Key takeaways of the call

T&D revenue for Q4FY19 and FY19 was down by 1.3% (to Rs 2434 crore) and 6.6% (to Rs 6338 crore). While SAE revenue for Q4FY19 was up by 3.9% that of full year was down by 5.7% to Rs 967 crore. FY19 T&D revenue was impacted on account of delay in approvals in SAE and execution challenges in a domestic private project; Large T&D order backlog of about Rs 15000 crore to enable future revenue growth.

Order intake for FY19 was Rs 14084 crore. Order book as end of March 32, 2019 stands at Rs. 20,307 crore, a growth of 17% over the previous financial year. But order book including L1 orders as end of March 31, 2019 stand at Rs 24000 crore.

Sitting on robust and well diversified order book, the company is confident of 15-20% growth in revenue for FY2020. The company expects its Railway business revenue to register a growth of 20-25% for FY20 and that of T&D as a whole is expected to register a growth of 15% for FY20. Expect revenue of Civil business to double from FY19 revenue of Rs 500 crore.

EBITDA margin for FY19 was 10.5% and the company expect to maintain it at that level for FY20 as well.

The T&D order win in Malaysia along with the earlier order wins in Papua New Guinea and Thailand will help in strengthening the position of the company in the East Asia Pacific market.

The Railway business continues to be on a high growth trajectory on the back of consistent order inflows.

The Civil business has secured its second order in the residential space. The company has diversified its civil client base to FMCG sector, in addition to cement, real estate, automobile and auto ancillary sectors.

Outstanding order size of the stick T&D order/project is about Rs 400 crore. Considering the fact of this order is part of South West Interconnector and thus a project of national importance, the issues are expected to get sorted out soon and execution to commence soon.

The company expects interest cost (as proportion to sales) is expected to come down to 2.5% for FY20 down from 2.8% in FY19 with average borrowing for current fiscal stand at about Rs 2500 crore. Debts have come down by Rs 1200 crore in Q4FY19.

In case of order pipeline, due to elections there is bunching up of orders both at central and state levels. About 25000 crore worth of projects are either bids quoted or in the process of quoting.

Renewable orders in the pipeline was to the tune of Rs 13-14000 crore and of which TBCB orders were about 11-12000 crore where RFQ were completed and bids will happen by May 2019. The cost plus orders were about 1500-2000 crore.

The company expects its order intake/booking to be about Rs 17000-18000 crore in FY20.

In international T&D growth will be largely driven by international in FY20 with execution of orders from SAARC/Bangladesh, Brazil and Arica start picking up during the fiscal.

On international front, tenders start flowing/coming in Saudi Arabia. Similarly tenders are coming from far east Asia. There is continuous flow of tenders/orders from Africa especially West Africa.

Brazil – Expect a growth of 35-40% in FY20. Some projects not awarded by developers who got development mandate in tenders in Brazil and awarding of such orders will pickup going forward.

The company is pretty comfortable in case of Saudi Receivables. Saudi receivables collected in FY19 was about Rs 1000 crore and of which about RS 450 crore came in Q4FY19. And it expect another Rs 300 crore soon.

Considering T&D market in last few quarters, there is pressure in fresh orders. There are also inflation led pressures. Thus the company is conservative and capped FY20 margin at 10.5% despite railways & Civil will leverage on increasing size and better absorption of overheads.