Dhruv Consultancy Services Limited — Q3 FY25 earnings call

Call held 6 Feb 2025

Management summary

Dhruv Consultancy Services Limited reported a sequential decline in Q3 FY25 revenue to INR22.56 crores, primarily attributed to delays from state government elections and higher initial mobilization expenses. Despite this, 9M FY25 revenue grew 31.5% YoY to INR75.49 crores, and the company secured significant new projects, including a INR23.46 crores LOA and its largest railway sector contract. Management expressed optimism for March '25 and future growth, driven by diversification into new infrastructure sectors and international markets, and declared an interim dividend of INR0.1 per share.

Highlights

  • 9M FY25 Revenue grew 31.5% YoY to INR75.49 crores.

  • Q3 FY25 EBITDA margin was healthy at 20%.

  • Secured a INR23.46 crores LOA from Maharashtra State Industrial Development Corporation.

  • Awarded first general consultancy contract in the railway sector for INR11.05 crores.

  • Declared an interim dividend of INR0.1 per share.

Concerns

  • Q3 FY25 Revenue declined sequentially by 30% to INR22.56 crores from INR32.23 crores in Q2 FY25.

  • Order finalization delays due to state government elections and code of conduct impacted Q3 performance.

  • Initial mobilization expenses for new projects were higher, impacting Q3 profitability.

Key financials

2 periods

Q3 FY25

  • Revenue
    ₹22.56 Cr
    QoQ -30%
  • EBITDA
    ₹4.47 Cr
  • EBITDA Margin
    20%
  • PAT
    ₹2.15 Cr
  • Diluted EPS
    ₹1.2

9M FY25

  • Revenue
    ₹75.49 Cr
    YoY +31.5%
  • EBITDA
    ₹11.24 Cr
  • EBITDA Margin
    14.9%
  • PAT
    ₹4.91 Cr
  • Diluted EPS
    ₹2.92

What they filed

Q1 FY27: revenue down 26.1%, net profit down 397.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue33 22 28 21 19 −41%-6 −126%8 −70%16 −26%
EBITDA4 4 4 3 2 −47%-29 −854%-9 −301%-4 −213%
Net profit2 2 2 2 1 −47%-31 −1542%-0 −103%-5 −397%
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.

Capital allocation

  • Capex Capex disclosed
    • Purchase of two major equipment: falling weight deflectometer and mobile bridge inspection unit
    our preferential money proceeds have been used to purchase two major equipment. One is the falling weight deflectometer which is the second one now and a mobile bridge inspection unit is also a second one.
  • Debt Debt disclosed
    bank guarantees would be required and our banks we are in talks with our bankers, our present bankers, who are happy to assist us for the same.
  • Dividend ₹0.1/share (interim)
    We are pleased to announce our interim dividend of INR0.1 per share, reflecting our commitment to delivering shareholder value.

Guidance & targets

Order Book

  • Order Book Doubling Order Book · coming months · High confidence Double current order book
    we plan to double this order book in the coming months.

    — Tanvi Auti

  • Order Book Execution Timeline Order Book · 3 years · High confidence 3 years
    They will be in three years.

    — Pandurang Dandawate

Revenue

  • FY25 Revenue Growth Revenue · FY25 · Medium confidence Significant increase from FY '24
    So we are expecting a significant increase from FY '24.

    — Tanvi Auti

Project Size

  • Business Development Focus Project Size · future · High confidence INR20 crores plus projects
    our business development focus would be on INR20 crores plus projects, where we will see a good improvement in the EBITDA.

    — Tanvi Auti

What to watch in Q4 FY25

Order book growth

coming months
Current INR557 crores (total order book)
Target Doubling the order book (to ~INR1114 crores)

Why it matters

Indicates future revenue visibility and the company's ability to secure new projects.

we plan to double this order book in the coming months.

Risks & concerns

  • Delays in order finalization due to government elections and code of conduct

    high

    State government elections in October and central government elections in May led to code of conduct, delaying tender scrutiny and order finalization, directly impacting Q3 revenue.

    Management acknowledged

  • Initial mobilization expenses impacting profitability

    medium

    Mobilization expenses for new large projects were higher, affecting Q3 profitability, though management expects future improvement in EBITDA margins.

    Management acknowledged

  • Dependency on government sector

    medium

    The company is actively working to reduce this dependency by expanding to private clients and international markets, having secured projects from private entities like HCC and GR Infra.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Challenges in Q3 performance (revenue, margins) Direct
First is that due to the state government elections that were there -- followed first, there was the central government elections in May, code of conduct was there, which was followed by the state government elections in October. So that had a minor impact on the billing on the top line as well as on the top line. Bottom line we have recent as I said in my opening remarks, we were awarded with two major projects... And hence, the initial mobilization expenses, as has been the trend before is slightly on a higher side.

Explains the sequential dip in revenue and margin pressure for the quarter, attributing it to political events and project-related costs.

Asked by Yashwanti

Future revenue outlook for coming quarters Partial
So we are expecting a significant increase from FY '24. We are not allowed to divulge any numbers as such. But March '25 looks to be quite good with now new stable governments coming in the state, as well as center. So March '25 looks quite good for us.

Provides a directional outlook for future growth, linking it to political stability and expected order finalization.

