Kore Digital Limited (KDL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Kore Digital Limited Q4 FY '25 Earnings Conference Call hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ganesh from Kirin Advisors Private Limited. Thank you, and over to you, sir.

Yes. Good evening, everyone. On behalf of Kirin Advisors, I welcome you all to the conference call of Kore Digital Limited. From the management team, we have Mr. Ravindra Doshi, Managing Director of the company. Please note that this call is scheduled to run approximately 35 to 40 minutes. If you are unable to answer any questions during the call, please don't hesitate to reach out to us at research@kiranadvisors.com. We will be highly coordinate with the management team to arrange further discussions. And with that, now I hand over the call to Mr. Ravindra Doshi. Over to you, sir.

Yes. I welcome all investors. And specifically, thanks to my team, they have achieved a very high and prestigious target. And this is in a row second year, we have done well, and we hope we will keep doing well. Now before we start, I want to address a couple of things. First is our lead manager, First Overseas Limited was investigated by SEBI and all, but we have not received any communication regarding First Overseas till date. So we can easily assume that First Overseas matter is not connected to us. And secondly, last quarter, we have shown some negative growth, which is because of we have written off certain bad debts, which were running on the balance sheet since the last 5 years. And most of the business is segregated as per business to different subsidiaries. We have reported the same thing. So now Mr. Ganesh can take all the questions.

[Operator Instructions] The first question is from the line of Akash Israni, an individual investor.

[Foreign Language] Congratulations on the great set of numbers. And I just wanted to check with you in terms of [Foreign Language] for 2026. FY '25 has been very good. 2026, we were looking at somewhere around INR 800 crores to INR 1,000 crores, and we are good in terms of moving forward in terms of those revenue projections. Is that correct?

That is right. Slightly, there is a delay in opening of Samruddhi Highway. So we are 6 months behind the schedule. But I am still hopeful that we have many other things in pipeline. And with that, we will be able to achieve the target because all these wars and geopolitical problems, slight plus/minus INR 100 crores, INR 150 crores is possible.

Okay. That's not a big issue. In fact, that was a big issue like 2 years ago, we were at that...

Still we are sure we will double the revenue minimum.

Right, right. So I think 10% to 20% here and there is not a big issue. In fact, we're already growing by 100% or more than 100%. So in terms of the trajectory, I just wanted to check with you from a long-term perspective. How is going to be our trajectory from '26 to '27, right? I'm not talking about many years down the line, but just 1 year down the line, how would be our trajectory? If [Technical Difficulty] in '26 -- and then we would start getting more and more revenue as we [ lead up ] more and more, right? So would we still grow by...

At least next 5 years, yes. We are doing lots of things other than pure telecom, we are doing many things, which will bring you fantastic revenue.

[Foreign Language].

[Foreign Language]. And that is where if we are able to succeed, INR 10,000 crores is just peanuts and we are in pipeline. We are doing some products in next 2, 3 days, it will be sent for approval. And because we are using Deep-Tech metal 3D printing, precision is not an issue. Composition is not an issue. [Foreign Language]. Now because it is defense, I cannot go into detail. [Foreign Language]. But we are in pipeline, and we are very much there. [Foreign Language]. So we have 4, 5 tenders coming for the telecom and roads. So that is there. Plus this defense development is there with the recent Pakistan war. Procurement has increased actually tremendously. And there is some opportunity. We have got very good associations, very senior retired officers with us, very senior, the ones -- those who have worked on these projects, all 5 technologies which were projected as a reason for our winning. Our new advisers and consultants have worked on it physically. So this is something really, really big. We have to keep fingers crossed because it is different. Once it comes through, it will be announced. So projection we can do very safely. I can tell you that INR 600 crores to INR 700 crores is guaranteed. Rest is on luck because if geopolitical and all other things are proper, then we will reach the projection. So I think I have answered.

Yes, sir. In fact [Foreign Language] the core business and I completely appreciate you being open and candid about the defense part. But if you come back to the core business, our core business [Foreign Language] INR 600 crores, INR 700 [Foreign Language] in this core business itself, are there any verticals which will help us expand further? As you said, we are looking at growing 100% year-on-year after that as well. So in core verticals [Foreign Language] achieve this?

Other than core business, we are just doing the Defense one.

[Foreign Language] which will make us to pay [ INR 1,400 ] next year after that and then [ INR 3,000 ] after that, right? [Foreign Language].

I've got the question. I'll answer. We have 3, 4 big tenders coming for the core business, Telecom and Construction. That is core business as of now. Entire revenue, everything is coming from that only. So Samruddhi is there, Samruddhi is going to give us INR 600 to INR 1,000 current year. But next year, there will be 2, 3 more Samruddhi in pipeline. We have those routes already tendered out and construction has started. Mumbai-Delhi is one. So those are possibilities and we have very strong presence with those government agencies. So I'm just telling you that I will be doing more. This is basic is always there with us. There is lots of expansion in team, lots of expansion in machinery, everything. So it is slightly slow. It may not go as per my investors' expectation every year, 100%. But yes, for next 2 years, 100%, I can guarantee. After that, it may be 50%, but 50% is also big.

It is, it is, certainly.

Because geopolitics is one thing, political conditions in India is one, then because as of now, it is running only in Maharashtra, but then once I touch Mumbai-Delhi, then it will run across 3, 4 states. And those -- every state has their own unique issues, positives and negatives both. So, execution speed as of now, I'm not able to predict, but I don't foresee any serious problems, which will decline our performance.

The next question is from the line of Hardik Gandhi from HMG Share and Securities.

