PNCINFRANSEQ4 FY2022May 30, 2022

PNC Infratech Limited

8,263words

227turns

14analyst exchanges

5executives

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Management on call

Jiten Rushi

AXIS CAPITAL LIMITED

Yogesh Kumar Jain

MANAGING DIRECTOR – PNC INFRATECH LIMITED

T R Rao

DIRECTOR – PNC INFRATECH LIMITED

B. Sawhney

CHIEF FINANCIAL OFFICER – PNC INFRATECH LIMITED

D K Maheshwari

VICE PRESIDENT FINANCE - PNC INFRATECH LIMITED

Key numbers — 40 extracted

rs,

Total length of highway and expressway projects awarded during FY 22 stood at over 12,700 kilometers, which is approximately 22% increase over FY 21. Though awarding activity in NHAI remained subdued

22%

expressway projects awarded during FY 22 stood at over 12,700 kilometers, which is approximately 22% increase over FY 21. Though awarding activity in NHAI remained subdued till February 2022, picked

67%

ter constructed in FY21. In case of toll projects, collections thru’ FASTag grew sharply by about 67% on year-on- year basis to reach over Rs 38,000 crore in FY22. On national highways, FASTag penet

Rs 38,000 crore

projects, collections thru’ FASTag grew sharply by about 67% on year-on- year basis to reach over Rs 38,000 crore in FY22. On national highways, FASTag penetration is now at 96.5% with 964 toll plazas live on

96.5%

r basis to reach over Rs 38,000 crore in FY22. On national highways, FASTag penetration is now at 96.5% with 964 toll plazas live on FASTag, which is very encouraging scenario. Now coming to the key

Rs. 8446 crore

ch 2022 and LOAs for all the 7 projects received by Company with an aggregate bid project cost of Rs. 8446 crores. In addition to the Q4 order inflow, company also received an user fee collection mandate of E

Rs. 369.0 crore

llection mandate of Eastern Peripheral Expressway for one year from NHAI, for a contract value of Rs. 369.0 crore. In January 2022, company in joint venture, received LOAs for Design, Construction, Commissioni

Rs. 2337.0 crore

s of Aligarh, Badaun and Barabanki comprising 2337 villages in total, for an aggregate value of Rs. 2337.0 crore. Company's share in the JV is 90%. On execution front - compa

90%

337 villages in total, for an aggregate value of Rs. 2337.0 crore. Company's share in the JV is 90%. On execution front - company completed 4 HAM projects and 6 EP

Rs. 82.68 Crore

ges completed ahead of the respective scheduled completion dates. In March 22, company received Rs. 82.68 Crore bonus for Purvanchal Expressway, Package-5 towards 132 days early completion, and in April 22 com

Rs37.02 crore

vanchal Expressway, Package-5 towards 132 days early completion, and in April 22 company received Rs37.02 crore bonus for Purvanchal Expressway Package-6 towards 97 days early completion. Given the substantial

Rs. 24,590 crore

d HAM assets. Out of these 25 projects, we have 18 HAM projects with a total Bid Projects Cost of Rs. 24,590 crores. Out of 18 HAM projects, we have achieved COD/PCOD of 5 projects, 6 are under construction and

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Guidance — 20 items

Yogesh Kumar Jain

opening

“First, I will share my thoughts on a few sectoral highlights which will be followed by financial and operational highlights of the Company.”

Yogesh Kumar Jain

opening

“Pace of project awarding activity in the country significantly picked-up during March 2022.”

Yogesh Kumar Jain

opening

“Company was declared as L1 bidder in 7 HAM projects in March 2022 and LOAs for all the 7 projects received by Company with an aggregate bid project cost of Rs.”

Yogesh Kumar Jain

opening

“However, Company will pursue guarded diversification in the project development business to continue the growth momentum without assuming the concentration risk.”

Yogesh Kumar Jain

opening

“The balance equity of Rs.1,475 Crore will be invested over the next 2-3 years, for which internal accruals that would be generated over the next 2-3 years should be sufficient.”

Yogesh Kumar Jain

opening

“Update on Ghaziabad Aligarh Project divestment Company concluded the divestment process of Ghaziabad Aligarh Project on 26th May 2022 and the asset handed over to Cube Highways.”

Yogesh Kumar Jain

opening

“90.33 crores towards sale of Ghaziabad Aligarh project, to allaling to an impairment of RS.”

