Skipper Ltd
NSE:SKIPPER

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Earnings Call Analysis

Q3-2024 Analysis
Skipper Ltd

Skipper Ltd Records Best Revenue Quarter

Skipper Limited achieved its highest-ever quarterly revenue with INR 8,015 million, marking an 80% increase from the previous year. This was boosted by strong performance across all segments: Engineering revenue grew by 54%, Polymer by 11%, and the Infra segment skyrocketed by 1,672%, thanks to robust project execution. The company maintains a healthy EBITDA margin of 9.6%. The order book is now at INR 57,790 million, providing solid revenue visibility for the coming years. Skipper is capitalizing on domestic opportunities in India's transmission sector and benefiting from global trends, with orders coming from the Middle East and Australia and a significant tender pipeline of INR 150,300 million.

Skipper Limited Hits Record High Revenue

Skipper Limited celebrated its highest-ever revenue quarter, reporting a striking 80% surge from the same quarter last year, reaching INR 8,015 million. This feat was accomplished through robust performances across all major business divisions and was complemented by a healthy operating EBITDA margin of 9.6%. This growth trajectory is not only a testament to the company's operational prowess but also a reflection of the sound strategy and forward-thinking leadership guiding Skipper's journey.

Exceptional Growth Across Segments

Dissecting the revenue streams, the Engineering segment experienced a 54% increase, achieving INR 5,177 million, while the Polymer division saw an 11% uptick that translated into INR 1,086 million in revenue. The Infrastructure segment outshone with a dramatic 1,672% rise, reaching INR 1,753 million. The export sales in Engineering played a notable role, making up 20% of the segment's revenue, thereby illuminating Skipper's expanding global footprint.

Transformative Strategies Leading to Market Expansion

Skipper's innovative marketing campaigns, headlined by prominent figures like MS Dhoni and Chris Gayle, have propelled the Polymer business to its best nine-month performance, clocking a 36% revenue increase year-over-year and a 60% volume growth. These strategic moves showcase Skipper's ability to effectively resonate with its consumer base and broaden its market reach, setting the stage for further geographic expansion.

Steady EBITDA Highlights Operation Efficiency

The company's EBITDA witnessed an uptick to INR 770 million with steady margins, and the Engineering segment, in particular, stood out with a higher EBITDA margin of 11.8%. Skipper anticipates maintaining these consistent margins by executing higher quality contracts, especially as its international business scope enlarges.

Improving Bottom Line and Expanding Order Book

A key focus on bottom-line growth yielded positive results, with the consolidated PBT rising to INR 291 million (3.6% margin) from INR 118 million (2.7% margin), and the PAT climbing to INR 205 million (2.6% margin). The robust order book stands at INR 57,790 million, thanks to securing significant new orders, providing revenue visibility for the next 3 to 4 years. This robust pipeline underscores the company's potential for sustained growth.

Capitalizing on Domestic and Global Tailwinds

Skipper is poised to capitalize on the vibrant domestic T&D sector and the global shift in focus towards T&D infrastructural investments. With India's infrastructural push and the 'China Plus One' strategy driving global inquiries, Skipper's vast tender pipeline of INR 150,300 million echoes its growth potential across telecom, railway electrification, water, EPC, and other segments.

Rights Issue Oversubscription Reflects Investor Confidence

Closing on a high note, the company's successful rights issue, oversubscribed by 1.77 times, signals a strong vote of confidence from both existing and new investors. This capital boost not only reaffirms shareholders' support but also equips Skipper with the financial muscle to accelerate its strategic ambitions, underlining a bright outlook for its future endeavors.

Earnings Call Transcript

Earnings Call Transcript
2024-Q3

from 0
Operator

Ladies and gentlemen, good day, and welcome to Skipper Limited Q3 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. Satyadeep Jain from Ambit Capital. Thank you, and over to you, sir.

S
Satyadeep Jain
analyst

Thank you. Hello, everyone. Welcome to Skipper Limited 3Q FY '24 Earnings Call. On the management side, today, we have with us Mr. Sharan Bansal, who is the Director; Mr. Shiv Shankar Gupta, the Chief Financial Officer; and Mr. Aditya Dujari, GM Finance and Investor Relations.

Thank you, and over to you, sir, for your opening remarks.

