POWERMECHNSEQ2 FY2023November 15, 2022

Power Mech Projects Limited

7,756words
73turns
6analyst exchanges
3executives
Management on call
Prasheel Gandhi
NIRMAL BANG EQUITIES PRIVATE LIMITED
J. Satish
CHIEF FINANCIAL OFFICER – POWER MECH PROJECTS LIMITED
S K Ramaiah
Director Business
Key numbers — 40 extracted
Rs.774 Crore
n to our set overall target for this financial year. The reported total income for Q2 FY2023 is Rs.774 Crores. This is all time execution for Power Mech in its journey during Q2 of any financial year. The E
Rs.90 Crore
s all time execution for Power Mech in its journey during Q2 of any financial year. The EBITDA is Rs.90 Crores and the PAT is Rs.44 Crores whereas Q2 of previous financial year, the reported total income was
Rs.44 Crore
er Mech in its journey during Q2 of any financial year. The EBITDA is Rs.90 Crores and the PAT is Rs.44 Crores whereas Q2 of previous financial year, the reported total income was Rs.554 Crores and the repor
Rs.554 Crore
and the PAT is Rs.44 Crores whereas Q2 of previous financial year, the reported total income was Rs.554 Crores and the reported EBITDA was Rs.63 Crores and PAT was Rs.27 Crores. On year on year basis total i
Rs.63 Crore
previous financial year, the reported total income was Rs.554 Crores and the reported EBITDA was Rs.63 Crores and PAT was Rs.27 Crores. On year on year basis total income has shown a growth of almost 42% wi
Rs.27 Crore
the reported total income was Rs.554 Crores and the reported EBITDA was Rs.63 Crores and PAT was Rs.27 Crores. On year on year basis total income has shown a growth of almost 42% with the growth of the reve
42%
Crores and PAT was Rs.27 Crores. On year on year basis total income has shown a growth of almost 42% with the growth of the revenue the EBITDA has shown a growth of 43% and PAT has grown by 62%. T
43%
has shown a growth of almost 42% with the growth of the revenue the EBITDA has shown a growth of 43% and PAT has grown by 62%. The revenue mix for Q2 FY2023 is as follows. Erection business has cont
62%
most 42% with the growth of the revenue the EBITDA has shown a growth of 43% and PAT has grown by 62%. The revenue mix for Q2 FY2023 is as follows. Erection business has contributed Rs.161 Crores, ci
Rs.161 Crore
has grown by 62%. The revenue mix for Q2 FY2023 is as follows. Erection business has contributed Rs.161 Crores, civil business including railway, water projects etc contributed almost Rs.367 Crores, operatio
Rs.367 Crore
ontributed Rs.161 Crores, civil business including railway, water projects etc contributed almost Rs.367 Crores, operations and maintenance contributed 226 Crores, electrical business.17 Crores and other inco
226 Crore
lway, water projects etc contributed almost Rs.367 Crores, operations and maintenance contributed 226 Crores, electrical business.17 Crores and other income it is around 3 Crores. Whereas during Q2 of last
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Guidance — 20 items
J Satish
opening
“The performance for Q2 and H1 FY2023 is line with our target and continues to be healthy.”
J Satish
opening
“The overall target set for the year is on track and is more likely achievable.”
J Satish
opening
“FGD ordering process and project mobilization already started.”
J Satish
opening
“The revenue from FGD if any will be in addition to our set overall target for this financial year.”
J Satish
opening
“Srinivasa Rao who has joined had MD and CEO for the international operations who has joined from Shapoorji & Pallonji is a good hand to strengthen the international operations and the target is more on the operational maintenance business to supplement both on the domestic and international business.”
J Satish
opening
“Up to date during the current financial year the company added new order for Rs.7445 Crores and for the entire year the company has set a target of 10,000 Crores of new order additions.”
J Satish
opening
“We are more confident we will reach the target of 10,000 Crores operation this year.”
S. K. Ramaiah
opening
“Satish that was very nice of you and coming back to some of the other developments: The business growth and the marketing side and also various opportunities and how the company will be taking forward these opportunities.”
