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

Ladies and gentlemen, good day, and welcome to NBCC Limited Q1 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Bharat Jain from ICICI Securities. Thank you, and over to you, sir.

On behalf of ICICI Securities, we welcome you to the Q1 FY '24 Earnings Call of NBCC. From the management today, we have with us Mr. P.K. Gupta, Chairman and Managing Director; Shrimati B.K. Sokhey, Director Finance; Shri K.P. Mahadevaswamy, Director Commercial; Shri Saleem Ahmad, Director, Projects; Shri Rajendra Chaudhari, Senior Executive Director; Mr. Sandeep Sharma, AGM, Business Development. I will now hand over the call to CMD, sir, for his opening remarks. After that, we'll open it up for Q&A. Thank you, and over to you, sir.

Good afternoon, dear investors. This quarter, we are taking a quantum jump in finishing of the earlier order book, which has been a major concern with our investors because the order book is healthy, INR 55,000 crores on consolidated versus and INR 45,000 crores for NBCC standalone basis. But wiping out this order book has been a cause of concern with investors. So we have our -- we have started awarding the future tenders of our 7 GPRA projects in a big way. In the first quarter, we have added the tenders worth INR 2,500 crores, and tenders worth INR 6,000 crores are in pipeline and will be awarded in the month of August and September, and this will show the results in turnover in the month of third -- quarter and fourth quarter. This will lead to quantum jump in turnover. One of the major contracts awarded is costing INR 956 crores for construction of houses in Sarojini Nagar, 7 GPRA Colony. Another contract will be awarded very shortly. Its price has been opened in the final stage of award. That is also costing around INR 800 crores. One more contract of INR 1,550 crores in Sarojini Nagar itself that has been floated and will be opened in this month and will be awarded in the month of September at fortnight. Our consolidated order book, as I told, is INR 55,000 crores, and this is a standalone order book is INR 45,000 crores. And we have backed the order worth INR 3,000 crores on consolidated basis in the first quarter itself, and getting -- the business is going in full stream. Major work that we secured is construction of printing presses for Government of India of INR 750 crores, then Ravenshaw University around INR 300 crores. These are the major ones. And in Jammu and Kashmir, our subsidiary company, HSCC, they bagged the order worth INR 650 crores under NHM. And a few other contracts totaling around INR 1,500 crores have also been bagged in the first quarter. As far as the total income of the first quarter is concerned, that is INR 1,966 crores. There's a jump around 6% as compared to the first quarter of the last financial year. PBT is INR 104 crores. Last year in the first quarter, it was negative around INR [ 5.5 ] crores minus. So there's a healthy jump both in turnover and profit. And future also seems to be bright because our -- we are expecting an order of around INR 8,000 crores to INR 9,000 crores in Amrapali. We are just waiting the orders of the Honorable Supreme Court mostly probably in the month of August or maybe in September, we will get that order, and we'll take up the construction in the current financial year itself. So this is about the figures. And as far as the outlook is concerned, we are targeting redevelopment projects in several states where there is a lot of scope for redevelopment projects. A lot of -- Government of India and state governments are having properties which are in very prime land, but properties have become old. So NBCC is the only company which is having credentials in redevelopment sector. No other company in India has done redevelopment projects. So on the basis of this credentials, we are targeting redevelopment projects, and we are in talks with several state governments. And in central government, also further redevelopment of 5 colonies in New Delhi and South Delhi, which includes very old structures of 60, 70 years old [indiscernible] colony and nearby area. So their initial survey has been taken up, so that project will be -- another big project may be in the range of INR 15,000 crores to INR 20,000 crores and likely to come to NBCC. Now, I open the field for questions for investors.

Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] We take the first question from the line of Rohit Natarajan from Antique Stockbroking.

So we have heard some news that NBCC is seeking not to cut additional trees, some forest departments' response is sought. Does this impact any of your awarding pipeline?

No, it does not affect any of the awarding pipeline because in 7 GPRA project, sanctions for all trees in Sarojini Nagar has been received. And for Netaji Nagar, we have already sent the application to forest department. The Honorable Supreme Court has already cleared our case and told the forest department to give the required clearance. And our applications are with the forest authority, and we are likely to get that clearance shortly. It's not affecting any project. It's not affecting any of our pipeline.

Sir, in the INR 9,000 crores standalone revenue projections made for this year, what kind of -- which are the top projects that will contribute? How much will be from Amrapali, non-Amrapali projects? If you could elaborate on that?

