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

Ladies and gentlemen, good day and welcome to the NBCC India Limited Q1 FY '22 Results Call hosted by ICICI Securities Limited. [Operator Instructions] I now hand the conference over to Mr. Adhidev Chattopadhyay, Vice President at ICICI Securities Limited. Thank you, and over to you sir.

Good afternoon everyone. On behalf of ICICI Securities, I'd like to welcome everyone to the Q1 FY '22 results conference call of NBCC India Limited. Today, from the management we have with us Mr. P. K. Gupta, the Chairman-Cum-Managing Director; Mrs. B. K. Sokhey, the Director Finance; Mr. Rajendra Chaudhari, the Senior Executive Director, Engineering; Mr. Pawan Kumar, the Executive Director, Engineering; and Mr. Pradeep Sharma, the General Manager, Engineering of the company. I'd now like to hand over the call to the management for their opening remarks. Over to you, thank you.

A very good afternoon to all the investors present here. I'm P. K. Gupta, Chairman, Managing Director of NBCC. The result of quarter 1 of 2021-'22 have been recently out. And I'm very happy to inform that despite the second wave of COVID, due to which a lot of time was washed out, we have performed fairly well as compared to the quarter 1 of the last year. The turnover during quarter 1 of the financial year had been INR 932 crore, which is 15% -- 115% higher as compared to first quarter of last year. Profit after tax has increased by 247% as compared to first quarter of last year. These are stand-alone figures. On consolidated accounts, turnover has increased by 104%, which is INR 1,380 crore as compared to INR 677 crore last year. And profit after-tax has increased by 260%, which INR 37 crores as compared to INR 11 crores during first quarter of last year. During first quarter, we have secured a business of INR 1,500 crores. Major of that is NIT Srinagar for an amount of INR 600 crores, National Sports University, Imphal for an amount of INR 400 crores and OHPC, Odisha for an amount of INR 200 crores, rest are small value worth. The sale of commercial property, particularly was very sluggish during the COVID period because almost everybody was working from home, but now since the -- COVID is practically over, we are hopeful that commercial property will open up and we are in touch with many clients for fell over work flexi project of World Trade Center, Nauroji Nagar. We have already sold INR 3,700 crore worth of property, out of which INR 1,700 crores was sold during the COVID period. And we are in fact with major clients, and the talks are likely to materialize soon. We are in touch with Border Security Force, National High Speed Rail Corporation, National Highway Development Consultants Corporation. And these talks are likely to materialize soon. Regarding our major projects of Amrapali, we have been recently able to arrange INR 650 crores from SBICAP to [indiscernible]. This was in talks for quite some time and it has recently materialized. We have received the advance of INR 10 crores, and further money is likely to come within 2, 3 days. So this will give a major boost to Amrapali project, in which there was a problem of funding because of sale issues of residential property, partly due to COVID. And earlier, it was awarded to some other company, but since they were not able to sell the residential property, we have taken over as per the direction of Supreme Court. And we are in the process of [ rewarding ] channel partners for the same and will be launching the sale very soon. We have already given the advertisement in paper. For this funding, SBICAP is for 6 projects of Noida and Greater Noida. And for balance 16 projects, we are in touch with many banks and honorable Supreme Court has also given direction to these banks to give the loan for these projects at the earliest, without waiting for any security. So these talks are in advance stage, and we hope that this funding arrangement will also materialize soon. Regarding further business, redevelopment is our main focus as large number of properties of all ministries and departments, they are in bad shape and they want to redevelop it. So that is the major area of focus regarding future business. We are in advance stages for redevelopment of Delhi Jal Board property in Lajpat Nagar in Delhi. That's likely to fetch a business of INR 3,500 crores. We are in advance stage discussions with Postal department for redevelopment of their property and defense land in Delhi and Visakhapatnam. In Delhi, it's likely to fetch a business of INR 2,200 crore and in Visakhapatnam it's likely to fetch a business of INR 1,500 crores. The Karnataka government also tasked our own for their twin tower in Karnataka, it is also a redevelopment property for INR 1,250 crores. As far as other than redevelopment projects are concerned, the timing of MoU with Delhi University for all their future works, that is in advance stage, we have already sent the MoU, likely to be signed soon. And MoU is under signing with Power Operating System Operation Corporation for redevelopment of their 8 acre property near NTPC Badarpur and 1 acre property in Bombay and 2.5 acre property in Bangalore. This 3 property of portfolio, they want to develop and talks are going on. We have already signed an MoU with National Productivity Council for their development of 3 acre property in NTPC Badarpur. Regarding overseas projects. We have taken up a project for social housing in Maldives. The cost of this is $130 million, and this is to be financed through Eximbank, and it is the final stage of negotiation. And the loan agreement is likely to be signed, soon after that we will start the work. We are also floating the tender for these works and depending timing of loan agreement. We are developing some new sectors. We applied for independent engineered services for construction of new airports in Jaipur. And I'm happy to inform that we have been declared the lowest after opening of bid, and this work is likely to be awarded very soon to NBCC. Similarly, for Central Warehousing Corporation for construction of their silos, the talks are going on with CWC. And this is also in final stage. So in many parts of the country, they are constructing new silos, that work will be awarded to NBCC. This is all on business development front and the performance of last quarter. And construction has picked up post the second wave of COVID. We have around 40,000 labor on our side. This was little less due to -- firstly due to second wave of COVID and then after that rainy season. Now both of them are over and labor is picking up, and we hope that during mid-September, we should reach the figure of 60,000, that is our peak requirement of labor. And then we'll be working [indiscernible]. Our current order book is INR 62,000 crore, and we are floating further tenders for redevelopment of 7 GPRA colony. The work on -- recently started works are Karkardooma project of Delhi Development Authority, the work has started. And the work GPO, General Pool Office accommodation, that is a part of 7 GPRA colony. The work on that project has also started recently. These are the 2 major projects that have been started recently. Work on Nauroji Nagar World Trade Center is going on in full speed. And Amrapali project also, there was a little slowdown in that project. But now that is again picking up. And in September, we hope to deal with full speed. We've already handed over 200 flats in Amrapali and 1,500 flats are ready for handing over. So this is all about the opening remarks. Now I hand over to -- for question.

