PNCINFRANSEQ2 FY23November 15, 2022

PNC Infratech Limited

7,208words
156turns
14analyst exchanges
5executives
Management on call
Yogesh Kumar Jain
MANAGING DIRECTOR, PNC INFRATECH LIMITED
Talluri Raghupati Rao
DIRECTOR, INFRA - PNC INFRATECH LIMITED
Bhupinder Kumar Sawhney
CHIEF FINANCIAL OFFICER, PNC INFRATECH LIMITED
D. K. Maheshwari
VICE PRESIDENT
Bharanidhar Vijayakumar
SPARK CAPITAL ADVISORS INDIA PRIVATE LIMITED
Key numbers — 40 extracted
rs,
hupinder Sawhney, CFO; Mr. D. K. Maheshwari, Vice President (Finance); and Strategic Growth Advisors, our investor relations advisors. We have uploaded the financial results and investors presentation
11%
lometers during the same period compared to 4,609 kilometers awarded during last year, reflecting 11% lesser awarding activity in H1 of financial year '23. Government recently announced that MoRTH
Rs. 4,501 crore
ow Expressway package I & II and Akkalkot Karnataka project with an aggregate bid project cost of Rs. 4,501 crores. Historically, the company has maintained a healthy track record of achieving financial closures
Rs. 24,590 crore
M assets. Out of these 23 projects, we have 18 HAM projects with an aggregate bid project cost of Rs. 24,590 crores. Out of eighteen, company has achieved COD and PCOD for 5 projects, six are under construction,
Rs. 2,390 crore
cts. In terms of equity investment, the total requirement for all these 18 HAM projects is around Rs. 2,390 crores, out of which Rs. 1,109 crores infused till September 2022, and the balance will be infused over
Rs. 1,109 crore
ent, the total requirement for all these 18 HAM projects is around Rs. 2,390 crores, out of which Rs. 1,109 crores infused till September 2022, and the balance will be infused over the next 2-3 years. The intern
Rs. 19,000 crore
ment. Now moving on to our order book. Our unexecuted order book on 30th September 2022 is over Rs. 19,000 crores that includes EPC value of all 7 HAM projects for which appointed dates are expected during the
65%
l year. Out of the total order book of Rs. 19,000 crores, the Roads and Highways sector is around 65% and water and irrigation projects is around 35%. In water supply projects, the company booked a t
35%
0 crores, the Roads and Highways sector is around 65% and water and irrigation projects is around 35%. In water supply projects, the company booked a total revenue of Rs. 348 crores till 30th Septemb
Rs. 348 crore
rrigation projects is around 35%. In water supply projects, the company booked a total revenue of Rs. 348 crores till 30th September 2022, which includes Rs. 108 crores revenues booked during the last financia
Rs. 108 crore
ts, the company booked a total revenue of Rs. 348 crores till 30th September 2022, which includes Rs. 108 crores revenues booked during the last financial year. Total revenues booked in first half of financial
Rs. 240 crore
oked during the last financial year. Total revenues booked in first half of financial year '23 is Rs. 240 crores, we expect up to Rs. 760 crores more revenue from water supply space during the second half of f
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Guidance — 20 items
Yogesh Kumar Jain
opening
“We achieved financial closure for 3 HAM projects, Kanpur-Lucknow Expressway package I & II and Akkalkot Karnataka project with an aggregate bid project cost of Rs.”
Yogesh Kumar Jain
opening
“Out of these 23 projects, we have 18 HAM projects with an aggregate bid project cost of Rs.”
Yogesh Kumar Jain
opening
“1,109 crores infused till September 2022, and the balance will be infused over the next 2-3 years.”
Mohit Kumar
qa
“And I think we had given an order inflow guidance of 90 billion to 100 billion.”
Talluri Raghupati Rao
qa
“So, whatever target we had given for the financial year '23, it should be around Rs.”
Talluri Raghupati Rao
qa
“We will stick by that, and we expect to achieve the new business of this amount, before the end of the financial year and specifically in the second half of the current financial year.”
Talluri Raghupati Rao
qa
“And also, as we have a 2:1 kind of a highway sector and roads – around 66 and 33 in the water sector projects – we also expect around Rs.”
Talluri Raghupati Rao
qa
“Yes, that is one of the focus areas, because new water project is under JJM.”
Mohit Kumar
qa
“That includes HAM assets and 1 BOT-Toll and 1 BOT- Annuity project.”
Shravan Shah
qa
“What is left in this year and FY24 and FY25?”
Q&A — 14 exchanges
Q
The order inflow has been very tepid not only for us but for the entire industry. And I think we had given an order inflow guidance of 90 billion to 100 billion. Do you think that it is possible in the H2, given everything?
