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Ahluwalia Contracts (India) Ltd
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Ladies and gentlemen, good day, and welcome to Ahluwalia Contracts (India) Limited Q4 FY '24 Earnings Conference Call hosted by AMBIT Capital. [Operator Instructions] please note that this conference is being recorded.
I now hand the conference over to Mr. Virat Shangri from Ambit Capital. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone. Welcome to the Q4 and FY '24 Earnings Conference Call of Ahluwalia Contracts Contracts (India) Limited. From the management today, we have with us Mr. Shobhit Uppal, Deputy Managing Director; and Mr. Satbeer Singh, CFO of the company.
I will now hand over the conference to the management team for their opening remarks, after which, we shall open the floor for Q&A. Thank you, and over to you, sir.
Ahluwalia Contracts (India) Limited, an EPC company has announced financial results for Q4 FY '24 during Q4 FY '24, the company has achieved a turnover of INR 11,63.66 crores. and PAT of INR 199.85 crores in comparison to a turnover of [indiscernible] And a PAT of INR 72.21 crores during Q4 FY '23.
The company has registered a growth of 34.83% and 176.76% in turnover impact, respectively, during Q4 FY '24 and in comparison to Q4 FY '23. EPS of the company for Q4 FY '24 is 29.83 as compared to INR 10.78 in Q4 FY '23.
During Q4 FY '24, the company's EBITDA margin is 8.96% as compared to 12.77% and a PAT margin of 17.17% as compared to 8.37% in the corresponding period. During FY '24, the company has achieved a turnover of INR 3855.29 crores and a PAT of INR 375.55 crores in comparison to a turnover of INR 3838.39 crores and a PAT of INR 194.16 crores during FY '23. EPS of the company for 9 months FY '24 is 56.06 as compared to 28.98 during FY '24. During FY '24, the company's EBITDA margin is 10.48% as compared to 10.72% and a PAT margin of 9.74% as compared to 6.84% in the corresponding period. Net order book of the company is INR 11,179.93 crores to be executed in the next 2 to 2.5 years. Total order [ input ] during FY '24 till date stands at INR 65,36.81 crores. At present, we are L1 import projects amounting to INR 3914.28 crores. Sorry, there was an error in one of my earlier statements. EPS of the company for FY '24 is 56.06 as compared to 28.98 during the last year.
Yes, that's all. So we are ready to take questions now, thank you.
[Operator Instructions]
The first question is from the line of Shravan Shah from Dolat Capital.
Thank you, sir. Sir, first is on the margin front. So this quarter, we have seen a 9% EBITDA margin. In the last con call, we were confident that we can do for more than what we reported in the third quarter but is 10.9%. So any specific reason? And now how do we see the margin for FY '25 and possible for FY '26.
Look, the last quarter, there has been -- there was this -- in the last month of the year, you slow down and started on account of the impending elections. So that has impacted. Plus in March, there was March and then subsequently in April and May, there was a huge scarcity of labor. So that is impacting the -- our productivity. So that has led to reduce margins while our turnover has grown, but it could -- it could have been more if the neighbor scarcity was not there.
What we had predicted. What I said in the last call that FY '25, the margins will grow up because our order book is healthy and with the new government also coming in now, I think the pace of projects even execution will pick up. And traditionally come May, the labor also starts coming back. At the moment, we are operating at about 60% to 70% on our project side over the last 3 months or so.
So all these things when we take into account these have impacted our margins. So going forward, whatever guidance I've given for FY '25 last time, we are confident it will be a double digit, more than 10%.
Yes. Did you hear my -- whatever I said after.
Yes, sir. Yes, sir. .
Definitely Sir, I was saying last time, we have spoke about more than 11% EBITDA margin or 25%, 26%, but now we are saying more than 10%.
We are confident. As I said, it all depends on how quickly we are hearing various things about what's going to happen. So your guess is as good as mine as far as the new government is concerned. So come fourth of June, I think things will be clear how quickly the new government takes charge and how quickly the pace of work gets back to what it was 3 to 4 months ago. That is why I'm being very conservative but we are -- I think we are better placed because a lot of our [indiscernible] government contracts. I don't think 80% or 75% of the contracts are free from escalation varies they are not fixed contracts. So while I'm also qualifying that we will stick to the guidance that I had given in just being a little conservative.