U
Unknown Executive

Thank you, Satya. Good afternoon to all of you, and thank you for your continued interest in Skipper.

Please take note any forward-looking statement made during this call must be reviewed in conjunction with the risks that the industry and the company face.

Some of the key operational and financial highlights in comparison to the previous year quarter were as follows: I'm pleased to inform you that the company registered its best ever revenue quarter of INR 8,015 million against INR 4,448 million in previous year quarter on back of strong performance across all its major business segments, achieving growth of 80% over previous year quarter period while maintaining healthy operating EBITDA margin of 9.6%.

The segmental revenue breakup were as follows: Engineering, INR 5.77 million (sic) [ INR 5,177 million ], up by 54% over previous year quarter; Polymer at INR 1,086 million, up by 11%; and Infra segment, INR 1,753 million, up by 1,672%.

The company engineering export sales were at INR 1,023 million and constituted 20% of overall Engineering segment revenue. And Y-to-date export sales were at a level of INR 4,369 million, constituting 29% of overall export Engineering revenue.

The company achieved its best-ever quarter revenue in the Infra business, fueled by robust execution, BSNL and other T&D projects. Our revenue surged by an impressive 16.72x compared to the previous year quarter. We foresee the similar momentum to continue for next quarter also.

Years of dedicated effort towards building a robust retail distribution network for our Polymer business has now started showing encouraging results. Polymer business achieved its best ever 9 months revenue performance. Revenue increased to INR 3,491 million against INR 2,572 million in the previous year 9 months, up by 36%.

Polymer sales volume increased to 24,654 million tons -- metric tons against 15,454 metric tons in the previous 9-month period, registering a growth in volume of 60%.

Our Skipper pipe brand campaign as India's Safest Pipes with brand ambassadors, MS Dhoni and Chris Gayle, is paying rich dividends. Higher growth witnessed in certain markets, indicating campaign effectiveness. Company intends to increase its campaign [ spread ] to other geographies as well as open new markets in the coming couple of quarters.

Our quarterly operating performances were as follows: reported EBITDA increased to INR 770 million, and operating margins stood at 9.6% for the quarter.

The Engineering segment EBITDA margins for the quarter stood at 11.8%. Going forward, we expect similar trends to continue and deliver consistent margin performance in this business on back of better quality contracts getting executed and rising share of international business.

The EBITDA margins for Polymer and infra business will continue to be benefited from fixed cost being rationalized over larger revenue base.

The management focus continues towards bottom line improvement. The consolidated PBT increased to INR 291 million and PBT margin at 3.6% of the sales for the current quarter period against INR 118 million in the previous year quarter with PBT margin of 2.7%.

The consolidated PAT tax increased to INR 205 million with a PAT margin of 2.6% of sales for the current quarter period against INR 95 million in the previous year quarter with PAT margins at 2.1%.

Order book and inflow. On the order front, during the quarter, company secured significant sized transmission tower export contracts from Middle East Asia and several other T&D projects, both domestic and international, including telecom. The total inflow for the quarter was in excess of INR 4,000 million with export inflows constituting 40% of the total inflows.

In 9 months, we secured new orders in excess of INR 31,450 million. The current order book currently stands at INR 57,790 million and is well diversified across sectors and segments. The order book to Engineering and Infra segment sales since now stands at 3.7x of FY '23 sales, giving us the revenue visibility for the next 3 to 4 years.

The domestic T&D environment looks vibrant and the company is committed to leverage and address the vast potential of India transmission sector with its integrated operations with the government's accelerated efforts towards scaling with one-grid infrastructure and improving electrification in urban and rural area. Skipper supports this growth.

Further, on international front, companies are witnessing a surge in global inquiries and getting benefited from China Plus One trend. The company will continue to get benefited from the pent-up demand as the global economy opens up and global focus and investment on building T&D infrastructure catering to renewal continues to grow.

Also, the company looks forward to tap emerging opportunities in sectors aligned with the government's rising interest.

Skipper's rising diversification into the business of telecom, railway electrification, water, EPC and field irrigation has tremendous potential leading to strengthen its revenue stream. The tender pipeline for us to participate looks deep, and the current bidding pipeline are at their all-time high level of INR 150,300 million with international share at INR 98,300 million and domestic at INR 52,000 million.

Also, I am happy to share that the company is in advanced stages of negotiation to secure some good sized international and domestic contracts.

