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

Ladies and gentlemen, good day, and welcome to the NBCC Q4 FY '22 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anshuman Ashit from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you, Rutuja. On behalf of ICICI Securities, I would like to thank the management for giving us this opportunity to host this call. Today, the management of NBCC India Limited is represented by Mr. P.K. Gupta, Chairman cum Managing Director; Smt. B.K. Sokhey, Director of Finance; Shri Rajendra Chaudhari, Senior Executive Director, Engineering; Mr. Pawan Kumar, Executive Director, Engineering; and Mr. Pradeep Sharma, Chief General Manager Engineering. The call will start with brief remarks from the management, after which we'll open the line for the Q&A session. Thank you, and over to you Mr. Gupta for your initial remarks.

Good morning, everybody. I'm happy to announce the results of financial year '21, '22. And to be clear that we have been able to achieve total consolidated income nearing about INR 8,000 crores and PBT of around INR 400 crores, approximately. And there are -- these are significantly better in operating margins and EBITDA margin side compared to the fourth quarter -- fourth quarter is better than the last year's fourth quarter. Our stand-alone order book as of now stand at around INR 50,000 crores and consolidated order book stands around [ INR 60,000 crores ]. And we have an ongoing construction work of around INR 22,000 crores consolidated level. As far as the business report is concerned, stand-alone business, we secured around INR 6,000 crores, and consolidated business, we secured around INR 8,000 crores during last year. Our flagship project, #1 is Amrapali project, which is going on in full swing. We awarded all 24 projects, all 24 projects are -- the work is going on. Two projects have been completed. Last year, we have handed over 1,000 flats to homebuyers and further about 1,200 flats are ready to be handed over to homebuyers. Total about INR 2,400 crores worth of work has in these projects have been completed out of which INR 1,200 crores worth of work was completed in '21, '22. And a large amount of labor over round 12,000 are working at the site of at Amrapali. Another major achievement in Amrapali has been that we have been -- since there is a gap between the amount that is being received from homebuyers and funding that it requires for construction. We have been able to arrange front for these projects, INR 650 crores for 6 projects from SBICAP and INR 1,500 crores for balance projects by a proportion of 7 PSU banks. That has been a major achievement for these projects. And the funds are now moving, INR 150 crores has been released at the first batch of INR 1,500 crores [indiscernible] bank. And SBICAP has also released sufficient amount of funds for these projects. Now the sale of Amrapali flat is also being done by NBCC. And we have been able to sell more than 300 flats till now. And we appointed general partners who are selling the flats and some of the flats we are selling directly also. Another shot in arm of NBCC in this year that we have been able to start the single largest project of overseas in Maldives Social Housing Project, which is valuing INR 1,000 crores approximately. So it has been awarded in 3 packages and work on all 3 packages has been started. This is the senior largest project of overseas in the history of NBCC, which NBCC is awarded by government of Maldives and funding it through Buyers Credit of EXIM bank and therefore, funding is assured. Another flagship project is 3 GPRA redevelopment projects, in which in Nauroji Nagar, we have sold INR 4,500 crores worth of inventory till now. And about 50% work on this project has been completed. And we have taken up the work in Netaji Nagar and Sarojini Nagar, which are going, ongoing. So, these are my opening remarks. And [ mic is ] open to questions.

[Operator Instructions] The first question is from the line of Rohit Natarajan from Antique Stockbroking.

Sir, my first question is what is the stand-alone order backlog as of now?

[Indiscernible].

stand-alone order backlog?

Stand-alone backlog is around INR 50,000 crores.

Sir, last quarter, you said it was INR 55,000 crores. We had execution maybe of not more than [ INR 200-odd crores ]. And now you say the order is on the backlog is revised down to INR 50,000. Is there a cancellation of INR 3,000 crores?

Yes, in fact, there was a project of Ghitorni redevelopment project. So that has been closed by government, that's no more there in the order book. That's why there is a reduction in the order book.

Okay. So now we can say maybe INR 270 billion is confined to redevelopment and INR 230 billion is in cost plus model -- not billion, I mean INR 27,000 crore to redevelopment and INR 23,000 crores to cost plus model.

That's broadly in this order.

Sure. And your consolidated order backlog will be?