[Operator Instructions] The first question is from the line of [ Atul Dwivedi ] from [indiscernible].

Wishes for -- to NBCC for future. Okay, so my question is, as Mr. Gupta said that current order book is INR 62,000 crore. So the thing is, when you are planning to finish all the work in near future, I mean, 4 years or 5 years? And how much profit after-tax you are going to generate in a normal situation, if suppose there will be no corona or some other unforeseen things? So this is my question.

We plan to wipe out all these order book within a span of 4 to 5 years. Though major order book we have on GPRA colony. And that is partly dependent upon the sale of the property. But we hope that post COVID, property will pick up. And next 4 to 5 years we will be able to wind up.

Okay. And how much -- what is the margin? I mean, what is the profit after-tax you are planning? I mean supposed to get?

We expect the profit after-tax of 4% to 5%.

Okay. So it means approximately with this order book, current order book, you will get around INR 3,000 crores in the next 4 to 5 years, right?

Yes.

The next question is from the line of Rohit from Antique Broking.

So my question is based on the -- of awarded project. I understand we had INR 18,000 crore of works being awarded, out of which INR 13,000 crores is cost-plus model and INR 5,000 crore redevelopment project. Is that the correct understanding of the numbers?

Broadly, yes.

Sir, out of which you are targeting close to INR 7,000 crore of execution in this fiscal? Is that guidance intact?

Yes, we are expecting that.

Okay. Sir, second question is on how much you are planning to award? That is the quantum of projects that has to be awarded to the contractors.

During current year, we have already awarded contracts for INR 1,500 crores. And we hope to award another INR 5,000 crores worth of contracts during the current financial year.

Okay. Sir, then my question is on the feed money. What is the quantum of feed money invested in all the share development projects and other projects?

So far, we have invested INR 1,100 crores of feed money in our project.

And madam, what is the other income that you're booking every quarter or by income that you want from the feed money?

In other income, the major portion is from interest on the feed money, which has been accrued. And in last time also, we have informed that NBCC received out of that accrued interest of INR 360 crore from the -- out of the SB account. And other income --.

