Key takeaways of the call

Quantum and quality of order is on steady rise. Orders bagged in FY21 were about Rs 4638 crore (16.3% is erection, 18% is O&M, 65.7% is civil & other works) up from Rs 1953 crore (29.8% is erection, 33.8% is O&M, 36.4% is civil & other works) of order inflow in FY20. Of the FY21 order inflow non power orders were 57.9% and power were 42.1%.

Order backlog as of today (Jun 22, 2021 stands) at Rs 7333 crore (up from Rs 4575 crore as end of FY20) and provides strong revenue visibility. Of the order book about 32.3% is erection, 15.9% is O&M and 48.9% is civil & others. While non power orders were 34% balance 66% is power sector orders.

Q4FY21 Revenue mix is with EW account Rs166 crore (Vs Rs 189 crore), Civil Rs 329 crore(Vs Rs 188 crore), O&M Rs 223 crore(Vs Rs 173 crore), Electricals Rs 36 crore (Vs Rs 42 crore)and Other income was Rs 6 crore.

Execution will be usually be 38-40% of opening order book. Post March 31, 2021 all sites are working with adhering to the covid protocol. Now expects Rs 200-220 crore of execution per month for FY22.

Manpower availability in May/June/July of 2020 was 50% of usual/required level. But in second wave, upto March 31, 2021 the manpower availability at site was good, but in Apr/May/June 2021 the manpower availability has come down by about 25-30% (or 70-75%) of required. The company required a manpower of 15000-16000 from about 11500 manpower from now to achieve the targeted execution for FY22. From peak of 16000 it came down to 11600. And it will go back to 15-16000.

The company has currently has built up an execution capability/ bandwidth (manpower and infrastructure) to execute orders worth about Rs 600-850 crore per quarter.

Execution of Rs 200-220/month is the target for current fiscal with higher contribution from Q3/Q4. While Q1 of current fiscal will have the covid impact, Q2 is empirically a weak quarter due to monsoon.Considering current capabilities of the company about Rs 750-800 crore of execution in Q3/Q4 of current fiscal is not difficult as the company has built up capability right now to do that.

The domestic margin of Erection business will typically be about 12-13.5% and international is about 14-16%. Similarly O&M margin domestic is about 17.5-18% and international at about 20-24%. In case of Civil and electrification the margin will be about 10-12% and 11-12% respectively.

In Railway & electrical earlier the company used to pay 3% as royalty to the partner whose credentials the company uses to pre-qualify. Now the company has built up in-house credentials and thus for new projects that the company is bidding for will not involve 3% royalty payment and thus the EBITDA margin will straightaway goes up by 3% in case of new projects.

Total opportunities looked at right now is about Rs 25000 crore.

Order inflow expectation for FY22 – with plenty of opportunity the company is looking at a quality order inflow of about Rs 4000-4500 crore.

Currently do not have any contract in AP, whatever it have it has completed.

Yadadri, Bhusaval is about 25% completed. The Maitree is 55-60% is completed. Currently the Nigerian DAngote order is about 80% plus completed and the project is targeted to be completed by Dec 2021. The billing for Yadadri and Bhusaval is about RS 10-12 crore/month and Rs 5-6 crore/ month respectively. In case of Dangote it is about Rs 10-12 crore/month.

Opportunities looked at include turbine segment of Kodankulam project, thermal project of adani, Talcher of NTPC, Singareni Colleries thermal project. On O&M side the opportunities include Rs 344 crore order from Singareni Colleries, one thermal project in Jordan. Apart from there are about Rs 200 crore of shutdown opportunities.

International not much of activity due to covid. New opportunity in middle-east has dried up and not much opportunity for picking due to covid so far.

Civil order increase with diversification to non power sector.

Interest cost, non fund cost has to go up due to business growth.