NBCC (India) Limited (534309) Earnings Call Transcript & Summary

Sir, we have 2 subsidiaries. Maybe -- one is HSCL and another one is HSCC. Can you please tell us about their revenues and profit they incurred in last quarter?

Regarding HSCC, quarter 3, the total turnover was INR 419 crore. And PAT was INR 7.85 crore. For HSCL, the total turnover in quarter 3 was INR 106 crore and PAT was INR 7.3 crore. We have another subsidiary by the name NSL, NBCC Services Limited. For that, the turnover was INR 48 crore and PAT was INR 4.19 crore.

Okay. Okay. And sir, what is the order book of HSCC, HSCL and NSL. Can you tell us?

HSCL is INR 3,000 crores. And HSCC is around INR 5,000 crores. The order book is INR 5,000 crore total.

Thank you. Mr. Rohit, may we request that you return to the question queue for follow-up questions. The next question is from the line of Dhananjay Mishra from Sunidhi Security & Finance (sic) [ Sunidhi Securities & Finance. ]

So what is the -- what are the prospects order we are expecting for next year? And what kind of subcontracting we are targeting for next year? If you could give some sense in terms of railways and Dharavi projects and all that?

See, order book, order we are going to secure next year will be around INR 10,000 crore -- INR 8,000 crore. We have planned for INR 8,000 crore. That is as per MOU target. So we plan to achieve a business development of INR 8,000 crore in next financial year.

And what was the order inflow in this year till date? And...

Till now, it is around INR 3,000 crore only, but we are expecting more orders in the last quarter.

So have we removed many orders from the order book because we used to have INR 80,000 crore worth of order book, and now we have INR 62,000 crore worth of order...

Certain projects which did not fructify, that have been removed from the order book.

Which order, sir?

Like Twin Tower, Guwahati, the project has been shelved by government of Guwahati. They have gone on a different mode. That has been taken out of the order book.

And lastly, you said, sir, this year target is INR 6,000 crores in terms of revenue, but we have already achieved the INR 4,100 crore and given the construction activity has improved, so we should do much better in Q4. So I thought we should be doing about INR 3,000 crore kind of revenue in Q4. So -- but you are guiding INR 5,500 crores for the whole year. So what is the reason, sir?

Around INR 2,500 crore we are planning in Q4.

On consol basis, right? Hello?

Standalone.

No, no, no, standalone.

The next question is from the line of Pankaj Kumar from Kotak Securities.

My question is on overall the next year outlook. So what kind of contracts that we are targeting to award in next year? So this year, we are targeting roughly around INR 12,000 crores. For next year, what is the target, sir?

We'll try to award the same amount of contracts, INR 10,000 crores to INR 12,000 crores in next financial year also. And a large number of that will be redevelopment projects of 7 GPRA in Sarojini Nagar and Netaji Nagar because by that time, approvals will come, and we'll get money from the sale of Nauroji Nagar and others. So we plan to award INR 10,000 crore to INR 12,000 crore in next financial year also.

Sir, as you stated that large part of your award will come from the redevelopment projects, particularly to the government colonies in Delhi. So how is the sales outlook in terms of the real estate monetization outlook that you have? So what kind of sales that you intend to generate out of these 3 projects in next year, real state sales?

See right now, Nauroji Nagar is in sale, and its sale consideration is around INR 12,000 crore. And so far, as we have awarded only INR 3,000 crores and some few works by CPWD. So we still have a buffer of around INR 8,000 crore. Even if we award work of INR 8,000 crore, we will be able to meet the construction costs from the sale consideration of Nauroji Nagar. And we are planning to sale -- next year, we are planning to sale some part of Sarojini Nagar also.

Okay. And sir, now these large projects have started moving, so is there any change in outlook on margins? So are we going to see some improvement in the margin? Any guidance on that?

Yes, definitely, to some extent margin may increase in the next financial year. As you rightly said, we are starting new good projects actually, high value projects of redevelopment as well as PMC growth.

Any specific number you would like to...