And coming on to the rights issue, I just wanted to brief you all. Further, we are pleased to announce the successful closure of our rights issue offering. The rights issue received a strong response from both our existing shareholders as well as from other investors and witnessed participation from both domestic and foreign public shareholders. The issue was oversubscribed approximately 1.77x.

The success of our capital raise is a strong demonstration of the confidence that our existing shareholders and new shareholders have in the prospects of the company and underscore their belief in our abilities to leverage the growth opportunities offered by the sector. This infusion will help finance our growth ambition and will allow us to emerge with a stronger balance sheet and increased flexibility.

Thank you. We are happy to take your questions now.

Operator

[Operator Instructions] The first question is from the line of [ Dhruv Agarwal ] from Niveshaay Investment Advisors.

U
Unknown Analyst

Congratulations on a very good set of numbers. Sir, on the international terms, how do you see the demand coming in from the Middle East countries, United States and North America? And how do you see the competition in those international markets also? If you can name some of the players from whom do you see the competition and also name some of the Turkish players as well, sir?

S
Sharan Bansal
executive

Yes. So demand from -- in a lot of geographies right now is very robust, primarily because a lot of international countries are investing in the renewable sector, renewable power generation. Now renewable power generation necessarily comes with investments in power transmission also, which is why we are seeing healthy demand in a lot of markets.

Skipper does operate in about 65 countries and we are seeing decent demand in a number of them. Particularly, right now, we have seen good orders coming from Middle East and Australia for our company. And in the future, we are expecting good amount of orders and business from North America and Europe also.

In terms of competition, mostly our competition is with Chinese and Turkish players and some 1 or 2 Indian players as well. So that is the competitive landscape. I hope I answered all your questions.

U
Unknown Analyst

Sir, can you please name some of the Turkish players as well like from -- like Turkish and Chinese players as well?

S
Sharan Bansal
executive

Some Turkish players who we regularly compete with are called Mitas and SA-RA.

U
Unknown Analyst

Okay. Okay. And Chinese, sir, if you can name?

S
Sharan Bansal
executive

Chinese, I'm sorry, I don't have -- their names are a bit complicated. I would be able to share those names with you later on.

U
Unknown Analyst

Okay. And sir, like one more question related to this. Any impact on revenue vis-a-vis Red Sea issue in this current quarter? And I'm sure going forward, do you see any issues given that in the upcoming quarters?

S
Sharan Bansal
executive

We do have some contracts in -- which are affected by the Red Sea crisis, particularly in Israel and Egypt. The rest of the Middle East is not that affected by this problem. However, even in these countries, the shipping lines are able to go around the longer route around the Cape of Good Hope and [indiscernible] destination.

So I think this is -- in the short term, we may see some freight increase, only particularly in these 2 countries, in Israel and Egypt. In other countries, there will be some amount of rate increase, but our contracts are well able to cover that increase.

U
Unknown Analyst

Okay. -- Sir, okay. And my question specific on the finance cost. If I calculate the interest expense and finance cost as a percentage of total borrowing within the long-term and short-term debt, instead of calculating it as a percentage of sales, it is coming to around like 15.7% in the year '23, 16% in year '22 and so on, sir. But on the other hand, if I compare the weighted average cost of borrowing, it is coming close to 10.5%. So why there is a gap of around 5% to 6%? Can you please highlight that it is -- like am I missing something or is there anything...

S
Sharan Bansal
executive

Yes. So we have said in earlier con calls also, the total finance cost is not just the interest paid on long-term and short-term debt. It also includes the interest paid on vendor bill discounting and customer bill discounting. Also, it is inclusive of the bank guarantee charges and margin charges. As you know, in our company, there are a lot of bank guarantees that we have to deal with. So all those charges are part of the finance cost overall in the company. So which is why I did not correct to calculate the overall finance cost divided by the short-term, long-term debt. That will not give the correct picture.

U
Unknown Analyst

Okay, okay, okay. And sir, just one more question. The CAE (sic) [ CEA ] has increased their investment for deploying the transmission, et cetera, including the lines and the substation close to around INR 4.75 trillion from INR 2.44 trillion previously. So can you give some color on like how do you see the demand rollout from this increased expenditure and what kind of market share can people be able to obtain from this? And also what kind of margins we can expect from this as well?