Okay. And on the order inflow and revenue growth for FY '25 '26 how now we are looking at?
15% to 20%. And these orders, we are L1 in approximately INR 4,000 crores worth of project or projects. So I think this will also happen in June or July. We were only held up because of [indiscernible] this should also happen. And going forward, we feel the order pipeline is also healthy.
So a dismal apart from this INR 3,949 crores, 4 projects, how much more are we looking at to bag in FY '25?
Another INR 2,500 crores to INR 3,000 crores.
And so considering the bid pipeline now stands at what.
It's at about INR 4,000 crores.
Okay. It is just a INR 4,000-odd crore bid pipeline -- but -- and also when we are saying 15% to 20% revenue growth. Does that mean that in FY '26, then we can have even more than 20% kind of growth?
I did say 15% to 20%. So FY '26, let's see, .
Okay. And a couple of, sir, just the balance sheet data points, mobilization advance returns money on billed revenue?
[indiscernible] INR 528 crores.
[indiscernible], INR 322 crores
Unearned revenue INR 395 crores.
And working capital base has or has increased, particularly data has increased and payable has decreased. So closer to 38 days or working capital day from the last quarter, it was around 25 days. So how do we see -- will it come back or will it sustain at these levels?
Working capital debt has increased due to debt, we have to repeat from the [indiscernible]. That is making [indiscernible] of around INR 125 crores. That's why working capital has increased. Otherwise, you will see 90 days has been reduced on how come [indiscernible] .
Okay. And then the CapEx guidance will remain the same INR 100 crores, INR 120-odd crores for FY '25.
This year, INR 110 crores. .
For FY '25 INR 110 crores, you are saying?
Approximately. .
Okay. And sir, Jansen delay, anything in terms of the scope reduction as it were finalized?
As I said, this will get finalized in June and July. It will end up on account of -- since the land is allotted by the government. There were certain formalities which were not completed on account of the election time. So it should happen now.
The next question is from the line of Samrat Sarkar and Individual Investor.
Sir, I just want to know the reason behind the high subcontracting charges. I guess it's about 2% higher than the last quarter.
So Basically, this is a -- this has included manpower [indiscernible] contracting and labor protection is not specific to work back to that material contacting. That's why it's basically [indiscernible] is very high .
Okay. And going forward, this will come down in line with our earlier guidance.
If you see -- yes, yes, it's one this along with the next listing, employee benefit costs, which have to be read in conjunction, Right
It would be about 1 percentage point higher. And this also did get impacted due to an extended NGT period in January, February this year.
Okay. Okay. Okay. And sir, I want to know also about the breakup of the government and the private orders in your entire order book. What is the ratio of government orders as well as private.
This is private 34.85%.[indiscernible]
The next question is from the line of Mohit Kumar from ICICI Securities Limited. Please go ahead.
Can you please help us with the status of the [indiscernible] Mumbai. And what is the kind of execution you can expect in FY '25 and FY '26 from this particular project?
So this project now is starting off now. There were certain issues with growing accruals because there has been -- there have been some changes from the initial tender drawing provided to us necessitated by the client requirements and local authorities. So all that is behind us now. So we have broken ground and construction has begun. So going forward, we are looking at in the rest of the year, we are looking at doing a turnover about INR 800 crores in this financial year, which is FY '25. And in FY '26, it will be to the tune of about INR 1,200 crores.
So are there any other slow-moving orders in the order book right now? .
There are a couple of slowing orders in the half. which we expect we can hearing complete and actually the last 50% into medical colleges is left, which we feel that co-selection, the pace will pick up. They are held up on account of funding issues.
And is it possible to share the L1 position, I'm talking about the details of the L1 order position.
Yes, we are L1 in INR 3914.28 crores 4 projects.
Is it in the -- from the government side or private side, just...
These are all 3 government sites and [indiscernible] jewelry park that can be classified as a private contract.
