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

Ladies and gentlemen, good day, and welcome to NBCC (India) Limited Q1 FY '25 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Ankita Shah from Elara Securities Private Limited. Thank you, and over to you, ma'am.

Thank you, [ Madhav ]. Good afternoon, everyone. On behalf of Elara Securities Limited, I welcome you all to the Q1 FY '25 Earnings Conference Call of NBCC Limited. We are pleased to host the management, which is represented by Mr. K.P. Mahadevaswamy, Chairman and Managing Director; Mr. Saleem Ahmad, Director Projects; Dr. Suman Kumar, Director Commercial; Ms. Reshma Dudani, Senior Executive Director, Engineering; Mr. Hrishikesh Kumar, EV Finance; and Mr. Pradeep Sharma, EV Business Development. Also, we have Krishna, who is from the Investor Relations team. We will start with opening remarks and then follow it up with question and answers. Thank you, and over to you, Chairman sir.

Good afternoon to everyone. On behalf of my NBCC team, I extend a warm welcome to you and appreciate your presence in today's earnings call for first quarter ended 30th June 2024. In recent quarters, NBCC has demonstrated significant growth in both revenue and profitability. For our consolidated operations and execution, we have achieved a total income of INR 2,198 crores, reflecting an 11% year-on-year increase. Additionally, our profit after tax stands INR 107 crores, making 38% year-on-year growth. Major business update: New business secured, NBCC has secured substantial business in the first quarter valued around INR 17,820 crores on standalone basis and INR 19,750 crores on consolidated basis. Following are the major business secured: Development of Satellite Township spread over 406 acres at Srinagar, Jammu and Kashmir valuing INR 15,000 crores. Development of two land parcels in Jhansi that is INR 700 crores. Land parcel development for Kochi Metro Rail Limited, that is KMRL at Kochi INR 700 crores. Amrapali Vananchal City Chhattisgarh, this is INR 250 crores order. HSCC, our subsidiary company, HSCC, procurement of bio-medical equipment and hospital furniture for Pandit Deen Dayal Upadhayaya University of Health Sciences, Kutail, Karnal, INR 528 crores. New government medical college for 100-student capacity, 430-bedded hospital at Buldhana, INR 411 crores. [indiscernible] subsidiary of HSCL, construction of new medical college, 100-student capacity, 430-bedded hospital, Parbhani that is in Maharashtra, INR 404 crores. Updating Amrapali project. Amrapali project has contributed INR 370 crores in top line. Out of 38,000 housing units, so far, we have completed around 21,000 units, and we are committed to provide remaining houses on or before 31st March 2025. Work on Phase 2 project is going on, and we will go into award the work at the earliest. Updating redevelopment projects. Nauroji Nagar project is on finally finishing stage, and we have already started handing over of the project. Netaji Nagar, the first phase of the project valued about INR 1,450 crores is currently underway and 70% of the work almost completed. Additionally, 2 more tenders worth of INR 1,700 crores are in pipeline for appointment of contractor. Sarojini Nagar. This is a large target and worth more than 10 phases are going on with a project value of INR 6,900 crores. Top priorities: The handover of Type 2 quarters in Sarojini Nagar planned to be handed over 1,738 quarters, that is 19 towers by end of September 2024. The handover of another 10,000 flats in Amrapali projects. Handing over of GPOA that is Netaji Nagar projects, 7.3 lakhs square feet GPOA. That is block #3, it has been handed over to [indiscernible] for internal finishing work. Major opportunity and focus area of NBCC for upcoming months: opportunity in housing sector. Opportunities in these sectors are very huge, and we are in talk with various state government agencies, including Housing For All, Pradhan Mantri Awas Yojana. Feasibility study and DPR preparation for low-cost servicing project is underway for many government departments. Land monetization. Government agency, including PSUs have a lot of land parcels across India, which are not generating any revenue to the owners. NBCC has been accessing these opportunities and started feasibility of few land parcels across Pan India for these large opportunities similar to [ DHEL Works ]. After a successful journey of redevelopment business model, NBCC is also eyeing some large-sized projects in the upcoming months, specifically government colonies for redevelopment. [indiscernible] Amrapali project experience and expertise, NBCC is examining feasibility of 2 more subsidiary projects, one in Gurgaon and one in Noida, that is Supertech and other private agencies. Overseas business: the expansion of new opportunities in [ PZ ], [indiscernible], Philippines, Dubai and Kuwait. Diversification. Acquisition of underperforming public sector units with significant land assets. Now thank you, the forum is open for question and answer.