Talluri Raghupati Rao
Normally, historically, as you all know, the awarding process by NHAI and MoRTH during the first half of the financial year has always been lower when compared to awarding activity in the second half of the financial year – any given financial year. Similarly, this year also, the first year not many projects have been bid out, and many of them even after bidding out, the financial bids are not opened and awarding has not started. So, whatever target we had given for the financial year '23, it should be around Rs. 8,000 crores to Rs. 10,000 crores. We will stick by that, and we expect to achiev
Q
Just to complete the last question, by the end of this year, we should be able to monetize? Talluri Raghupati Rao: We are expecting at least execution of a definitive agreement for certain projects before the end of the financial year.
Shravan Shah
And in terms of the equity investment, Rs. 1,100 crores we invested. What is left in this year and FY24 and FY25? We have already infused Rs. 1,109 crores in the HAM projects and the balance we require is Rs. 1,280 crores. And this year in the second half, we are expecting Rs. 250 crores, in FY24 around Rs. 450 crores, and FY25 around Rs. 350 crores. Now in terms of the execution revenue guidance, last time you said Rs. 7,200 crores, Rs. 7,300 crores revenue for this year, that is a 15%. This first half, we have already done kind of Rs. 3,300 crores. And if I take the same number, in the secon
Q
Sir, my first question is, basically the top line has been flat for the quarter. Do we have any execution challenges for this quarter? And our consolidated margins are down to 18% from 25% quarter to quarter and 20% year to year. Any reasons for that?
D. K. Maheshwari
The main reason as compared to last year is only because of the 1 project we are executing – Eastern Peripheral Expressway Toll project. Where toll revenue here around Rs. 100 crores to Rs. 102 crores, and that project is only a breakeven point. In case, we will remove that project by turnover and EBITDA, my EBITDA margin comes to 14.6% as compared to 13.26%. That is the main reason. Last year, this project was not there. There was an answer to the question about monetizing the assets, and you mentioned 3 projects are underway and due diligence. You mentioned the monetizing figure but I think
Q
Sir, my first question is on the bid pipeline. If you can highlight, especially on the non-road segment, what is your bid pipeline in water and Railways? That is my first question.
Talluri Raghupati Rao
In the water sector, as we mentioned, our primary target is the Jal Jeevan Mission projects where we find there is no constraint of funds. So, our primary target would be Jal Jeevan Mission where as we know, if you see the projects that have been floated by the different state governments, around Rs. 20,000 crores to Rs. 25,000 crores of new projects are expected to be bid out in the next 2-3 months. And in other things, as of now, our focus is on the roads and highways which will be our focus going forward and the water sector. We are not particularly looking at other sectors as on date. Sir,
Q
Sir, my question again is on the JJM. The pace of approval seems to be a little slower. We did mention that there is no funding constraint. But still the speed at which we have been getting the approvals, I think it is far slower than what we would have originally expected. Any reason that you think this is happening?
Yogesh Kumar Jain
Generally, Ashish, a complete DPR is required to be done in this. After the complete survey is over and when they hand over the land, all this process takes 4-5 months. After the 4-5 months when we submit it, then zero date for it will start after the approval. As of today's date, you can say that the total value of contracts secured in drinking water is around Rs. 7,000 crores. Value of the projects approved for execution till September is around Rs. 2,300 crores, i.e., we can say that we can execute Rs. 2,300 crores worth of work. Basically, what I am trying to ask is, are there any administ
Q
My first question was towards Eastern Peripheral. As I recollect that the Eastern Peripheral was for 1 year only. By December 2022, we should be done with it or there is any extension or can you just give us some color on it?
Yogesh Kumar Jain
Yes, it is already handed over to NHAI on 10th November 2022 The Eastern Peripheral NHAI, as you know, one of the ToT bidders secured this project for the next 15 years. So, on the 10th of November at 2400 hours, we handed it over back to NHAI, so 50 days before the scheduled date of 31st December. Are we looking for any more ToT projects going ahead? Given that they are margin dilutive, even for a brief period, are we looking forward to bid into this model? Not now. As of now, nothing.
Q
Sir, I would like to know the total bidding pipeline for road projects in H2 and the amount of bids that you have already put in till date.
Yogesh Kumar Jain
The MoRTH and NHAI floated around 85 projects, including EPC and HAM. The aggregate value of these projects is around Rs. 80,000 crores. We are working on around 50 projects opportunities with an aggregate estimated project cost of Rs. 50,000 crores. The due dates are staggered up to December and January. There is a worth of Rs. 11,000 crores we already bid out, we submitted our bids. They are under evaluation. The price bids are expected to be opened before 31st December, maybe in the next 1 to 1-1/2 months. The bids we had already submitted. And sir, we have received PCOD for multiple projec
Q
Sir, my first question is on the competitive intensity. Last couple of years, we have seen very high competition for road projects. What is the kind of competitive intensity that we expect this year? And also a similar question for the JJM or the water projects that we are targeting?