S
Sharan Bansal
executive

Which customer are you talking about?

U
Unknown Analyst

CAE (sic) [ CEA ] has increased their expenditure, right, on the transmission infrastructure, right? So INR 4.75 trillion from INR 2.44 trillion?

S
Sharan Bansal
executive

Are you asking about Government of India expenditure?

U
Unknown Analyst

Yes, yes, yes. Funding from Government of India, yes, yes.

S
Sharan Bansal
executive

So one thing in transmission, you have to understand that there is a bit of -- fair amount of private participation also where transmission investments are concerned. Government of India make the investments through power, but it's not exactly a budget allocation for them.

So the transmission market is fairly robust and there's an active participation from companies like POWERGRID, Sterlite, Adani, et cetera. So they are the ones who are bidding and taking the project, and government essentially creates an enabling environment where they have identified projects of around INR 2.5 lakh crores to be bidded in the next 5 years to connect 500 gigawatt of renewable power.

Effectively, that is what is leading to the growth in demand in overall in India. And of course, international markets, we've already spoken about the connection of renewables, which is driving the transmission demand.

U
Unknown Analyst

Sir, my question was only -- regarding only like what kind of shares Skipper will be able to attain from this. Can you give some guidelines on that?

S
Sharan Bansal
executive

Well, currently, in the segment that we operate in, which is the ultra-high voltage segment, the 400 kV and 765 kV in India, we have close to about a 10% to 15% market share. And I think we will be comfortably be able to maintain that.

U
Unknown Analyst

Okay. Just one last question, sir. Is there any unexecuted BSNL order book out of the total order book that stands in the quarter 3? And what is the share of the BSNL in the current quarter revenue, sir? Can you share that financial, sir?

S
Sharan Bansal
executive

I don't have those numbers readily available. However, BSNL project is going well. We still have announced some quarters of execution left in this contract. So -- but I don't have the numbers available -- readily available, how much is it is muted and how much was done this quarter.

Operator

[Operator Instructions] The next question is from the line of [ Deepak Parswani ] from Swan Investments.

U
Unknown Analyst

Congratulations for a very good set of numbers. Sir, firstly, in terms of the bid pipeline, last quarter, the bid pipeline was somewhere close to INR 12,500 crores. And this time, it has increased to the INR 15,000-odd crores whereas order inflow has actually declined vis-a-vis the last quarter. So if you can throw some light, how should we read into it, whether clients are taking a little longer time or it's just a normal course in the business?

S
Sharan Bansal
executive

See, in terms -- in all the performance metrics of the company, it will be much better to look at it on an annualized basis than on a quarter basis because quarter numbers may be impacted by a various number of factors by purely about how many bids are getting finalized in that quarter, which customer is moving, how fast.

So honestly, if you look at the annual number, we have secured about INR 3,100 crores of orders so far in the first 9 months. In the last quarter also, looking at the order inflow that are coming in, we are quite confident that we should be close to the number of -- close to or exceeding the number of last year, which was about INR 4,000 crores annually.

So honestly, order inflow, et cetera, is really not a concern. There will be continuous robust inflow of orders continuously for several years.

U
Unknown Analyst

And sir, you did mention regarding -- when you are also at advanced stage of discussion on some of the orders. What would be the typical ticket size of these orders, if you can throw some light on that?

S
Sharan Bansal
executive

For major contracts, anywhere between INR 200 crores to INR 400 crores is on a per-contract basis. That is the order ticket price, which we are targeting.

U
Unknown Analyst

Okay. And sir, in terms of the debt level, what was the debt level at the end of this quarter? And also, if you can throw some light on the working capital cycle as well?

S
Sharan Bansal
executive

Our debt level at the end of quarter 2 was approximately INR 700 crores, including long-term and short-term debt. We have not published the numbers of quarter 3 debt as the requirement is not there.

And in terms of the working capital cycle, we are at about working capital cycle of 120 days right now.

U
Unknown Analyst

So sir, with the proceeds of rights issue to the extent of INR 50-odd crores, would that be fair to assume this quarter again that would have come down to that extent?

S
Sharan Bansal
executive

The proceeds are yet to be received by the company as the final allocation of the rights issue will be done hopefully by the end of this week. So we expect the proceeds to come in by next week, perhaps.

U
Unknown Analyst

Okay. And sir, in terms of the CapEx, how much has been the CapEx incurred so far?

