NCC Limited (500294) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the NCC Limited Q4 FY '26 Earnings Conference Call, hosted by JM Financial Services -- JM Financial Institutional Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Shah from JM Financial Institutional Securities Limited. Thank you, and over to you, sir.

Yes. Thank you, Jitesh. On behalf of JM Financial, I welcome everybody to 4Q and FY '26 Earnings Conference Call of NCC Limited. We have from the management today, Shri R.S. Raju, Director of Projects; Shri Sanjay Pusarla, Executive Vice President, Finance and Accounts; and Shri Neerad Sharma, Head Strategy and Investor Relations. Now I hand over the call to the management for their opening remarks, post which we can start with the Q&A session. Over to you, sir.

Thank you very much, Vaibhav. Very good morning, everyone. This is Neerad. And on behalf of NCC, I thank you for joining us as we close out the financial year '25-'26. With me today are Mr. R.S. Raju, Director Project; and Mr. Sanjay Pusarla, our CFO. We appreciate your continued engagement with the company, though -- through what has been an eventful year for the sector. Safe Harbor. Before we proceed, I would like to draw your attention to a brief disclaimer. Certain statements made during today's call may be forward-looking in nature and are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. I encourage you to read the detailed statement on Page 2 of the investors presentation. Order book, the foundation. Our consolidated order book as of 31st March '26, stood at INR 83,004 crores, which is about 16% increase over the last year, and highest in the company's history. The fourth quarter contributed INR 9,573 crores of fresh consolidated inflows and full year inflows totaled INR 31,884 crores. This book -- this order book gives us multiyear revenue visibility and a book-to-bill ratio of roughly 4x, and it is spread across 7 verticals. viz, buildings, transportation, mining, electrical, electrical T&D, water and railways and irrigation, which is what gives the portfolio its resilience. Now I will hand over to my colleague, Mr. Sanjay Pusarla, he will share the details of the financial performance of the company. Post that, we will open for questions, any questions, any queries that you might have. Over to you, Mr. Pusarla.