INR 50,000 crores.

Okay. Sir, out of this headline number INR 50,000 crores, how much is actually awarded to contractors or what is the quantum of work happening on ground?

And out of INR 50,000 , about INR 18,000 crores worth of works are going on.

Okay. How much are you having aspirations to award in this particular year, how much do you propose to award it to the contractors?

Around INR 8,000 crores, we plan to award during the current year.

And what will be your guidance for this year in your stand-alone revenue?

Stand-alone value will be INR 6,000 crores.

Sir, Amrapali project you claimed that almost like INR 7,500 crores worth...

It's more than that. Our target is more than INR 6,000 crores. INR 6,000 is achieved but target is in the range of INR 7,000 crores.

Sir, my question is on Amrapali project. When we say that INR 7,500 crores worth of projects is happening on ground, usually these kind of building projects [ gets ] completed if 100% execution is happening -- they should get completed within 2 years itself. So against our revenue trajectory of INR 3,000, INR 2,500 crores, we are doing INR 200-odd crore. So where is the disconnect?

Last year, there was a issue of funds availability because the money from homebuyers business is coming in that order. But this year, it has been sorted out. So turnover from Amrapali should be much better. We have been able to get the loan, and we are in the process of selling the houses.

And sir, in the redevelopment projects, I see that it's continuing to be disappointing in terms of monetization because, sir, for the last few years, our cumulative monetization has not moved beyond that INR 5,000 crore benchmark. So what exactly is the problem over there, sir?

Real estate markets during the last 2 years were sluggish, but we hope that during the current year, things will improve.

And finally, if I may ask one more question. The EBITDA margin is almost like 3.5% in this particular quarter. Is there a provision write-back or more some non-linear [ elements ] on it?

Our Director Finance will answer these questions.

Hrishikesh, you please explain this to Rohit.

So EBITDA margin does not include the other income from...

No, no, I'm talking about the provision write-back. We've seen provision.

ECL provision. There were the reversal of ECL provision because we have received the old amounts from our certain debtors from the client, which has impacted our reversal of ECL provisioning amounting to INR 42 crores.

Okay, amounting to INR 42 crores of -- revision? . And if I just quickly -- that other income part within this, like the seed money, how much of it is booked in the accounts and how much of cash is realized?

Seed money, we have invested to the teams of INR 1,160 crores in the various redevelopment projects, during the Gomti Nagar and [ AIIMS ] in and that 3 GPRA. So we are earning a income of about INR 120 crores from them, which is including in the other income.

Okay. And how much of it is booked in form of cash as in accounting income or how much of that was cash?

In this current year, we have received around INR 240 crores from this year on the interest, which were charged earlier to the project. So we have received the INR 240 crores in this financial year in cash from accounting point of view.

And how much of it is outstanding?

Total INR 1,160 crores including the interest, INR 950 is a principal amount at about INR 200 crores is the [ interest ].

[Operator Instructions] The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.

My first question is in the year gone by which is FY '22, how much orders did we award to [indiscernible] contract at the consol level?

At a stand-alone level, it is INR 3,500 crores and consolidated level, it is INR 5,000 crores.

Okay. And how much do we expect these numbers to be in FY '23?

In FY '23 regarding the [indiscernible].

Yes.

It will be around INR 8,000 crores.

This will be at the consol level or stand-alone?

Yes, consolidated level.

And in terms of consolidated revenue and EBITDA margin, what is it that we expect in FY '23?

Parvez, can you repeat your question?

I'm saying for consolidated financials, what is the kind of revenues and EBITDA margins would we expect FY '23?

Revenue will be around INR 7,000 crores. EBITDA will be more than INR 400 crores. Parvez, did you get that right?

Okay. You said EBITDA will be more than INR 400 crores.

Sorry, it will be around INR 300 crores.

[Operator Instructions] The next question is from the line of Rohit Natarajan from Antique Stockbroking.

One question that I had was in terms of the real estate margin. It seems to be negative. What exactly is the nature of last year?

