Kore Digital

Kore Digital's flagship Samruddhi project, encompassing 1,400 kilometers of fiber optic pipeline, is actively under execution. Management reported a current completion rate of 9-10% as of the call date. The project is being executed from both Mumbai and Nagpur ends, with the Mumbai-Nashik duct part being particularly critical for saleability once connected. The entire project is targeted for completion by the end of the next financial year (FY26).

Beyond the Samruddhi project, Kore Digital currently has no other unexecuted orders. However, management indicated a strong pipeline, expecting 4-5 new orders to materialize by March end. Additionally, the company is in advanced stages of securing a defense contract, focusing on providing 3D printed metal parts for indigenization efforts with the Directorate of Indigenization Indian Army. An official announcement for this contract is also anticipated by March end, pending final paperwork.

To enhance operational clarity and manage diverse business models, Kore Digital has established three subsidiaries. These subsidiaries are structured to handle distinct aspects: an EPC model for subcontracted construction work, a co-build model for joint ventures with telecom/infrastructure companies, and a leasing model for owning and leasing assets. This structure aims to provide better clarity for investors, taxation authorities, and internal management, with plans for a fourth subsidiary for defense-related activities.

Management confirmed the need for fundraising to support future growth, particularly to achieve the INR1,000 crore revenue target for FY26. However, current market conditions are deemed 'bad,' leading to a delay in fundraising efforts until after March. The company is currently operating at maximum capacity, and any new projects would necessitate expanding its team, indicating a need for capital for both project execution and organizational growth.

An analyst raised a concern about a significant increase in inventory. Management clarified that inventory build-up is inherent to their infrastructure business model. Projects involve extensive construction before being sold or leased, meaning inventory naturally accumulates until completion and sale. This is not indicative of unsold stock but rather work-in-progress awaiting finalization and monetization.

Regarding potential competition from Starlink, management expressed confidence that it does not pose a threat to Kore Digital's business. They highlighted the fundamental difference between fiber optic's unlimited capacity and satellite communication's limited transponder capacity (1-2 gigs vs. gigabit connectivity). Management asserted that fiber optics remain superior for corporate and home broadband needs, especially given the scale of their infrastructure projects.