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

Ladies and gentlemen, good day, and welcome to NBCC (India) Limited Q4 FY '23 Earnings Conference Call hosted by Nomura. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Priyankar Biswas from Nomura. Thank you, and over to you, Mr. Biswas.

Thank you, [ Nirav. ] So good afternoon, ladies and gentlemen. So we welcome everyone to the fourth quarter FY '23 results call for NBCC, so NBCC is a leader in project management, engineering and consultancy services. So we have the management here today represented by Mr. P.K. Gupta, the CMD; Ms. B.K. Sokhey, Director of Finance; Mr. K.P. Mahadeva Swamy, Director of Commercial; Mr. Saleem Ahmad, Director of Projects; Mr. Rajendra Chaudhari, Senior Executive Director of Engineering; Mrs. Reshma Dudani, Executive Director of Engineering and Investor Relations. So we thank the management for providing us with this opportunity and without any further delay, I am handing over the floor to Mr. P.K. Gupta, the CMD, for his opening remarks. Over to you, sir.

Good afternoon, and a very warm welcome to all the investors of NBCC. I'd like to share a few highlights of the financial year '22, '23, major happenings of this year. Our most important projects and the largest value projects of Amrapali Housing, which has been awarded by Honorable Supreme Court, which is costing around INR 8,200 crores. So in this project, we have achieved a turnover of INR 1,750 crores, that is about 25% of the total turnover of the company. We have successfully sold around 26 number units already and the sale value of these units is INR 1,500 crores. Work on all the houses are going on, and by the end of '24, we plan to complete these works. During the year and before that, we got the loan from SBICAP and a consortium of 7 banks, and they have disbursed the money, and homebuyers are paying the amount successfully and some money is coming from the sold and unsold inventory. And as of now, project is running smoothly. In this project, we plan to get an additional business of INR 7,000 crores to INR 8,000 crores that is construction of additional FAR that is lying vacant in these projects, that is 1 highlight. And second is that our trademark project, World Trade Center in Nauroji Nagar. In this, we have sold inventory of INR 2,100 crores during the financial year '22, '23, that is the largest value sold in 1 financial year. And we hope that during the current financial year, complete inventory will be sold out. And this project is nearing completion, and by September, we hope that this project will be completed. As far as financial highlights are concerned, the turnover that we have achieved is 21% more than the last year, on a year-to-year basis, and it's close to INR 7,000 crores. And profit before tax, there is an increase of 31%. Profit before tax is INR 312 crores and 31% more than the previous financial year. EBITDA margin has also improved substantially as compared to 2.8% during '21, '22, we have achieved an EBITDA margin of 4.5%. Consolidated profit before exceptional items, there is an increase of 40% increase, while after exceptional item is 31% increase. The order book of NBCC stands at INR 45,000 crores, which is roughly 50% is redevelopment projects and 50% is other PMC and EPC projects. And in the coming financial year, we are targeting a business development of INR 12,000 crores to INR 15,000 crores. And we are in discussions with various state governments and central government and PSU for award of works. Already signed an MOU with Zambia for construction of mass housing units, and we hope that this order will [ fructify ] shortly. Now I open the floor for questions. Our directors and myself, we are ready to answer the question.

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

So my first question is to do with the monetization part of the redevelopment projects. From what we know last time, it's not more than INR 6,000 crores of the total target of INR 22,500-odd crores. What is that position looking like at this point in time?

Regarding redevelopment projects, [indiscernible], that is World Trade Center and Downtown Sarojini Nagar. In World Trade Center, like, already told that we have sold INR 2,100 crore worth of property during the last financial year. And this year, we plan to end up this property, around INR 5,000 crores worth of property still to be sold, and we hope that this complete property will be sold within the current financial year. As far as the sale of Downtown Sarojini Nagar is concerned, we are launching a bulk sale for this property for which the required approval has been obtained. The sale has already been [ last. ] Only thing is that some conditions have to be modified, and we hope that if this bulk sale is successful, total property worth INR 1,350 crores will be sold.

So if I add up together, INR 1,350 crores and maybe World Trade Center, INR 2,100-odd crores .

INR 2,100 crores is the value of the property sold during last financial year. Total value of this property is around INR 12,000 crores.

And how much do you have realized till date for World Trade Center?

For World Trade, INR 6,300 crores worth of property has been sold.

Okay, okay. Sir, in terms of Amrapali project, how many -- what are the remaining tenders to be done in FY '24?

No. In Amrapali, we have done all the tenders, only 1 tender of INR 100 crores approximately for the remaining work -- some additional works were required in some of the projects, only that is to be done. Otherwise, all the tenders have been finalized and work is going on all the projects -- one tender of around INR 82 crores for some additional work in some of the projects.

And when is this project expected to be fully completed as in -- how much is you're expected...

By the end of '24, this project is likely to be completed.

How much would be the contribution to the stand-alone revenue, sir, from Amrapali?

Stand-alone revenue will be around INR 8,000 crores since the time it started 2021, '21-'22, '22-'23, '23...

No, in '24, how much will be recognized?

'24, it should be around INR 2,000 crores, maybe a little more than that.

Okay. Sir, if I can ask you on the subsidiary part, how much is the HSCC revenue and Hindustan Steelworks revenue? Similarly, the EBITDA and net profit for this full year FY '23?

