Key takeaways of the call

Orders bagged in Q2FY19 and H1FY19 was Rs 4189 crore and Rs 8359 crore respectively. After elimination of slow moving orders from the order book the order backlog as end of Sep 30, 2018 stood at Rs 32955 crore. The company has bagged orders worth Rs 1350 crore in October 2018.

Execution is picking up nicely and the company is confident of exceeding the revenue target of Rs 11000 crore for FY19. Similarly the company having bagged orders worth Rs 8359 crore in H1FY19 and another Rs 1350 crore for Oct 2018, the company is confident of achieving an order intake of Rs 14000 crore for FY19.

In Q2FY19 the company registered an EBITDA margin of 11.63% (up from 9.6%) and expect that level to sustain for balance quarters of current fiscal as well. Increase in margin in Q2FY19 is largely due to order mix. Electrical division which has good margin bagged orders and got executed in first half.

NBCC order current status – The tree cutting was already completed by N BCC before the stay for not felling the trees obtained by NGOs for 7 of NBCC's projects and the company was in possession of land with all necessary trees cleared/felled. Hope the clearance will come in place by end of next hearing that is scheduled on Nov 20, 2018.

Originally the company targeted a revenue of Rs 750 crore from NBCC projects and it has booked a revenue of Rs 27-28 crore in current fiscal till the stay order. If the stay is vacated on Nov 20, 2018 hearing the company will be having 3 month period of execution leaving out the mobilization time. And the 3 month of execution will only fetch a revenue of about Rs 100-150 crore more during current fiscal. As the company has hastened work on other projects to offset the loss of revenue from NBCC project the company is confident of achieving Rs 11000 crore of revenue for FY19.

In Q2FY19 the company has bagged an large road order worth Rs 2850 order from MSRDC in relation to Mumbai – Nagpur Expressway. NCC has bagged the biggest package out of total 15 packages. Revenue from this project will come from Q4. Other major orders bagged are rural electrification order from Jharkhand, building order from IIT Ropar and one educational institution in WB and one irrigation project in WB.

Of the planned capex of Rs 250 crore for FY19 the company already spent Rs 175 crore in H1FY19 and balance will be incurred in H2FY19.

No payments are pending for long time in the states of Telengana and AP. In AP there is not much delay more than one month as there is enough fund with the government for Amaravathi Development authority and the government want to shore atleast the core capital is ready before election. Only GST difference payment is outstanding at both in AP and Telengana as in various other states and both the state governments have agreed to pay the difference.

The impact on account of adverse arbitration award was Rs 55 crore in the books of Dubai Subsidiary So the Dubai subsidiary recognized an loss in Q2FY19.. The Dubai subsidiary has went on appeal on some payment made to specialized agency engaged by the client and not related to the project. But a provision of Rs 40 crore was made at the parent books for the impact of adverse arbitration in Q2FY19.

Total real estate exposure is Rs 1200 crore. Focus is on monetizing of real estate assets. NCC Urban have land parcel and the company clearly told it to sell land parcels and repay loan take from the parent. NCC Urban to pay Rs 100 crore every year for next four years to parent. The company exited equity from Jubilee Hills project but the company will get 70000 sft of developed area once the land is developed. Telembur techno city project the other two partners including ICICI venture exited.

Arbitration award as far as Sempcorp issue is expected by June 2019. The issue here is how much money the company will receive as there is an retention money of Rs 900 crore struck in the project.

MDO project – all permissions recd. 80-90% paper work completed. Already ground level work has started include camp work and railway siding and dewatering etc are started.

Debt level with be plus or minus Rs 100 crore by end of this fiscal.