WPIL Limited (505872) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to WPIL Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Balasubramanian. Thank you, and over to you, sir.

Thank you. Good evening, everyone. I'm behalf of Maria Capital, I welcome you to the earnings of WPIL Limited Q1 FY '21 Conference Call. We have with us today Mr. Prakash Agarwal, Managing Director; and Mr. Krishna Kumar Ganeriwala, Executive Director. I shall now hand over the call to the management of our opening remarks, following which we will have opened up floors for Q&A. Over to you, sir.

Thank you. Good evening, everyone. It is a pleasure to welcome you all to our earnings conference call for the first quarter of financial year 2021. I -- let me take you through the financial performance of the company, followed by operational highlights and questions. On a consolidated basis, revenue from operation for the quarter ended review stood at INR 51 crores a substantial increase of 32% year-on-year. EBITDA stood at INR 75 crores, while EBITDA margins were at 15.04%. That stood at INR 59 crores with PAT margins at 11.79%. On a stand-alone basis, revenue for the quarter stood at INR 115 crores, down by 37% year-on-year, while EBITDA stood at INR 14 crores. EBITDA margins were 12.2%, net profit stood at crores with PAT margins at 5.41%. At the end of Q1, the total order book stood at INR 570 crores, providing healthy revenue visibility across both our international and domestic business. For the international business, we continue to witness strong momentum across both our product and project operations. International revenues for the quarter increased substantially to INR 386 crores compared to INR 197 crores in the corresponding period last year. While international EBITDA margins improved materially to 15%, the international order book stood at INR 2,891 crores, providing strong revenue visibility over the medium term. With our international product business, Gruppo Aturia continued to perform -- witnessed fresh demand from the Mile region across both oil and gas and water sectors supported by robust demand for gas turbine pumps. Our Australian business turning and United continued to benefit from healthy inquiry pipelines from LNG mining and industrial projects while WPIL Thailand continued to secure healthy orders from the drainage sector, high dense sector. On the international project side, MISA HP has successfully completed all its legacy projects and is witnessing a healthy pipeline of new mitigation and drainage businesses. PC Africa has commenced execution of large contracts secured during FY '26 in the South African water sector and is expected to gain further momentum as the year progresses, supported by a strong order pipeline and an attractive margin profile. Moving to the domestic business. The product division continued to witness healthy momentum during the quarter Domestic product division revenue stood at INR 72 crores compared to INR 65 crores in the corresponding quarter last year. Order intake remained healthy with the domestic products division order book at INR 459 crores at the end of the quarter, providing healthy revenue visibility. We continue to witness good traction in revenues and order inflows across the power and irrigation sectors supported by a robust inquiry pipeline. We remain focused on expanding our export business, which continues to provide attractive long-term growth opportunities. The domestic project division remained subdued during the quarter with revenues for the quarter at INR 43 crores. Our focus continues to remain on project commissioning and commencement of operation and maintenance activities. The domestic project order book stood at INR 1,921 crores with about INR 530 crores of O&M business. We expect an improvement in the domestic water sector during the second half of the year as the sector issues are resolved. With this, we can now open the floor for questions, please.

[Operator Instructions]. The first question comes from the line of Divyansh from Trinetra Asset Managers.

So my first question was regarding the margin. So what is going in the resto is there any effect in the RM prices and the procurement.

No, our margins are quite stable across our business.

Okay. And we are not able -- like any problem is on regarding raw material due to...

Most of our raw material is steel. So we are metals and steel. There is a short spike when a lot of materials were not being exported from the Middle East. But I think it is balanced out in our contract, which are pretty medium term, long term in nature. So it's not much of an impact.

Okay. And the next question was like the order book, which we have from the PM Jal Nigam. So we extend that all the order book which enterprise, which we are getting, so in this project, the margins which are carrying is the -- is what the business were like looking for it?

Yes. Most of our project growth has got a price variation contracts. So therefore, that takes care of it, which are longer term. And otherwise, not much of a concern on margins.

The next question comes from the line of Ravi Naredi from Naredi Investment.

Prakashji, you have delivered a very good result in this quarter. I would like to ask -- this enhanced margin, which you booked in quarter 1, it will be following next few quarters?

Our consolidated margin has hit 15%, and our standard range is between 15% and 20%. So we should see it improving only further.

Okay. And this INR 1,029 crores is our stand-alone orders and 4,200 is on consolidated order. Is it correct?

No. I think we have given product order of 1,000. The product business order is 1,029 and the project order is 4,241.

INR 1,029 is products order.

Product order only. I mean there is a division of 55% international and 45% domestic.

And what about INR 4,241?

That is projects. Again, you will see there about 55%, again, there also international and 45% domestic.

What problem we face from MP government?