Asked by Mahesh Sheth

Capital allocation priorities and future funding needs Direct
our preferential money proceeds have been used to purchase two major equipment. One is the falling weight deflectometer which is the second one now and a mobile bridge inspection unit is also a second one... bank guarantees would be required and our banks we are in talks with our bankers, our present bankers, who are happy to assist us for the same.

Details recent investments in equipment and the strategy for funding future project requirements through bank guarantees.

Asked by Aditi Rao

Strategy for joint ventures and international project pipeline Direct
Now that we have established ourselves in almost all the states of the country and we require very less joint ventures... We have a few projects in pipeline in the international market. One is in Tanzania, Ghana, then in Zambia and there is a major project coming up in Philippines, which itself is a single INR200 crores project. So, FY '25 -- FY '25-'26 looks to be dominated by the international market for us and we are expecting a good success rate in these projects.

Clarifies the company's reduced reliance on JVs and highlights specific international expansion plans and pipeline projects.

Asked by Swaraj Singhania

How Dhruv positions itself for new opportunities in the infrastructure sector Direct
So in the highway sector, I would like to talk about first. In the past 21 years that the company is in existence now, we have become one of the top three top three, four consultants in India and we are now eligible for any large-sized ticket projects for six lane, eight lane, Greenfield, expressway projects, iconic structure... In the international market, when it comes to the highway sector, now that we can do any kind of -- we have the setup for any kind of service we can do in the highway sector and we plan to take this to the global market as well... For the other sectors that is there, railways we have established ourselves. Ports, we already had a project since 2016. Metros, we have been awarded projects from MMRDA.

Outlines the company's strategy for growth across domestic and international markets and diversification into new infrastructure sectors.

Asked by Priya Jain

Current order book value and its execution timeline Direct
Unexecuted order book is INR280 crores and total order book is around INR557 crores... They will be in three years.

Provides key metrics for future revenue visibility and the timeframe for converting the order book into revenue.

Asked by Yashwanti

Manpower addition plans given order book doubling and expansion Direct
So as far as the highway sector is concerned, if there is a supervision assignment, then yes, we need to hire people on contract basis. Our HR and our recruitment team is well capable of doing that. And people are actually preferring coming to our company since in our domain, we are the only listed company. We are giving ESOPs to our employees.

Addresses how the company plans to manage human resources for growth, highlighting competitive advantages in talent acquisition and employee benefits.

Asked by Yashwanti

Long-term top-line and bottom-line growth outlook (3 years) Evasive
We are actually not allowed to disclose any numbers as such. But as I've already mentioned that we expect a significant increase in March itself. And of course, in the coming years, where a lot of emphasis has been given on other infrastructure sectors in India, crores of -- lakhs and crores of provisions are being done for not just the highway sector, but railways, metros, ports, airports, energy and power.

Management avoids giving specific long-term numerical targets, but reiterates focus on diversification and overall growth, indicating a positive but unquantified outlook.

Asked by Yashwanti

2 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

Dhruv Consultancy Services Limited reported a Q3 FY25 revenue of INR22.56 crores, with an EBITDA of INR4.47 crores, resulting in a 20% EBITDA margin. Profit after tax stood at INR2.15 crores, translating to a PAT margin of 9.52% and diluted EPS of INR1.20. This quarter saw a sequential revenue decline of 30% from INR32.23 crores in Q2 FY25, primarily due to delays in order finalization and higher initial mobilization expenses.

Nine-Month FY25 Performance Highlights

For the first nine months of FY25, the company delivered a strong performance with total revenue reaching INR75.49 crores, marking a 31.5% year-over-year increase. EBITDA for this period was INR11.24 crores, with an improved EBITDA margin of 14.89%. Profit after tax for 9M FY25 was INR4.91 crores, maintaining a PAT margin of 6.5% and diluted EPS at INR2.92.

Operational Achievements and New Project Wins

Dhruv secured a significant Letter of Award (LOA) for an authority engineer project from Maharashtra State Industrial Development Corporation, valued at INR23.46 crores. The company was also shortlisted for a second major project by the government of Bangladesh. Furthermore, it received a notice to proceed for a INR11.05 crores general consultancy contract for the Garkhal Bridge project in Himachal Pradesh, marking its largest railway sector project to date and its first general consultancy contract.

Strategic Expansion and Diversification

The company is actively diversifying its service portfolio beyond highways into other infrastructure sectors such as railways, metros, airports, public health engineering, energy, and power. Dhruv is also expanding its international presence, with its first achievement in Mozambique and a pipeline of projects in Tanzania, Ghana, Zambia, and a INR200 crores project in the Philippines, anticipating international markets to be a dominant growth driver for FY25-26. The business development focus is shifting towards larger projects, specifically those above INR20 crores.

Challenges and Future Outlook

Q3 FY25 performance was impacted by delays in order finalization due to state government elections and the associated code of conduct, alongside higher initial mobilization expenses for new projects. However, management expects a significant increase in performance from FY24, with March '25 looking promising due to the formation of stable governments. The company plans to double its current total order book of INR557 crores in the coming months, with the existing order book expected to be executed over three years.

Capital Allocation and Shareholder Returns

Preferential money proceeds were strategically utilized to acquire two key equipment: a falling weight deflectometer and a mobile bridge inspection unit, enhancing operational capabilities. The company demonstrated its commitment to shareholder value by announcing an interim dividend of INR0.1 per share. For future projects, bank guarantees will be a requirement, and discussions are ongoing with existing bankers to facilitate these needs.

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