POWERMECHNSEQ1 FY23August 22, 2022

Power Mech Projects Limited

9,192words
107turns
10analyst exchanges
4executives
Management on call
S. Kodandaramaiah
DIRECTOR – BUSINESS
Jami Satish
CHIEF FINANCIAL OFFICER – POWER MECH PROJECTS LIMITED
Prasheel Gandhi
NIRMAL BANG EQUITIE PRIVATE LIMITED
S. K. Ramaiah
Director, Business Development. We welcome you all to the earnings call Quarter 1, FY22-23.
Key numbers — 40 extracted
Rs. 749 crore
y in line with overall plan set for the company. The reported total income for Quarter 1, FY23 is Rs. 749 crores. EBITDA is Rs.86 crores and the reported PAT is Rs. 39 crores whereas Q1 of previous financial y
Rs.86 crore
n set for the company. The reported total income for Quarter 1, FY23 is Rs. 749 crores. EBITDA is Rs.86 crores and the reported PAT is Rs. 39 crores whereas Q1 of previous financial year, the reported total
Rs. 39 crore
otal income for Quarter 1, FY23 is Rs. 749 crores. EBITDA is Rs.86 crores and the reported PAT is Rs. 39 crores whereas Q1 of previous financial year, the reported total income was Rs.628 crores. EBITDA was R
Rs.628 crore
orted PAT is Rs. 39 crores whereas Q1 of previous financial year, the reported total income was Rs.628 crores. EBITDA was Rs.71 crores and PAT was Rs.31 crores. The revenue mix for Q1 FY23 is as follows:
Rs.71 crore
es whereas Q1 of previous financial year, the reported total income was Rs.628 crores. EBITDA was Rs.71 crores and PAT was Rs.31 crores. The revenue mix for Q1 FY23 is as follows: Erection business contrib
Rs.31 crore
financial year, the reported total income was Rs.628 crores. EBITDA was Rs.71 crores and PAT was Rs.31 crores. The revenue mix for Q1 FY23 is as follows: Erection business contributed Rs. 152 crores. Civi
Rs. 152 crore
PAT was Rs.31 crores. The revenue mix for Q1 FY23 is as follows: Erection business contributed Rs. 152 crores. Civil business including railway, water projects is around Rs. 376 crores. Operation and mainte
Rs. 376 crore
n business contributed Rs. 152 crores. Civil business including railway, water projects is around Rs. 376 crores. Operation and maintenance Rs. 196 crores. Electrical business 22 crores and other income around
Rs. 196 crore
il business including railway, water projects is around Rs. 376 crores. Operation and maintenance Rs. 196 crores. Electrical business 22 crores and other income around 2 crores whereas during Quarter 1 of last
22 crore
projects is around Rs. 376 crores. Operation and maintenance Rs. 196 crores. Electrical business 22 crores and other income around 2 crores whereas during Quarter 1 of last financial year, erection busin
2 crore
. Operation and maintenance Rs. 196 crores. Electrical business 22 crores and other income around 2 crores whereas during Quarter 1 of last financial year, erection business contributed around 137 crores
137 crore
nd 2 crores whereas during Quarter 1 of last financial year, erection business contributed around 137 crores, civil business contributed around 284 crores, O&M business contributed 173 crores, electrical b
Advertisement
Guidance — 20 items
Jami Satish
opening
“PlT GnIWth Unlimitad And going forward, the overall working capital cycle looking to be improved.”
Jami Satish
opening
“250 crores to 300 crores, and the same is expected to improve going forward.”
Jami Satish
opening
“Power Mech's vast experience and in-house core strength to handle any power plant will add lot in terms of value addition and execution of this project.”
Jami Satish
opening
“For the entire year, now the Company has set target for reaching 10,000 crores of new orders additions or expect to add new orders of Rs.”
Jami Satish
opening
“We will come with the revised target of revenue for the year in couple of days from the FGD schedule.”
Jami Satish
opening
“The MDO project is going as per our original schedule.”
Jami Satish
opening
“1,000 crores which will be executed over a period of 5 years.”
Jami Satish
opening
“Of course, operation and maintenance, both in power and non-power sector including international operations is expected to play a dominant pie in our overall business plan going forward also.”
S. K. Ramaiah
opening
“And then the latest job what we have taken from the Adani Group in the Khammam - Kodad road project in Telangana, 645 crores.”
S. K. Ramaiah
opening
“So, this is where the company's focus will be in the next two to three years.”
Risks & concerns — 11 flagged
From a pure power sector player 7 years ago, the company has transformed itself into a multi-dimensional infrastructure player retaining its core competence in O&M and mechanical pie as we foresaw slowdown in the thermal power sector years back, post that Power Mech has demonstrated its execution capabilities in every segment we operated so far including railway, road projects, water projects, material handling, cross-country pipeline, international operations etc.
— Jami Satish
So, in a way, the thermal plants will come under lot of stress in operation & maintenance because of the within the generation mix of the coal and renewable power, and that obviously calls for different O&M practices.