Amrapali will contribute around INR 2,000 crores, and 7 GPRA will contribute another INR 2,000 crores. These are the 2 major projects.

Okay. Followed by any other critical projects like WTC, Guwahati and other such projects?

Delhi University, we have awarded 3 tenders worth INR 800 crores already. So that will contribute to a lot of turnover.

Okay. Sir, out of INR 45,000 crores of standalone order backlog, what is the outstanding projects awarded position? The last time we were given to understand it's somewhere around INR 21,000 crores. Is that the number still around?

We have awarded around INR 2,500 crores worth of projects during the current year, so around INR 19,000 crores, you can say, is the balance for us to be awarded. And out of that, we have already floated the tender for around INR 6,000 crores. That would be awarded in the month of August and September.

Okay. Sir, in terms of the monetization of the World Trade Center, we were given to understand there was not such a strong response, at least this was the new circle flowing around. What is the situation over there at the...

Our response has improved drastically. Total property of World Trade Center sold till now, it is INR 6,500 crores. And our next date of the auction is 21st of this month, and we are expecting a sale of around INR 1,000 crores during this sale. And for the first time, the Bentley, which is the car company, they have purchased a property in World Trade Center for their showroom.

Okay. Sir, what is this Hari Nagar project? Is it part of the 7 GPRA colonies? Or is this a bit...

No. It's not part of 7 GPRA colonies. It's a redevelopment of bus depots of Delhi Transport Corporation. We have 4 projects of Delhi Transport Corporation. One is Hari Nagar colony, then Hari Nagar bus depot, then Shadipur colony and Vasant Vihar bus depot. We are taking up all these 4 projects.

And within the monetization for the GPRAs, downtown Sarojini is the biggest revenue driver, if I'm not mistaken?

No. Biggest is World Trade Center, not...

Okay. And what about downtown Sarojini Nagar, sir?

Downtown Sarojini Nagar, we have opened the bulk sale. So we want to -- if the investor is available, we want to sell it to one person who can further sell the smaller shops. In case that does not succeed, then we'll revert back to the sale of individual units.

We take the next question from the line of Dhananjay Kumar Mishra from Sunidhi Securities.

Congratulations for strong [ execution ] to start with. Sir, Amrapali project, what kind of margin we make in Amrapali project? And you said that INR 8,000 crores to INR 9000 crores will be awarded in August or September. So what will be the time line? And as of now, what is the revenue we already booked in Amrapali?

The Amrapali project that has been awarded to NBCC, that is worth INR 8,300 crores approximately. Out of that, we have already booked the revenues worth INR 5,000 crores, and our margins are 8% PMC fees plus 1% on marketing. And that INR 8,000 crores we are expecting in the month of September, that will be in addition to the earlier one, but the margins will be same in future...

8% plus 1%. 8% plus 1%.

8% plus 1%. 8% is project management consultancy and 1% is marketing for the property being sold.

Okay. So currently, the outstanding is about INR 3,300 crores, and additionally, we will get INR 8,000 crores, right? And what is the time line to complete all these projects of Amrapali?

Old projects, that will be completed by the end of 2024. And the new projects from the date of award, within 3 years, we will complete. That is the target.

Okay, 3 years additionally. Okay. And sir, we have signed MOU with the Ministry of Urban Development. So what is the target for FY '24 and '25 in this MOU?

This MOU is for 2 years, '23, '24 and '24, '25. The target of turnover for '23, '24 is INR 10,650 crores and target for turnover for '24, '25 is INR 11,700 crores . This is on consolidated basis.

Okay. And any PBT target is also there in this?

EBITDA margin is about 6%.

6% for both the years, right?

For both the years.

Okay. Okay. And in terms of pipeline, you said that this year total pipeline is about INR 9,000 crores. Or is it more than that -- new order inflow, because we already got INR 3,000 crores?

INR 11,000 crores, INR 12,000 crores.

INR 11,000 crores to INR 12,000 crores. Okay. And sir, lastly, in Real Estate segment, we have been doing about INR 200 crores annually. So any chance that we start expanding our own real estate business because we have got INR 700 crores, INR 800 crores kind of inventory? And so are we thinking on that side? So if you expand that business because that is -- that will be a high-margin business.

Yes. We are starting that as of now of 3 properties, Patna, Coimbatore, and Jaipur, where we have the land parcels available. And for the properties already constructed, which are mainly at Bhuvaneshwar, Kolkata and Lucknow, we are getting good lead, and hopefully, we'll be able to wipe off these properties by the end of this financial year.

And what could be the potential revenue from these 3 projects? Potential sales value from these 3 projects?

