Bharat Global Developers Limited — Q3 FY25 earnings call

Call held 15 Feb 2025

Management summary

Kore Digital's Q3 FY25 earnings call highlighted steady progress on the Samruddhi project, which is 9-10% complete, and reiterated FY25 revenue guidance of INR300-400 crores. The company is actively pursuing new orders and a defense contract, both expected by March end, with fundraising planned post-March. However, concerns were noted regarding the current lack of other unexecuted orders, slow government billing, and existing capacity constraints.

Highlights

  • An analyst noted 'very good numbers' and that the company 'crossed last year full PAT' for the quarter.

  • The Samruddhi project, covering 1400 km, is actively under execution with 9-10% completion reported.

  • Management anticipates 4-5 new orders and a defense contract to be finalized by March end.

  • Strategic restructuring into subsidiaries aims to improve clarity for investors and authorities by segregating business models.

Concerns

  • Currently, there are no other unexecuted orders apart from the ongoing Samruddhi project.

  • The company faces challenges with slow billing and payment cycles from government projects.

  • Fundraising plans are delayed until after March due to 'bad' market conditions.

  • Operating at maximum capacity, the company requires team expansion to take on new projects.

What they filed

Q4 FY26: revenue down 75.7%, net profit down 88.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY23Q2 FY24Q2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q4 FY26
Revenue15 15 92 119 40 +166%157 +945%34 −63%29 −76%
EBITDA3 4 11 19 6 +94%20 +352%6 −41%6 −67%
Net profit2 3 8 13 2 −9%14 +350%2 −68%2 −88%
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

Execution

expected to complete by end of next financial year (FY26)

Pipeline

deal pipeline tcv

4-5 more orders in pipeline, defense contract

The company's current unexecuted order book primarily consists of the Samruddhi project, which involves 1,400 kilometers of pipeline construction and is expected to take 2-3 years to complete. Management confirmed no other pending unexecuted orders at present, but a pipeline of 4-5 new orders and a defense contract are anticipated by March end.

Source: Q&A

Guidance & targets

Revenue

  • FY25 Revenue Revenue · FY25 · High confidence INR300-400 crores
    If I give guidance, I will definitely achieve it. INR300 crores to INR400 crores today I'm telling you I will achieve it.

    — Ravindra Doshi

  • FY26 Revenue Revenue · FY26 · Medium confidence INR1,000 crores
    No, I mean in future to achieve INR1,000 crores, just wanted to know. So I got my answer that to achieve INR1,000 crores, you will be requiring some fund raise. That would be discussed after... Yes, that will be next year next financial year.

    — Ravindra Doshi

Rentals

  • FY25 Rental Income Rentals · FY25 · High confidence INR25-30 crores
    We are expecting about INR25 crores to INR30 crores from rentals in financial year end.

    — Ravindra Doshi

Project Completion

  • Samruddhi Project Completion Project Completion · End of next financial year (FY26) · High confidence 100%
    And actual completion is by when, sir, in terms of the whole project... Next year end. End of next financial year.

    — Ravindra Doshi

New Orders

  • New Order Signings New Orders · By March end · Medium confidence 4-5 orders + Defense contract
    Expected by month end, we have something in pipeline, 4, 5 more orders. ... It is expected by March end, which is very, very positive things are there, but then papers are not signed. ... Once I have paper signed, my NDAs and things are in place, agreements are in place, then I will make the announcement. It is expected by March end, which is very, very positive things are there, but then papers are not signed.

    — Ravindra Doshi

What to watch in Q4 FY25

New Order Signings

Next quarter (by March end)
Current No other unexecuted orders apart from Samruddhi
Target Signing of 4-5 new orders

Why it matters

New order signings are crucial for diversifying the revenue stream and ensuring future growth beyond the current large project.

Expected by month end, we have something in pipeline, 4, 5 more orders. ... It is expected by March end, which is very, very positive things are there, but then papers are not signed.

Risks & concerns

  • Limited unexecuted order book beyond Samruddhi

    medium

    Management confirmed no other unexecuted orders currently, impacting future revenue visibility beyond the ongoing large project.

    Analyst acknowledged

  • Slow billing and payments from government projects

    medium

    Management noted challenges with slow billing and payment cycles when dealing with government clients.