See, specific number we can not predict, but definitely, it will be on higher side, where you may consider...

Sir, sorry to interrupt you, this is the operator. Sir, we can't hear you clearly.

Sorry, sir, I could not get you.

The margin will definitely increase because we are going to start new projects of higher value, where margin is a little bit on higher side. So like Karkardooma project we are starting, that is on the basis of PMC INR 1,000 crores. And recently, we have started some new projects at [ Worli ] of more than INR 500 crores, INR 600 crores. So definitely, the margin is likely to increase in next financial year.

[Operator Instructions] The next question is from the line of Sunil Kumar Bansal, individual investor.

Sir, as an investor, I just wanted to know that this company previously had a valuation of INR 20,000 crore. Currently, it is less than INR 6,000 crore. So what the management is doing because investor confidence has shaken? Or are you having any plan to buyback of shares? Or what are the actions you are planning to create a confidence in the investors or community?

No, we don't have any plan for buyback of shares, but we are focusing on execution and decrease of our -- reduction of our internal expenditure, and that will reduce the margin -- that will increase the margins, sorry. So our focus now is on execution.

Sir, second question is, there is another company which is under the same Ministry, Ministry of Housing, Hemisphere Properties, they recently announced INR 90,000 crore development. So are you in talk with this under the same head with the company?

It is under the same ministry, but it's a different company.

Yes. So any discussion going on with them and if we can take up these projects?

Yes, we are in talks with them. We may take up some of these projects.

The next question is from the line of Rajiv Rupani, individual investor.

I have a follow-up question. What is the revenue guidance for FY '22 and FY '23, your guidance, please?

'22 to '23 or '21 to '22?

'22 and '23.

'22, '23, sir.

Okay. Next year, we plan to do around INR 8,000 crore. And this will increase by another 10%, 12% in next to next year, it could be around INR 9,000 crore. That is our plan.

Okay. And I have a follow-up question on Amrapali, what is the total revenue to be generated from Amrapali project?

It's about INR 8,000 crore.

The next question is from the line of Saurabh, individual investor.

I have a specific question. We have a subsidiary, HSCC, which is in the health care segment. And with the recent pandemic, a lot of spending on health care, are we leveraging HSCC capability to aggressively ramp up the order book on the health care sector?

Yes, definitely. We have recently received an order of INR 1,800 crore from Rajasthan government, our hospital subsidiary, HSCC. And since there is a lot of emphasis on health in the current budget, we plan to leverage the business in this sector.

Okay. Next question is about -- there are reports for a housing project, which NBCC has won in Male, but we have not seen any exchange filing or any statement from the company on this. So what is the status on that?

Regarding this Male housing which is actually social housing project, which is to be done under financing from Exim Bank to buy us credit. The government of Maldives and Exim Bank are in talks. The agreement is yet to be finalized. As soon as it is finalized, then this agreement will be operational. We have already signed an EPC agreement with them, but it is actually subject to the signing on agreement between FDC, that is government of Maldives and Exim Bank. This will -- may take time. By April or first week of May, it will be finalized.

Okay. My last question is, can you tell us what specific steps you are taking to speed of the execution because that is a long overhanging order stock?

Yes. I'll tell, number one is that we are awarding very large value contracts, so that we get better contractor and with lesser supervision, the work can be executed in a faster manner. So all our contracts awarded in last -- most of the contracts awarded in last 1 year, they are very high-value contracts. And next year also, we plan to award high-value contracts on EPC basis. So EPC basis means, the design will also be done by the contractor, and work will not stop on any account. So this is one step that we are taking. And second is that most of the -- we are pursuing our approvals aggressively. This year, there was some delay in the execution due to corona in first 4, 5 months, after that, it has picked up. So we plan that next year will be very good as far as execution is concerned.

Any plans on PSU London development or development of other just like Amrapali?

Yes. Whenever government gives the opportunity, like JP, we are expecting to come very soon. And further also, whenever government gives us any opportunity, we have given our expression of interest verbally and/or in writing wherever required. So like star projects of Unitech or any other project, whenever government or Supreme Court wants us, we'll be ready to take up those projects.