Around INR 1,100 crores.

[Operator Instructions] We take the next question from the line of Vasudev from Nuvama.

Before, you said our total consolidated order book is INR 55,000 crores. So can you give us a split between P&C and redevelopment? And also out of this consolidated order book, how much amount is the ongoing work?

Ongoing works are around INR 18,000 crores.

Okay. And the split between P&C and...

And the consolidated basis is around INR 23,000 crores.

Okay, [ 23 ]. And the split between P&C and redevelopment would be? And the consolidated order book?

Consolidated order book is INR 55,000 crores and redevelopment order book is around INR 23,000 crores.

Okay. And sir, you said on the EBITDA margins, you are looking for a 6%. So what is the PAT margins that we are looking for?

It will be around 4% to 5%. PAT margins will be then -- comes around to 5%.

Okay. Okay. And can you just help me with the cash value on the consolidated level as on the June end?

The cash and bank balance as on June end is INR 5,000 crores, out of which INR 4,000 crores pertains to our client deposits and INR 1,000 crores is our own firm and major funds are with [ HSC ] and subsidiaries.

Okay. Okay. Got that. Then in Q1, what is the amount of real estate that was sold?

In the Q1, it is approximately INR 17 crores that has been sold. But in the coming months, we are expecting now this sale because the 3 projects are in the pipeline. One property at the commercial complex at Lucknow, then there is a property at Kolkata, and third one is at Bhuvaneshwar. And we are getting many queries related to these properties and many buyers are coming forward to take these properties, and interests have been shown. And we are hopeful that by the end of this financial year, we are able to sell it.

Okay. So in the previous question, you answered that the total value for this is INR 1,100 crores, and we are planning to [ spend our ] INR 1,100 in FY '24?

Yes, yes. You are right.

Okay. Then next, if you can give me the status of the 7 GPRA colonies? Like what is the work done, the amount of real estate sold and our targets for FY '24?

We have around INR 5,000 crores of inventory in World Trade Center and INR 1,300 crores with Sarojini Nagar. These 2 inventories, we have to sell it. Hopefully in this year, we are able to sale around more than INR 4,000 crores in World Trade Center and INR 1,300 crores in Sarojini Nagar.

Okay. [Technical Difficulty]

Pardon me?

Netaji Nagar.

Netaji Nagar, that is World Trade Center. Around more than INR 4,000 crores, we are trying to complete because we are going to complete this project by November. So once we will complete by November, we'll see we can get OC occupancy, then the GST exemption will be there. So definitely, by March, we are going to sell it all the properties in World Trade Center.

Okay. So that is in Netaji Nagar. Then, what about the Nauroji Nagar project?

Nauroji Nagar only. Netaji Nagar, nothing is there.

Okay. That's what I was asking, about Netaji Nagar. So have we started awarding? And when do we plan to start for that?

When do we going to end it over?

When is the start for Netaji Nagar?

Netaji Nagar, for sale purpose, you are asking or completion?

Both of them.

In Netaji Nagar, there is no sale. So if you want residential part, that's done. Nauroji Nagar and Sarojini Nagar only the sale part is there.

Okay. Okay. And sir, last 2 questions. What would be the total seed money and the interest on that? And how -- what is our tenders in the current tender bidding?

The seed money is around INR 923 crores in respect of all these projects. And outstanding interest is to the extent of INR 298 crores -- INR 280 crores.

Okay. And lastly, the tenders which are currently under bidding?

Tenders which are under bidding?

INR 6,000 crores. INR 6,000 crores.

Okay. And for FY '24, as of all, what is the total amount of orders which you are planning to [ award ]?

FY '23, '24, we are targeting around INR 12,000 crores. It could be even more than that on a consolidated basis.

So this is the order which we are planning to award, INR 12,000 crores?

No. Award will also be in that range, INR 10,000 crores. And I told about what business we are likely to get. That will be more than INR 12,000 crores. But award will be INR 10,000 crores minimum.

Okay. And these amounts are on standalone or consolidated basis?

These are on consolidated basis.

[Operator Instructions] We take the next question from the line of Nikhil Abhyankar from ICICI Securities.

Sir, in the opening remarks, you mentioned about the redevelopment projects across India you are targeting. So can you just quantify the opportunity size over here? And what kind of projects will these be?

Pardon me? We couldn't understand you.

Sir, in the initial remarks you mentioned targeting redevelopment projects.

Yes.

So if you can quantify the -- like, the opportunity size for this, for redevelopment projects?

