Kalpataru Projects International  hosted a conference call on Aug 11, 2023. In the conference call the company was represented by Manish Mohnot, MD & CEO.

Key takeaways of the call

Mid teen growth in consolidated revenue in Q1FY24 was driven by improved execution and healthy order book in flagship businesses. 

In Q1FY24, Revenue of T&D (including LMG & Fasstel) was up 8%YoY, B&F up 10%, water up 48%, Railways up 14%, UI up 100% (on low base). O&G revenue in Q1FY24 was   down by 27%YoY, hit by lower opening order book on account of Lower activity and delayed ordering. 

Progress on project management and operational efficiency has driven expansion in EBITDA margin in Q1FY24.  Improved profitability at PBT level, notwithstanding increase in finance cost and higher depreciation on back of higher capex last year.

Order Book as on 30 June 2023 stood at Rs 47332 crore [Domestic 61%, International 39%], which is an all-time high.   Of the order book about 33% is T&D, 22% B&F, 26% water, 9% Railways, 3% O&G, 7% Urban Infra.

YTD FY24 Order Inflows is Rs 7383 crore [Domestic 61%, International 39%], and that is led by key order wins in T&D and B&F business.  Additional KPTL is also in L1 position for orders worth Rs 4000+ crore.   Of the YTD order intake about 38% is T&D, 39% B&F, 10% water, 10% Railways and 3% O&G.

Order book of  LMG (Sweden) and Fasttel (Brazil)  as on Jun 30, 2023 stood at Rs 1394 crore and Rs 640 crore.  Reduction in OB of Fasttel (compared to Q4FY23 level) is largely due to scope reduction and cancellation of some orders due to lack of necessary approvals. 

Ordering activity remains positive across all of the company’s  business verticals with the company securing over Rs 11383 crore (including Rs 4000 crore L1 orders) so far in current fiscal.  Further the order pipeline for the company at Rs 47332 is strong.    

Expanded presence in 3 new countries. KPTL secured another B&F project in international market.

LMG (Sweden) and Fasttel (Brazil) registered revenue of Rs 244 crore and Rs 164 crore respectively in Q1FY24. EBITDA margin recovery in Fasttel driven by closure of legacy projects.

KPTL acquired balance 49% equity stake in Fasttel (Brazil) during Q1FY24.  

L1 of Rs 4000 crore include the Australia T&D project which it won with local partners.

T&D business: Entered new markets in Latin America and Europe.  Business traction remains strong in domestic & international markets; Estimated order pipeline of Rs 25000 crore in India and over USD 3.5 Bn in overseas market in near term. Tenders for orders worth about Rs 12000-15000 crore is already tendered out for TBCB projects in the state of Rajasthan & its neighboring states in the Domestic T&D space.   Tenders for projects worth about Rs 10000 crore are expected to be bided out soon or near term.

B&F order intake in Q1FY24 was driven by addition of new clients and markets. It sees robust outlook for industrial, institutional buildings, data centers & residential buildings. Expect to continue scale up in execution in case of B&F vertical. 

Water projects –Water - Ramp-up in EPC projects ordering linked to water supply in India. Projects worth about Rs 50000 crores are to be bided in near-term.  Most of the water projects in the OB  are government projects.  Not see any lag or obstruction in execution of water projects going forward.   Venturing into our first project to treat household sewage

O&G - Healthy pipeline of projects in the international markets. The company has submitted bids for about 4-5 projects on international market and ordering or bid finalization will happen in next few months.  OF these 4-5 projects the company is favourably placed in one project. 

For FY24 the company expects a revenue growth of 30% and PBT margin of 4-5%.  For FY25, the company expects revenue of Rs 25000 crore and a PBT margin of 4.5% to 5%.

Standalone revenue growth for FY24 expected at about 30% with EBITDA margin in the range of 8-8.5%, and PBT margin of about 4.5-5%. Expect to close the current fiscal with an order inflow of Rs 24000-25000 crore.

Expect the 30% growth in revenue for FY24 will largely be driven by about 35% growth in Water, 20-25% growth in T&D International; 25%+ growth in B&F.  The other business is also expected to report good growth.   Segment wise PBT margin is expected in the range of 5% in T&D, 6-7% for Water, 3-4% for Railways, 8-9% for B&F, 0-1% for Urban Infra and 5-6% for International Civil.

Expect T&D business STO to grow by at-least 20% in next few years.

Planned election next year will have no impact on the order flow and revenue of the company.

Divestment of Vindyachal road asset (VEPL): Due Diligence is at advanced stage post which the binding agreement will be signed. Targeting to complete the process by the end of Dec-23

Focused efforts to liquidate balance inventory in Indore real estate project

Confident of net Working Capital days below 100 days for FY24.

Standalone  and consolidated net debt as on 30th June 2023 stood at Rs 2216 crore and Rs 3174 crore. Expect net debt to start declining from Q2 FY24 onwards given recovery of milestone linked collections and closure of projects.

Standalone Other income is higher compared to consol other income is largely as   dividend income and interest cost on advance to subsidiary that will get cancelled out.

Promoter stake pledge is continuously reducing over the last 2 months.