Kalpataru Power Transmission hosted a conference call on May 9, 2023. In the conference call the company was represented by Manish Mohnot, MD & CEO.

Key takeaways of the call

Order Inflows for FY23 was at record level of Rs 25241 crore, up 39% YoY. Order Book as on 31 March 2023 is at Rs 45918 crore, an all-time high. Additionally the company is in L1 position for orders worth Rs 4000 crore.

In FY23, the company has won some significant & strategic business in T&D in domestic as well as international markets. It has expanded its civil business in international markets during FY23.

For standalone entity the company expects a revenue growth of 30% for fy24 and PBT Margin of 4.5- 5%.  Expect an OI of Rs 26000 crore for fy24. 

On consolidated basis also the company expects 25% plus growth for FY24 and PBT margin in 4.5-5%.  Brazil is expected to return to PBT positive this fiscal.

Focus is on profitable growth and not topline growth.

Merger synergies (across all 3 fronts i.e. interest cost reduction, productivity and increase in bidding capability for higher value projects) started to kick in from Q4FY23 onwards and will in full flow during FY24.  Expect interest cost reduction to the extent of 200 bps to accrue from Q1FY24 leading to a savings of about Rs 60-70 crore in interest outgo in FY24.   Similarly ability to bid for large projects - civil, mechanical and electrical has improved.  

Monetization of Road BOOT assets – the company expects to sign non binding offer for at least one project out of three during Q1FY24.

Business visibility in   T&D and civil businesses of the company remains robust in both India and international markets. This gives the company the confidence to further build on growth in FY24 and beyond.

Considering current order book visibility all business segment except railways are expected to register double digit growth for FY24.   

Lower margin in Q4FY23 is largely due to project mix as well as impact of forex movement and higher travel cost. In forex hedging the company accounted a loss of Rs 25 crore in Q4FY23 against a gain of Rs 7 crore in corresponding previous period. Similarly there is higher travel and legal cost.  Travel cost    in the quarter has gone up by about 35%. 

Definitely operating margin will improve going forward but taking to double digit margin is couple of years away. 

B&F – trying to diversify into more areas already diversified into airports and looking at data centres now.  New segment of airports and data centers are of high margin as there is less competition in these segments with in B&F.

B&F is high teen margin and continue to be. T&D and water will continue to be high single digit.  Railway and oil and gas will be of less margin.

Promoter share pledge will continue to get reduced quarter on quarter.

Net Debt declined by 18% QoQ to Rs 1,680 crore as on 31st March 2023.

Net Consolidated Debt at Rs  2577 crore as on 31st March 2023. Look to end FY24 with a net debt of Rs 2200-2300 crore and interest cost will be about or less than 2% of sales.

Planned capex for FY24 is about Rs 275 crore.  

Revenue of LMG (Sweden) of  Rs 1,002 crore and Fasttel (Brazil) of Rs 439 Crore in FY23.

International Order book currently is about Rs 11000 crore and it is L1 for orders worth Rs 2500 crore thus giving current  visibility of RS 13500 crore. 

Expect 25% growth for India international business.  Growth for Sweden entity will be about 5-10%   and Brazil is expected to see steady growth.

Road asset fund infusion in FY24 will be Rs 50 crore and largely towards major maintenance. 

Currently Subham Logistics is having an external debt of Rs 170 crore and the company will review for requirement of any equity infusion by end of Q2FY24.

Lot of international T&D order book is of long delivery schedule/long gestation.  Removed order in Myanmar and some other geographies which are impacted by geo political tensions.

In overseas front, the visibility is in Transmission, civil in few select geographies and O&G where the company has qualified in six MEA countries.

Having higher OB in water, the company expects strong growth from this vertical.   The orders are spread over 12 states.  See strong order pipeline with government push for expanding/modernising   water supply to urban and rural areas. Similarly lot of activity happening in micro irrigation. So there are strong opportunities for next couple of years in water.   

Take EPCG for all international projects as risk mitigation exercise and move to lot more developed economy.  Now more than 60% of overseas order book is variable.

The company going international in sectors/vertical where the company is already 6-7 years of presence in India.