[Operator Instructions] We have our first question from line of [ Sumeet Rohra from Smartsun Capital ].

Firstly, sir, I mean, many, many congratulations on posting a very good set of results in quarter 1. Sir, if you can just take us through what is our current order book today? And secondly, you just mentioned that you are looking at many various business opportunities. So how do you basically see order inflow over the next maybe 6 months till this financial year? My second question, sir, is now that you've got such a robust order book and we have a very strong targets of about INR 25,000 crores revenue. So sir, this year, I mean, what kind of revenue growth are we looking at? And secondly, if you can also help understand a little bit on how do you think EBITDA margins, et cetera, will shape up along with PAT because then we see a [ flow through ] for EBITDA to PAT directly. If you can just highlight a bit on these two, then I'll come back for more, sir.

So the first question you asked, the order book. So we have around INR 70,000 crores order book in our standalone only. And in consolidated level, INR 81,000 crores order book we have. And the current year target is around INR 10,000 crores turnover at the standalone and INR 13,000 crores at the consolidated level.

Okay. And sir, I mean, on margins, because in Q4, we saw, I mean, a very sharp uptick in margins in Q4 and Q1 though generally is a subdued quarter always for NBCC. But this time, Q1 also was quite good. So if you can basically tell us a little bit on margins that how do you basically see this shaping up for the full year?

5.5% to 6%, around 6% profit margin.

Okay. And sir, I mean, on the potential business opportunities, which you just mentioned. I mean land monetization of other PSUs, plus stress projects of Supertech. So sir, what, I mean, in your eyes or in your opinion, is the potential we are looking at in terms of getting further orders? Because currently, you said INR 81,000 crores. So can we end the year with about INR 100,000 crores?

Definitely, definitely. By the year-end, I think we're going to clock INR 100,000 crores order book. This is our target. We have some orders in pipeline that will be going to mature by -- in the next coming quarters. So by the end of the year, I think we're going to reach INR 100,000 crores at consolidated level.

Okay. And sir, if I heard correctly, you said that you're looking at about a INR 13,000 crore consolidated revenue for current year, which is, I mean, a sharp 25% growth. So do you expect this growth in revenue to continue for the next several years seeing the robust order book we have?

Definitely, definitely. For getting any project we want to start, we'll need some statutory approvals, for which it will take at least 6 to 8 months. So once we've got statutory approvals and all, then the order book can be converted into execution.

[Operator Instructions] We have our next question from the line of Akshay Patil from NBCC.

I want to know NBCC has recently increased the authorized share capital. So any plans for further fundraising? Or what was its purpose?

Not for fundraising. So this question will be answered in the next -- at the next meet.

Okay, okay. So my next question is NBCC was planning to set up an NBFC to fund its internal...

Not presently.

Not presently. Okay. Sir, my next question is revised estimate for the top line and bottom line for the next fiscal year, not this fiscal, next fiscal year.

Next fiscal year?

Yes, next fiscal year.

Not this year, coming year?

Yes, coming year.

Current year, you are talking? .

No, next year growth. I'm asking about the growth. How much can it increase top line? Can you increase...

Around 25% to 30% growth we are expecting in top line.

Okay. So in this budget, INR 10,00,000 crores has been allocated for the urban infrastructure development. So how much percentage of the order is NBCC expecting so that you can secure it?

Definitely, presently, we are not getting any order from that low-costing housing projects. But certainly, we have discussions going on with some state governments. We're going to get the other in this year, current year.