We had a -- I think, give us a deboninnotice saying that basically, we pointed out that various projects are moving slow. So we are addressing those concerns that they have raised. They gave us a department basically saying that you cannot bid for new projects until you finish the old projects. And we are addressing those concerns and hopefully, we can resolve the issue soon.

Okay. And by the way, up to what time period, these projects will be completed of MP government.

Our target is within, say, the next 1 year.

Okay.

They're quite advanced projects are most projects are at 65% to 70% completion.

Okay. And sir, what is our margin in O&M work?

It is higher than our normal margins on EPC contract and over will be able to give you a better picture when most of the projects start moving then, which is next year.

The next question comes from the line of Saket Kapoor from Kapoor Company.

Sir, just to get the number right, INR 1,029 crores is the product division order book and 4 to 40 is the project and 530 is the O&M part, which is embedded in 4 to 4 year.

Yes.

Okay. Sir, can you please explain what exactly led to our stand-alone numbers, the EBITDA margins declining to to sub optimum number of 5%. It is only the underutilization in the project business? Or what has led to the -- and how is things going to get aligned going ahead, sir?

Only due to the project invoicing, which is very drastically lower because the sector is still facing problems. Our funds are not yet released, so I think these are sector issues and all people in this sector are facing it. Hopefully, we were expecting by this quarter to have resolved matters -- but I expect in the second quarter, it should happen now. So we are patiently waiting.

Okay. Sir, can you quantify what is the slow-moving order book for the project business in the domestic market? I think that pertaining I think to the Jal jeevan the scheme both for center and state.

No, it is only the Jal jeevan products, which are -- we are primarily exposed there right now that those are slow moving. And that is states supported by center. It's joint effort. So hopefully, that will get resolved and invoicing can pick up in the second half of the year.

I'm just trying to quantify out of the total order book in the project business

Most of the -- so the total order book is INR 1,400 crores, most of it is from Jal jeevan.

Our domestic project order is INR 1400 crores.

If you see INR 530 crores of O&M.

Okay. INR 1,400 plus INR 530. Your voice is breaking that come again?

Yes.

INR 1400 EPC and INR 530 O&M part?

Yes.

Just to dwell only on the project business, then I'll come to the product part, even for -- if we take the control number also, I think to be one very big large orders in our South African entity. So there also, for this quarter, although the revenue booking is good, -- but the margin profile seems to be lower. So can you give -- can you throw some more light on how the project execution phase is gathering momentum, especially to the South African projects and what should be in the annual going ahead?

I don't know. I don't understand your question. Let me explain -- so consolidated margins have gone up to 15%, which was our target. And the South African business, as we have earlier mentioned, is 3- to 4-year contracts. So they are supposed to pick up -- this is -- the business has started contributing to our revenues, as you can see by the drastic increase in international business. And this will further increase during this period.

Okay. Why I was mentioning it because of the June quarter, the revenue profile for projected INR 260 crores vis-a-vis for March whereas the profitability is down to INR 19 crores. So that was the reason, even if we net off our domestic underperformance the profitability for the project business as a separate entity is down. So what factors have led to that -- the entire overall is 15% EBITDA is correct. But for the project, even on a consolidated basis is lower. So if you could just throw some more light.

I'm not sure how you got these numbers.

Sir, I'll just come again, it is on the segmental revenue on the gross grow..

[indiscernible] profitability is mentioned.

Sir, it is mentioned there there. So what contract is INR 19 crores the project part. The second line item.

I can't answer this.

This is what is being exchanged submitted to the stock exchange.

Yes, we can move on.

The third part of attributing to the product business, even taking into account how the quarter 1 performance has been -- what should we emit as going ahead in terms of the product business execution cycle, how will it gain traction? And what is the executable period of the total closing order book.

I think the order book is moving well, and the operation for product is stable. So it will move along in the same manner it is moving on. INR 1,029 crores order book execution period cash Alere higher it's consistent with the performance of product division. Like you can see the revenue is growing in the product division. It will continue to maintain this growth.

The next question comes from the line of Jaina Doshi from Chris PMS.

Congratulations on a great set of numbers, sir. So first question with respect to like the domestic project business due to the ongoing crisis like government had diverted certain funds to other clauses. So -- like do we see any compromise year on in the GM 2.0 allocation? Or we feel water will remain the priority and the funds will be released for the JJM thing.

Yes. This is a good question. And I completely believe that the sector remains a priority, and the funds will be released and future, there will be good traction in opportunity. However, we are trying to derisk ourselves and manage in the best manner possible. The future outlook remains good or even better.

Great, sir. Great, sir. And with respect to the outstanding receivables from the JJM, we expect the realizations to be kicking in from this quarter onwards, like a small factor.