Yogesh Kumar Jain

opening

“On a consolidated basis the impairment on account of divestment of Ghaziabad Aligarh project is Rs.”

Mohit Kumar

“My second question is when do you expect appointed dates for all the seven new HAM projects which you have won and what is the status of land acquisition.”

Mohit Kumar

“When do you expect appointed dates for all the new projects Sir?”

Risks & concerns — 4 flagged

However, Company will pursue guarded diversification in the project development business to continue the growth momentum without assuming the concentration risk.

— Yogesh Kumar Jain

Are you looking also for TOT Sir by any chance or we will not take the toll risk?

— Mohit Kumar

Actually we are discussion with the buyers and the main concern is the valuation which is not in the line with what we are expecting and we will take the call in FY2023.

— D K Maheshwari

And remaining it has gone in the PNC holding because the equity was infused by PNC Infratech directly as well as from PNC Holding so Rs.37 Crores impairment has gone in the PNC Holding and if you see the consolidated account, the total impact of Rs.167 Crores including Rs.39 Crores in the Q3 of FY2022 is reflected.

— D K Maheshwari

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Q&A — 14 exchanges

Hi good afternoon Sir and congratulations on very good quarter. My first question is how to see FY2023 in terms of revenues and EBITDA margin and you can please explain the softness in the EBITDA margin in the current quarter.

Yogesh Kumar Jain

EBITDA margin should be 13%-13.5% for FY 2023. Revenue Sir. Revenue guidance. It should be a growth of around 15%. Any colour on the last year EBITDA margin especially last quarter was it affected by the high input inflation and how much was the impact. As regards to the margin it may impact marginally, however it is now on reducing trend as the steel prices have reduced and we are also having escalation clause in all the projects, in the HAM projects as well in the EPC projects. Understood Sir. My second question is when do you expect appointed dates for all the seven new HAM projects which y

Hi Sir. Couple of questions first when we say 15% revenue growth in FY2023 so last time we said Rs.1,500 Crores revenue from UP projects so that remains intact or is there any change.

Yogesh Kumar Jain

That remains intact. How much are we factoring in revenue from this HAM projects where the appointed date as you said would by third quarter October, December. In the growth of 15%, we expect Rs. 200 Crore revenue from these 7 HAM projects in FY’23. Okay got it. Sir first the breakup of equity investment and the monetization so you already mentioned that Rs.2,390 odd Crores equity is required and Rs.1,475 Crores is to be invested in two to three years so in FY2023 how much and in FY2024 how much. Out of the outstanding of Rs.1,475 Crores around Rs.410 Crores, we have to infuse in FY2023 and Rs

Good afternoon Sir. Sir first thing in the JJM how much revenue we have done in Q4 and FY2022.

T. R. Rao

See JJM FY2022 put together we have done a billing of Rs.108 Crores and we have done a work around Rs.200 Crores. I am talking about total in fourth quarter. Okay and Sir of this how much is paid and how much is outstanding. See out of Rs.200 Crores work done we booked Rs.108 Crores and we received payment of Rs.108 Crores. 100%, whatever amount we booked we received the payment. Apart from that we got around Rs.156 Crores mobilization advance under phase II which is 10% of the DPRS approved, Rs.156 Crores mobilization we received is interest free. And Sir just to reconfirm the JJ models have

Yes good afternoon Sir. Thanks for taking my question. Sir two questions from my side. First question in this quarter the overall working capital and the debtor amount seems to have basically gone up a bit quarterly wise also annual wise also so any specific payments delays that we are seeing from any specific project or is it related to payment from the HAM projects if you could just give some idea on that?

D K Maheshwari

This is not the reason because on specific date of March 31, 2022 it is comparatively higher because we have not taken the disbursement of the HAM EPC projects or otherwise it is in the range of the 60 days. Since the company was having the cash and bank balance, hence we decided not to take the disbursement in the HAM projects from lenders. Got it Sir so basically we are not taking disbursement of the HAM projects still then we are completing? Later on when we reverse, we reverse that? Amount wise it seems the higher side but debtor day it reduced to 74 days from 96 days. Got that. Secondly S

Percentage wise we will share you separately. Otherwise the pipes constitute the majority of the cost followed by the overhead tank and other parts and boring. Bharani Vijay Kumar: Not water pumps, etc.?