Sir, as an individual investor, we would be looking towards management to aggressively pitch for these rather than waiting for government to receive these things. Because the stock has taken a big hit for last 3 years. So if you can be more aggressive on your approach, I think that will give a lot of confidence to The Street?

Now we are pursuing it aggressively.

[Operator Instructions] The next question is from the line of [ Vikas Srivastav from RBC Financial Services. ]

I had a couple of questions. The first was on your real estate inventory with the real estate prices having picked up. What is real estate sales you're expecting in this year and the coming years? That was one question. The second question I heard that JP is expected -- I joined the call late, so you said JP is expected very soon. You are talking about the Jaiprakash Infrastructure judgment in the Supreme Court, which has been reserved. Is that what you're referring to?

As far as real estate sales for the next financial year, we are expecting INR 100 crore sales next year.

And in terms of margin, what kind of margin should we expect on the sale? I believe the cost of acquisition is quite minimal on this. Is my understanding right?

See, we work at the IRR of 15%. We are expecting 10% to 15% profit out of the sale. What was the JP question?

JP question. You said, JP, you are expecting very soon. My question was, are you referring to the Supreme Court judgment, which has been reserved?

Yes. Yes. Yes. Exactly. Exactly.

Okay. Because that judgment was reserved in September of 2020, it has been about 4, 5 months. Has there been any resolution or any further discussion in terms of the amount owing to Jaiprakash Associates? Or why, in your view, has there been -- I know it's subjudice, has there been any further discussions on this post -- and when you say soon, how soon are you expecting this judgment to come?

See, the things are going in Supreme Court, and you see, we cannot know whether discussions are going on or not. We do not get into this kind of a surety or finding out what is happening because Supreme Court judges, they are not going to divulge anything.

No, no, no. My question was, that sometimes there is -- on the amount of payable, there were certain issues between what was payable to Jaiprakash Associates out of that -- that was one of your preconditions that all this INR 750 crores and interest...

Yes, I got it. I got it. I will tell you, everything was explained during the last hearing, whatever, about INR 750 crore or whatever amount was there. Now they will decide...

Got it. That of course. My last question was on the sales, besides your project development, if I remember right, many years back when we were selling World Trade Center, there was a commission income, which was accruing to NBCC on the sales of the World Trade Center in Nauroji Nagar. If you could throw some light into what percentage it was. What kind of sales are you expecting in the next year on the World Trade Center inventory? And what is your aggregate commission rate on that World Trade Center sales?

We have a 1% margin on marketing and on the margin on execution. And next year, we hope that full Nauroji Nagar will be sold. That means we'll get a revenue of around INR 9,000 crore.

So INR 9,000 crores...

That will be the income to the ministry, not our revenue, but we'll get a 1% margin on that.

This is the operator, Mr. Srivastav, may we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. The next question is from the line of [ Akshay Patel, ] individual investor.

Hello? Am I audible?

Yes. Yes.

Yes. Actually, the ex CMD of NBCC has promised the CAGR of 30%, Dr. Anup Kumar Mittal, but it has been from past 3 years I'm stuck on very high prices, and I'm still not exiting the stock, hoping that someday it will pop up. So when we can see that kind of levels or that kind of execution? Even there were -- there was news that cabinet has asked for the plan for -- to submit that how we will complete the INR 80,000 crore order book. So is that correct that cabinet has asked you something regarding costing? And what are your projections for the next 5 years? Every year, how much you are going to increase your execution rate, means, what percent of our order book you are going to execute in -- for the next 5 years?

