Key takeaways of the call

The order book (excluding L1 orders)as end of June 30, 2015 was Rs 10537 crore. And of which T&D orders were about 75% and SAE order 9%, cables 6% and railways 7% and water 3%. On geography wise about 50% of the orders are from India, 17% MENA, 15% CIS & Africa, 9% Americas, 8% SAARC and 1% East Asia & Pacific.

Q1FY16 order inflow was Rs 3081 crore and the order inflow in the last 6 months was about Rs 6500 crore. Apart from this the company has an L1 orders of Rs 3500 crore. Of the Q1FY16 order inflow about 49% are from India. OF the Q1FY16 order intake about 77% is T&D excluding SAE.

The sub-station orders book of the company is about Rs 1500 crore. Share of SEBs in the total order book is 14% or 1400 crore.

Saudi Arabia operations : KEC's share of Saudi Arabia JV order book is Rs 2000 crore. Execution cycle of SAE JV order is about 12-15 months. Order worth Rs 4500 crore under pipeline and substantial part of L1 order book of the company (i.e. 3500 crore) is from Saudi Arabia. SA ordering has not impacted by movement in oil price and will hope-full of sustaining strong growth.

Cables business: Demand uptake is not expected but with copper price coming down the margin will improve.

Strong focus on execution and completion of projects and ordering out of approved projects is there on the Railway ministry now with change in guard. The large contractors are welcomed so the size is going up.

SAE sale was nearly flat in Q1FY15. SAE EBIDTA is positive for the quarter compared to marginal negative in corresponding previous period. Expect SAE will be PBT positive this year. While Brazil capacity is fully booked it is not the case of Mexico facility so the fingers are crossed.

The company sustains its revenue guidance of 10-15% and EBITDA margin of 7.5-8%. Order book growth will be couple of % points higher than the revenue guidance for current fiscal. Interest cost target of 3% of sales for FY16 remains.

Legacy orders in the order book are just about Rs 30-40 crore and the impact will be very minimal going forward.

New orders picked up in last 6 months are with better margin, the minimal impact of legacy orders in railway etc to lead to 8% EBITDA margin for the fiscal.

Now GI Substations has become a major part of the order book. The company has large presence in PGCIL GI substations.

The order intake in last six months largely skewed in favour of domestic market the revenue contribution of domestic going-forward in Q3& Q4 FY16 will improve compared to corresponding previous period.

Of the T&D order book about 40% is price variable and balance is fixed. In case of fixed price contract the company enter back to back contract for materials. The lower raw material prices will benefit in case of order where the company bid at high cost and yet to receive the contract and no back to back contract for material is entered.

Lesser completion in HVDC lines as its difficult to construct and complex.