Good morning, ladies and gentlemen. This is Sanjay Pusarla, Executive Vice President and CFO of NCC Limited. I am pleased to announce the financial results for Q4 FY '26 of NCC Limited and also for the year ending 31st March 2026. My announcement basically covers order book revenue, profitability, debt movement and some of the important balance sheet items. The order book stands at INR 83,004 crores as of the end of 31st March '26, you are aware the order book at the beginning of the year stood at INR 71,568 crores and orders received in Q4 is INR 9,573 crores and balance at the end of the year is say INR 83,004 crores. The revenue for the stand-alone. Turnover reported in Q4 FY '26 is INR 5,382 crores, as against turnover of INR 5,445 crores in the corresponding quarter of the previous year. It decreased by 1%. For the full year, the turnover stands at INR 17,669 crores as against INR 19,393 crores of the previous year, a decline by 9%. At consolidated level, the turnover is reported in Q4 at INR 6,251 crores as against INR 6,189 crores in the corresponding quarter of the previous year, which shows an increase by 1%. For the full year, the turnover is INR 20,944 crores as against INR 22,355 crores, which is a decrease of 6%. Next on the profitability. At the stand-alone level, we achieved an EBITDA of 8.44% for Q4 FY '26 as against 9.21% of the corresponding quarter of the previous year. PBT, we achieved 5.2% before exceptional items and PAT of 3.77% in the current quarter, that is Q4 FY '26 as against PBT of 6.18% and PAT of 3.93% reported in the quarter 4 of FY '25. At consolidated level, we achieved EBITDA of 8.83% and PBT of 4.70% before exceptional items and PAT of 3.3% in the current quarter. In the current quarter, that is Q4 FY '26 as against EBITDA of 9.07% and PBT of 5.93% and PAT of 1% reported in the corresponding quarter of the last year. Then getting into the debt movement. The debt at the beginning of the quarter stood at INR 2,980 crores, and net debt after cash and cash equivalents is INR 2,830 crores at the end of quarter 4 of FY '26. It stood at INR 2,251 crores and net debt at INR 1,667 crores. And at the end of Q4 FY '25, the same is at INR 1,484 crores and net debt of INR 706 crores, there is a decrease of debt by INR 729 crores in Q4 FY '26. The debt-to-equity ratio stands at 0.30% at the end of Q4 FY '26 as against 0.40% at the end of Q3 FY '26 and 0.21% at the end of March '25. Getting into working capital. Working capital, excluding cash and margin money deposits at the end of Q4 FY '26, it stands at INR 4,847 crores, which is 28% of the turnover in terms of working capital days, it is 97 days. The trade receivables outstanding at the end of Q4 has decreased from INR 3,505 crores to INR 3,336 crores and the number of days also has decreased from 87 days to 73 days in the current quarter and 65 days for the corresponding quarter of the previous year. Unbilled revenue. It has decreased from INR 7,129 crores, which is 44% to INR 6,675 crores, which is 30% in Q4 FY '26. And at the end of the previous year, it was INR 5,937 crores, which is 31%. Retention money stands at INR 2,253 crores for quarter 4 FY '26, as against INR 2,099 crores at Q3 FY '26. And at the end of the March '25, there is a corresponding period of previous years, it is INR 1,870 crores. Coming to the mobilization advances. Mobilization advances are standing at INR 3,386 crores as at the end of March 31, 2026, as against INR 3,162 crores at the end of December '25 and INR 2,098 crores at the end of March 2025. Of these mobilization advances, 64% are interest-bearing, and the average interest comes to 9.2%. Interest-bearing advances decreased from 67% to 64% during the current quarter. Cash and cash equivalents, INR 585 crores as on 31st March 2026, and INR 150 crores as on 31/12/2025 and INR 778 crores as on 31/3/2025. Margin money deposits and others. It is standing at INR 631 crores as of the end of March '26, INR 671 crores at the end of December '25 and INR 650 crores -- INR 654 crores at the end of March '25. Coming to the CapEx. We have incurred a CapEx of INR 344 crores in Q4 FY '26 and INR 912 crores we have incurred in the current year which includes a capital work in progress for TBM about INR 320 crores as against the budgeted CapEx of INR 1,050 crores, which was revised earlier from INR 750 crores to INR 1,050 crores in the year FY '26. EPS stands at INR 3.23 at the end of Q4 FY '26 as against INR 3.4 in Q4 FY '25. And in FY '26, it is INR 9.19 as against INR 12.12 in the previous year. With the end of -- with this, I'll be ending the announcement of the results. Thank you so much. .

Thank you, sir. Should we start the question-and-answer queue?

Yes, please.

[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.

A couple of questions. So first, I will start your broad guidance on revenue margin and order inflow for FY '27, and also, please specify this will be for stand-alone or at a consol level?

I mean there are too many variables in the equation as we speak. The whole environment is very uncertain. So we have decided not to give any guidance for FY '27. However, we will revisit this decision, maybe when we will have -- we have some clarity after conclusion of the first quarter. There is any guidance. We would be happy to come and share that with you.

So for order inflow also, no guidance?

No guidance for all the parameters. But as I shared with you, there are too many variables. It is very difficult really to look forward. You are already aware about the uncertain world that we are currently living in, but we will revisit this decision maybe, say, after first quarter or so. Should there be any clarity, should there be any change in the environment, we would be very pleased to revisit and come back to you with the guidance for '27.

Sir, there just still I understand that we don't give, but still trying to get some sense. So obviously, the order book is at a historic high and we must be knowing what kind of projects in which segment is this going on? And till 1.5 months is already there for this quarter also. So you -- we must be knowing a broad idea. I understand for last 2 quarters, we are not doing and again, we are not giving. So it is becoming a very, very difficult. So are we still the opinion that still the working capital pressure payment issues, and whatever is this happening at the world level obviously prices. But at the India level, I understand the commodity prices inflation will be there. But still, we'll be having some kind of a minimum that this definitely we should be doing some color more would be helpful, whether at least we will see a kind of a minimum 10% plus kind of growth because already probably have seen a 9% early growth in FY '26. So that would be helpful and that the margin level also at the current level, 8.3% is maintainable or can we see a kind of a 0.5% kind of pressure or some improvement, something would be helpful there.