Actually, this year, one of the projects 37D executed at Gurgaon, 37D Gurgaon. The inventory has been written down by INR 100 crores of because of the -- as for the accounting center, we have to take the cost value or NRV whichever is less. The market price was getting evaluated and [ InvITs ] are lower by INR 100 crores. So we have [ rather ] taken an impairment of inventory. That's why real estate is showing a loss of about [indiscernible] because of that volume. Otherwise, all other projects is probably in -- I mean running in profit only.

So what is the cumulative land bank that you have, how much of it is in the form of inventory?

The first point of view, it is about INR 700 crores total land bank on the total [indiscernible] across India.

Okay. And this is the inventory booked by next 2 years?

Please repeat the question?

And sir, what is the inventory of real estate that is about to be sold in the next 1 or 2 years?

We'll plan to sell our Alwar project around INR 150 crores in 2 years and mainly it will be Alwar, [indiscernible], Patna.

Just to get back to the earlier question, I talked about the ECL provision. Can you quantify the ECL provision write-back for this quarter and last -- full year as such?

Fourth quarter in the INR 15 crores to INR 16 crores.

Okay. And full year was INR 42 crores.

Yes.

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

Yes. Sir, question is related to the ongoing construction work. So you have INR 50,000 crores of order backlog at stand-alone. You said on consol, you are constructing on INR 22,000 crores of project, so what is the figure on the stand-alone?

Around stand-alone basis, INR 18,000 crores balance amount of ongoing projects and from consolidated basis, it's around INR 22,000.

Out of this INR 50,000 crores order book, which are the orders where we see the risk of cancellation or it is very slow moving or some issues are there?

Pardon me, we are not able to hear it.

Yes. So what I'm saying is you have a stand-alone order backlog of INR 50,000 crores. So which are the orders which are slow moving or we see a risk of cancellation?

We don't see any risk of cancellation, but the redevelopment projects for 7 GPRA is comparatively slow moving because of the lower sale of inventory, lower sale of the project of Nauroji Nagar.

So I mean, going -- I mean, for next year, what are the order inflows that we are looking at? And which segment we are targeting because we are very -- I mean, we have faced issues in redevelopment projects in terms of execution. So where we -- which are the segments that we are targeting and what is the order inflow guidance for next year?

New orders, we have actually [ seen ] before this financial year will be around INR 6,500 crores.

We are targeting ,INR 6,500 crores?

Yes. And mostly, this was on the PMC projects. They are starting from education and infrastructure projects, and also some of redevelopment projects, which have been under discussion with Ministry of Defense and other power sectors, ONGC payment partners are there.

You said that you're also looking at redevelopment for the [indiscernible].

Yes.

So this -- I mean -- because -- will it be a smaller size project or we'll be looking for large size project?

No, these are large size projects, these are around INR 2,000 crores worth projects.

And where they will be located in terms of geography?

Delhi, one is located in Delhi, [indiscernible] Partners of defense in the defense area. And other is the IP in the power sector, the in the first power [indiscernible]. And then on land parcel, we are discussing with the naval authorities to start at Visakhapatnam. [indiscernible] So these are the ramp-ups. And HPCL also has some land parcels in Bangalore and other areas which are under discussion.

[Operator Instructions] The next question is from the line of Akhil from Robo Capital.

Sir, I just wanted to just clarify one regarding the consolidated revenue guidance that you have given around INR 7,000 crores. So this year, you've done more than INR 7,000 crores itself in consolidated revenue. So I just want to know is the guidance in [indiscernible].

INR 7,000 crores guidance was for stand-alone.

What would be the consolidated revenue guidance?

Consolidated will be INR 8,500 crores.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.

With no further questions. Our main stay during the current year will be our Amrapali project and 7 GPRA, and we are going in a big way in redevelopment projects because that is where the scope of further business is, and we are also targeting some big foreign projects from Ministry of external affairs, which are funded by government of India and funded by EXIM bank. So it's not possible to reveal the details of those projects. But we are targeting some big figure overseas projects during the current year. So guidance that has been given is INR 7,000 crores on stand-alone basis and INR 8,500 crores on consolidated basis. And hopefully, we will do more than that. So with that, I close my remarks. Thank you very much for attending this conference.

Thank you. Ladies and gentlemen, for any other further questions and queries, please contact Mr. Balkishan Singla, Investor Relations, NBCC. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you, Mr. Gupta, and thank you to the management of NBCC India.

Thank you.