T. R. Rao

Normally bore we consider it including the submersible pump and other fixtures and there is some element of solar power also is there but the majority is the pipes. Bharani Vijay Kumar: Okay. The next is on the completion so we had won the seven HAM projects in the month of March when the competition was very high? Could you help us understand according to you would these projects continue to have fair amount of margins that we usually do at around 13% or the number of bidders were higher and you feel it might impact the margins on these projects? Out of seven HAM projects what we secured in t

Good afternoon Sir. Thanks for taking my question and congratulations on a good set of numbers. Sir my first question is on the revenue side for FY2023 so as you said that revenue from water projects you can expect Rs.6,000 Crores in FY2023 so in the last call we said that we can expect revenue from water projects at around Rs.1,500 Crores in FY2023 but we now revision in cost for the water projects by almost 40% so what is the revenue which we can expect from the water projects and also revenue from the AP irrigation projects so if you add all this together our revenue guidance can be upwards

T. R. Rao

In the water projects we are seeking Rs.1,500 Crores from the Jal Jeevan, as they have approved projects worth of Rs.1,660 Crores, 702 DPR they approved during the period of September and December which have to be completed within 18 months so we expected revenue of Rs.1,500 Crores only. We are not up-warding this amount and from irrigation we are expecting a revenue of around Rs.200 Crores in the current financial year FY2023 so both put together will come around Rs.1,700 Crores plus in the road sector as we mentioned it may be Rs.5,500 Crores to Rs.6,000 Crores from the road sector so overal

Good afternoon Sir. Thanks for the opportunity once again? Sir my first question is on clarification of bonus income? You said that are you expecting the bonus income from the package five of the Purvanchal expressway and secondly on the Aligarh Project how many days ahead we completed the project?

T. R. Rao

In case of Purvanchal Express that is Package V, we completed 132 days ahead of schedule. The rate of bonus is 0.04% of the contract cost for each day so we got Rs.82 Crores from the Purvanchal Express package five and in case of Purvanchal Express package six we completed 97 days ahead of schedule at the rate of 0.04% and we got a bonus of Rs.37 Crores from the Purvanchal Express package six in the month of April, which will be reflected in the Q1 of FY23. Understood and on Aligarh-Moradabad Sir? Aligarh- Moradabad there is a bonus due of around Rs.17 Crores because there is a lot of approval

Good afternoon Sir and thanks for taking my question? Sir I wanted to get some more details on the JJM project in UP? Overall I mean how many DPRs have been prepared till date and how many DPRs preparation and approval do we expect in FY2023?

T. R. Rao

In the JJM phase two we have a total DPRs of around 1600. Out of 1600, 700 DPRs they approved for a cost of Rs.1,560 Crores so we expect another 300 DPRs to be approved in the current financial year so that would roughly translate into around Rs.500 Crores value of work. The remaining DPRs though we have prepared it is in the process of approval and then to be sanctioned by the SLSSC followed by signing of cover agreements so it is a long drawn process. And for phase one everything has been approved right? Which one ?. This company for phase one? Phase one is the only one project and that DPR

Congratulations on a good financial year and quarter. My first question is on UP state budget so major project as and when UP state? I am asking in this financial year is there any major capex announcement on the road or any other infrastructure project Sir if you can throw some light on that?

D K Maheshwari

Parikshit Ji your voice is not clear. UP state budget they have been some major announcement on infrastructure investment new roads, new expressway because Ganga Expressway was the last one, are there any more? As of now nothing. Ganga Expressway is the last one. For other projects even they are approaching Government of India to take-up, so no further projects by the UP Government. My second question is on the water projects Sir you told there are Rs.6,900 Crores of JJM projects are there? In this Rs.6,900 Crores only Rs.1,500 Crores has been approved? Yes. Out of Rs.6,900 Crores only Rs1,560

Good afternoon Sir. Thank you for taking my questions? Sir can you shed some light on the Rs.90.33 Crores impairment of Ghaziabad-Aligarh Expressway and also Rs.129.7 Crores for the same one and will you shed any impairment going forward?

D K Maheshwari

No impairment is required in future in GAEPL. And Sir why this impairment in the recent Ghaziabad-Aligarh Expressway Private Limited? Pardon. Viraj Gawade_: Why the impairment in the recent Rs.90.23 Crores and Rs.120.72 Crores why this impairment? Actually the valuation what we are expecting from the sale plus what compensation we are expecting from NHAI is more than what we actually received. Many of the projects in the BOT toll segment, NHAI compensated higher amounts on account of delay in handing over of the land and other further omissions on part on NHAI but in the case of Ghaziabad thou

Sir what is the mobilization advance and the retention money as on March?