HSCC has achieved a turnover of INR 1,100 crores, and their PAT is INR 23 crores. HSCL has achieved the turnover of INR 791 crores and their PAT is also around INR 23 crores. And [ 1 of our more subsidiary, NSL, ] INR 177 crore turnover has been achieved, and they have achieved the PAT of INR 7 crores.

Sure. My final question from my side, what is the total projects awarded at this point in time in the cumulative order backlog of INR 45,000 crores?

Pardon me, you want to know the...

The projects awarded -- total projects awarded from INR 45,000 crores order backlog that you have in hand?

Total projects -- no, this INR 45,000 crores is the value of work which have not been awarded. Apart from this, there are running projects of INR 20,000 crores, but this INR 45,000 crores is in addition, which have not been awarded.

Okay. Okay. And sir, how much you plan to award it in FY '24?

INR 10,000 crores to INR 12,000 crores.

[Operator Instructions] Next question is from the line of Nalin Shah from NVS Brokerage.

Very good afternoon to everybody. I have 2 questions, sir, overall broad questions that in spite of having a turnover, I mean, total, I would say, the revenue at something like almost INR 8,000 crores, INR 9,000 crores, why is in last 3 years, I have been seeing that our PAT level margin is hardly above 3%? There is all the -- last about 2 to 2.5 years, all the real estate companies are doing extremely well. Even if I see your return on net worth, it is hardly anything which we are earning, so what is the reason for such a pathetic, I think, performance?

Our PAT is 7.25% -- PBT margin is 7.25%.

PBT margin, I'm seeing the 2023, our PAT is at INR 238 crores. Am I right? On the top line of INR 7,884 crores which is hardly 3%. Again, in the previous year also, I see it is 3%.

I mean last year -- actually, in these 2 years, we have to book some exceptional items due to which PAT has been -- remains at the same level. Otherwise, if you will see our EBITDA margins, there is a drastic change in our EBITDA margin from 2.82% to now we have achieved the 4.47%.

Correct. But I think in the overall context of the volumes, there is hardly any profitability like if I see 3% margins, if you see, in many projects in Mumbai. I'm talking of Mumbai because I'm more this thing conversant with Mumbai. I mean the real estate companies pay even 2% and 3% brokerages to the brokers, whereas we are earning hardly about 3%. What is the, I think, reason for such a poor profitability. It is because of the -- I think the tender system in which we are growing at a very, very cheap rate we are quoting that is the reason or what is the reason?

NBCC's total revenue is from the project management consultancy work, it constitutes around 95% of the total turnover, right? Our real estate portion is hardly 2% to 3% and rest is EPC, so if you -- you are comparing our turnover with the other developers in the Mumbai that is not the case. But definitely, our real estate projects have contributed this time a huge margin, we see a sale of INR 195 crores. There is a gross margin of INR 68 crores in the real estate projects, but that constitute a very small portion of our total revenue.

Exactly. So my point is that only that company is, if I see your net worth, your net worth today, what you are using is almost about maybe INR 2,000 crores. So we are hardly earning maybe even a little over 10% on that.

No, our net worth is not INR 23,000 crores.

Our net worth is INR 1,900 crores...

Approximately INR 2,000 crore, I'm saying -- INR 2,000 crores.

We are having completed real estate inventory of INR 674 crores out of which we are focusing on that. Our net worth mainly constitute that real estate [Foreign Language]

Consultancy.

Yes, right, right [Foreign Language] So we still have the land banks of INR 619 crores, which will be developed in the coming years. We have the plans for that, and we are going to rather develop at Patna initially and then at Coimbatore and then might be at Jaipur.

Okay. And current year, I think you mentioned, if I remember correctly, the order book stands at around INR 45,000 crores. Am I right?

Yes.

Yes, yes.

Total order book, so what is the likely -- I think the execution part, which will give, I mean, reflect into the top line approximately?

In the current financial year '24, top line will be around, stand-alone basis, INR 9,000 crores, that is what we are targeting.

Around INR 9,000 crores. Okay. Okay. And do you see some improvement in margin, sir on that?

I guess with improvement in top line because some of the expenditures are constant when improvement...

Right, economies of scale will follow.

Yes.

[Operator Instructions] The next question is from the line of [ Vasudev ] from Nuvama Wealth.

Sir, for this INR 45,000 crores of order book, which you said that is on stand-alone or consolidated basis?

That is on stand-alone basis.

So then on consolidated, what would be this figure?

Consolidated is INR 54,200 crores.

Okay. And the split between PMC and redevelopment would be same 50-50?

[Foreign Language] for stand-alone, yes, right.

And for the consolidated it would be?

Rest of the companies are having only PMC. They are not having any redevelopment projects, you can say around 40% on consolidated basis is redevelopment and 60% is PMC.

Okay. Got it. Then what would be your order intakes and ongoing works on consolidated basis for FY '23?

Please repeat your question.

What will be your order intake on consolidated basis for FY '23? And as on March, how much is our ongoing work?

Sir, your voice is not coming clearly. So can you please repeat your question again?

[ Vasudev, ] can you speak through the handset.

Am I audible now?

Yes, yes.

Yes. So I was asking that what is our order intake on a consolidated basis for FY '23? And as on March '23, how much is our ongoing work?