S. K. Ramaiah
opening
“The O&M side we are trying to give a lot of push in the Middle East that has seen some uptrend in terms of capital overhaul, maintenance jobs and AMC job is on the pipeline we have already mobilized for the Dangote refinery, nearly of 100 Crores and that work agreement will be signed shortly.”
S. K. Ramaiah
opening
“We have completed about 15% out of 345 Crores, Buxar boiler job 25% of around 176 Crores, Bhusawal we have completed almost 70% of the work that is 2 x 660 megawatt work, then Yadadri is going very well that is a large project in Telangana 813 Crores.”
Risks & concerns — 6 flagged
Because this project it has been almost three years we have put effort to get a decent size project after considering all the risk factors so if all goes well, we may look one project based on the progress of KBP but not immediate because the order book is quite full but given a chance if we get at effective price we may add one more project.
— J. Satish
I think we had mentioned in the past that due to our legacy orders we are finding it difficult to improve upon our EBITDA margin.
— Deepak Poddar
Okay working 11 or 11.5% is I could say a bit of challenge.
— J. Satish
Sir the concern on FGD that you are stating so the commodity prices have kind of softened in last two to three quarters instead of taking the order so there should be tailwind only from the company side at least in the FGD.
— Abhishek Poddar
Therefore in that way we are definitely covering up many of the risk impact through the suppliers also and the other aspect is that as Satish has rightly said we have got in house capability for doing 25% of the work that should also help us.
— S. K. Ramaiah
They have put in the budget and the challenge is they are constraint of the cash flow.
— J. Satish
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Q&A — 6 exchanges
Q
Hello thank you for giving me the opportunity. Since our concentration on civil in the order book is increasing what kind of margin profile do we look for the coming quarters.
J. Satish
Now we have seen some improvement in margin profile, so more or less this year we are seeing this number to be continued for Q3 and Q4. There could be small marginal improvement. This is a trend we are expecting going forward in a short run. What kind of working capital are we looking for H2 since our execution would be higher? See the receivable days now is ranging almost 75 to 80 days. There could be some improvement. In terms of the holistic if you take the overall working capital cycle now it is working around 143 to 145 days. This cycle we are expecting to continue and there could be some
Q
Thank you very much for the opportunity Sir and very good set of numbers. I just wanted to understand first on the execution front. Now we were talking about FY2023 and 15,000 Crores is the order backlog we are targeting right and generally in a particular year we generally execute 38% to 40% of our starting order book so ideally if I go by that calculation we are looking at 5600 to 5700 kind of execution FY2024 so is that something that we are also kind of looking at in terms of execution level next year.
S. K. Ramaiah
Now what I can say is that there is a mix of orders and there are short duration contracts, long duration contracts then there are different type of schedules for different contracts and that 40% norm can be there and what we can say is that from 2720 Crores we are going to achieve nearly 3600 Crores and that is because many of this jobs what we are going to do has got some material content particularly Adani job is there and then this BMRCL job will be there some of the other segment jobs also. Therefore what we can safely say is that with the schedules committed to customers and the resource
Q
Yes thanks for the opportunity. Actually most of my questions have been answered just one question from when the MDO project will start recognizing revenue.
J. Satish
Q4 FY204, Q4 we are expecting 40 to 60 Crores of revenue booking taking the rate of Rs.886 per tonne but now the rate has substantially gone up because of the escalation so that may go up to 70 or 80 Crores. Per quarter. 2025 it may go up to 250 Crores and 2026 we are expecting close to 450 Crores. And margins in this segment will be higher right. Yes Sir there is some investment and some capex so we quoted at a price of almost like 20% plus at EBITDA level because there is some depreciation element also but with the revised price the margin profile will again improve. The price which we quote
Q
Thanks for taking my question Sir and congratulations on a good quarter. Sir regarding this order outlook of 8000 Crores for FY2024 and 9000 Crores for 2025 so if you look at this year we had a very large order of 7000 Crores coming from Adani, if we take that out from 10,000 Crores then the rest of the order is about 3000 Crores so I am trying to understand this bridge between 8000 and 3000, 5000 additional number next year. Any large orders you are looking at Sir.