Yes, Mr. Shah, I really very much appreciate your concern. You talked about the cost element in the whole economy. Finally, this might also affect the ability of our clients to move take the projects forward, make timely payments. So all these situations will finally are expected to play out in days to come. So as we have already shared with you that we will revisit the subject once we have some more clarity say that post about 3, 4 months' time, I mean, it is not really helpful to talk about any hypothetical number and to more revise that number. I hope you appreciate the spirit in which we have decided to share this information with you. So should there be any change in our view, should we have more clarity, we feel very happy to come back to you, Mr. Shah and share what we have, what is it that is really possible for FY '27.

Yes. And on the CapEx, working capital and net debt also or some kind of a color would be helpful how we want to look for FY '27 or there also no guidance?

Mr. Shah, this is finally a function of the revenue growth, degrowth, the cost element how the final -- the raw material prices will finally get impacted in the next few months. So it will be a function of that. It is not that the working capital exists in a vacuum. It's an outcome of all these variables.

Got it. Sir, on JJM front, so whatever the numbers if you can provide? So both at total JJM and the UP. So the outstanding order book, the data both for UP and the total and how even post March and till now? What's the status there? .

For UP project, JJM projects, the order book outstanding at the end of March '26 is INR 3,619 crores for all the groundwater. But the surface water projects, the outstanding order book is INR 2,562 crores, that means INR 6,181 crores is a total order book ending as on 31st March 2026. The amount of work executed, amount of work executed in UP projects is INR 1,730 crores for both groundwater and surface water. As far as the receivables are concerned, the receivables have come down to INR 3,015 crores, which includes groundwater surface water, trade receivables and unbilled value that is coming to INR 3,015 crores.

Okay. So this is only -- and the total data is also from the JJM across all the states would be how much?

This is what I have told you, it was INR 3,015 crores. .

He is asking data only.

Only data, if we are asking, it is only INR 695 crores.

Okay. So the number, which was INR 700 crores as of December, now it is INR 605 crores, you are saying?

Correct. Correct. You are right. About INR 1,000 crores we have collected in the current quarter.

Okay. Okay. And lastly, any more kind of a write-off impairment at the subsidiary level because last 2 years, I think we are slowly, slowly are doing it. So -- and at the same time, the NCC Urban Infra, how much is outstanding and how much we will like to get a repayment in FY '27?

Yes. In the case of inertial projects, the impairment is done in the case of an investment at Oman, where the project is completed and whatever claims we have to receive, we have received, we have made an impairment of INR 21.3 crores an exceptional item. With this, the international outstanding quarter is there a completely impaired. That is one. As far as the Vizag Urban is contained, we are expecting about INR 250 crores in the current year.

The next question is from Parikshit Kandpal from HDFC Securities.

Can you hear me, sir, hello? .

Yes. Yes, Mr. Kandpal. You're audible, but you please speak a bit loudly.

Okay, sure. So sir, in this environment, there is so many uncertainties. So are you bidding for orders? Or are you stop bidding for orders also?

No, no. We will continue to bid depending on the projects which are coming up for bidding. We will continue to bid depending on the risk/reward question. In fact, we have already backed a few projects in this financial year as well, that is FY '27. We have already reported about INR 1,700 crores odd projects in month of April. .

So are we seeing any slowdown in your execution because we have INR 83,000 crores of order book. So just wanted to check if we are -- I mean the work is going on entirely on all those entire orders or there are still some orders where the work has not started. Has the clients asked us to slow down the work, so that doesn't give you confidence to give guidance. So just wanted some color on the...

Nothing of that sort, wherever the fronts are available, and the clients are taking the forward. Nothing is really substantial to report. By and large, things are moving forward.