Understood, sir. Understood. And the last question, sir, as the order for FY '25, where do you see the new government or the new government formation, do you think that there will be more opportunity you some throw some color on that.
I think it is -- it's all a matter of conjecture, but general consensus seems to be there that -- the NDA will come back to bar and the infrastructure growth will continue. And we said that, we are relatively secure because we have a healthy order book. And with the INR 4,000 crores worth of projects coming in, which we expect to come between June and July. We wouldn't have achieved 70% of inflow what we achieved in FY '24, which was, as it is very healthy. So as far as the order book is concerned, we are relatively secure.
The next question is from the line of Vaibhav Shah from JM Financial.
Any other state you are taking some payment issues.
No. 1 of projects are over, except for one, which also will be completed in the next 2 months. So other than that, we don't have any major issues.
So we have slowed down the execution for Bihar and Bengal projects given the payment issues.
As I mentioned earlier, 2 projects in Bihar, actually, it's a problem with 1 particular department. We are majorly executing projects for 2 departments there. One is they are building a construction division where this veterinary hospital is going on. That's going on time and there's a residential housing projects for [indiscernible] which is also nearing completion. It's the hospital that we are doing for the Bihar medical services operation. Where the projects are stalled, sequentially on account of fine.
And these are 2 projects where 70%, 75% work is already done.
So we are hoping that once the political combined comes to power. India comes to power, rising fund will start flowing in. But at the moment, the project has fallen.
Okay. Okay. And sir, what about the Mumbai Service disposing project and the, how do you see the execution because in Q4 year on, we have seen a strong execution.
So we expect the momentum to continue?
2-odd crores per quarter?
It will. The first quarter, again, of FY '25 because of elections, as I mentioned earlier, May the results may be a little sluggish, but and then this is the monsoon season also. But FY '25 overall should be good.
Okay. And sir, what about Bihar animal science in city project. So what is your targeted revenue for; '25 '26 ballpark?
So out of the total value of that is about INR 890 crores. And we have executed till day. We have executed till day -- we have executed about 100 [indiscernible]
Around INR 680 crores in an execution. So there was -- as I had mentioned in my last form that for building or old buildings are being demolished to make 1 space for the new one. So all those are handed over to us barring one. So the case now is moving on at high speed.
So earlier, we had guided, we are targeted to complete it in '25
Over the next 15 months.
Okay. And sir, lastly, for the Jensen jury part, what is the amount that we have considered in the INR 4,000 crores L1 position?
INR 2350 crores
The next question is from the line of [indiscernible] from Avendus park.
My first question is on some people who share the adjusted PAT number for FY '24 and quarter.
Adjusted PAT without the exceptional item.
So settlement with them or on [indiscernible] tumor. This is INR 197 crores. If this is a people -- so total INR 218 crores, including [indiscernible] and out of this, we have received INR 90 crores adjusted [indiscernible] without this exceptional items.
We are in INR 140 crores .
Basically, the tax amount 25.1% tax.
Okay. 25.1%
My next question is, sir, as per your strategy where you want to increase the composition of private orders -- what type of developers, which developers are you looking to work with? Or do we have any agreements with developers.
There are no agreements per se. But as you can see from the order book, we are working with DLF now, we are working with -- on the private side, we are working full we have bid for [indiscernible], we have bid for [indiscernible] we say, Bharti, we are already working with certain clients or certain degree, right, and with deep pockets we want to work with them. And then there are a few clients who are long-standing clients or we are not their outstanding contractors like MIT, Bennett Coleman, who we've been working with us for a number of years, then some hotel chains, we are doing a JW Marriott. So we're not working with and Brookfield is the client to private sector clients. We want to work with. And our order book, as be mentioned earlier, is at 65%, 35% approximately. So in the long run, we want to make it 50-50.
Understood. And also, sir, how are these contracts. Are these privately negotiated or the
Also looking in [indiscernible] On the plant. And we're working with Anami. So padegree the client Understood.
These are privately negotiated contracts, right? .
Privately. Yes.