Talluri Raghupati Rao
As we know that due to dilution of criteria for the bidding, both in terms of networth and turnover and other things and also they dispensed with the requirement of bid security as a part of Aatmanirbhar Abhiyaan, the competition was much aggressive. Now the bid security requirement they reintroduced and also then the eligibility and the experiential criteria and turnover criteria are also expected to be restored. So, competition would be less. But if you see typically, the competition for EPC projects will always be more than the HAM projects. And also, competition for the larger size of proj
Q
Sir, my question was with respect to our guidance for FY25? If I heard you right, I think we are targeting around 10% growth in FY24. But I think somewhere in your comments, you mentioned that you expect JJM water to kind of contribute almost around Rs. 2,500 crores in FY24 versus Rs. 1,000 crores that you are expecting in FY23. There is a jump of almost around Rs. 1,500- odd crores in the water itself. Does it mean that we are targeting lower revenues in the road segment because the overall growth that you are talking about for FY24 is only around Rs. 700 crores or are we being a little conse
Yogesh Kumar Jain
This is on conservative side because we are expecting appointed date in our HAM projects. After appointed date, we can give you a proper guidance. And also, if you can help us with the execution time line for the water projects vis-a-vis for which we have DPRs approved and you have zero day, how many months does it take you to be able to kind of finish and how has our experience been? Are you able to stick to your timelines which are mentioned in the document that you will finish these projects by this time or these many months? Post signing of the cover agreements, i.e., after approval of the
Q
Sir, you have given a bidding pipeline of Rs. 80,000 crores. Can you bifurcate between EPC and HAM? What would be the proportion of EPC and HAM in this bidding pipeline of Rs. 80,000 crores?
Talluri Raghupati Rao
It would be something like 50-50% you can say. Maybe HAM slightly higher than EPC. How much balance equity investment will be done in FY23? The balance of, in the second half, Rs. 250 crores.
Q
Sir, any idea on any new big state projects coming up besides the NHAI projects? UP or any other states?
Talluri Raghupati Rao
As of now, we don't see any major projects coming from the state governments, because most of the state governments, they have state highways. As mentioned by our MD, these state highways, they want to give it to the central government for the development. So, in maybe the next 2 to 3 months, we don't expect any major projects in the highway sector coming from the state governments. The greenfields like Ganga Expressway or anything like that, any major mega projects of states you are expecting? The Maharashtra government recently announced some big projects. Do you think any of these will be c
Q
Most questions are answered. Just a couple of questions. One is, of this Rs. 19,000 crores order book, how much is currently under execution at this point of time?
Talluri Raghupati Rao
Out of Rs. 19,000 crores, around Rs. 12,000 crores projects are under execution. If you precisely go for the sector of the road projects, it will be around Rs. 10,000 crores because the road projects only around Rs. 2,300 crores projects approved and HAM projects another Rs. 7,000 crores appointed dates are to be fixed. So, it will be around Rs. 10,000 crores. And sir, in one of the previous questions, you mentioned that after the DPR, it takes 15 months to get it kind of completed. I just want to understand, when you receive these projects, typically, how we should consider the execution time
Q
Sir, when we are saying that we are looking at Rs. 7,000-odd crores inflow in roads. Mostly Rs. 5,000-odd crores would be from the HAM?
Yogesh Kumar Jain
We are expecting from both sides – EPC and HAM; we will see. My point was, because the competition would be high in the EPC, that's why I was trying to understand, can the proportion be 60% to 70% of this Rs. 7,000 crores would be on the HAM? It may be because HAM projects are more than EPC. And second, sir, last time we said we are expecting bonus on Mumbai-Nagpur also and Aligarh- Moradabad by March 2023 we will be able to see. Any update on that? In Aligarh-Moradabad, it is in the process, and you can say, Samruddhi Expressway is also in the process. By when and if it comes, what would be t
Q
Thank you everyone for your participation in our earnings call. 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.
Management
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Speaking time
Talluri Raghupati Rao
28
D. K. Maheshwari
23
Shravan Shah
22
Yogesh Kumar Jain
20
Moderator
17
Parikshit Kandpal
14
Jiten Parmar
6
Nikhil Abhyankar
6
Parvez Qazi
4
Mohit Kumar
3
Opening remarks
Talluri Raghupati Rao
A small request. Please read out the standard disclaimer clause before our Managing Director will start the speech because he will be making forward-looking statements in the speech.
Yogesh Kumar Jain
Good afternoon and season greetings to everyone. On behalf of PNC Infratech Limited, I extend a very warm welcome to everyone for joining us today on this call. I have with me Mr. T. R. Rao, Director, Infra; Dr. Bhupinder Sawhney, CFO; Mr. D. K. Maheshwari, Vice President (Finance); and Strategic Growth Advisors, our investor relations advisors. We have uploaded the financial results and investors presentation on the website of the stock exchange as well as on our company's website for reference. I will quickly highlight major developments in the sector before sharing key happenings in the company and financial performance during quarter 2 and H1 of financial year '23 with you. As per the Ministry of Transport and Highways, 3,559 kilometers length of National Highways built during the first half of current financial year as compared to 3,824 kilometers built during the corresponding period previous year. Awarding of new projects stood at 4,092 kilometers during the same period compared
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