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

Sir, I had a few queries. So on the Q1, what is the total value of works that we have awarded? And how much are you planning for the full year than this year?

Total awarded at consolidated level is INR 1,700 crores in the Q1.

Okay. And how much...

[indiscernible]

5okay. And how much are we planning for the full year?

Full year around INR 12,000 crores to INR 13,000 crores.

Okay, sir, INR 12,000 crores to INR 13,000 crores. And sir, out of this INR 81,000 crores of order book, how much is currently ongoing book?

Currently, around INR 21,000 crores is in running projects.

Okay. INR 21,000 crores. Sure, sir. And sir, you said on the EBITDA margins, you are targeting 5.5% to 6%. So what is that we're planning for the PAT margin?

PAT margin around 4.5% to 5%.

[indiscernible].

Around 7%. So the PAT margin will be around 6% to 7%.

Okay, 6% to 7%. Okay. Sure, sir. And sir, on the Amrapali project. So if you can give that what is the total value that you have sold here till date? And what is total execution over here in this project?

The sold value is around INR 3,600 crores. And so far, around INR 6,000 crores, we have executed another INR 1,800 crores to INR 2,000 crores early balance that we're going to compete by next March 2025. We're going to complete all the units. So far, we have completed around 21,000 units. The rest, 17,000 units, total 38,000, you have to complete, so 17,000 is balance. Out of 17,000, around 15,000 units we're going to complete by this year December itself, another 2,000 units next March '25.

Okay. Okay. Sure, sir. And sir, on the Netaji Nagar project, can you please repeat. I missed your opening remarks over here. What is the value that is currently ongoing? And how much have we completed the execution here?

INR 1,400 crores project that is GPOA is in progress, out of which from block 1, 2, 3, block 3 has completed and handed over to [ security ] for internal finishing work. So, so far, around 70% of work completed. Balance we're going to complete by November, December.

Okay, sir. And sir, our Nauroji Nagar is now fully sold up, right?

Yes, fully sold up. Only some 6 floors have to be sold. But I think by the month of end, we're going to sell complete inventory. There is a lot of competition for purchasing the flats on other floors, office space in Nauroji Nagar.

Okay. And sir, on the Sarojini Nagar, what are the sales that we are planning for this year?

There is only one, Sarojini Nagar has only one downturn bulk sale that has been completed. We have sold out the bulk sale, successfully sold Sarojini Nagar.

And how much are you planning for balance in this year?

Balance is from office space [indiscernible] commercial space has to be built. So we are waiting for the cabinet approval. As soon as we get the cabinet approval, we'll go into start the construction of the commercial space.

Okay. So then over here until last quarter, we had already sold INR 500 crores to INR 600 crores. So that is the only sales until now in this project, right?

Where? In Nauroji Nagar?

Sarojini Nagar. Sarojini Nagar.

Sarojini Nagar, INR 1,300 crore unit we sell it. Recently, the [ downtown sales ] has been taking place.

Okay. So then in your balance, we're not expecting any further sales in this project in FY '25?

There is no sale in Sarojini Nagar so far as of now. The inventory already sold out.

Okay. Okay. So sir, what the total value that we've sold over here?

In Sarojini Nagar, INR 1,300 crores. And Nauroji Nagar INR 12,500 crores already sold. So one more action is going to happen in this month only, wherein we can fix another INR 800 crores to INR 900 crores, that is the last [ factor ].

In the Nauroji Nagar?

In the Nauroji Nagar.

Okay, okay. And lastly, sir, what is the total real estate that we've sold in this quarter?

Real estate, [ INR 63 crores ].

INR 63 crores. And what is our target for the full year?

Around INR 600 crores we are targeting.

[Operator Instructions] The next question is from the line of Ankita Shah from Elara Securities Private Limited.

Yes. Sir, could you help us with the order book breakup between project management consultancy orders and redevelopment orders?

PMC and redevelopment, around 46% on PMC, 54% is on redevelopment, that is out of INR 81,000 crores, 46% in PMC and 54% in redevelopment model. And EPC is very small margin from 6% to 7%.

