Dilip Buildcon Limited — Q3 FY25 earnings call

Call held 15 Feb 2025

Management summary

Dilip Buildcon reported a mixed Q3 FY25, with standalone revenues and profits declining due to muted order inflows and lower execution. However, consolidated 9M FY25 results showed strong EBITDA and PAT growth, primarily driven by the robust performance of its Coal MDO business and gains from HAM asset divestments. The company is actively pursuing debt reduction, targeting INR1,500 crores by March 2025, and progressing with its public InvIT formation, despite acknowledging delays in order finalization from the government.

Highlights

  • Consolidated 9M FY25 EBITDA increased by 37% to INR1,490 crores, driven by MDO business, completed HAM assets, and exceptional divestment gains.

  • Consolidated 9M FY25 PAT increased by 185% to INR563 crores.

  • Coal MDO business is on an accelerated execution path, with 9M FY25 production of 17.45 million metric tons, exceeding the annual target of 22 million metric tons and expecting to reach 25 million metric tons for the full year.

  • InvIT formation process is progressing well, with JB approval received for a public listed InvIT, expected to conclude in Q1 of the coming year.

  • Successfully concluded Shrem InvIT deal, receiving INR60-80 crores per annum from the InvIT for its stake.

Concerns

  • Standalone Q3 FY25 Revenue decreased by 16% to INR2,155 crores from INR2,571 crores.

  • Standalone Q3 FY25 EBITDA decreased by 34% to INR210 crores from INR318 crores.

  • Standalone Q3 FY25 PAT decreased by 7.37% to INR88 crores from INR95 crores.

  • Order inflows remained muted in the past 12-15 months, leading to a 16% decline in top line YoY and 12% on a 9-month basis.

  • Debt reduction plans have been delayed by 9-12 months due to lower order inflow, lower revenue, and stuck receivables, with net debt increasing to INR2,177 crores as of Dec 31, 2024, from INR1,515 crores in March 2024.

Key financials

2 periods

Q3 FY25

  • Standalone Revenue
    ₹2,155 Cr
    YoY -16%
  • Standalone EBITDA
    ₹210 Cr
    YoY -34%
  • Standalone PAT
    ₹88 Cr
    YoY -7.4%

9M FY25

  • Consolidated Revenue
    ₹8,221 Cr
    YoY -5%
  • Consolidated EBITDA
    ₹1,490 Cr
    YoY +37%
  • Consolidated PAT
    ₹563 Cr
    YoY +185%

What they filed

Q1 FY27: revenue down 9.2%, net profit down 52.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,497 2,590 3,096 2,620 1,926 −23%2,138 −17%2,300 −26%2,378 −9%
EBITDA535 477 661 521 471 −12%382 −20%392 −41%429 −18%
Net profit266 158 277 271 214 −20%789 +399%124 −55%128 −53%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹16,600 Cr

as of 2024-12-31 quantified

Pipeline

L1 awaiting loa

Bidded projects awaiting opening and open pipeline

Order inflows have remained muted in the past 12-15 months, impacting top line and leading to lower economies of scale. Management expects strong order inflows in the next few months as orders have been floated.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Replacement capex
    Shravan ji, whenever we speak on capex, we speak net capex. So, we said INR100 crores, INR120 crores at the start. So, there are old sale also. So basically, net basis, the guidance for next year is also similar INR100 crores, INR120 crores. This year also, the guidance basis the net number. So, we have basically purchased new equipment for the business.
  • Debt Net ₹2,177 Cr Cost 10%
    • Repayment DBL Infra debt repayment in November ₹81 Cr
    Shravanji, March '24 number was INR1,515 crores. Now as on today, the 31st December 2024, the net debt number is INR2,177 crores. And we are saying the March '25, we will close at the number where we were there in FY '24. So INR1,500 crores around we will be having the net debt.
  • M&A Shrem InvIT Divestment · Closed

    Monetization of HAM assets, provides predictable cash flows and improved return ratios.

    Receiving INR60-80 crores per annum from InvIT for stake.

    As informed and discussed in the last quarter, we have fully concluded the Shrem InvIT deal. As per the deal, we have received the entire consideration in terms of cash and InvIT units. We continue to receive cash distributions of INR60 crores to INR80 crores per annum from the InvIT for our stake.
  • M&A Alpha Alternative Divestment · Pending regulatory · Consideration ₹457 Cr (undisclosed)

    Monetization of HAM assets.

    26% stake in 7 assets transferred, construction completed for 8th asset with 25% stake divested and PCOD expected soon. Balance 10 assets under construction to be divested post COD.