S
Sharan Bansal
executive

This year, we expect -- I think we've invested about INR 70-odd crores.

U
Unknown Analyst

Okay. And sir, finally, on the pipe business, I mean on a 9-month basis, again, growth has been pretty strong to the extent of 26%. But if I'm looking at the Q3 level, that has been -- come down to the 12%. So on an incremental basis, if you can throw some light, how should we look into these numbers?

S
Sharan Bansal
executive

Yes. I think overall, there's been a very good volume growth in this business, approximately 50% to 60% volume growth we've had. However, top line-wise, we've seen slightly lesser growth than that because the resin prices have contracted quite a bit compared to last year. But volume growth is strong, and we'll -- we expect that to continue to remain strong in the coming years as well.

Operator

The next question is from the line of Dhiral from Phillip Capital PCG.

D
Dhiral Shah
analyst

Congratulations for the very strong set of numbers. So my question is if I look at the export revenue on a 9-month basis, we have seen a sharp decline of almost 8% to 10%. So any particular reason for this?

S
Sharan Bansal
executive

The export has seen decline in what sense?

D
Dhiral Shah
analyst

Sir, revenue. Export revenue on a 9-month basis, if I look at 9 months FY '23 compared to 9 months FY '24, we have seen it decline by almost 8% to 10%.

S
Sharan Bansal
executive

It is that because the domestic execution is quite strong right now on the back of the BSNL contract as well as the various transmission contracts, which we are securing. Otherwise, the export execution is in more or less in line with last year.

D
Dhiral Shah
analyst

Okay. So with the export for the full year, last year, we did an export revenue of INR 730 crores. So what is the guidance for the current year, sir?

S
Sharan Bansal
executive

It will be similar to last year's level.

D
Dhiral Shah
analyst

Okay. Okay. And sir, as you talked about this year, order inflow will remain same as compared to last year. So what kind of growth we are envisaging for next year and for FY '26 overall?

S
Sharan Bansal
executive

See, already, the company, about 2 years ago, we have secured about orders of INR 1,500 crores to INR 2,000 crores annually. Starting from last year, we have seen good amount of order inflows starting to come in.

So now honestly, in terms of market availability, we don't see a challenge of getting orders. Our capacity will only be the constraint going forward. So we are planning new CapEx plans. And as we grow capacity, then obviously, we can target higher and higher amount of orders also.

D
Dhiral Shah
analyst

Okay. So what kind of CapEx are we looking maybe for the Engineering segment?

S
Sharan Bansal
executive

We haven't firmed up our CapEx plan for next year. This year, as I was mentioning earlier, that we have spent about INR 70 crores of CapEx, but that has been towards more capacity optimization and debottlenecking. We haven't gone for a capacity expansion till now, which now we are in the planning for both brownfield as well as maybe greenfield expansion.

D
Dhiral Shah
analyst

Okay. And sir, lastly, in terms of margins, if I look at our margins, we are very close to the double digit. But maybe by next year, sir, do you expect this margin is comfortable at, say, about double digit, sir?

S
Sharan Bansal
executive

On a blended basis, I am not sure. We will be quite comfortable with our margin guidance of between 9.5% to 10%. However, incrementally, we should see margin expansion as and when -- as our -- as we get better and better quality contracts in the Engineering business and our PVC business also start to see better and better margins.

So yes, long term, we should see margins of 10%, 11%, et cetera. However, for next year, we would expect margins to be in the similar range.

Operator

[Operator Instructions]

The next question is from the line of Namish Gupta from Namish Gupta & Company.

N
Namish Gupta
analyst

Hello? Sir, my voice is audible?

S
Sharan Bansal
executive

Yes. It's audible.

N
Namish Gupta
analyst

Okay. So sir, my question is regarding margin. Sir, you are saying that your margin is like -- your sustainable margins are like 9.5%, 10%, something, sir? Sir, I mean, what I have seen is like from March quarter, we are incremental. As each and every quarter, our turnover is increasing. So my assumption is that on every increase of turnover, there are economies of scale that should play out and margins should enhance due to that, sir. But I mean, this is not happening in our case, sir. So I mean can you just clarify on this point, sir?