— S. K. Ramaiah
And for us handling this many projects is not a challenge at all, because we are quite used to work in about 40 to 50 projects, and what we may need in this case maybe another modest increase of the manpower about 5% to 10%.
— S. K. Ramaiah
PlT GnIWth Unlimitad Therefore, I think from scaling up from 3,600 crores for current year, I think the existing resources little bit of modest addition, scaling up to 5,000 crores is not a challenge.
— S. K. Ramaiah
And then the infrastructure side, I don't think there is again any slowdown will be there.
— S. K. Ramaiah
This they have come regarding some subcontractors pertaining to some projects where they had some concern.
— Jami Satish
So, what is the risk management you are taking so that new approvals, new projects going back or some government intervention in those projects, does it affect the company?
— Faisal Hawa
So, can you just list out key risk management principles or steps you have taken to really protect the company from going backwards?
— Faisal Hawa
So, what are the kind of risk management measures you are taking to avoid the company going backwards?
— Faisal Hawa
So, most of the risk gets automatically mitigated.
— Jami Satish
So, not taken any projects with undue risk.
— Jami Satish
Advertisement
Q&A — 10 exchanges
Q
So, first question regarding the FGD order that we have received. Some understanding on how the revenues will be booked in '24, '25, and also if you could give some understanding on the payment terms, how much is retention money?
S. K. Ramaiah
I think this 6,163 crores will be spread over next 30 months, and the first year, we can expect about 10% of revenue. That is the maximum. Therefore, perhaps '23 and '24, you know, the revenue should be out of this, 50% should get converted. 40% to 50% percent. That can boost up the revenue, the other backlog of orders for the year '23-'24, because by the end of the year as I told, you know, 14,000 to 15,000 crores of backlog will be there, and that should give a vision of 4,500 to 5,000 crores of revenue beyond '23. And so, what is the retention money that we have agreed on? It is around 10%.
Q
Sir, a few clarifications. You mentioned that the revenue for '23 will be 3,600 crores, and revenue for '24 will be 5,000 crores, and bulk of the FGD execution which means will slow down to '24. Is that correct on the assessment?
S. K. Ramaiah
I think that 3,600 crores was based on the order backlog of 8,855 crores what we built up in the beginning of the year, taking into account whatever orders we are going to build up in the current year also excluding the FGD orders, but with the FGD orders factored, you know, that should go up to or nearly 4,000 plus crores. And the next year, obviously, the backlog is the going up by end of the year because of the balance of the pipeline of the orders of 1,500 cores plus the FGD orders . That is how that projection has been given beyond '23, '24. Sir, my second question is you mentioned that o
Q
My first question is more to do with the L1 that you have identified. It's almost like 1,500 crores. Can you highlight on what exactly these orders are and when exactly it is expected to be part of our backlog? The 1,500 crore L1 order?
S. K. Ramaiah
I told, you know, Yes, in this, there are about 7 FGD orders. Of course, with some EPC orders and ETC orders with Civil works. They are construction orders, about 1,950 Megawatts for about 870 crores, that is from the Goenka Group of CESC at Haldia, Chandrapur, and Budge Budge Stations, 250 to 350 Megawatt units. And then Bangalore Metro, we are L1 for about 450 crores. And then railway electrification job in Mangalore and Hasan also about 88 crores, and then one O&M job in Nigeria where we are already doing the installation job for the Dangote. And sir, you also said that additional you are f
Q
Sir, I wanted to ask that in the first quarter we heard reports of income tax raids on the premises of the company including that of the top management and the promoters. If you could put some light on the same, it will be great. And also has the IT department given any monetary claim on the company as a result of these raids?
Jami Satish
Yes. See 13th July to 17th July, they had search under Section 132. It's a search actually, so different premises. Now the matter is going on Income Tax Department, whatever the PlT GnIWth Unlimitad information they are asking, we have been providing. This they have come regarding some subcontractors pertaining to some projects where they had some concern. Okay. Even they have gone to multiple companies including Power Mech. So, we are providing all the information such till the matter is going on. It may take some more time. Of course, this will not impact as far as our operation is concerned
Q
Firstly, one clarification from this FGD order of 6,100 crore. Does that include 1,000 crore of O&M?
S. K. Ramaiah
No. No, it excludes. It excludes. That 1,000 crores is in addition to 6,100 crores. That order yet to get. So, that will be a follow- up opportunity to this FGD. After the commissioning. So, we have not received that order. It will be tendered. PlT GnIWth Unlimitad It's been tendered. We are L1, but the awarding part, they are broken into two components. Immediately, they have given the FGD, the EPC part of 6,100 crores. The follow-up 1,000 crores they will award later. That will be the opportunity of 200 crores per annum in terms of O&M. My second question is regarding this MDO project of Coa
Q
So, my question is that in the order that we have now taken on, what is the ROCE and the ROE that we are targeting for the orders which have been taken in the recent 1, 1.5 years? And will you be benefited due to the current commodity decrease in three to four months?
