PSP Projects Limited (PSPPROJECT.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to PSP Projects Q1 FY '22 Results Conference Call hosted by AMBIT Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Varun Ginodia from AMBIT Capital. Thank you, and over to you, sir.

Thank you so much, Ayesha. And good afternoon, everyone, and I hope everyone is keeping in good health in these unprecedented times. Today, we are pleased to host the management of PSP Projects for 1Q FY '22 earnings call. From the management, we have Mr. P. S. Patel, Chairman, Managing Director and CEO; and Mrs. Hetal Patel, Chief Financial Officer. In terms of the format of the call, the management will give the brief remarks on the results release, and then we will open the floor to Q&A. Sir, over to you.

Thank you. Good evening, ladies and gentlemen. This is P. S. Patel, Chairman, Managing Director and CEO of PSP Projects Limited. Along with me is Mrs. Hetal Patel, our CFO, welcomes you all to this earnings conference call, which is focusing on our company's performance in quarter 1 FY 2022. First of all, I hope you all are safe at your place and taking care of yourself and your family. As we are meeting on this call, within a very short gap of almost 1 month from our last call of quarter 4 FY '21 results, operationally, I think there is not much to update to share as I had covered all the areas in the previous call. However, I'm covering a few of the updates. Revenue. Company has booked the revenue from operations of INR 317.35 crores in quarter 1 FY '22, which is about 197% higher compared to year-on-year. As you know that the first 2 quarters of previous year, they're badly affected due to [ mining of oil ], lockdowns, worker migration, etc. This is -- hello? Hello?

Sir, you can go ahead. We are able to hear you.

This is by far the biggest quarter 1 revenue we have achieved, but we believe that this could have been higher. But once again, the operations were affected due to the second wave of COVID. This is by far the highest quarter 1 revenue we have achieved, but we believe that this could have been higher. But once again, the operations were affected due to the second wave of COVID. Most of the laborers, who generally go to their village during Holi, didn't return back till end of May. Also, there were partial lockdowns, night working restrictions, reduced staff working, etc. which has interrupted the operations in quarter 1. The situation now is really very well, and I would say all the sites are working with 100% labor strength. We are very optimistic that the upcoming quarter should be good without obstacle of third wave or something else disrupt the operations. Order book. At the end of quarter 1 FY 2022, company stands with the order book of INR 3,852.21 crore. As informed in the last call, all the projects are fully mobilized and that means work is going on in full swing, except 2 projects. And third is UP Medical College and Hospital. As informed in the previous call, the designs are getting approved by -- very aggressively and the physical process of -- at hindsight have started from first week of July. Remaining 2 sites are fully mobilized in terms of plant and machinery and manpower. Just waiting for the design clearance, which should be completed by end of this month. So these were the key highlights from my side. For detailed financial disclosures, I will request our CFO, Mrs. Hetal Patel, to take it forward. Thank you, everyone, to be a part of this call.

Thank you, sir. Good evening, everyone, and welcome on the call. Let me first give you highlights on stand-alone financial results for the quarter ended on 30th June '21. Company has booked revenue of INR 317.35 crores for the quarter ended on 30th June '21. The revenue generated from Surat project was the...

[Foreign Language]

I think -- are we audible?

Yes, ma'am, we can hear you.

Okay. So revenues generated from Surat project was INR 92 crores during this quarter. Cumulative revenue till 30th June '21 is INR 1,486 crores booked for Surat project. EBITDA for the quarter is INR 39 crores, which is 12.42% of the revenue from operations. Net profit for the quarter is -- arrived at INR 25.11 crores, which is 7.82% of the total revenue. There is no change in revenue for the year ended on consolidated basis. Net profit as per consolidated financials is INR 24.91 crores, which is 7.76% of the total revenue. Total expenditure incurred for the precast unit is INR 85 crores till 30th June 2021. Working capital days on the stand-alone basis are as follows: debtor days are 82, creditor days are 52 and inventory days are 25. During the quarter, company has increased credit facility limit from INR 610 crores to INR 1,047 crores. Out of total credit facility of INR 1,047 crores, utilized limit is INR 551 crores, of which INR 120 crores are fund-based utilization and INR 431 crores is nonfund-based utilization. Work on hand as on 31st March '21 -- 30th June '21 is INR 3,852 crores, which comprises of INR 289 crores for Surat Diamond Bourse project. As on 30th June '21, the company has total fixed deposit of INR 220 crores, out of which [ 3 deposits ] of: INR 73 crores; equities worth INR 140 crores are under lien with bank for credit facilities; and equities given to clients as security deposits amounts to INR 7 crores. The increase in fixed deposit is attributable to the receipt of mobilization during the first quarter from a couple of projects. With this, I end up giving key highlights on the company's financial performance. And now we are open for the question-and-answer session. So request the moderator to take it forward. Thank you.