S
Sharan Bansal
executive

The turnover is increasing in a mix. You're right that there is some amount of economies of scale that are being obtained also. However, the revenue has been going up as the mix of PVC growth as well as growth in the Infra division, which have, on a blended basis overall margin of the company perhaps is not going up as sharply as what you would expect.

We are at a comfortable margin level compared to overall. Last year, if you look -- our overall blended margin was 9.1%. This year, our overall blended margin is about 9.8%, 9.9% already. So we have definitely had some amount of improvement overall in terms of economies of scale, et cetera.

N
Namish Gupta
analyst

Okay. I mean, is it due to some kind of mix that you are not getting some high-value order? Or your fixed cost percentage is very high that we are not -- I mean, we are not getting the economies of scale, sir?

S
Sharan Bansal
executive

No, that's not the case. As I mentioned, that you will have to look at margins on an annual basis. Last year, the overall margins were about 9.1%. This year on a 9-month basis, we are at 9.9%. So obviously, margins have gone up.

Operator

[Operator Instructions] The next question is from the line of Rusmik Oza from 9 Rays EquiResearch.

R
Rusmik Oza
analyst

Sir, I want to understand, you have mentioned in the presentation that you aim for growing at 25% CAGR in terms of revenue for the next 3 years. So just a clarification, is this from FY '24 or on FY '23 number, sir?

S
Sharan Bansal
executive

It is on the FY '23 numbers.

R
Rusmik Oza
analyst

'23. So because I was asking the question because this year, I think we'll end up growing at around more than 50%. So does that mean that actually because it's a compounded at 25% for FY '23, then you go to around close to, say, INR 3,800 crores, INR 3,900 crores by FY '26, but then that reduces the next 2 years CAGR to around 10% because this year, you should do around close to INR 3,200 crores revenue.

So just if I can understand the math there, does it mean that going forward for the next 2 years, your CAGR could be around 10%, 12%? Or will it be more than that?

S
Sharan Bansal
executive

Well, we will be giving next year guidance with the quarter 4 results. However, obviously, our efforts will always be, as we have done this year, about being conservative where the guidance is concerned and outperforming.

So as this year instead of 25%, we have done much better, like you mentioned, close to about 50% growth. So yes, our efforts will be there. Whatever guidance we gave for subsequent years, we do outperform that guidance.

R
Rusmik Oza
analyst

Okay, okay. And sir, since I'm new to the company, can you just explain what is the total capacity in the T&D segment? And what is the utilization right now?

S
Sharan Bansal
executive

Our utilization in the Engineering segment is approximately about 80% right now.

R
Rusmik Oza
analyst

80%. And how can -- how far can we go in this in terms of utilization, sir?

S
Sharan Bansal
executive

So there's some amount of enhancement that will happen. We should be close to about 90% in the coming quarters. But as capacity will also start going up, some amount of brownfield capacity expansion will also start happening in subsequent quarters.

R
Rusmik Oza
analyst

Okay, okay. And in terms of Polymer, sir, capacities around 62,000; 9 months, we have done around 24,000. That means we should do around close to 33,000 for the year. How do we see the utilization levels of this going up in the next 2 to 3 years?

S
Sharan Bansal
executive

As are -- of course, we do have capacity in this business. Here, capacity is not a constraint as the market is opening up for us, thanks to -- on the back of our ad campaign and our dealer distributor network.

So I think as our brand is getting more and more accepted in the market, volumes will continue to grow. And like I said, we -- the capacity is not a constraint in this business for us.

R
Rusmik Oza
analyst

Okay, sir. I have 2 more questions, sir, one is on the same, T&D. Since the utilization level is 80%, is there any expansion plan in the [ foray ] for the next 2, 3 years going forward?

S
Sharan Bansal
executive

Yes, surely. There will be expansion plan. We will be planning both brownfield and greenfield expansion.

R
Rusmik Oza
analyst

Okay. Any CapEx would you like to give for this?

S
Sharan Bansal
executive

Not right now. We will be sharing you along with the Q4 numbers.

R
Rusmik Oza
analyst

Okay, okay. And my last question, sir, is on the tax rate. We're paying around 33% tax on PBT. When do we shift to the new tax regime? Or we'll continue with the same tax regime for some more time?

S
Sharan Bansal
executive

We expect to move to the lower tax regime next year.

R
Rusmik Oza
analyst

Next year. So from next year, you can expect 25% instead 33%, right?

S
Sharan Bansal
executive

That's correct.

Operator

[Operator Instructions] The next follow-up question is from the line of [ Dhruv Agarwal ] from Niveshaay Investment Advisors.

U
Unknown Analyst

Sir, on the last con call, you said that over the years the H1 revenue in relation to the total revenue is 40%. So in the first half, the revenue was around INR 30 crores, INR 27 crores. So is it a back calculation after reconsidering the quarter 3 sales, it comes close to around INR 200 crores. So are you confident to do in the quarter 4 of around INR 1,200 crores [indiscernible]?

S
Sharan Bansal
executive

No. How did you calculate INR 1,200 crores?

U
Unknown Analyst

Sir, like generally, H1 revenues is 40% of the total revenue you said in the last con call. So I just did the back calculation of INR 30 crores dividing by 40% minus this 9 months revenue, so it comes close to around INR 1,200 crores.

S
Sharan Bansal
executive

So the first 6 month revenue was...

S
Shiv Gupta
executive

INR 1,327 crores.

S
Sharan Bansal
executive

INR 1,327 cores. Okay. See, 40-60 is just an indicative number. Obviously, it cannot be something, which is an exact guidance, but it's a very loose guidance.

So I think the point is, we have seen a very good growth in top line already in the year. I think we're at about 60%, 65%, something. And we have seen the revenue, the quarterly execution grew to about INR 800 crores in the range in quarter 2 and quarter 3.

Now how much if you grow by quarter 4, again, that remains to be seen. But again, overall, execution is robust.

U
Unknown Analyst

Okay, okay. And sir, like what kind of conversion rate one can expect from bidding pipeline to flow into the order book? And how many quarters do you expect, sir, this order -- inflow in the order book?

S
Sharan Bansal
executive

What kind of -- sorry, once again?

U
Unknown Analyst

What kind of conversion rate one can expect from the bidding pipeline to flow into the order book, sir? And by how many quarters?

S
Sharan Bansal
executive

Okay. So as of now, like I mentioned, we will be constrained for capacity in the coming quarters. So unless and until we increase capacity, we will not be able to take in more than INR 3,000 crores to INR 4,000 crores of orders annually. So they all depend on our capacity expansion plans and which, of course, are underway. And hopefully, then we will be able to take in higher amount of orders next year.

U
Unknown Analyst

And so currently what would be the conversion rate, sir? Can you give some guidance on that?

S
Sharan Bansal
executive

I mean, right now, we are pursuing about INR 15,000 crores of orders and we are targeting about INR 4,000 crores of orders next year. Then I would say about 25% conversion.

U
Unknown Analyst

Okay. And just one last question, sir. When do you expect the operating leverage to come into play in the business? Like you are growing so well like revenue, one thing, is fantastic to grow, but like the operating leverage part is not playing in the business. Like can you give some color on that, sir?

S
Sharan Bansal
executive

You mean in terms of working capital?

U
Unknown Analyst

No. Operating leverage, sir. Like change in profit divided by change in sales. Like sir, it is not growing as much as the sales is growing, sir.

S
Sharan Bansal
executive

I'm surprised you feel that way because when we look at the EBITDA margins compared to last year, as I was mentioning to the previous caller, that EBITDA margins have moved up from 9.1% to 9.9% on a 9-month basis.

PBT numbers, which were at a low margin of only about 1.3% in the previous year 9 months has moved up to about 3.8% this year.

So certainly, there has been some benefit of operational leverage coming into play. A fair -- I mean, by top line growing about 60%, the bottom line has grown by about 250 bps. So certainly, I think there has been a good amount of operational leverage already that is coming and more can be expected as the company grows.

Operator

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

S
Sharan Bansal
executive

Thank you to all the participants. We are confident of delivering profitable revenue growth with a consistent margin in the current year and expect to clock healthy revenue growth for the next financial year as well on back of pending Infra, Engineering contract and strong Polymer segment performance.

We will continue to focus on improving bottom line profitability, stabilize operational cash flows, trim our debt, thereby leading to improvement of company's margin profile and strengthen its balance sheet position and capital return ratio.

The company's effort towards sustainable business practices will help to achieve its goals by making meaningful contributions to the national and global infrastructure.

We appreciate your continued support, and look forward to interacting with you again in the next quarter. Thank you.

Operator

On behalf of Ambit Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

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