    Till now, we have transferred 26% stake in seven assets out of a total deal of 18 assets. In these seven assets, we have received COD and annuity has started. In the eighth asset, construction is completed, and we have divested 25% stake and will receive PCOD very soon. This will conclude the first tranche of the Alpha deal. Balance 10 assets are under construction as per the schedule and will be divested post receiving COD. Our InvIT formation process is also progressing well. We have received JB approval for forming the public listed InvIT, and we are hopeful of concluding that in the first quarter of this coming year. Total from Alpha against eight assets, we received total INR457 crores money.
  • Liquidity Liquidity disclosed JJM money from central government being released and arbitration payments in pipeline are expected to improve cash flow for debt reduction.
    So right now, we feel that our debt will come back to the same number as last financial year. This will be because we are expecting now JJM money from central government has being released. So that money that will get released, we're expecting some arbitration payments also to come in. So that will also happen. So all those different factors will bring it back to that.

Guidance & targets

Revenue

  • Revenue Revenue · FY25 · Medium confidence INR9,000 crores
    So now the revision this year, we should be doing a revenue of about INR9,000 crores.

    — Rohan Suryavanshi

  • Revenue Revenue · FY26 · Medium confidence Similar to FY25 (INR9,000 crores)
    Now with INR9,000 crores, how do I see next year going? Next year, we are expecting similar kind of revenues because the orders that we have, we are at least very confident that this much orders going to come — current order book. And as the year progresses, we will modify the guidance as we see the government activity on a surer footing. So right now, all these are estimates and we were looking into the future.

    — Rohan Suryavanshi

Order Inflow

  • Order Inflow Order Inflow · Till March 2026 · Medium confidence INR15,000-16,000 crores
    And Shravanji, as you said, total order book, INR15,000 crores to INR16,000 crores, though the last 12 to 15 months, the order inflow is lesser. But based on the already ordered bidded and new opening, we think the target is getting INR15,000 crores to INR16,000 crores order from now till next financial year-end.

    — Sanjay Kumar Bansal

Margin

  • EBITDA Margin Margin · Near-term · Medium confidence 10-10.5%
    As of now, that guidance of, I think, 10%, 10.5% that is happening is a safe sort of haven to kind of go forward with, given, like I said, the headwinds around where our current order book is and how much we'll be able to execute.

    — Rohan Suryavanshi

Debt

  • Net Debt Debt · March 2025 · High confidence Around INR1,500 crores

    From INR2,177 crores (Dec 2024) today

    Shravanji, March '24 number was INR1,515 crores. Now as on today, the 31st December 2024, the net debt number is INR2,177 crores. And we are saying the March '25, we will close at the number where we were there in FY '24. So INR1,500 crores around we will be having the net debt.

    — Sanjay Kumar Bansal

  • Net Debt Debt · March 31, 2026 · High confidence Around INR1,000 crores or less
    Yes, yes. In FY '25, '26, we are expecting further INR500 crores reduction. So basically, the debt reduction plan basically pushed by 9 months to 12 months. So, what we used to do last year, we will do next financial year. So, by 31st March 2026, the debt will be around INR1,000 crores or even lesser than INR1,000 crores.

    — Sanjay Kumar Bansal

Capex

  • Net Capex Capex · Next financial year · High confidence INR100-120 crores
    Shravan ji, whenever we speak on capex, we speak net capex. So, we said INR100 crores, INR120 crores at the start. So, there are old sale also. So basically, net basis, the guidance for next year is also similar INR100 crores, INR120 crores. This year also, the guidance basis the net number. So, we have basically purchased new equipment for the business.

    — Sanjay Kumar Bansal

Coal Production

  • Coal Production Coal Production · FY25 · High confidence Almost 25 million metric tons

    Previously 22 million metric tons → Almost 25 million metric tons

    Be in mind, even the 22 million was a higher target that we had kept. But as announced in the last con call, we are on track to even beat that target by at least 10% to 15%, meaning we'll end up doing this year with almost about 25 million metric tons of coal production.

    — Rohan Suryavanshi

  • Siarmal Coal Production Coal Production · Next year · High confidence 25 million tons

    From 18 million tons (this year) today

    Sanjayji, to add to Rohanji, in Siarmal, already the peak requirement is 50 million ton. So, this year, we are ending at 18 millions ton, next year, 25 million and so on in FY '28 the peak capacity, 50 million ton will be achieved. So, with these two MDOs, we are already at 57 million, and we are looking for new projects as well.

    — Sanjay Kumar Bansal

  • Siarmal Coal Production (Peak) Coal Production · FY28 · High confidence 50 million tons

    — Sanjay Kumar Bansal

InvIT

  • Public InvIT Listing InvIT · Q1 of coming year · Medium confidence Conclude in Q1
    Our InvIT formation process is also progressing well. We have received JB approval for forming the public listed InvIT, and we are hopeful of concluding that in the first quarter of this coming year.

