Kalpataru Power Transmission hosted a conference call on Aug 13, 2020. In the conference call the company was represented by Manish Munot, JMD of the company.

Key take aways of the call

Emergence of nation-wide lockdown and restrictions on movement of people and vehicles impacted the performance of the company in Q1FY21.

Revenue and profitability growth impacted by lockdown and restrictions. Core EBITDA margin of KPTL standalone stood at 10.7% in Q1FY21 compared to 11.6% in Q1FY20.

Order Book as on 30 June 2020 was Rs.13522 crore of which about 46% is T&D International; 13% is T&D Domestic; 17% Oil & Gas and 24% is Railways.

Continue to win orders despite unprecedented working environment. Order inflow in Q1FY21 was Rs 1866 crore and the company has bagged orders worth Rs 604 crore till date in Q2FY21 thus taking the YTD order inflow in current fiscal (i.e.FY21) to about Rs 2,470 crore. Of the YTD FY21 order inflow about 71% is T&D International and 29% is T&D Domestic. In addition the company has a L1 order book of RS 1000 crore which is largely a T&D International orders.

Construction activity has resumed on almost all sites in KPTL. Site and labour productivity touched at around 90% in KPTL. Expect situation to normalize by end of Q2FY21.

KPTL is expected to deliver 5-10% growth for FY21and thus there is no change in revenue guidance for current fiscal. The company even after losing 2 months of sales still looks to target an EBITDA margin of 10.5-11% for FY21.

Signed agreements for sale of Jhajjar and ATL despite pandemic; Working to close all T&D assets sale transactions in FY21. Proceeds from sales of all T&D assets will be used to repay debts as the company target to become a standalone debt free company by end of FY21.

Tendering outlook remains positive across all businesses in KPTL and JMC. Expect to grow positively in KPTL and JMC for FY21

KPTL consolidated gross debt as end of Q1FY21 was Rs 3784 crore (down from Rs 4139 crore in Q1FY20 and Rs 4091 crore in Q4FY20) and the net debt was Rs 3374 crore (down from Rs 3841 crore in Q1FY20 end and Rs 3458 crore in Q4FY20 end).

In Q1FY21, while T&D revenue stayed flat, the revenue from rail and O&G declined by 20% & 35% respectively. The revenue of Lingemote, the subsidiary company has more than doubled to Rs 272 crore in Q1FY21.

Expect floating of tenders for electrification orders worth RS 5000-6000 crore in next 6 months. Similarly the O&G order pipeline is about Rs 8000-10000 crore.

Subham Logistics – Appointed advisors to rope in strategic or financial investor. Expect to have some committed investor by Q1FY22 in Subham logistics.

Promoters have reduced debt against pledged share by about Rs 60 core to Rs 730 crore and have committed to reduce it further by another RS 70-80 crore in next 5 months.