To add that the order book of INR 83,000 crores, whatever INR 80,000 -- INR 83,000 crores. All the orders we have got the clearances, we'll be able to execute. There is absolutely no issue on account of any holdups or resins or rate of base. Whatever orders are considered in this, they are all fully available for execution.

No, no, sir, I was coming on the point that L&T is the largest infra company despite having a huge exports order, they have given a guidance through yesterday gave guidance, other infra companies are giving guidance. So if we are not confident, I mean somehow we as an analyst I'm getting confident that you will be able to execute. It looks like you've taken a lot of orders, and then you are facing some challenges on execution. So I just wanted to clarity whether internally, you have any challenges on execution or execution capability, you're not getting the staff, not able to get labor, not able to get your supply chain in order. So maybe that's the reason -- something they're not able to give guidance. I just wanted clarity on that. .

Mr. Kandpal, I think I have already tried to answer this question in I think for -- I think Mr. Shah's question. We will revisit this. We have all that we are doing. We need some clarity. You are aware about the pricing pressure in the whole economy. All that we are saying is we need 1 more quarter. We expect some more clarity, then we should be in a position to talk about the guidance for FY '27. So this is what we have already stated.

So the current levels of execution of INR 6,000 crores, are we geared up to go below that now given the order book? Or do you think that at least in the base case, we will be able to maintain this level of execution of INR 6,000 crores, which we reported in this quarter?

No, no. Please -- could you please repeat your question?

In this quarter, we have reported a execution or revenues of INR 5,300-odd crores. So in the base case, are we geared up to at least this much, not asking any guidance on full year, but as we here on the execution should not go down below this because we have already mobilized the entire order book?

So I think we need to understand one thing. Today, considering the unpredictable situation, unpredictable development are happening on a day-to-day basis. They are very dynamic, and there is nothing which we'll be able to predict. That is the reason we were telling very clearly that we'll wait for a quarter to understand how it is going to move forward, then we'll be giving the guidance.

No sir, I'm not asking guidance. I'm saying, are we able to maintain the current execution rate of INR 5,300 crores, which we reported in this quarter? Or can it go down?

That also depends, we have still 1.5 months more because this situation is developing day by day. If you see that in the last -- beginning of the year and today, there is a lot of development that was happening. And we are seeing the prices going up, the dollar is weakening and how the economy is going to move. All these things will also have a bearing on the balance 15 days. So we'll be able to tell you at the end of the quarter, we have to wait, watch and see patiently.

Okay. So the last thing, sir, just want one advise, NCC is one of the oldest company in infra, I have been covering more than 18 years now. And you're seeing cycles is not the first time you have seen challenges of headwinds you have GFC, you have demonetization, so many things have happened. You have never resisted away from -- even the [indiscernible] which happened where a large part of the order book got -- and you have to lose it. But still, we have guided, I don't -- I mean when the size becomes so big, so is this an advice, I mean should we consider discuss with your Board, I mean you need to give the guidance if you have such a large order book, you need to at the call. I know you can grow at 30%, 40% maybe next year, but at least you can guide 10% or 15% to 20% some number to start with where you are at least confident you can do it. That's my advise.

The next question is from the line of Parvez Qazi Nuvama Group. Sorry, so the management line has got disconnected. Just a moment.

So my first question is regarding overall payment cycle. You indicated, we have received about INR 1,000-odd crores in UP Q4 not really asking about name of plan, but in general, has the payment cycle improved in the last 3, 4 months compared to, let's say, what it was in CY '25 or do we think overall challenges still remain on the payment?

Hello, speakers. Ladies and gentlemen, the line has got disconnected. Stay connected.

Am I audible?

You're audible. Please go ahead.

So my first question is regarding the payment cycle. I mean, you mentioned you've received about INR 1,000-odd crores in UP in Q4 on JJM. Now overall, regarding payments across all projects. Would you say the payment cycle has improved in Q4 compared to, let's say, what it was in CY '25 or do you think issues still remain here and there?