What is the feed money interest madam like?

We are getting the interest at the rate of 12% per annum.

And this was more like an income booked. However, cash is realized after -- later?

Yes, yes, yes.

The next question is from the line of Rahul Dawawala from S K Medical Agency.

I am a very small retail investor of NBCC since 2014. And I have a number of times written to all the management, but my major concern is that after 2018, our share price in the market is drastically down. We were at the market cap of INR 25,000 crores. And right now, we are below INR 10,000 crores. And why in this such bull run, we were not -- we are not able to attract many more investors in our company, even after performing well. What is the reason behind that? And why and what steps are being taken by management to catch this? I know the share price is market-driven, but market is also drived by the confidence of the investors. So what is the -- what are the steps taken by management towards this?

As far as investor confidence is concerned, last 2 years, unfortunately, 4, 5 months of last year and here also 3 months, they were loss to corona that is one of the important reason for lower share market, share price mix. But as compared to the price of share during March 2019, we are still 50% higher, the market share was 50% higher as compared to March 2019. So in fact, as our order book is quite robust, our strategy is, number one, to have faster execution of the project. And we are floating very large value tenders. Earlier, we were not having that large value tender. Large number of tenders were more than INR 500 crore have been finalized recently. And further tenders are also in that range. Another is that we are diversifying in new areas. One is the airport transection. We have submitted the offer for independent engineering services. And since there large number of airports are likely to come up in India under the program UDAN of honorable Prime Minister. So there will be a lot of business in that sector. Second area is that we are venturing into railway sector. We have given our Expression of Interest for construction of road over bridges over railways. So that shortlisting process is own for construction of road over bridges. And third is that we are aggressively taking up overseas projects. This Maldives project agreement is likely to be signed soon. And the margins in overseas projects are comparatively higher. So we hope that all this activity will see boost in the share price and market cap in future.

The next question is from the line of [ Marshall ] from IT Solutions.

Good afternoon, sir. Good afternoon, everyone. My question is that in terms of company turnover, we see a huge number of -- we see a huge amount. But when it comes to dividend payout, it seems to be very small, like not even small, it's like infinitesimally small. So like the numbers are not reflecting with respect to the dividend payout. So do you have any concerns about this or any -- because it's not going to help union government also. So how are we going to take care of this with respect to like -- like shareholders?

As regard to dividend payout, the company is following the guidelines given by the [ EDC ], they say we have to pay the minimum dividend of 30% of tax and 5% of net worth. Though we would like give more dividend, but currently, the company is concentrating on the business because we want that team had a commitment of feed money in our redevelopment project. So far, we have invested INR 1,100 crores of redevelopment project, whereas we have a commitment of INR 1,500 crores. We would like to put more focus on the business, so that the money will be first utilized on the basis so that the value of the shares of our shareholders will increase and in the future, we will definitely come to the paying more dividend because we have to take care of the liquidity also.

The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.

A couple of questions from my side. First, we indicated that we have an order book of INR 62,000 crore. I believe that must be at the stand-alone level. Wouldn't it be possible to get the order book at the consolidated level, including the subsidiary?

I will tell you, consolidated level, you can add another INR 10,000 crore. So it's INR 72,000 crore.

And in terms of guidance also, the revenue guidance that you have given, I mean, would it be possible to get at the consol level?

Consolidated level should be around 9,000 -- INR 9,500 crore.

And sir, of this INR 72,000 crores consolidated order book, what is -- what are the tenders that we have already awarded?

During the current year, you mean to say?

No, no, same date. Out of this overall INR 72,000 crores, how much have you been totally awarded still date, not in current year?

Total running projects are INR 23,000 crore.

And we expect INR 1,600 crores we have awarded this year and INR 5,000 crores additional we are looking at?

Yes.

Got it. And sir, last question, would it possible to get the cash at the consolidated level? Cash level at the consol?

Pardon, you are not clear.

Repeat your question.

Cash and bank balance at the consolidated level.

Okay. Cash and bank balance at the consolidated level is INR 5,300 crore. Out of this is company-owned balance is around INR 550 crores.