S. K. Ramaiah
I think Adani was an exception but what I can say is that see if you look at the opportunities what we follow every year, we follow between 25,000 to 40,000 Crores that is the type of BD development various groups undertake in all the segments and the 8000 Crores the confidence is coming from the sustained balance ordering to be done in the FGD nearly 80,000 megawatt is there. We will try to focus on couple of those maybe 3000 to 4000 megawatt. Then water projects are also there that is drinking water project and surface drinking water project. See for example metro we entered in a big way tha
Q
Good evening Sir. So my question is like for the FGD order from Adani how is the revenue forecast for recovering quarters.
S. K. Ramaiah
You see the total contract is structured between 18 to 30 months. We individually start the kick of dates for various projects. Now we have started with one or two projects then other projects has to Power Mech Projects Limited November 15, 2022 follow based on the advances what we have drawn. Now we know in a way the first one or two quarters the revenue will be low can be less because engineering work has to be done, ordering has to be done that is what Satish was telling perhaps the revenue will start coming from the end of this year but next year we should be able to have substantial conve
Q
I thank everybody, and we are in a very interesting time and lots of expectations are also there and we have got many things to do. The challenge of execution but there are lot of opportunities and the Power Mech Projects Limited November 15, 2022 company is well geared up for the execution model and we have demonstrated in many cases wherever peak earlier initial achievements have to be done we have done in the previous year’s also and with the resources available and the opportunities available I am sure that the next 2 to 3 years will be quite bullish for our organization both in the growth
Management
Speaking time
J. Satish
19
S. K. Ramaiah
14
Deepak Poddar
9
Moderator
8
Abhishek Poddar
7
Dixit Doshi
5
Sheen George
5
Riya
4
Prasheel Gandhi
1
J Satish
1
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Opening remarks
Prasheel Gandhi
Thanks Steven and good afternoon to all. Nirmal Bang Equities Private Limited welcomes you all to 2Q FY2023 earnings conference call for Power Mech Projects Limited. From the management team Mr. S. K. Ramaiah, Director, Business Development and Mr. J. Satish, Chief Financial Officer. I now hand over the call to the management for their opening remarks post which we can take Q&A. Thank you and over to you, Sir!
J Satish
Thank you. Good afternoon friends. This is Satish. I have with me Mr. S K Ramaiah – Director Business Development. We welcome you all to the earnings call quarter two and H1 FY2022-203. I will take few minutes to update on the financial performance for Q2 and first half 2023. The performance for Q2 and H1 FY2023 is line with our target and continues to be healthy. The overall target set for the year is on track and is more likely achievable. FGD ordering process and project mobilization already started. Revenue booking from FGD expected to start from Q4. The revenue from FGD if any will be in addition to our set overall target for this financial year. The reported total income for Q2 FY2023 is Rs.774 Crores. This is all time execution for Power Mech in its journey during Q2 of any financial year. The EBITDA is Rs.90 Crores and the PAT is Rs.44 Crores whereas Q2 of previous financial year, the reported total income was Rs.554 Crores and the reported EBITDA was Rs.63 Crores and PAT was R
S. K. Ramaiah
Thanks Satish and thanks Nirmal Bang for this H2 call and that was for the fine input what we had given for the first half of the results of the company. Satish that was very nice of you and coming back to some of the other developments: The business growth and the marketing side and also various opportunities and how the company will be taking forward these opportunities. Let me give you a brief. I think on a broad basis the order back log which was at the end of last year 8855 Crores has gone up to 14,782 Crores a jump of nearly 67%. I think this is mainly driven by the huge order what we got from Adani for 6163 Crores of 8460 megawatt of FGD for 4 plants. Now in the segment wise changes at the end of 22, in the mechanical and installation business was 1650 Crores because of this Adani FGD order share has gone up to 7796 Crores. On the Civil side the order backlog of 5842 is more or less the same and O&M side it was at 1244 Crores it is now around nearly 1000 Crores and electrical ha
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