Okay. Okay. And sir, in terms of inflows, how much inflows are we targeting for this year? And from which areas?

Another INR 20,000 crores. So far around INR 20,000 crores we have secured, another INR 20,000 crores we are expecting in this current year.

Okay. Okay. And where does this opportunity come from? You've mentioned housing for all, land monetization, [ overseas business ]. If you can quantify on each of these?

Some land monetization around INR 10,000 crores from the state government and some PSU land monetization, INR 5,000 crores. And from the government and Pradhan Mantri Awas Yojana. So we are expecting INR 5,000 crores.

Okay. Okay. And the overall opportunity pipeline across all this would be like over the next 4, 5 years, how big this opportunity can be?

Around next 4, 5 years, we can go up to 200,000 crores order book, will be around INR 200,000 crores. Current year, we are targeting for INR 100,000 crore, INR 1,00,000 crores. So next 4, 5 years, I think it will double, almost double.

So INR 100,000 crores is your inflows or the order book number?

Our order book. Currently, we have INR 81,000 crores at the consolidated level. Another INR 20,000 crores added, it will be INR 100,000 crores during this year.

Correct, correct, correct. Okay. Okay. And what about, sir, any opportunities in overseas market?

Yes. We are going to get some new work order from [ VB ], Morocco, Kuwait, Dubai. Duabi also we're looking for our real estate as well as some PMC projects in Dubai and Kuwait.

Okay. How much would be our [ bid ] pipeline as of now? No, overall domestic and overseas [ bid ] pipeline.

As we already told INR 100,000 crore, around INR 100,000 crore. [indiscernible]

We have our next question from the line of [ Sumeet Rohra from Smartsun Capital ].

Yes, I mean I just heard your comment just now on the opportunity, which you said over the next 3 to 4 years. So sir if I understand correctly, you're saying that next -- I mean, currently, by the end of this year, our order book should be close to INR 100,000 crore. And after executing of INR 13,000 crores, so if you say that our order book should be about INR 200,000 crore after 4 years, which basically means that, that would be after execution, right? So because I mean, since we are looking at a run rate of about 25%. So my understanding is that this year you will do INR 13,000 crores, then the next year, you could do about INR 17,000 crores, INR 18,000 crores, then on the third year, you could be about INR 23,000 crores, INR 24,000 crores. So you are basically saying that after executing and growing 25%, your order inflow, I mean, your order book after 3 to 4 years should be INR 200,000 crore. Is that correct, sir?

Because we are getting around INR 40,000 crores or better in every year. So after deducting INR 25,000 crores, the balance order book will be around INR 200,000 crores after 4, 5 years.

[Operator Instructions] The next question is from the line of Amit Kumar, a shareholder.

Firstly, congratulations for the good results. And there are two questions. First is, as per your previous guidance, about INR 25,000 crores top line and INR 2,000 crores bottom line, [ 27, 28, ] if I am correct.

Yes.

So with this new development, like you are getting good orders and good execution. So are you sticking on this number? Or are you existing or I mean, are you are going to raise this bar?

Definitely it will rise, this is the minimum. Whatever we are committing, this is minimum. Definitely, it will vary another 5% to 10% because we got this year alone, INR 20,000 crores, in the first quarter only we got the order. And we are expecting another INR 20,000 crores in the next coming quarters. So INR 40,000 crores only we got against INR 20,000 crores. So definitely it will increase.

Because you said that you will raise like top line by 25% every year. So in that formula, it will be around INR 27,000 crores, INR 28,000 crores, if I'm correct, the top line?

Another 10% definitely it will increase.

Okay. And the bottom line, you mentioned about INR 2,000 crores in your previous session, I mean, last year. So INR 2,000 crores, it will also increase?

Definitely, definitely, it will also definitely increase. Because we have our real estate info wherein we are getting profit of around 25% to 30%. So that will be also added to our [indiscernible], so definitely...