Okay. Just 1 last question on depreciation. So -- why has depreciation increase, high depreciation in the quarter?
Basically, this quarter, we have been impaired for more with 14 to 91 lakh. That's why .
Around INR 15 crores.
INR 15 crores, right? Am I right?
Yes, INR 15 crores.
The next question is from the line of Uttam Srimal from Axis Securities.
Sir, how do you see the opportunity in data center creation?
I think I did -- I was asked this question during the last call also. It is not something that excites us.
So 1 question in regard to what is our cash and cash position, including FBR currently?
Cash and cash equivalent is INR 334 crores.
And basically bank [indiscernible] in INR 445 crores.
30, that is cash.
Getting app on the balance sheet the balance sheet. .
The next question is from the line of Parkshit from HDFC Securities.
So my first question is on the margins in March, there was a problem of labor, and it still continues at will continue even in May and June. So we are also saying are we looking at Q1 being again a soft quarter in terms of margins?
I did mention that, yes.
So I mean, could it be worse than Q4.
Probably labor is one and then election we [indiscernible]
But can we go below 9% because in this quarter, there was only 1 month in [indiscernible] on Q1, we'll have more in time 2 months or maybe 3 months. So can it go below 9% as well?
I don't think so. .
So is the bottom some 9% would be the bottom margin revenue you recorded in Q4? .
Yes, yes, I said, yes.
And second question is on the settlement with MRGM. So how much is the total cash inflow expected from this transaction -- from the settlement and how much have you realised in Q4.
That amount has been settled INR 218 crores and including the SC. And out of this, we have shown with 194 core delivery budget come out. And this would get 25.17% tax and INR 90 crores balance. That is INR 125 million
Within 2 tranches, basically August and January.
. .
And after total INR 140 crores per share overall, right?
Basically INR 128 crores .
So I'm taking out the INR 194 million, excluding the taxation, you will have the realization of about INR 140 crores total cash inflow for the company, right?
Yes.
Yes. Okay. Got it. And this last thing on us on the L1 so. Can you please again tell me what is the L1 amount?
INR 3914.28
The next question is from the line of Nidhi Shah from ICICI Securities Limited.
The only question I had was on the exceptional item that was in this quarter, the arbitration within a customer in Sohanya So could you give more details about the arbitration and whether the settlement amount has been received. If not, then when can you expect that.
So this was the long timing dispute on the Cornell [indiscernible] project with EMA MDI. Settlement amount is INR 218 crores, the award, which has come to us, out of which 90 crores has received. The balance will be received over 2 branches, 1 in August this year and the other 1 in January.
The next question is from the line of Ruchi Jain from SSP Meta Investment Limited.
My first question how much you have an outstanding order book as on 31st March 2024? On executed order book?
INR 11,179 crores .
INR 1,179 crores. Okay.
And we may expect that this to be executed around next 18 to 24 months?
24 to 30 months.
And my second question that, as you have mentioned, as far as expected order inflow is concerned, in FY '25, there is an election around the corner, but can you give some numbers that can be possible to your target for FY '25 as a new order inflow because the way the infra push is still there and the way we are seeing that in a new budget Govt may further increase their CapEx target, maybe around possibility of further more some chances are there. So can you give some bit of an idea, these are the numbers that can possible as an expected order inflow in FY '25.
So as I said, INR 4,000 crores is something which -- in which we are lower, 4 projects, aggregating INR 4,000 crores. That should happen in the next 30 to 60 days. The award was held up on account of elections. So that should happen in the next 1 to 2 months. Other than that, there is an order pipeline in the short term of INR 5000 crores. But for the entire year, in addition to this INR 4,000 crores, we have given a guidance of about another 2,500 or 3,000 crores.
So we may expect somewhere close to INR 7,000 crores, there can be a possibility order guideline an inflow for the FY '25 nutshell? right? My understanding is correct?
Understanding is correct yes.
[Operator Instructions] The next question is from the line of Laxmi Ana from Tonga Investments.
I want to understand I just want to understand, you look at the entire year, what has seen our win loss ratio? And is that something which you track that so much of projects you have bid and takes you yourself with you and why you lost some kind of a number. I just want to understand what -- how that is planned in the last 1 or 2 years.
