number. So that I got it. So next question is in terms of the order inflow, sir. So last time also we were looking at close to INR 5,000-odd crores. We got INR 2,652 odd crores. So just trying to understand this INR 5,000-plus crores that we are looking for this year, will it be spread across or at the same time in terms of the opportunity? Where we have bidded, is there any L1? How confident are we that we are able to get more than INR 5,000-odd crore?

So Shravan, we are already L1 in 2 projects, one of INR 100 crore and one of INR 386 crore where we have already been declared as L1 and in the Q1 we should get the order for this. This is 1 part. With regards to the slow inflow of orders for the last year what we expected was we agree, but it is mainly because of the delay of submission of the tenders which was being postponed by the departments. So we have already submitted bid of around INR 16,000 crores, which was for C3 for the high speed railway. The bid has already been submitted. The bid submission got postponed and that's how the L1 has not been declared. But we expect by mid of June these tenders will open and we are quite hopeful about that job. As well as there are some other jobs of road tunneling, metros NHAI that we have been bidding and the bid submission has been delayed. That's how this FY '23 order book stood at INR 2,600 crores that we bagged and another INR 500 crores that we are L1 into so INR 3,100 crores. But this year we are very sure because the ticket size that J Kumar is looking at and the average ticket size is INR 1,000 crores to INR 5,000 crores minimum. So in that situation, 1 or 2 orders that we are looking at striking would take the order book requirement to the figures that we are expecting.

That is great. Sir, this INR 16,000 crore, is this the single package and have we bidded through the JV so what would be our share?

So it's INR 16,000 crore single project. It's an elevated corridor for the last leg of the Emperor Bombay bullet train and it's in joint venture with 1 more party where J Kumar's share stands at 40%. So even if we are L1 and won this tender, our share goes up by INR 6,000 crores.

Okay. And we will be doing only 40% and not higher. So for technical participant, definitely we need a JV. But for execution purpose also, it will be the 40% share that we will be booking as the revenue.

So this is the understanding as per the joint venture, which we have done. So clearly it's a business call that we have taken. And if you talk of 40% also, you're talking of around INR 6,400 crores single job of at 1 location. So I think that's a good respectable number that we have finalized as a business call.

Okay. Got it. Lastly 2 questions, first is on the CapEx and the second will be the mobilization, retention and unbilled revenue as on March. So CapEx was slightly higher for FY '23 versus we were looking at INR 150-odd crore, INR 232-odd crore we have done. So what's the number for FY '24? And if we get this bullet train let's say so then how one can look at in terms of the CapEx for FY '24-'25?

For FY '23, we have done a CapEx of INR 230 crores so we are expecting around INR 150 crores and this is mainly because of an additional of 1 TBM, which was added to this so INR 150 crores plus this. And we have put a new casting yard at Porbandar for metro project. So that line for casting yard we have around INR 25 crores so that's INR 230 crores. And for FY '24 we are contemplating around INR 150 crores of CapEx, which includes our maintenance CapEx of 5% plus some incremental CapEx.

Okay. But we will not be needing a significant -- let's say if we get this bullet train, then also in terms of the CapEx, how one can look at?

If we get bullet train, the CapEx would surely increase because it's a different nature of job and the machineries and CapEx required for that project would be surely different because it is project specific. Like in underground metro, you require TBMs. In this case, you'll need different type of set of CapEx that's required. So the CapEx would be pretty high as compared to what we are talking right now, but that would be spread and it would be required because of the nature of job. It's already been taken care in costing.

Lastly, the numbers on mobilization advance, retention money, unbilled revenue as on March?

Outstanding mobilization advance stands at INR 548 crores.

Okay. Retention money?

Retention is INR 267 crores.

Yes, that is the receivable part and the payable part is INR 212 crores.

And unbilled revenue?

Unbilled revenue is in the range of INR 546 crores.

Sorry, INR 546 crores. Okay. And debt likely to remain at current levels of INR 500-odd crore?

Sorry. Shravan, what did you say?

Debt level, which is currently at INR 516-odd crores so likely to remain at this level or we can see some...

Yes, debt level will be around same level for the coming year as well.

Yes. And the working capital will also remain in the same range or some improvement can be expected?

So working capital as we have been always saying, we want to maintain 120 days. We are today also at 126 days. So same thing in the same range and of course we may be able to further improve and take it [ 128 or 125 ].

[Operator Instructions] The next question is from the line of Nikhil Kanodia from HDFC Securities Limited.

Am I audible?

Yes, very much, Mr. Nikhil.

So first of all, congratulations on the good set of numbers. Sir, my question was on the status of the metro construction that is going on. So if you can give us the as on date status and also the expected date like the commercial operation date for the metro projects?

Metro all the projects are going in full swing. The Line 3 Metro, which is underground from Colaba to SEEPZ so 86% of both the packages are completed, which is done by J Kumar and we see like MMRC is planning to open the first phase from SEEPZ to BKC by the end of this year. So that's a very advanced stage. And all other lines also like are going in full swing, whether it's Line 9, Line 2B, Line 6, Navi Mumbai metro, Pune metro, Delhi, Surat. All the metros are going full swing so every year like you will see part of the metro lines getting operational to people.

Okay. And sir, all these lines are similar to Line 2 and 7 so we won't be having any -- like even if there is a delay, that won't be affecting us, right? Because the contract would be to hand over the metro lines to the government and like we don't have a say in the operational revenue, correct?

All the metro lines that has been there, the type of construction is similar. So of course due to working in urban area, there are some delays, but it does not impact anywhere in terms of our bottom line or top line. So right now also this Pune metro, we have [ completed ] the last plan of Pune metro as well. So we'll be handling from our side to the department for operational other completions, which will be done by June 8. So Pune metro will also be completed by June 8 as well.

And so coming to your point also, Nikhil, like first of all, all of our contracts are covered with price escalation clause so any delay because of any other reasons does not affect us. Secondly, I think what was your point is like if they are taking time in operational the department, will it affect us? So like if our major work is completed, we demobilize our resources from the site so our overheads go down apart from some maintenance staff. So it does not affect our bottom line.

Okay. Understood. Sir, if you can give us the amount of the bid pipeline that you have?

We have already bidded for around INR 12,000 plus crores of projects and we have already -- Nalin had already shared HSR project of INR 16,000 crore where our share is INR 6,200 crores plus some minor share projects of flyover and bridges in Chennai, but also some underground metro projects plus some flyover projects other places. So all put together, INR 12,000 crores projects have already been bidded and bid line is around INR 40,000 plus crores of projects we plan to bid in this year.

INR 40,000 crores, you said, right? Okay, sir. And sir, the other question was on the trade receivable fund. So if you can give me what is the value that is outstanding as on date because this becomes a concerning level?

It's INR 1,141 crores.

That was as on March. So like I believe after that we would have received some of the other payments because for the infra, it would be lumpy kind of thing at the year-end so if we would have received. As on date what is the receivable amount, sir, like whether it has gone down?

We have already received INR 540 crores of INR 1,100 crores till now.

INR 540 crores?

Yes.

The next question is from the line of Prem Khurana from Anand Rathi Shares. I'm sorry, Mr. Khurana, your audio is too low. We are not able to hear you. Can you please switch to your handset?

Am I audible now?

Yes, sir.

So to begin with, I mean just want to have some clarity on this INR 40,000-odd crore of bids that you spoke about that you intend to kind of place this year. So this INR 40,000 crores would include the INR 12,000 crores of bids that have already been placed or this is over and above INR 12,000 crores bids which are awaiting outcomes?