In Q4, we have seen improvement in the payment cycle. Absolutely, that is correct. And as far the UP is concerned, we have received about INR 1,000 crores in the quarter 4 about INR 400 crores, INR 450 crores in the month of April, and we are expecting further payments also in the coming months. So we are confident that with the way the payments are being released, some of payments related to UP projects also will come. So this will improve the situation. And as far as others are concerned, now it will continue to be a good semester. So we are not seeing -- we are not foreseeing any program.

That's great to hear. Second, you gave the numbers about JJM projects in UP. Would it be possible to get those numbers about our overall JJM order book, I mean, including orders that we might have in other cases also, what is the order book and what are the payment outstanding there?

The overall order book we have already covered, but I will give you for better clarity. The overall order book, what we have received for the JJM projects, including groundwater, surface water is INR 26,000 crores. We have already executed projects up to INR 20,142 crores, leaving a balance of INR 6,181 crores. Is this clear?

Sir, I think you have given me the numbers for rupee. I was asking if we have JJM projects and other projects, other states also, but I will take it offline. I mean, not an issue. Yes. Okay. My second question is what would be our total exposure to our subsidiaries, including investments and....

Could you repeat your question? I think you asked about our total investment in the subsidiaries, right? .

Yes. Total exposure, investments, the loans and advances, whatever you might have done.

Yes, investment is INR 887 crores at the end of March '26, and loans to the group companies is INR 309 crores at the end of March '26. Coming to the Vizag Urban status, I've already explained to you, we will be collecting about INR 250 crores and the outstanding is INR 291 crores.

And last question, some update on the smart meter project, what is the kind of investment you've already done there?

In the smart meters, in the 2 SPVs, we have already invested about INR 460 crores. And in the case of our own project, which is executed under the name of NCC Limited, about INR 130 crores, INR 140 crores, we have used as working capital. The total investment in SPV is about INR 460 crores.

The next question is from the line of Vaibhav Shah from JM Financial Institutional Securities.

Yes. Sir, in December, the outstanding loan from Vizag Urban was around INR 390 crores. So now it is INR 290 crores. So we have received INR 100 crores in Q4.

Yes, we have received INR 100 crores in Q4. .

Okay. And INR 270 crores this year and the remainder in next year?

No, we are expecting about INR 250 crores or INR 290 crores whatever is there, it will be coming in the current year itself.

Okay. Okay. Sir secondly, on smart meters, you have invested INR 460 crores, any pending investment now remaining?

No, nothing is there. The -- what our investment calls were for both the projects in the SPV, it has been fully invested.

Okay. And sir, in the stand-alone order backlog, what would be the value of smart meter order book on the stand-alone books? .

Yes. You can ask the next question. In the meantime, I'll get you that number.

Yes. So what is our CapEx plan for next year FY 27?

FY '27, the CapEx plan is INR 500 crores. .

Okay.

And the order book in the stand-alone is INR 4,456 crores in the case of smart meters.

Okay. And sir, lastly, in order flow number, it was INR 9,573 crores for control and INR 4,775 crores for stand-alone. So what was the difference of roughly INR 4,800 crores in Q4?

PC NPL for Pachhwara Coal Mining. So we generally take -- look ahead for 3 years as the order book. That was INR 4,800 crores.

So we have added that order book for the mine -- from mining?

Yes.

The next question is from the line of Sucrit Patil from Eyesight Fintrade Pvt Ltd.

I have 2 questions, forward-looking ones, both questions. My first question, Mr. Raju, in your point of view, how is NCC preparing to capture future opportunities in infra and construction while thoughtfully addressing challenges such as project delays, regulatory compliance and pricing input cost, what strategic levers do you see as important for sustaining growth and execution discipline in FY '27 and beyond? That's my first question. I'll ask the second question afterwards. .

Could you please repeat the question? I don't think I have understood your question correctly.

I'm referring to any practical steps like project pipeline expansion, technological adoption and operational efficiencies that reinforce NCC's leadership in the infrastructure space. I want to understand the forward guidance on this.