    — Rohan Suryavanshi

  • Final InvIT Value (DBL share) InvIT · 2.5 years · Medium confidence INR4,000 crores
    Sure, sure, sure. Secondly, our target of final InvIT value of our share of INR4,000 crores in 2.5 years, are we on track on that?

    — Sanjay Parekh

HAM Divestment

  • Remaining 10 HAM assets divestment HAM Divestment · FY26 and beyond · High confidence 7 assets by March 31, 2026, 3 in next financial year after that
    Seven assets will be completed by 31st March '26 and three in next financial year after that.

    — Sanjay Kumar Bansal

What to watch in Q4 FY25

Net Debt Reduction

March 2025
Current INR2,177 crores (Dec 31, 2024)
Target Around INR1,500 crores

Why it matters

Debt reduction is a key focus for the company, and achieving this target would signal improved financial health and execution of deleveraging plans.

Shravanji, March '24 number was INR1,515 crores. Now as on today, the 31st December 2024, the net debt number is INR2,177 crores. And we are saying the March '25, we will close at the number where we were there in FY '24. So INR1,500 crores around we will be having the net debt.

Risks & concerns

  • Muted ordering activity and low economies of scale

    high

    Ordering activity has remained weak across all sectors for the past 12-15 months, leading to low economies of scale and margin contractions.

    Management acknowledged

  • Delay in debt reduction program

    medium

    Debt reduction plans have been delayed by 9-12 months due to lower order inflow, lower revenue, and stuck receivables, particularly from JJM.

    Management acknowledged

  • Government order finalization delays

    medium

    Government orders have not opened up as expected, impacting order inflow and revenue visibility, though management expects acceleration by Q1 FY26.

    Management acknowledged

  • Working capital intensity

    medium

    The company's asset-heavy model and in-house execution mean working capital release will be gradual, despite efforts to reduce it.

    Analyst acknowledged

Q&A highlights

5 direct
Order inflow and future targets Partial
Shravanji, we are saying that on a very conservative guidance because the orders have not floated till now by the government. The idea is obviously to be getting a lot more orders than this. But bare minimum, our still target will be to do this much.

Analyst questioned the conservative order inflow target (INR15-16k crores by March '26) given historical numbers, highlighting concerns about future revenue visibility. Management attributed it to muted government ordering and conservative estimates.

Asked by Shravan Shah

Debt reduction timeline and current status Direct
Shravanji, March '24 number was INR1,515 crores. Now as on today, the 31st December 2024, the net debt number is INR2,177 crores. And we are saying the March '25, we will close at the number where we were there in FY '24. So INR1,500 crores around we will be having the net debt.

Analyst sought clarity on the significant increase in net debt from March '24 to Dec '24 and the revised debt reduction timeline, which management confirmed was pushed by 9-12 months due to external factors.

Asked by Shravan Shah

Reasons for muted order inflow and government focus Direct
Historically, for the last 25 years, this was always a trend that the election year the orders dry up. The government doesn't focus on giving out new orders and the focus is on completing, ribbon cutting, etcetera.

Analyst questioned the dilemma of companies building infrastructure not getting awards despite government's infrastructure push. Management explained the historical trend of muted ordering during election years and acknowledged the continued delays post-election.

Asked by Saket Kapoor

DBL 2.0 vision and strategy Direct
The long-term goal is to keep building our long-term cash flows and eventually come to a place and position where long-term cash flows and profitability is more than 50%, more than 60%, more than 70%, keep on increasing that pie.

Analyst asked for an update on the DBL 2.0 strategy, particularly regarding current headwinds. Management reiterated the focus on reducing debt, building long-term revenue streams (MDO, InvIT), and improving return ratios and free cash flow.

Asked by Saket Kapoor

Timeliness of results reporting Partial
Sir, the results are always taken and presented once the Board members and a lot of other factors that come in. Also, bear in mind that ours is not a tech company, like when you see all the sector sector-wide, the numbers, how they are reported, we will also be reporting in a similar kind of time line.

Analyst questioned why results are reported late in the quarter, suggesting it indicates issues with internal systems. Management defended by stating it's typical for the sector and involves multiple factors, not just internal systems.

Asked by Saket Kapoor

Inventory levels and working capital release Partial
Shravanji, is our endeavour, like I mentioned earlier while we're focusing on all different areas of the company to keep reducing this as well as our model keeps shifting. But given that we still have all our equipment, which is doing all this job in-house, and there is a significant life there. So, the model will not change overnight. But there are changes that we are making and those changes will show gradually the thing that will happen.

Analyst asked about releasing working capital from inventory given lower revenue growth. Management acknowledged the endeavor to reduce working capital but noted that the asset-heavy, in-house model means changes will be gradual.