Bottom line is, I mean, last year -- last financial year, the top line was like around INR 10,000 crores and bottom was around INR 500 crores something -- I mean 5%, the margin. So -- but as we were saying that in '27, '28, if you are going to book top line around [ '28 ] and your bottom line is around, let's say, INR 2,300 crores, so it means like 8% to 9% bottom line?

Yes, definitely. Because our breakeven is around INR 5,000 crores, INR 5,500 crores, our breakeven point [indiscernible] it will match. Afterwards, anything we will earn the profit will directly increase, so that is the reason. .

So like -- so this year also, your margin like bottom line -- I mean, next financial year, '25 -- '24, '25, your margin would be like, if I am right, around more than 6%?

More than 6%.

More than 6%. Okay. And any new -- like you're going to start your own projects in real estate more or just you are staying with the PMC?

No, no, no. We are going to start. We have three land parcels at Jaipur, one land parcel at Kondapur. So that We're going to start. We have one more project at Gurgaon so [indiscernible].

In that segment, your profit will be around 20% to 25% margin, right? Yes. But then the question is, I mean, your major part is PMC and where there is just 8% your -- I mean, the EBITDA, 8% margin. So how you will achieve this 8% bottom line in next course of 2 years?

As I told you, around INR 200 crores, INR 250 crores only our overheads. Beyond INR 250 crores, so we are going to get profit. It's our overhead. So that is [indiscernible] one more thing in real estate, we are getting good margin.

Yes. But that is very limited part, your real estate will not more than around maybe 5% to 10% in your book.

I totally agree. In redevelopment projects, we are getting market increase also. 1% or 2% market increase also we'll go into get.

So in that, you will achieve 8% bottom. And this new Jammu and Kashmir project, what is your fee? The same 8%?

Not -- including the marketing, around 7% to 8%.

7% to 8%. So this all development. So you will get more like these projects in coming years? Are you...

Yes, yes. In the coming quarters, I think we are expecting one more state government to participate in the development of the project, not redevelopment, development of the project.

That kind of a scale or lesser?

Almost, almost. [indiscernible].

So it means that in the next 5 to 6 years, your path is clear about 20% to 25% growth as top line and also on bottom line?

Yes.

We have a follow-up question from the line of Ankita Shah from Elara Securities.

I wanted to check in these projects that we've got. Are these projects on nomination basis or we have bidded for these projects and got it?

Redevelopment. Of course, redevelopment projects we are getting on nomination basis. But certain PMC projects, we are getting through competition, even EPC contract also through competition.

And this recent Srinagar project that we got is...

It is on nomination basis. Srinagar, Kerala, and Kochi Metro, all the 3, we got through nominations. They got their approval from the cabinet.

Okay. Okay. Okay. And the...

In redevelopment, only NBCC is doing redevelopment projects except NBCC [indiscernible] is doing. Even [indiscernible] we are generating money and giving to them. So this is the USP of NBCC redevelopment.

So in this redevelopment project, which is nearly 50% of your order book. Any cost escalations or [ delays ] would be a pass-through to the government?

Pardon me, cost escalation. Whatever profit that will be given to we are charging our PMC fees. The profit, of course, it will go into government only, state government only.

No. If the project [indiscernible] and the overall project size only increases, then you get your fees on the escalated project cost or at the original project cost?

No, no, actual cost. If project cost increases, we'll go into get done by increased costs.

So do you get fees on the increased cost?

Yes.

Okay. Okay. Got it. And who are the other competitors for us in other PMC orders?

PMC orders, 3, 4 PSUs are there, one is [indiscernible], [ RITES ] EPAL, VAL, [indiscernible].

Private companies don't bid for these orders?

Private people won't get this among PSU only because we are doing government projects. Government projects are usually appointed to either [indiscernible] or state government bodies are PSUs. So among the 3, it will go into competent.

Okay. And these margins are decided by the government or...

No. We have to quote. Suppose if you are in the competition means you have to quote the rate. And nomination, of course, the government will decide. Mutually, it will be settled based on the quantum of the work, size of the work and location, it all depends on the factor for deciding the PMC fee.