T. R. Rao

We will share you separately. The retention money is Rs.198 Crores and mobilization advance from Authority is Rs.620 Crores. Sorry retention money was Rs.198 Crores? Yes. And mobilization advance was? Rs.620 Crores. What was the HAM debtors out of the total Rs.1,273 odd Crores debtors? There is a HAM debt. HAM debtors receivable HAM receivables? Total Rs.1,273 Crores as on March so from that so HAM projects because last quarter it was Rs.942 odd Crores? It is Rs.793 Crores Sir. Sir in Ghaziabad-Aligarh just a clarification needed though you said that no impairment required but when announcemen

Good afternoon Sir. Thanks for taking my question. Sir you guided for capex of Rs.100 Crores to Rs.125 Crores in FY2023 so what is the capex guidance for FY2024?

D K Maheshwari

Should be in the range of Rs.75 Crores to Rs.80 Crores not more than that. Okay and Sir what is the current composition over our EPC and HAM projects currently in terms of percentage? Around 65% in the Road projects and 35% in water So what will be in terms of percentage Sir in HAM V/s EPC overall? It will be about 80: 20. 80 is HAM and 20 is EPC? Okay and Sir now coming to operating cash flow? Last year our operating cash flow has reduced substantially so do we think that we will be able to improve substantially in FY2023? We do not think so much. Because these have reduced to Rs.88 Crores? I

Thank you for taking my question. Sir most of my questions are already answered so just a couple of questions so first was mostly clarifications only? Sir when I look at our consolidated financial for the quarter, the contracts revenue that you show in your segment numbers it is around Rs.1800 odd Crores and when I compare it with our standalone the difference is quite stark when I compare with let us say the earlier quarters? The difference on an average used to be around Rs.20 Crores to Rs.30 odd Crores between standalone and the contract revenues that you report in segment but in this quart

D K Maheshwari

It is only because of the elimination in the consol accounts because certain maintenance we have booked and we have taken elimination in the consol. How about Sir toll annuity income from Rs.230 Crores to Rs.427 Crores almost Rs.200 Crores of change on a sequential basis? We have received the annuity of the new HAM projects because around five projects we have received the COD and PCOD in this year. Sure just one more question so on this Ghaziabad-Aligarh the deal that we have done I think everything is already settled so the money that has come of Rs.275 Crores this is adjusted for any claims

Thanks Faizan. We thank the participants for joining the earnings call. Thanks a lot and over to you Sir for any closing remarks.

Yogesh Kumar Jain

Thank you everyone for your participation in our earning call. We have uploaded the presentation of our company’s website. In case of further queries you may get in touch with the strategic growth advisors, our investor relations advisors or feel free to get in touch with us. Thank you very much.

Speaking time

D K Maheshwari

T. R. Rao

Shravan Shah

Moderator

Jiten Rushi

Mohit Kumar

Parikshit Kandpal

Yogesh Kumar Jain

Ashish Shah

Vibhor Singhal

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Opening remarks

Jiten Rushi

Thank you Faizan. Good on behalf of Axis Capital I welcome everyone to PNC Infratech Limited Q4 FY2022 earnings conference call. From the management side we have with us Mr. Yogesh Kumar Jain - Managing Director, Mr. B Sawhney – Chief Financial Officer and Mr. D.K. Maheshwari Vice President Finance. We also have investor relations team of SGA on the call. To begin with, we will have opening remarks from the management followed by Q&A session. Thank you and over to you Sir!

Yogesh Kumar Jain

Good afternoon everyone and a very warm welcome to all of you present on the call to discuss our financial results of 4th Quarter of FY22 and FY’22. Today along with me, I have Mr. T.R. Rao, Director (Infra), Dr. Bhupinder Sawhney, Chief Financial Officer and Mr. D. K. Maheshwari, Vice President (Finance) and Strategic Growth Advisors - our Investor Relations Advisors. First, I will share my thoughts on a few sectoral highlights which will be followed by financial and operational highlights of the Company. Pace of project awarding activity in the country significantly picked-up during March 2022. During March 22, MoRTH, NHAI and NHIDCL combinedly awarded a little over 5100 kilometers of new highway projects, located across the country. Total length of highway and expressway projects awarded during FY 22 stood at over 12,700 kilometers, which is approximately 22% increase over FY 21. Though awarding activity in NHAI remained subdued till February 2022, picked-up the pace in March 2022.

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