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Sadbhav Engineering hosted a conference call on Feb 15, 2017. In the conference call the company was represented by Nitin Patel, ED & CFO.
Key takeaways of the conference call
Order book as on December 31, 2016 stood at Rs 7708 crore. New order inflow during Q3FY17 is Rs 2273.00 crore.
The company expects a sale of Rs 3500-3600 crore for FY17. Based on current order book the company expect its sales for FY18 to exceed Rs 3800 crore. In FY18, the company expects a revenue of Rs 1800 crore from Road project, Rs 1200-1300 crore from HAM projects, Rs 500 crore from Irrigation and Rs 400 crore from Mining projects.
The company has already submitted bids for 6 Hybrid Annuity projects, which are yet to be opened. The company will submit bids for another 18-20 projects with an estimated project cost of Rs 26000 crore by March 2017. Of which couple of the projects will be EPC projects and balance are Hybrid Annuity projects.
Share of road orders in the order book to grow to 75% with-in a couple of quarters. The company expects an order intake Rs 5000-6000 crore in road sector itself in FY18.
So far in current fiscal NHAI has awarded 3200 km of road projects and of which 1500 km of Hybrid Annuity projects, 1300 km of EPC projects and balance are BOT toll projects. MORTH has awarded 3100 km all under EPC.
The company has got appointed date for 2 Hybrid Annuity projects in Gujarat and the company will get appointed date for all the 4 Hybrid annuity projects by end of this month.
The company expected the work on 3 hybrid annuity projects to commence but there was delay in getting appointed date from NHAI. The company got appointed date for two Gujarat projects in Feb 2, 2016 and Feb 9, 2016 and the company expect this two project to contribute about Rs 75-100 crore in Q4FY17 and the appointed date for another hybrid annuity project is expected soon and the company expects a contribution of Rs 50 crore in Q4FY17 from the 3rd hybrid annuity project.
EBITDA margin in FY18 is expected to improve as the company commences execution of all new hybrid annuity projects and high value projects starting FY18.
In 2016-17 both NHAI and MORTH is expected to award about 9500-10000 km translated into a growth of about 17-22% up from 8500 km in FY16. Of which the share of MORTH alone is expected to be 4500-4700 km at least.
Bid Pipeline: Hybrid projects numbering 23 with a road length of 1473 km valued about Rs 23200 crore is expected to be bided out by March 31, 2016. Expects two projects worth Rs 2821 crore is to be bided out in EPC mode by March 2016. Expects 21 projects valued Rs 12403 crore is to be awarded by March 31, 2016.
State Highways department of Maharashtra has lined up 93 projects estimated to cost Rs 28000-30000 crore and bidding for handful of it already started. MSRDC has called bids for 16 packages of Samruthi Expressway worth Rs 27000 crore.
NHAI mobilization advance - First year interest free and subsequent years it is interest bearing. Since the interest is higher than market, the company decided to repay the advance to NHAI. The company repaid Rs 189.5 crore in Q3FY17 and another Rs 159 crore in Q4FY17 to NHAI. This will increase interest cost in Q4FY17. But with fresh mobilization advance of Rs 310 crore in case of 5 hybrid road project coming in Q1FY18 and substantial release of WC from irrigation projects, the interest cost in Q1FY18 will expected back to come down.
Standalone debt as end of Dec 2016 stood at Rs 1400 crore up from 1250 crore. This is largely due to re-payment of mobilization advance to NHAI and supporting SIPL to the tune of Rs 70 crore due to demonetization. The company expects SIPL to repay Rs 70 crore this Quarter.
The company expects fresh order inflow of Rs 5000-6000 crore in roads alone in FY18 considering the target of 10000 km of award by NHAI and MORTH which is expected to be increased to 15000km. Even if 80% is awarded that will be good for the industry.
Opportunities in Metro segment are also looked at to engage the resource released from DMRC.
Of the irrigation order book three projects are of low margin orders. These three projects are Ratanpur project in Gujarat, Omkareshwar and Banpura project in Madhya Pradesh. While the unexecuted order book in case of Gujarat irrigation projects is about Rs 30-35 crore. In Omkareshwar one project is completed and another project unexecuted portion is Rs 40-45 crore. In Banpura the pending is about 10 crore. The company will complete these low margin irrigation projects by end of this quarter.
Incremental cost to the amount of Rs 55 crore is in arbitration in case of Rohtak Hisar.
Debt can go up to Rs 1500 crore by end of this fiscal.
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