    Management acknowledged

  • Unfavorable market conditions for fundraising

    medium

    Management stated that the market is 'bad' for fundraising, delaying plans until after March, which could impact the achievement of future growth targets.

    Management acknowledged

  • Capacity constraints for new projects

    low

    The company is operating at maximum capacity, requiring team expansion to take on new projects, which could slow down new business acquisition.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Receivables status and aging Evasive
Chitreshji, all the analysis is available on paper. Why do you want to visit it again and again? In receivable, it is reported or I will ask my CA.

Management avoided providing specific details on receivables, including overdue amounts, which is a key indicator of financial health.

Asked by Chitresh Lunawat

Current unexecuted order book beyond Samruddhi Direct
absolutely, there is no other order as of now, which is pending, unexecuted.

Reveals a lack of other significant unexecuted orders beyond the large Samruddhi project, impacting future revenue visibility.

Asked by Chitresh Lunawat

Fundraising plans for INR1000 crore target Direct
We will do it after March... We will be doing fundraising, but after March, not now. Market is also bad. This is not right time to raise the fund.

Indicates the necessity of fundraising to achieve ambitious future targets and provides a timeline, while also highlighting current market challenges.

Asked by Chitresh Lunawat

Progress on defense contracts Partial
Sir, please wait. I'll be making announcement soon. It is -- that is what I said, it is not proper for me to speak at this time. If I said I'm doing something, definitely I'm doing it. Once I have paper signed, my NDAs and things are in place, agreements are in place, then I will make the announcement. It is expected by March end...

Confirms ongoing progress and high expectations for a defense contract, with an anticipated announcement by March end, but details are withheld until signing.

Asked by Chitresh Lunawat

Significant increase in inventory Direct
Inventory is going to pile up unless it is sold, simple. This business is very straight, Guptaji. The work is to be done, it will be done, it will remain. Then only it will be sold. It won't be unconstructed.

Clarifies that inventory build-up is a natural part of their infrastructure construction business model, where work is completed before being sold.

Asked by Ayan Gupta

Threat from Starlink entering India Direct
Not now, not in future. Take my word for it. Technically, it cannot challenge -- see, what you are using right now at your place is maybe 100 Mbps or 1 gig line. And satellite transponders have limitation of 1 or 2 gigs. Here, we are using gig line in all corporates. It is very common. You will have 1 gigabit connectivity at broadband at your home or at your office. There is a massive difference. ... Basically, the answer is no, there is no threat.

Management confidently dismisses Starlink as a competitive threat due to fundamental technological differences and capacity limitations of satellite communication versus fiber optics.

Asked by Jimmy

Details and progress of the 700km project (Samruddhi) Direct
No, no. 700 kilometers means Samruddhi. That is the size of Samruddhi. Prakash sir, the capacity are limited for us, first will complete 700 kilometers then we will take additional. This is massive project. This is one of the biggest project done by any private company all over India. ... This is 700 plus 700. One site 700, other site 700. So 1,400 kilometers are under execution. ... Percentage, let me check today's report, 9% to 10%.

Provides crucial clarification on the scale and progress of the flagship Samruddhi project, confirming 1400 km under execution and 9-10% completion.

Asked by Prakash Israni

Structure and purpose of subsidiaries Direct
basically we have created subsidiaries, new companies are formed and then we have shifted the existing business to them. For the clarity, basically one we have is EPC model where we take construction work from bigger companies on subcontract and execute further and that is plain execution, no complication. Simple, we take the job and complete it. ... So that is why for clarity, I have created three. One more will be done. So it is not only for investors, it is for the taxation authorities. Everyone is getting confused.

Explains the strategic rationale behind creating subsidiaries to streamline operations, improve clarity for stakeholders, and manage different business models (EPC, co-build, leasing).

Asked by Manickam Ravichandran

2 min read 6 chapters

Detailed narrative

Samruddhi Project Execution Update

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).

New Business Pipeline and Defense Contracts

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.

Strategic Subsidiary Structure for Operational Clarity

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.

Fundraising Plans and Market Conditions

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.

Inventory Management and Business Model

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.

Competitive Landscape and Starlink

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.

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

More Telecommunication earnings calls