Congratulations on a set of numbers. So I just saw that we had made certain -- we started a few subsidiaries, companies and everything. I just wanted to know what was the purpose for that? And what are we going to use them for?

Let me explain. I have already explained in previous 2 con calls, but still no issue. If you have a question, I'll answer it. See, basically, our business runs in 2, 3 different models. One is, we only take the order, complete it and deliver, forget. Second is we take permissions from government, construct and sell it off. And third is we take the permission, we own the project and we take revenue long term, 15 to 20, 25 years we get paid. So that is the lease model. So these 3 models are always confused by all authorities, not one. So, to avoid confusion and ease of accounting and explanation, we have done this. So 3 parts are there, 3 parts are done. One more subsidiary is coming that will be handling the Defense production, it is in pipeline. By end of year, you will see -- March, you will see the results from that also.

Correct, sir. Sir, the second question is regarding our investment in fixed assets. I think so you spent approximately INR 55 crores to INR 60 crores in new equipment or -- so just wanted to know what was the -- did we buy new machinery? Did we invest in the Defense thing or where...

No, it is for purchase of machines and purchase of right of way. Because my network is my asset. And there was a huge objection from our investors that you are not capitalizing the asset. So that is why we have started. We have learned and we have started. So machineries are -- yes, definitely, we have bought the machine. Without machines, we cannot do this kind of growth.

Correct. Sir, one last thing, sorry, but I think so from the last 3 con calls quarters, we've been hearing that we will be getting new projects. We've also applied for tender and we are [sure] to get them. I do understand our majority growth in the revenue is coming from contracting for other contractors, correct? But other than Samruddhi Highway, we don't have any other major contracts. So when can we expect some concrete things on this front? Or are we going to continue to be a subcontractor for other projects?

December.

Okay. Understood, sir. And this will be again similar to...

This is a lean time for our business because most of the construction activities are not permitted during the monsoon. So this is the time when we participate in tenders and hopefully, we'll be successful. We are participating in 5 tenders, at least 1 will be successful. So that will bring additional and future...

So the quantum will be similar to Samruddhi Highway or smaller or?

No, no. Most of them are smaller. Samruddhi is a unique project all over India. If they launch another project like this, it will take 4 to 5 years for me to enter because unless the entire project is complete, we cannot lay telecom line. Yes, we will get...

Just one last bifurcation of the INR 300 crores, how much is from the telecom and how much is the road EPC business?

Sir, as a typical, normally telecom will be about 90% and rest will be from roads. About 25% to 30% only comes from telecom because telecom is something -- unless I complete it, it will not be sold. I'll give you an example from Samruddhi. At least I have to connect Mumbai and Shirdi to make first money from it. So it is -- the telecom is something we construct, we complete and then only we sell. And then only money also...

How much more [ time ] is spending for -- do you think you will connect Mumbai to Shirdi?

Sir, by December only.

But given the monsoon and everything, are we...

No, no. already stop work notice has come. So [indiscernible], we have our contracts and everything, but then the speed decreases greatly. So that is there, but then we will have money in pocket by December for this stretch.

The next question is from the line of Krishnendu Banerjee, an individual investor.

I'm from Kolkata. And for a long time, I am following you. And one day, I called you also. But my question is one that the trade payable is about INR 100 crores above. So that trade payable from where it is coming? Because I'm asking this question because day by day trade receivable is increasing. That's why...

I'm not able to understand you. Can you repeat it, please?

Your trade receivable is day by day increasing. So why it is affecting? And another question is how many days...

See, basically, when work is increasing, assets are increasing, then debt are also increasing. There is nothing new about it. And then this is 0 debt company. So funding is done from debt only, from my vendors only.

Okay. But one more question is, sir, Samruddhi Highway project, how much days will be there to complete and get the revenue in this financial year?

No. It will take 2 years.

It will take 2 years. How much will -- yes, but last con call you told that something new is coming and you just give a suspense. I cannot reveal like that only in March or May end. [Foreign Language].

You have to understand the Samruddhi as a project first. My basic work to do the trenching, lay the [dirt], do the banking and all earth work and other things. Apart from that, this project is having permission for telecom poles all across 700 kilometers. So -- and my company is not doing that. So for that, we have joined hands with Crest Digital. So they will be doing it. So that is the news, which I have already given.

Okay. But you are telling that...

There is a company specializing in small cell and IBS, in-building system. Those things too we have joined hands with them for getting it done.

Okay, sir. Okay, sir. Understood, sir. Sir, one more thing. I'm just confirming that you tell that INR 600 crores to INR 700 crores in this revenue will come in this financial year, correct?

Yes. You're right.

But last 2 to 3 con call, you were just predicting that INR 1,000 crores can be touched that will be now how much percentage you will give for monsoon, early monsoon and all?

Sir, the problem is not with the early monsoon or anything. The problem is with the opening of Samruddhi Highway, which is delayed by 6 months. So my entire project is delayed by 6 months. I have reduced my projection only for that period, which is overflow.

As far as Ind-Pakistan war, it's delayed.

Because government has delayed the opening.

Okay, sir. Understood, sir.

Yes. Because see, you have to understand, [Banarjee], the telecom lines cannot be laid unless road start because if construction is going on, they will destroy my line. So once construction stops and road starts, then only my line can be laid in that sector. So 76 kilometers, out of that 10 we have completed and 8 is a tunnel. So, 18 kilometers are taken care. Balance, we'll have to push through and connect it to the Mumbai -- Mumbai lines. And only then this is useful. Otherwise, it is useless.

So, it will get in the next financial year? So it is like...

Some overflow will be there. That is what I'm projecting.

Okay. So now you just follow that INR 600 crores and INR 700 crores in this financial year...