In redevelopment, we are focusing on the 2 states. One is from Kerala, other one is Mumbai. Around INR 3,000 crores, we are expecting minimum redevelopment for this.

This year. And most of these will be, what, sir, residential? Most of these projects will be residential?

Residential and partly commercial.

Partly commercial as well. Right. And sir, you mentioned that you have already awarded INR 2,500 crores of orders in Q1. Am I right?

Yes.

And you have mentioned that by Q2 end, another INR 6,000 crores will be sold. We are just -- there won't be any orders in H2? Like, most of it will be done in H1?

No, no. Whatever further orders that we'll get, that we'll award. But still at -- If I figure, it's difficult to tell right now. But we told that INR 10,000 crores, INR 12,000 crores, we'll be awarding, so around INR 8,000 crores will be by H1. H2, can be anything from INR 4,000 crores onward.

INR 4,000 crores onward in H2. Okay. And sir, I don't know if you have given any guidance for FY '24. So can you give us the revenue guidance for FY '24 and the expected margins?

Yes. Our target is -- for FY '25?

'24, I'm asking.

'24 will be around INR 10,600 crores as per our target, MOU with [ the ministry ], we'll reach this target, INR 10,600 crores.

And the margin, sir? Any margin value?

EBITDA margins are to the range of 6% to 6.5%.

The next question from the line of Dr. Akshay Patil from NBCC.

Yes. Actually, on just what kind of measures are you taking for better margin improvement? Like diversification for the -- into the foreign business and other streams? So for margin improvement, what measures are you taking?

Couldn't get your question. Our international projects are giving better margins and real estate projects are giving better margins. As far as real estate is concerned, we are on the verge of floating the tenders for Coimbatore and Jaipur projects. Patna contract has already been awarded. That is about to start. And as far as international projects are concerned, we have got a work of [indiscernible] the contract for which has been awarded, and that's also likely to start shortly. We are touching the prospect for -- our CGM business development will tell about the international projects.

We are also exploring new opportunities in Guinea. It's a West African country. There are 2 big hospitals coming up, around $56 million. And we are also trying in Djibouti and Zambia, that is mass housing project, and other talks are going on in other countries also.

Okay. And one more thing. The fixed cost, remaining employment and salary costs remaining the same. Going forward, what are the predictions for the next upcoming 2, 3 years?

The salary cost will remain in this range only, what is appearing now. And we are hopeful that with that, our fixed cost remaining the same, our volumes will increase. So definitely, our margins will be high.

[Operator Instructions] We take the next question from the line of Vasudev from Nuvama.

So in the previous question, you mentioned that our margins in real estate and international orders are higher. So if you can quantify our margins in each segment?

10% to 15% -- 10% to 12% in international projects.

And 15% to 18% in real estate.

Yes. And in the real estate and P&C, what are the margins currently in earning?

In the P&C business, our margins will remain to the tune of between 5% to 8%. And in real estate, it will be between 15% to 18%, or even you can say even 20% also. And in the overseas, it will be between 10% to 12%.

Okay. So we have a high-margin real estate and currently, on our consolidated order book, nearly 40% is redevelopment. So do we have to change this mix going ahead between the P&C and redevelopment?

No. In...

Redevelopment also, we are getting 8%. 8%.

Okay. Okay. And in a total order book, how much portion would be international orders?

At the moment, we are doing one project in Maldives that is around INR 1,000 crores and 2 PMC projects are going on in Mauritius and Seychelles. So new projects we are looking at is Guinea, that is $56 million project. So that will be our new order book.

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

Thanks to all the investors for the patient listening and for showing their faith in our company. The share price has seen a steady increase during the last 2, 3 months, and I hope it will further go up as soon as we award further tenders and we get further orders. Company has been getting a very good name for their efforts in the field of star projects, Amrapali, and in redevelopment projects of 7 GPRA. And we have recently completed the projects of ITPO, which was inaugurated by our Honorable Prime Minister. This is one of the biggest convention center in the world. And it has a plenary hall which can seat around 7,000 audience, and this is one of the biggest plenary halls in the world. It is the state-of-the-art convention center, having the best facilities, and very large exhibition halls which can showcase large, heavy machinery and other products. So this has given a very good name to the company. And G20 conference will be held during the month of September at this venue. This shows the ability of the NBCC to complete very high value and complicated projects. Thank you very much.

Thank you, sir. In case any investor has any queries, so we have Mr. Balkishan Singla from the Investor Relations of NBCC. [email protected]. To address any further queries, you can get in touch with him. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.