Ahluwalia Contracts hosted a conference call on May 30, 2017. In the conference call the company was represented by Shobhit Uppal, Deputy Managing Director of the company.
Key takeaways of the conference call
Order book as end of March 31, 2017 stood at Rs 3553 crore which will be executed over next 2-2.5 years. Of the order book the share of government orders were about 69%. In terms of vertical the share of infra orders are 12%, residential private is 24%, residential government is 8%, commercial is 5% and Hospitals is 21%.
Order intake in FY17 was about Rs 1450 crore and the company expects to bag orders worth Rs 1400-1500 crore in FY18.
Given the competitive intensity and unfavorable contract terms the next 12 months is going to be cautious one. So expect a top-line growth of about 12-15% in FY18 and EBITDA margin of about 12-13%.
Competitive intensity has increased with indiscriminate bidding in some cases and this trend is expected to continue for a year. Some smaller and mid size players are bidding for NBCC and other government orders and aggressively bidding.
The company is bidding only for selective projects as some contracts terms are not skewed against contractors. For instance the Pragati Maidan project the time is very ambitious at 24 months. The company having constructed auditorium and convention centres already has skipped despite the company could have qualified with foreign partners.
Slow moving orders in the order book are about Rs 300-400 crore is. They are slow moving if they stop we will remove from the order book. Of the current order book the fixed price contracts are about Rs 100 crore.
Order pipeline was about Rs 1500 crore and these project are primarily government and in the segments of hospitals, convention centres/auditorium projects at various state capitals, redevelopment projects including that of NBCC/CPWD. The order size is typically Rs 300-500 crore.
From July 2017 onwards the labour shortage will be sorted out and in Q4FY17 the labour shortage is due to impact of demonetization.
Q4FY17 margin impacted due to higher labour cost and provisions. The company provided about Rs 4.75 crore towards lease rent charges on Kota project which was accounted in Q4FY17. The provision towards Koto project will be there in FY18 as well and it will be about Rs 6 crore for FY18 which will be apportioned and accounted quarterly. The lease period is for next 30 years so it will be amortized over a period.
Monthly revenue rate for Kota project is about Rs 8-10 lakh as end of FY17 and that is expected to go up to Rs 50 lakh a month
Share of NBCC to order book is about Rs 100 crore.
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