[Operator Instructions] The first question is from the line of Chintan Sheth from Sameeksha Capital.

Am I audible?

Yes, sir, we can hear you.

Yes. A little bit louder, please.

Sure. Sure, Prahaladbhai. Good set of numbers, sir, managing margins as well, that is commendable. Couple of updates, sir. Bhiwandi, what is the update there? Then UP already you mentioned. And anything you want to talk about the bid pipeline and the outlook, if you can, for this year?

See, regarding bid pipeline, it is again ranging in the range of about INR 3,000 crores as a whole. And about Bhiwandi, the matter is in the court, and they are going to file their answer. So we are waiting for the matter to go on hearing.

So when is the next hearing, now?

Yes.

Next hearing.

Next hearing, I think, 26th of July.

26th of July. Okay. And in the bid pipeline, anything -- any large project, [ Google ] is still there?

Yes. Yes. Still the bid book is in the range of INR 3,000 crore, and most of the projects are what we discussed and discussed in the last con call, that's on the same line. Yes.

The next question is from the line of [ Sitaraman ] from Spark Capital.

Can you give me the receivables, including retention and unbilled revenue for the quarter ending?

Sorry, can you please repeat the question because it was not audible?

Okay. Can you give the receivables, including retention and unbilled revenue at the end of quarter 1?

See, receivables is -- just a minute. Retention is around INR 99 crores in total, and receivable is INR 281 crores.

Okay. And the unbilled revenue part?

Unbilled revenue is also in the range -- means, in line with last year only. There is no significant change.

What is -- where does it currently stand at the end of first quarter?

Sorry?

At the end of first quarter, where does it stand, the unbilled revenue part?

Unbilled revenue?

Yes. Yes, ma'am.

Just a minute.

[Operator Instructions] The next question is from the line of Kaushal Shah from Dhanki Securities.

Yes. Sir, just wanted a clarification on the UP projects. You were saying the design, et cetera, is under approval. So when do we actually start work on the ground? And will we start billing from maybe the October quarter? Or it could actually start even in the current quarter, the second quarter?

No, I said 5 projects, we have already started work on ground. And on 2 projects, the design is in the process of approval. So 5 projects, we have already started. And yes, we will book the revenue in this quarter only -- next quarter only.

[Operator Instructions] The next question is from the line Aditya Choksi from PSP Projects.

Yes. First of all, sir, congratulations for a decent set of numbers. Sir, I have 2 questions. One is what -- is there any execution issues right now going on in any project? And my second question would be what would be the revenue projection and EBITDA for the current financial year? As now the scenario is open, so if you can just throw some light on that?

See, as far as revenue is concerned, it will be in the line with the same every year what we say the growth of about 25% to 30%, and it's been the same thing what we have done last year. So we can expect 25% to 30% growth from revenue. And related to any other project, which is as of -- first issue, that was the Bhiwandi project and one second is this Pandharpur project. Pandharpur project, we have to slow down the project because there is no payment. And Bhiwandi, you are aware that it is in the [ first ].

Okay. So sir, 25% to 30% revenue growth before the previous year from pandemic, right, sir?

Yes.

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

Sir, just a clarification. The previous guy -- you said 25% to 30% revenue growth on FY '21 numbers or FY '20 numbers?

FY '21.

'21. So that comes to close to INR 1,600 crores, even if I take 30% because last time we have talked about around INR 1,700 crores to INR 1,800 crores revenue. So it is lower, so are we slightly lowering what we said last month in the call?

We are not lowering, but to be on the conservative side, we are saying it should be in the range of 25% to 30%. And every year, whatever figures we say, it is almost -- every time, we try to do better than what we expect.

Okay. Sir, here, just to reiterate in terms of the SDB, now INR 290-odd crores is remaining. So this quarter, that is July to September, can we see -- because this quarter, we have seen only INR 92 crores, so now can we see INR 150 crores plus? And by third quarter, it would be 0 in terms of the order book?

See, as far as the overall revenues coming from SDB is concerned, I would say it will be somewhere in the range of 60% to 70% will be closed in this quarter only. But maybe about 30% revenue may be left after this quarter because there are few issues related to position, there are few issues related to commissioning and there are few percentage hold due to commissioning. So [Foreign Language], you can consider 60% to 70% revenue -- left up revenue should be booked in the next quarter, and rest of the revenue, they may go in the last quarter.

