Kalpataru Projects International Limited — Q4 FY24 earnings call

Call held 9 May 2024

Management summary

KPIL delivered a record-breaking FY24, characterized by robust revenue growth and significant order inflows across T&D, B&F, and Oil & Gas segments. The company successfully integrated JMC Projects, achieving synergy benefits in finance costs and working capital management. Management is pivoting away from high-competition areas like Railways to focus on large-scale international T&D and Oil & Gas projects, targeting >20% revenue growth in FY25.

Highlights

  • Achieved highest ever annual consolidated revenue of ₹19,626 crores, up 20% YoY

  • Order book reached record high of ₹58,415 crores as of March 31, 2024

  • Annual order inflows surpassed ₹30,000 crores, a growth of 19% YoY

  • Standalone net debt decreased by 29% QoQ to ₹1,833 crores

  • Net working capital improved to 99 days, meeting the target of below 100 days

  • Consolidated EBITDA stood at ₹1,628 crores with a margin of 8.3%

  • Board proposed a dividend of ₹8 per share for FY24

  • Secured major breakthrough orders in Middle East Oil & Gas and domestic Metro tunneling

Key financials

  1. Consolidated Revenue ₹19,626 Cr +20%YoY
  2. Consolidated EBITDA Margin 8.3%
  3. Order Inflow ₹30,022 Cr +19%YoY
  4. Order Book ₹58,415 Cr
  5. Standalone Net Debt ₹1,833 Cr -29%QoQ
  6. