Power Mech Projects hosted a conference call on Nov 15, 2022. In the
conference call the company was represented by S Kodandaramaiah, Director
Business Development and Jami Satish,
CFO.
Key takeaways of the conference call
For Q2FY23 the revenue mix in terms of geography was 87% domestic
and 13% international. In-terms of power
and non power it was 63% from power and 37% non power.
Revenue Mix
|
|
2209 (3)
|
2109 (3)
|
Var. (%)
|
2209 (6)
|
2109 (6)
|
Var. (%)
|
Erection
|
161
|
106
|
51.9
|
313
|
243
|
28.8
|
Civil
|
367
|
223
|
64.6
|
743
|
507
|
46.5
|
O&M
|
226
|
188
|
20.2
|
422
|
361
|
16.9
|
Electrical
|
17
|
23
|
-26.1
|
39
|
51
|
-23.5
|
Others/Other income
|
3
|
5
|
-40
|
6
|
11
|
-45.5
|
Order book (excluding MOD order of Rs 9294 crore executed over 25
years) as end of Oct 2022 stood at Rs 14782 crore.
Order inflow in Q1FY23 was Rs 775 crore and YTD was Rs 7445
crore. Further the company is L1 for orders worth Rs 960
crore. So the company is confident of achieving its order inflow target of Rs
10000 crore for current fiscal.
Of YTD order inflow about 61.6% is power sector orders and 38.4% is
non power. Similarly of the YTD order
inflow about 86.8% is erection orders, 10.1% is civil & other works and
2.2% is O&M contracts.
Revenue recognition from FGD orders is expected to accrue from
Q4FY23 and it’s in addition to the set target.
Execution bandwidth is increased quarter on quarter basis.
Expect to close current fiscal with an order backlog of Rs 15000
crore with OI for FY23 at about Rs 10000 crore. The company has fixed an order booking target
of Rs 8000 crore for FY24 and Rs 9000 crore for FY25.
Completion status of project on hand: In case of Udankudi the
company has completed 15% of Rs 345 crore order. Likewise it completed 25% of
Rs 176 crore in case of Buxar and 75% of Rs 855 crore Maitre project is
completed. Further the company has so
far completed about 70% of Bhusaval and 60% of Yadadri power projects as well
as 90% of Ramayanpet canal project.
It has completed about 35% of Rs 780 crore Hassan and Mizoram road
project. The work is expected to commence
this year in case of Rs 428 crore Bangalore Metro order which was taken
in JV with rites by the company.
Adani FGD project: Received initial orders for Engineering and
technical equipment. Further order for balance equipment/work will follow soon.
Debt – Gross debt and net debt as end of Sep 2022 was Rs 481 crore
(down from 527 crore) and Rs 292 crore (down
from Rs 320).
Performance in H1FY23 is in line with the internal target and the
company is confident of achieving its FY23 revenue target. It expects a sales revenue of Rs 3600 crore for
FY23. The company expect alteast a
revenue of Rs 5000 crore as some of the
job that come for execution next fiscal such as BMRCL and Adani FGD jobs
includes materials.
Drinking water project is getting lot of flip and mobilisation and
procurement for this project is already started. So far DPR is completed for
2000 villages. The company has completed
3% of work and expect a revenue of Rs 100 crore plus every month from this
project starting after next couple of months.
In near term, current margin is expected to continue for Q3 & Q4
of FY23 with some marginal improvement.
Orders under pipeline is about Rs 15000 crore including Rs 3500
crore of FGD orders, Rs 2500 crore water project, Rs 500 crore railway
maintenance sheds orders, Rs 1000 crore railway project in Nellore, Surat and Kazipet, Rs 6000 crore of
road projects.
Expect execution cycle and order inflow in international business to
improve going forward.
The MDO job will start commencing by Q4FY24. The company expect a quarterly revenue of Rs
70-80 crore in FY24 and Rs 250 crore for FY25.
Billing of FGD order will start from Q4FY23. More clarity on FGD order conversion will be
known by Q4FY23 or Q1FY24 and that will give an idea for revenue growth and
margin going forward.
About 81000 MW of FGD order are yet to be ordered out and if the
company gets about 3500 MW that will be
big. The company has entered Metro Rail segment in big way and the company
expect strong order traction in this segment. Expect one more contract worth
about RS 600 crore in metro side next fiscal.
Opportunity is quite large and so order booking of RS 8000 crore is very
much achievable for the company.
So new verticals supplementing the traditional verticals of the
company are to drive the order booking growth in FY24.
O&M provides high margin compared to others business verticals
such as erection, electrical and civil business of the company. In erection the
company used to work with a margin of 13-13.5% but that has come down to about 11-11.5%
with comedown of scale. In case of civil the company spent about
2.5-3% in buying the PQ but now able to prequalify on its own strength in case
of tenders that will be a savings. But in case of projects such as railway
water, civil the competition is high so working with a margin of 11-12% . In
FGD the company was expecting a margin in the range of 10-11%. In the near term the company expects the
margin to improve to about 11.5-12.5% but with increase in contribution from
FGD business and new verticals how the blended margin pans out has to be
seen.
Now the company is equipped to execution projects worth Rs 750-1250
crore in a quarter.
Post completion of Adani FGD project there will be an O&M
opportunity of Rs 1021 crore and similarly in case of drinking water project
there will be an O&M component of Rs
80-100 crore.
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