Yes. That's a very interesting question. We continue to see a very interesting pipeline of prospective projects. If I were to put a number, this number would be close to INR 2.5 lakh crores. So we continue to see a lot of infrastructure projects coming up for bidding. And as you are aware, we have been active in this space for a little less than 5 decades. So we believe we have what it takes to identify a good project, put a competitive bid on the table and at the same time, execute the project with profitable margin on time. So this is what we have been doing for last little less than 5 decades, and we hope we will continue on that path. Regarding you talk about, we have a stated policy to take care of the ESG, all these parameters, all these priorities are already in place, and we are very conscious to impact the local economies, the local communities wherever we are executing our projects.

My second question is to Mr. Sanjay, from a technical point of view, how is the company optimizing its capital structure to balance project financing requirements with debt sustainability especially given the long-term decent period of infrastructure product -- projects. Could you elaborate on the framework being used for cash flow forecasting interest rate risk management and working capital efficiencies to ensure liquidity while maintaining the profit?

In the case of the projects which we are executing, we do not have much long-term high-value high-ticket infrastructure projects, okay? The projects which we are executing basically after contracting nature on EPC Board. That is one. As far as the projects which we have received and smart meters are concerned, we have done financial case for those projects at a very competitive rate of 9.15%. And we have been using that facility to complete those projects. As for other projects are concerned, which are in general nature and general contracting our EPC nature, we have enough facilities tied up working capital facilities tied up, both in terms of fund-based and nonfund-based. Our interest rates are very competitive. And today, we are just nearing 9% average interest rate, and we have capabilities of raising good products in the market, which are like purchase invoice discounting, trade, commercial paper which are at a very competitive rate of interest, which is even below 8%. And we have enough bandwidth when we compare to the facilities. We have never crossed 80% or 90% of the working capital. We have enough working capital limits also to meet any kind of gaps that are going to come. This is how we are managing our financing.

The next question is from the line of Bhavin Modi from Anand Rathi.

The first question is, sir, do we have any international exposure? .

At the moment, we do not have any international exposure. We have only 1 project in Qatar, which is almost completed at the final stage. We have to probably execute few maybe INR 20 crores, INR 25 crores of work in INR.

Okay. Understood. Sir, second question, again to dwell on the guidance part, like there can be 2 issues, right? Either we are facing some execution issues or the company is facing challenges in terms of the margin. So what is it that is refraining us from giving the guidance?

I think Mr. Neerad has already covered. We have the execution capabilities we have built up over the last 5 decades -- less than 5 decades were built up. So resource capabilities is not a constraint at all. Order book is not a constraint at all, given the uncertainties, which are prevailing today, we thought that we will just wait and give the guidance. We'll watch for this next 2 months. At the end of the first quarter, we will reset the situation and then give the guidance.

Okay. So I understand there is an uncertainty, but that can impact 2 things, right? Either your execution or your margins. So where you see -- I am not asking for the guidance, but where you see it's impacting the more way, the uncertain rise? Is it the margin or is it the execution?

At the moment, what I can say is that we have all our contracts -- many of the contracts we have with escalation clauses. About 74% of the contracts we have escalation clauses, but I'm not very sure whether the increase in the prices will completely get covered under the escalation clauses. There are maybe some impact. There is no doubt in that. And second thing on that availability of the materials because of the logistics problems and also the problems on account of the fuel prices and other things, there can be some availability issues in the case of materials. But as of now, we are following a path of buying the materials, required materials just in time so that our execution pace and progress will not get hampered. .

Understood. And just last question, sir. Almost 50% of our order book comes from the buildings and the transportation giving aside mining and [indiscernible] So just wanted to understand, so what is the share private and the government client order book question being, are there any pressure coming from the private clients, any cancellation of orders or something like that, that you're seeing?

No, we have not seen any kind of pressure from the private clients because our private clients orders comprises about 4% to 5%. Yes, about 5% in the entire order book. .

So 95% on the government?

Yes, that's right.

And government when we say government, mid-state government, central government, central government agencies, PSUs, all put together.

So any payment in transportation or from the building side, any payment related issues? Or is it going fine? .