So it's -- we are at about 17% in our analysis as to be submitted and the project 1 last year. So this is a total number. Other than that, what we are seeing is that there is increased competition on the government sector side.
17%.
Yes, 17%.
Moving on, we are reducing our bids if I may say so in the public sector side, we are becoming more selective only bidding on large jobs where competition is relatively better and increasing our exposure to private sector because that is picking up speed continues to pick up speed. And on the larger projects with market developers, they are only looking at pedigree contractors. So we feel margins there would be higher or higher.
And there, it's very difficult to calculate for the number because it's not L1. You can calculate the number of consultants, success percentage in an L1 bid, right? .
Got it. So the 83% where it did not get to is it all because of cost related in .
Yes, yes. It's all. Cost because on jobs where we don't qualify, we don't even big then, no. .
And then second, in terms of the total number of proposals you are working on the private side. How that has actually increased in the last -- when you ended last year, let say, you're working on x volume of projects worth in private sector. What is that volume now right now as we speak, how many -- what the total time price you are actually working on the private side in terms of cost.
As [indiscernible] mentioned earlier in response to an earlier question, our order book, just to give you an idea, out of a total order book of, say, about INR 11,000 crores, 35% is the private sector side. So that would amount of about INR 4,000 crores. If we were to go back, I don't have those numbers with me. But if memory serves me right, last year, the private sector was about 17% our auto book also like order book was also competitively meters in a month. I think INR 6000 crores , right?
So say from about INR 1,000 crores, this number has gone up INR 4,000 crores in absolute numbers.
Got it. Sir, the question is slightly different. It's not the order book about the total let's say, you are actually working actively on ex crores sort of proposal in the private sector. I just wanted to put a how large is the opportunity we are currently working on and submitting proposals. It's not the 1 which has converted into order book.
Okay. So out of, say, the order pipeline that I mentioned about INR 5,000 crores. The pipeline on the private sector side should be about 50% of that, about INR 2500 crores.
And this number would have been much lesser last year.
Much much lesser. So just to give you an idea, even the scale like the project that we're doing for DLS, that project is about INR 744 crores, right?
So the project that we did for quadrant projects is big. They were about INR 500 crores each. The project that we have recently bid [indiscernible], that's also about INR 500 crores. The project that we backed with [indiscernible] mention that earlier, that's in excess of INR 400 crores.
Well under doing a project with life fund that connects to INR 500 crores.
And you mind you, these are all core and sell packages. So at the moment on all these projects that I named, these are not including the other verticals, MET or [indiscernible] .
[Operator Instructions]. The next question is from the line of Abhishek Individual Investor.
I wanted to know about the cost of material consumed that has gone up in quarter 4 by about 1.59% year-on-year. So can you throw some light on that? Is it a year-end settlement?
Ole, year-on-year, it seems to have the figures that I have in [indiscernible] some it's reduced 0.2%
Yes, for the 1 year, it has reduced. But for -- specifically for the quarter 4, it has gone up by 1.5%. So especially in quarter 2. So what's -- just wanted to know the reason for the [indiscernible]. .
So if we see successive quarter, it is the same. If we see Q4 48.75% if we see Q3, it is 48.15% .
I'm not saying quarter-on-quarter, but year-on-year, that is correspondingly of the previous year. on the previous financial year.
For comparing for financial year '22, '23 comparing it .
You are comparing quarters of successive years. Is that what you're saying?
But you can't really -- these are things which tend to average out -- if you see year-on-year, it's almost same. If you see quarter to the last quarter, it's almost same. But yes, there is a difference in in the quarter of the 2 years, same quarter of 2 years, there is a difference of about 1.5%. Yes, we'll need to take a look at that. But as I said, overall, you see tend to average out .
Okay. And sir, I wanted to know about the margin in private sector and the government sector. Where we are having the EBITDA margin is the highest whether it is in the private sector or the government sector, can you throw some color on the
-- and one other thing I was just thinking about your question. One other reason why I said it can average out or does average out is it depends where are -- in the life cycle of a project, -- the structural package, say, the labor cost is lesser and material costs are higher in the finishing packages, it's the other way around. Finishing items is the other way around it.