And generally how much is the PMC margins that we get in this?

Around 68%.

68% is our margin, plus the subcontractor will also make margins?

He will get around 10% to 15% or it is usually kept in the, as per [indiscernible] DSR the contractor profit and overheads will be around 15%. So that will be extra, not in the existing margins.

So total was 16%, 10% to the subcontractor and 16% for NBCC?

Not 10%, 15%. As per [indiscernible] Guidance, 15%, we have to pay tax, GST. I mean, not GST, overheads and labor pays, everything is included in the 15%.

Okay. Got it. And over and above that 6% for us?

6%. Cost plus.

Whatever cost plus.

Cost plus. Okay. Cost plus.

Margins we are getting around 10%. We are getting 10%. Some work, we are getting 8% to 10%. In Amrapali, we are getting 8%. So it depends on project to project, size of the project.

We have our next question from the line of Akshay Patil from NBCC.

The recently secured INR 15,000 crores Srinagar project. So what is the timeline [indiscernible] that it should be executed?

It is varying from -- actually, this will be in a phased manner. The first project we are targeting 1 to 2 years, first phase. The rest of the project maximum 5 years. We're going to develop that Satellite Township in phased manner.

Okay. It means by end of 6 to 7 years, the project will be completed, right?

Yes.

The next then is from the line of [ Sumeet Rohra from Smartsun Capital ].

Just two things from my side. One is that what's the cash we have today in our book? And sir, secondly, how much of land parcels do we own today at NBCC? Plus, we also had some land in Delhi, right? I mean [ Ghitorni Nagar ] I mean, I don't exactly recall which one. So how much of that land we have of our own, which is in Delhi? And how big is that, sir? And how much is value of that?

First question is first. I'll answer for your first question. The total fund available with NBCC is around INR 2,200 crores, out of which non-dedicated, INR 732 crores. Similarly in HSCC, around INR 1,700 crores, non-dedicated, INR 154 crores. In HSCL, INR 788 crores, non-dedicated INR 639 crores. In NSL, INR 85 crores, non-dedicated, INR 83 crores. So we have land parcel in Delhi, that is Ghitorni around 22 acres. This also we are planning to develop this land parcel of Ghitorni. I think I have answered your question.

And sir, basically, on the land parcel. Sir how many parcels do we have all over India?

All over in India, we've around 15 land parcels. Around 39 acres excluding Ghitorni 22 acres.

The next question is from the line of Vikas, a shareholder.

Yes. Sir, just wanted to check, sir, any plans for listing of our subsidiary down the line? Listing of our subsidiaries, sir?

Yes, yes, we are planning one more subsidiary.

Any timeline, sir? This financial year, next financial year?

Next financial year.

[Operator Instructions] The next question is from the line of Miraj Shah from Arihant Capital.

Just want to clarify one thing you mentioned to one of the earlier participants in an answer that we are targeting profits of INR 2,000 crores in, I think, in 4, 5 years. Did I hear that right?

Yes, yes, you're right, exactly right. .

Sir, what would be the margin? I believe you mentioned the INR 27,000 crores, INR 28,000 crores would be the top line by then?

Top line will be around INR 25,000 is minimum, maximum up to -- it may increase another 10% to 20%.

Understood. Okay. And sir, the cash level that you just mentioned of INR 2,200 crores, this is on a consol basis, right, sir?

No, no, no. This is only standalone NBCC. This includes clients advance also, whereas our money is around INR 730 crores.

INR 730 crores is unallocated, you said, the non-dedicated?

non-dedicated, yes.

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

Once again, thank you, everyone, for trusting on NBCC. We are trying our level best to improve quarter-to-quarter, year-to-year, both revenue as well as profit. So next year, we are focusing on our execution because we already secured sufficient work order. Our main focus is to execution of the projects that we are concentrating on that. So thank you once again all the investors and Elara for arranging this conference.

Thank you. On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.