And for UP project, now as we have started the work, so if you can broadly -- roughly idea -- because INR 1,491 crore total order book, so per month, it's INR 83 crore. So this quarter, can we see a INR 150-odd crore kind of a revenue because it is just a quarter? And the third quarter, can we see a normal INR 80 crore per month, so that is around INR 250 crore a quarter?

As far as the monsoon is going on and there is heavy rains in UP as of now, and at the same time, when we are in the [ print ], volumes will not be generated in this first quarter only. So it can -- we can see a reasonable revenue in the third quarter.

Okay. So this quarter, it would be a much lower number, maybe a INR 50-odd crore? Or can it be INR 100 crore?

Right now, we can't see INR 100 crore in this quarter for UP. Because presently, we have started only 5 projects, and we are expecting last 2 -- the other 2 projects to start by end of July. So in excavation, the only -- there are 2 activities, which is going on excavation and the RCC [ to claim ], and which is always a time-consuming job. Once we are out of [ claim ], you can have a set of numbers as what we planned.

Okay. Okay. Okay. Got it. And sir, a couple of things in terms of the balance sheet numbers. The left one is mobilization advance, how much is mobilization advance?

It is in the 89%. Presently, we have...

No, ma'am -- sir, I was saying, as of June, last time, it was INR 31 crore. So now what is the outstanding mobilization advance number?

INR 100 crores. INR 100 crores because this quarter, 2 project mobilization advance money -- the residential project and the UP project also we received around INR 60 crores.

Okay. And cash is -- cash on bank balance is?

Yes. I have already mentioned, mainly we are...

Your voice was not clear, so that's why I was asking.

Yes. Total FD currently is INR 220 crores. So that includes the receipt of mobilization advance, we have kept it as it is and we'll be utilizing the overdraft facility as and when required. So out of INR 220 crores, the pre-FD is around INR 73 crores.

The next question is from the line of Prem Khurana from Anand Rathi.

So 2 questions. So one was, I think in your opening remarks, you said the utilization of our fund-based limit is around INR 120-odd crores, which appears to be higher on a sequential basis. Whereas when I look at scale of operations, we've done lower revenue sequentially. I understand I mean there's a seasonality, which would have kind of played out during the quarter. But I was wondering if you could explain why this increase was there in utilization of our fund based? Because as I see it, you've also been able to manage good amount of mobilization advances from these UP orders as well as your residential. So if you could help me understand what is the total debt? And why did the utilization of fund-based limits go up in this quarter?

See, I have already mentioned this, the fund-based facility -- total facility has been increased. And as on 30th June, the fund-based utilization of INR 120 crores was there. And yes, you said that mobilization was received, but we are keeping that separately for those projects. And the fund-based utilization is mainly used for working capital as well as procurement of some of the assets as we have not taken any specific project finance for precast, so we are utilizing for that also. Because we have...

Okay. So it's fair to assume the increase that we have seen on a sequential basis is not because of the business operation, but because of precast facility, incremental CapEx that you would have done during the quarter?

Yes. You can say it, yes.

Sure. And also ma'am, on this precast given the fact that you've already spent INR 85 crore, which is -- I mean, eventually, I mean, we've spent a large part of the money that we were supposed to spend for this facility. Have we started engaging with the clients now because it is the facilities nearing completion, so the idea would be to kind of don't let it sit idle. And the idea would be the day I finish it, I mean, I get to have some works wherein I would be able to utilize this facility. So have we started engaging with the clients for works which would be carried out on a precast basis?

Yes, we have started going into inquiries. We have almost near to closing of inquiries to 2 of the people, which may happen maximum within this month. So we'll be having some, but as and when it is concluded within the next week or maybe next 2 weeks from here. There are 2 projects on which we are discussing on. And one is I'm hopeful that it will be concluded in a week or so.

Sure. And sir, we are already engaging with the clients. I mean if you could share your thoughts on the margin. I think last time you said the margin could be slightly lower than the -- I mean the conventional method of construction because of the raw material that we would be required to use. So margin would be -- I mean you still believe that the margin will be lower or it still could be in line with what we've been doing?

It will remain in the same rate what we expect in the construction business. So the -- and the cost of the material, it is always a pass-through whenever we bid for any project in precast also, we have to go through base rates only because this is cement and enforcement basic raw material for the business. So that has to be get pass-through. And usually, the trend is the same. So we'll be bidding as and when we bid for any precast elements, it will be on a base rate. So there won't be any impact of rates going up because of market [ sustainability ].