So it totally depends on in the last quarter of the last financial year, what were the items or what were the kind of items that were being executed in the projects which were under execution time.
So it's not a very substantial difference.
So repeat your last question again, please? .
Yes. And sir, what about the margin in the private sector and the government sector. What kind of margin we are having operating margin?
As a generalized statement, I've always said private sector is the going is all right, the margins are always better. But it is all a factor of its in pain from time to time. But generally, because government tenders are L1 tender. Right? -- there is intense competition. Private tenders are awarded more on -- there is a bit. They try and equate various bids, but it's a relationship driven largely -- so -- and obviously, in the private sector, what we are seeing today, because of the high demand in terms of timely delivery and delivering a quality project, all the large developers are looking at only for 4 or 5 pedigreed contractors. So that's why the margins are more. There is a difference of about 1 percentage point between a percentage or percentage of 1.5% between the public sector and private sector. If I was to generalize, but it also depends on the pedigree of the developer and the type of projects that is being executed. The more complex project, obviously, the competition is better.
Okay. And sir, my next question is that how much fixed price contract and variable contract, what is the mix in the total order book?
It is yes, 70%, 30% -- 29% is 65%.
The next question is from Rayna rash from Marcellus Investment Managers.
My question is regarding. So on unattainment -- and I mean so.
Can repeat it, you were not clear.
Am I audible now? .
Yes, you are. Yes. .
Sir, my question was regarding the update on SAP implementation. If you can update us .
Yes. We have engaged PwC to we are implementing SAP. We engaged with them a month ago. They have started and targeted in the next 9 to 12 months, the entire operation for all our projects and our head office and regional offices will be on par. .
Okay. And will this affect our financials in any way in the next 3 quarters? .
No, not really. No. .
In fact, after 9 months or so, we have kind of why we -- I mentioned in my last investor call also, we are embarking on a digital transformation exercise. So maybe a year from now, efficiency should increase .
And last question is on this quota Burstein project where you have taken an impairment of INR 15 crores, what is this impairment regarding and what we can expect in future?
Again, you repeat your question.
What is this impairment cost explain the impairment.
This is digitally the new for our standard and according to discounted cash flow better. So basically, last year, whatever we have projected last year that is not that couldn't metallize. That's why -- and whatever the both cash inflow and outflow would be there according to that has been discounted and sincere around 14.91crores
The next question is from the line of from [indiscernible] Sarkar, an Individual Investor.
I just want to know, in the segment result the heading investment properties for this Q4, there is a loss of INR 15.25 crores -- can you just elaborate on that theme?
Basically very super this question. And as we have replied that, this is basically impairment and basically quota all that INR 1,491 lakhs, that's why [indiscernible] been appreciated at higher rates.
Okay, so Okay. Okay. I got it. Okay, sir. Okay. And sir, again, congratulations for great execution, whatever with the margins, I understand due to the labor issues and all, but congratulate for great execution of sales this year.
The next question is from the line of Vasudev Ganatra from Nova Wealth. .
So sir, my question is on the bid pipeline of INR 5,000 crores. So which are the segments that you are currently focusing long term?
On the private sector side, it is residential and in commercial and retail. On the government sector side, it is institutional and education and health care.
Okay. And sir, in the last call, you said that we have bidded for 2 airport projects also where to open. So are they open? And are we L1 in those? Or it's still pending?
Yes. We are L1 in 2 projects which is [indiscernible] about INR [indiscernible] crores.
, as I mentioned earlier, these are part of the INR 4,000 crores worth of L1 projects, which should be awarded in the next month or so.
Okay. And lastly, sir, are there any other projects where we have embedded but the [indiscernible] to open.
Verity project, State University, large projects in Orissa, where the top 4 companies in the country have bid. So where the bids are yet to be open. And there are a few kind of type where negotiations happen.
[Operator Instructions] As there are no further questions, I would like to say on behalf of AMBIT Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.