There are so many reasons actually why we could not achieve 30%, as you said has promised by ex CMD because you are aware, there are so many reasons. Our major projects like redevelopment of Nauroji Nagar, Netaji Nagar and Sarojini Nagar. Those projects will start actually in -- because of the projects in subjudice. So we could not start the work on the project. So that is a major setback actually that's why we could not get 30% CAGR actually. And second reason, nobody was -- nobody predicted this COVID-19. So that has also impacted our overall turnover. But as -- I guess, as you rightly said, things have improved and almost labor strength has recovered actually to 90% of what was earlier -- what was before COVID. And the court case also, verdict has come in case of Nauroji Nagar and for the last 3 months we have resumed the work at Nauroji Nagar. And even Sarojini Nagar and Netaji Nagar, we have got almost all the statutory approvals and project have -- some work have started like dismantling boundary wall and fencing and other work. And the main work, we'll take up soon. In addition to that, PMC also, we are going to start new project soon. Like AIIMS also, we have awarded both the projects and it is in the final stage of approval. Like similarly, Karkardooma, about INR 1,000 crores we have done, which is right now in the process of [ trending. ] Amrapali also, as you know that we have awarded worth INR 8,000 crores. So all big projects are now on the verge of -- I mean, some projects have begun and some projects are likely to start coming soon. So I think 15% to 20%, you can expect annual -- year-to-year 15% to 20%, and maybe it was even more than that, close to -- [indiscernible] loans.

I have one follow-up question. Actually, I want to know that how the Chinese companies are actually promoted by the Chinese government for the various infrastructure in the foreign land like for building of Hambantota port and many such things. So is there any plan of Indian government to promote NBCC as such company from the Indian side, which will execute the huge infrastructure projects in the foreign land so that we can compete with the Chinese company? Anything information regarding this?

No. As far as the building sector is concerned, NBCC is already on the forefront in constructing the buildings in the foreign countries. We already have the project in Mauritius, Maldives. Niger, we have completed recently. Dubai, we are doing the Expo Center. So we are [indiscernible] company by Government of India. As far as the competition with Chinese company is concerned, there is no bar from the government to compete with the Chinese company. As and when the opportunities arise, we are taking up the work even in competition and on nomination basis. So we are already a nominated company by Government of India in building sector. And exclusively in building sector, in fact, we are the only company who works primarily in building sector only and is known for construction of building in India as well as in foreign countries.

This is the operator. Mr. Patel, may we request that you return to the question queue for follow-up questions. Question is from the line of Rajiv Rupani, individual investor.

Yes, sir. I have a follow-up question on Hemisphere Properties. And earlier participant asked, whether we are in talks with them for development. So I have a follow-up question on that. Sir, Hemisphere Properties own properties in Delhi, Pune, Chennai and Kolkata, so total is about 740 acres. So we are in talks for any particular city or across the board, number one? Number two, we also heard that Tata Housing or Tata Construction will develop these lands. So could you please guide us on this?

No. In any metro -- all these cities, they are very important, and we can take up the project in any of the cities. So we don't have any limitation. And since the amount of land is quite high, so there is scope available for NBCC and for private sector builders also. So we are expecting our share of business from this project. But as far as cities are concerned, we are ready to work in anything.

So basically, both NBCC and Tata will do the project?

No, individually. I think private sector builders, we are not sure how they'll be roped in. That will be through competitive process. But we may get some work on nomination.

Okay. And will it be city-wise or in any -- let's say, in Delhi, both can do? Or Delhi NBCC will do and other city Tata will do, just to guide us, please?

There is no such thing decided.

Okay. And by when can we get an update on this? I mean, when would the development start? Any idea?

The work has just been taken up by the Ministry. So it's difficult to say, but it could be near future. Due diligence has been done and it should happen in near future.

The next question is from the line of Saurabh, individual investor.

Once you get the Amrapali verdict, do you plan to -- sorry, once you get the JP verdict, do you really plan to delist the company? Or do you like to continue listing the company as been requested by a lot of minority shareholders.

We have already submitted in our resolution plan about the delisting of the company once we take it over, yes.

Yes. So there is no reconsideration about keeping the company listed and unlocking the value from that?

No. Currently, there is no reconsideration because the matter is subjudice. And once our resolution plan is approved, so we will go strictly as for the plan only.

Thank you. Ladies and gentlemen, if you have any questions, please contact Balkishan Singla, Investor Relations, NBCC limited. Ladies and gentlemen, on behalf of Yes Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.