Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PNC Infratech Ltd (BOM:539150, Financial) reported a significant increase in EBITDA for Q1 FY25, reaching INR593 crores, a 142% rise compared to the same period last year.
- The company achieved a PAT of INR421 crores for Q1 FY25, marking a 169% year-over-year growth.
- PNC Infratech Ltd (BOM:539150) received INR515 crores from NHAI under the second scheme, including INR117 crores and INR398 crores from arbitration awards.
- The company's unexecuted order book stands at INR19,000 crores, which is 2.5 times the revenue of FY24.
- The company has secured new orders worth INR5,000 crores in the current financial year and expects to secure an additional INR8,000 to INR10,000 crores in new orders.
Negative Points
- The roads and highway sector witnessed muted progress in Q1 FY25 due to general elections, early onset of monsoon, and delays in land acquisition.
- Construction activities are expected to pick up only during the third quarter of FY25 due to continuous rains affecting the second quarter as well.
- The company revised its revenue guidance for FY25 to be flat or around minus 10% due to various unprecedented conditions affecting the first quarter.
- The EBITDA margin for FY25 is expected to be around 12.5%, excluding the arbitration and bonus amounts.
- The company's net working capital cycle increased to 121 days as of June 30, 2024, primarily due to an increase in debtors.
Q & A Highlights
Q: Sir, just a clarification on this entire arbitration and the bonus, the entire amount directly goes to the EBITDA. There is no expense related to that before EBITDA.
A: Yes, there is no expense on this arbitration and bonuses.
Q: Now sir, given that, if I remove this in terms of the core revenue, which is kind of on the low 29% kind of particular, 30%. And we are looking at 10% growth on this revenue in FY25, so the ask rate is significantly higher. So how do we now see the revenue and also the EBITDA margin have been (inaudible) the same 12%, 12.5% for FY25.
A: Yes. This first quarter growth has been affected due to some unprecedented activities, unprecedented conditions. Some of them are expected like the elections. But like the summer has been very severe, and extreme heat also affected our progress and the early onset of monsoon. And more importantly, the projects which we secured during FY23 March could not be commenced due to delayed declaration of appointed date, on account of delay in land acquisition. So this is a multiplicity of factors, general elections, early onset of monsoon and the excessive heat during the summer, then the delay in declaration of appointed dates. And also particularly in case of the water sector, that has been delaying the release of payments due to lack of budgetary allocations during the period of (inaudible) on account of budget (inaudible). So there's all these [headache] -- complex and complexity. So it's reduced our first quarter revenue. So still, we will be trying to expedite it. But the second quarter also because now, again, the act -- when monsoon has been very active and widespread. So we expect a similar kind of situation during the second quarter also. The situation is challenging. Given the conditions and some of them are expected things, so the guidance for the FY '25 would not be what we expected earlier. We would be flat or maybe around minus 10% on down basis.
Q: Sorry, sir, you said flat to minus 10%, you are saying?
A: Minus 10%.
Q: And other margins remains the same by 12.5%.
A: Yes. Yes. EBITDA margin would be around 12.5%.
Q: Congrats on a great result. So I have a couple of questions. Firstly, starting with the EBITDA margin. So we have seen an amazing spike in the EBITDA margins to 34% in the standalone financial segment. So I would like to understand like what was the specific reason for such increase in EBITDA margins? And what's the expected? And is this an increase of EBITDA margin expected to continue for the entire FY25?
A: It would 34% inclusive of INR435 crores, amount received on account of arbitration bonus in this quarter. Otherwise, the EBITDA margin will be maintained around 12.5%.
Q: And sir, what is to be the pipeline which is the company is expected in this FY25?
A: The pipeline, as I mentioned, so we expect another 8,000 to 10,000 new orders during the FY25. Already, we secured around INR5,000 crores new orders. So total cumulative be around 13,000 crores to 15,000 new orders.
Q: Sir, my first question is on -- so the issue which we faced recently in June. So what is the status now on the bidding -- so are we allowed to bid now? Is there any punitive action taken in terms of restricting us or bidding for some time or demurring us for some time. Any update on that issue?
A: So no, this -- no punitive action has been taken by NHAI. We don't foresee anything in the near future. So we are able to bid, and we are hopeful that we'll continue to able to bid projects.
Q: Okay. So -- but has any of our bids been opened until now? Have you submitted any bids, are those bids being opened? Or so any update if you can give us?
A: Yes, it are being opened. And also three of our bids got opened. And also some of the bids we submitted, around 18 bids are there, that will be open.
Q: Sir, what kind of revenue are we targeting from the JJM projects for FY25, given the weaker execution in first quarter?
A: See, as I mentioned, there's the progress were not substantially affected during the Q1, and that trend would continue to be doing Q2 also, because many of our scheme locations are inundated due to heavy rainfall. So nevertheless, we are expecting around INR1,500 crores during the FY25 with revenue for the water sector.
Q: And payments have improved in the second quarter for the water segment?
A: Yes. See, now the full year budget is approved. So the comps we export the funds coming from the government of India, 50% of the project cost. And the remaining 50% (inaudible) also is expected timely from the state government. So we expect that whatever our outstanding payments are there, it would be cleared for the end of the second quarter. And thereafter, the accounts flow and the payments would be normal.
Q: And sir, remainder would be done in FY26, would be completed water?
A: Yes. FY26, complete water the segment -- projects (inaudible).
Q: And sir, as you mentioned that the execution should be weak in the second quarter as well. So that is the case for the entire portfolio or only for water? So the revenue would be somewhere around INR130 crores only on a quarter basis?
A: See, water segment when compared to highway, water -- in case of monsoon continues to be active on West front. The water gets more affected, water projects. Because these projects are in isolated locations spread and also then pipelining and other things gets affected when compared to highways, et cetera. So water will be more affected. But highway also, the asset would be certain affect would be there on the highway sector also, in terms of progress.
Q: But do we expect a quarter-on-quarter increase in terms of revenue, for second quarter, overall revenue?
A: Yes, yes.
Q: And sir, lastly
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