Jami Satish
Yes. See, these are pure cash contracts. So, in terms of margins, it will range 11% plus. So, definitely, we don't need to invest much except the CAPEX of 25 to 30 crores. So, it will help a lot in terms of improving the both ROE and ROCE because we don’t intend to increase any debt. So, that will help to push ROE also. And what is the ROE which will come ultimately say 1.5 years then? Sir, it will definitely, my assumption is it should cross 18% to 19% plus blended, sir. PlT GnIWth Unlimitad And, sir, we are looking at, you know, we are working to so many sectors. So, what is the risk managem
Q
One question from my side. If you could please provide EBITDA margin guidance for FY23 and FY24?
Jami Satish
Sir, now it's we are working around 11% to 12%, and we think that margin profile to improve further. And as we discussed like the projects which we are quoting directly, so it can help us to save in terms of our cost for borrowing the credentials and all. That will also help adding EBITDA margin. So, we are expecting the margin profile to improve gradually.
Q
Sir, just wanted to check, what's current execution capability per month in rupees crores?
Jami Satish
Sir, now it's well set. It's in the range of 750 to 1,000 crores. It can be increased even up to 1,200 crores gradually. 750 to 1,000 crores, up to 1,200 crores per annum. Per quarter. Per quarter. Sorry. 1,000 crores per quarter. That is the range. Now for this FGD, we have created a separate unit headed by senior professionals. The team is well set now. So, this should gradually move up. So, the reason I was asking that is because, I mean, given the revenue outlook that we have for this year, ideally, given the second quarter is generally lean, so our second half execution per quarter should
Q
My question is with regards to the notification given to the stock exchange today that there is a Board meeting for preferential issue to the promoters. Now, you know, the company is at an PlT GnIWth Unlimitad inflection point. The profitability, revenue is going to be very, very good over the next two, three years. So, at this point, for the company to go ahead and do preferential issue to promoters is not really minority shareholder friendly. What would be nice if you have a rights issue which is given to all the stockholders of the company. If somebody subscribes, fine. If not, then promote
Jami Satish
Yes. We will take a note of it, sir. Thank you.
Q
I think lot of things have been covered up. I think we have got a very clear vision for the three years, and then the issues which can come up after third year perhaps we are gearing up also in both in the marketing side, business development side, and then the most important the operations side. Therefore, Company is well set for 4,000 to 5,000 crores of turnover in the coming year. And what is important is to sustain the growth and then the new opportunities will be there in infrastructure, O&M, mining and then railway, and then international operations also we will focus it now as the COVID
Management
Speaking time
Jami Satish
28
S. K. Ramaiah
18
Moderator
12
Rohit Natarajan
8
Pritesh Chheda
7
Faisal Hawa
7
Abhishek
6
Dixit Doshi
6
Deepak Poddar
5
S.K.Ramaiah
4
Advertisement
Opening remarks
Prasheel Gandhi
Thanks and good afternoon to all the participants. Nirmal Bang Equities welcomes you all to 1Q FY23 Earnings Conference Call for Power Mech Projects Limited. From the management team, we have S. K. Ramaiah - Director, Business Development and Mr. Jami Satish - CFO. Without taking much time, I hand over the call to management for opening remarks post which we can take for Q&A. Thank you and over to you, sir.
Jami Satish
Thank you. Good afternoon all. This is Satish, and along with me I have Mr. S. K. Ramaiah - Director, Business Development. We welcome you all to the earnings call Quarter 1, FY22-23. Let me take first through the financial highlights of first quarter '23. Performance for Quarter 1, FY23 continued to be healthy in line with overall plan set for the company. The reported total income for Quarter 1, FY23 is Rs. 749 crores. EBITDA is Rs.86 crores and the reported PAT is Rs. 39 crores whereas Q1 of previous financial year, the reported total income was Rs.628 crores. EBITDA was Rs.71 crores and PAT was Rs.31 crores. The revenue mix for Q1 FY23 is as follows: Erection business contributed Rs. 152 crores. Civil business including railway, water projects is around Rs. 376 crores. Operation and maintenance Rs. 196 crores. Electrical business 22 crores and other income around 2 crores whereas during Quarter 1 of last financial year, erection business contributed around 137 crores, civil busines
S. K. Ramaiah
Thanks, Satish, for your opening remarks and bringing out the various facts and the company's operations. Thanks everybody. I think on the marketing and business side, as you know the COVID is behind us, and that has obviously opened up the market in a big way, and that is obviously reflected in the results and the opportunities and the new orders the company is bagging. And last year, at the end of the year, we had a backlog of 8,855 crores, and the first quarter, about 775 crores orders have been PlT GnIWth Unlimitad booked in the mechanical side 296 cr and in civil side 323 cr and then O&M side about 115 crores. And that is taking into the backlog of conversion in the first quarter, the order backlog now stands at 8,883 crores. And there is a modest increase based on the first quarter inflow of the orders, about 8.6% in the ETC business, and in O&M the order backlog stands at 1,208 crores, and then civil and infra, the order backlog is now 5,789 crores, and then electrical we are no
Advertisement
← All transcriptsPOWERMECH stock page →