Asked by Shravan Shah

Government order book revival timeline Direct
Sanjayji, if the projects are not floating then there is worry. The NHAI has already floated INR1.3 lakh crores bids due to different regions because of land scarcity and clearance is happening, 100% this activity will get faster reaching till Q1. We only worried if there is no bid activity. So, we are not much worried about the state government projects, if we look at the central government's bid process, there are a lot of bids in the pipeline, the government hasn't declined in the budget, they have given a little more budget for FY '26, so I see the activity getting faster till Q1 on the ground, if I can tell you from my experience.

Analyst asked for management's view on when government order book activity would pick up. Management expressed confidence that activity would accelerate by Q1 FY26, especially for central government projects, citing increased budget allocation.

Asked by Sanjay Parekh

Impact of state populist schemes on state projects Direct
It depends on the state, which ruling state or which party's state rules, but the state government-based limited projects that we have, in Jal Jeevan Mission projects, 75% of India's participation is already there, so that is fine. Now, in Gujarat and other states, state-related projects, I don't see any funding problem, the rest of the Ladli Behna schemes that you are talking about, in the future, their impact will definitely be seen somewhere, but our DBL's strength, we usually target central government and central government funding-based projects only.

Analyst inquired about the potential negative impact of state populist schemes on state-level infrastructure projects. Management clarified that DBL primarily focuses on central government-funded projects, which are less affected, and sees no funding problems in states like Gujarat.

Asked by Sanjay Parekh

3 min read 6 chapters

Detailed narrative

Q3 & 9M FY25 Financial Performance Overview

Dilip Buildcon reported a 16% decrease in standalone revenue for Q3 FY25, reaching INR2,155 crores, down from INR2,571 crores in Q3 FY24. Standalone EBITDA also saw a 34% decline to INR210 crores, and PAT decreased by 7.37% to INR88 crores. However, on a consolidated 9-month basis for FY25, revenue decreased by 5% to INR8,221 crores, but EBITDA increased significantly by 37% to INR1,490 crores, and PAT surged by 185% to INR563 crores, primarily due to strong MDO business performance, completed HAM assets, and exceptional gains from divestments.

Order Book and Inflow Challenges

The company acknowledged that ordering activity has remained muted across all sectors for the past 12-15 months, contributing to a 16% YoY decline in top line and 12% on a 9-month basis. The current order book stands at INR16,600 crores. Despite this, Dilip Buildcon has bidded for projects worth INR20,000 crores that are awaiting opening, and the overall pipeline of open orders is INR130,000 crores. Management expects order inflows of INR15,000-16,000 crores by March 2026, albeit a conservative estimate due to government ordering delays.

Debt Reduction and Capital Structure

Net debt (standalone) increased to INR2,177 crores as of December 31, 2024, from INR1,515 crores in March 2024. This increase and delay in debt reduction plans (pushed by 9-12 months) are attributed to lower order inflow, reduced revenue, and stuck receivables. The company targets to bring net debt down to around INR1,500 crores by March 2025 and further to INR1,000 crores or less by March 31, 2026, supported by expected JJM receivables and arbitration payments. The blended cost of funds is approximately 10%.

HAM Asset Monetization and InvIT Progress

Dilip Buildcon has fully concluded the Shrem InvIT deal, receiving consideration in cash and InvIT units, and continues to receive INR60-80 crores annually from its stake. The first tranche of the Alpha deal is nearing completion, with 26% stake transferred in 7 assets and 25% stake divested in an 8th asset awaiting PCOD. The remaining 10 HAM assets are under construction, with 7 expected to be completed and divested by March 31, 2026, and the rest thereafter. The company's public InvIT formation process is progressing, with JB approval received, and listing is anticipated in Q1 of the coming year, targeting a final InvIT value of INR4,000 crores for DBL's share.

Coal MDO Business Performance

The coal MDO business is a significant growth driver, demonstrating accelerated execution. For the first nine months of FY25, production reached 17.45 million metric tons, and the company expects to exceed its annual target of 22 million metric tons, projecting almost 25 million metric tons for the full year. Specifically, the Siarmal MDO project is expected to increase production to 25 million tons next year and reach its peak capacity of 50 million tons by FY28, contributing to a total MDO capacity of 57 million tons (Pachhwara + Siarmal).

Capex and Operational Strategy

The company's capex strategy has shifted from historical annual spends of INR400-500 crores to a more focused INR100-120 crores for the next financial year, primarily for replacement capex. This aligns with the 'DBL 2.0' vision to reduce debt, build long-term revenue streams through MDO and InvIT, and improve return ratios. Management emphasized that while the asset-heavy, in-house model provides control over project timelines and quality, it also means working capital optimization will be a gradual process.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Construction earnings calls