Kalpataru Power Transmission hosted a conference call on May 16, 2022. In the conference call the company was represented by Manish Mohnot, Managing Director. 

Key takeaways of the call

Consolidated order book as end of Mar 31, 2022 stood at Rs  32761 crore, up 17%YoY. Order intake for FY22 was Rs 18161 crore, a growth of 11%YoY.  Of the OB of Rs 32761 crore about 34% is T&D, 24% is B&F, 28% is Urban Infra & water, 8% Railways and 6% Oil & Gas.  Of the order book about 60% is domestic orders and balance 40% is international. Subsequently it received new orders of Rs 3819 crore till date in FY23 and additionally L1 for orders worth Rs 4200 crore.

Order book of JMC Projects as end of Mar 31, 2022 stood at Rs 17,139 crore (up 22%YoY) with order inflow in FY22 being Rs 10139 crore (OI in Q4FY22 is just Rs 155 crore). However the company has secured new orders of Rs 2,193 crore till date in FY23 and it is additionally L1 for orders of about Rs 2700 crore.

Order book of KPTL Standalone as end of Mar 31, 2022 stood at Rs 15,759 crore ( up 13%YoY) and the total order inflow in FY22 was Rs 8159 crore (of which about Rs 4598 crore came in Q4FY22).  Of the JMC order book about 22% is now international and of FY22 OI about 32% is international orders. Order inflows till date in FY23 at Rs 1,626 crore and additionally it is L1 of around Rs 1,500 crore.

Order Book of LMG, Sweden stood at about Rs 1,300 crore (with order inflow in FY22 stand at RS 985 crore) and that of Fasttel Brazil stood at Rs 509 crore as on 31 March 2022.

Roads, B&F, Water, Oil & Gas and Railways business international Order Book reaches 10% of total consolidated order book with international foray in.  Secured first international project in the B&F (2000 social housing units in Maldives) and Oil & Gas (Laying of gas pipeline in Middle East) business. Road business won new projects in Africa of Rs 2,214 Crores. It also bagged Airport order in Asia and emerged as top bidder in metro project in India. Entered 4 new countries and L1 in 2 new countries.

Secured single largest order till date of about Rs 3276 crore in the T&D space in the South America market.

Water business received order of Rs 3,286 crore in FY22 with year-end order book position of water at about Rs 6,500 crore.

About 75% of orders secured in FY22 have price variation clause or are long-term in nature result in effective risk mitigation given volatility in commodity prices.

Expect consolidated revenue growth of 15% in FY23 and a PBT margin of 5%, order inflow of Rs 21000 crore in FY23. The company expect to reduce debt to the tune of Rs 300-400 crore in FY23.

For FY23, expect 10-15% growth for KPTL standalone and 15-20% growth for JMC. The EBITDA margin for both is expected to be 9%.

Considering order bagged and order visibility the 10-15% growth of KPTL is not an issue.

Currently have order visibility of over Rs 7500 crore and so achieving 21000 crore of OI is not a challenge.

Visibility on T&D segment has improved as the company is started bidding for international orders funded by multilateral agencies. In domestic market also lot of states have started tendering and PGCIL has also tendered Leh project where the company will have its right-full share.

Secured & L1 in large size projects - T&D (South America), Airport (Asia), Water (India); Average project size over Rs 900 Crores.

Planned capex at consolidated level is about Rs 300 crore for FY23.

Road BOOT projects – As far as Waingaga Road Project (WEPL) it has received consent for restructuring from majority of lenders and awaiting approval from NHAI.  Expect closure in H1FY23.  Similarly started refinancing process for Vindhyachal Road Project (VEPL).  Cash outflow to come down with restructure.  Funding in WEPL and VEPL in FY22 was about Rs 150 crore and this year it will be about Rs 80 crore. 

Kurukshetra Road Project (KEPL): Has issued notice for termination in accordance with relevant provision of the concession agreement and handed over the asset to NHAI.  All exposure has been provided. Engineer recommendation says that the NHAI payment is good enough to cover lenders. But has to be seen what will be the action of NHAI, which currently evaluates the engineer recommendation.

Indore realty project 60% of units sold. Collected over Rs 160 Crores till FY22.  Plan to complete balance sale by this fiscal end.

LMG Sweden - Revenue grew by 12% YoY to Rs 1,191 Crores with improved profitability.   Considering strong orders book it expect a growth of 5-10% for LMG. LMG has not debt in its books and is a cash surplus company. 

Fasttel Brazil has achieved a revenue of Rs 548 Crores in FY22; Strengthened organization with deployment of senior management resources. Integrating systems and processes in-line with KPTL. Cautious approach in expanding operations given volatility in commodity prices and pandemic. This is not expected to have any losses going forward. Expect an EBITDA margin of 8-9% for current fiscal. This company have small debt. 

JMC emerged as L1 for a large Airport project in Asia. This is an area the company is targeting for quite some time. This segment has strong growth opportunity in Africa in coming years.

Consolidated net debt declines by Rs 402 crores to Rs 1,902 crores on account of effective working capital management, record project closures and proceeds from sale of T&D BOOT assets.

Net debt in core areas of both KPTL & JMC is about Rs 1100 crore.  About Rs 125 crore of cash flow is expected to come from Indore project and that will be used to retire debt and factored in guidance of Rs 300-400 crore debt reduction.

Merger of JMC with KPTL will result in Complementary Capabilities. Proposed merger will integrate diverse capabilities to win business in high growth segments and emerging markets. It will improve the position to bid for large size and complex projects. Merger Readiness: Synchronized systems & process at JMC in-line with KPTL over the past few years. By Q4FY23 the merger is expected to be completed.  Enhanced management bandwidth across organization for achieving vision 2025.  

Vision 2025 aspiration target is reaching a consolidated revenue of Rs 24000 crore by FY25 and order book of Rs 48000 crore with global footprint across 100 countries. ROCE of 22%plus.

Higher commodity prices hit the margin of JMC in FY22. But margin are to improve going forward as most project has price escalation clause.

Subham Logistics high prices of wheat has reduced revenue. The export ban has to increase the demand.

Non B&F and non-government orders book is to keep growth for JMC in next 3 years. Expanding B&F in international side and it already have few successes in this regard. 

Most of water contracts have PVC clause but Index is not moving as fast as commodity price and that hit the margin.

Operating environment continue to be challenging with high commodity price and supply constraints.