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The company held its conference call on 30 May 19 and was addressed by Mr. Rajeev Mehrotra, Chairman and Managing Director
Key Highlights
For FY 19, the company has surpassed its target of net sales and profits that were signed by the company in the MoU targets with GOI. The company achieved 37% growth in net sales as compared to 22% growth given in the targets with GOI.
The company is the only Indian arm of Indian Railways to provide Rolling stocks to overseas countries. The company has exported first DMU shed and 1st locomotive to Srilanka in Mar 19 quarter.
At Ebidta margin level the expansion was due to improved efficiency, better leverage of skill sets, economy of scale in turnkey operations and international consultancy business, which was not there in the past.
Consultancy segment which account for around 55% of total revenue grew by 13% in FY 19 to Rs 1092 crore. Turnkey segment revenues which account for 29% of total revenues grew by 286% YoY. Leasing income grew by 13% to Rs 104 crore, while exports were down by 11% to Rs 207 crore for FY 19.
35-38% is average Ebidta margins in consultancy segment. For FY 19 the margins stood at 43.9%.
20-22% normal margin in export consultancy business and for FY 19 the margins were around 30.2%.
Turnkey projects work on cost plus project basis where margins are around 3%. FY 19 margins were around 3.3% which is in line with the expected margins.
Management reiterated that the margin improvements are on efficiency and economies of scale reasons and they look sustainable. There is a 33% improvement in revenues per employee matrix in FY 19 as compared to FY 18 as more or less the number of employees for FY 19 remains at same level of FY 18. Still potential of further leverage remains. There will be surely addition in employees in FY 20 as more growth opportunities emerge.
Order book stands at around Rs 6097 crore up by 27% YoY as on Mar 19 to be executed in 3 years. This includes consultancy orders of Rs 2317 crore and turnkey orders of Rs 2542 crore. Export orders within the total order book stands at around Rs 1086 crore. Rs 600 crore of orders within exports are orders relating to coaches which will be executed in H2 FY 20. Exports will increase going forward.
75% of total order book is from government and PSUs and rest is from Pvt and others.
More than Rs 2800 crore of order inflow in 12 mths ended Mar 19.
The order inflow pipeline looks good. Expects order inflow in FY 20 also to be in similar line of FY 19 orders. Lot of orders which are tendered out got postponed due to elections. Expect the release of orders very soon.
The company has also increased its scope of work and provides consultancy for railways, Metros, airports, ports etc.
The dividend payout ratio for FY 19 is at 57% which also exceeds to what was signed in the MoU with GOI.
The government intends to further reduce its stake and they will come out with the offer any time during Q1 FY 20 . The company doesnot need any money.
As per the MoU signed with GOI, the targets for FY 20 in terms of net sales is around Rs 2300 crore, a growth of 17% YoY and PAT growth of 20% to Rs 534 crore.
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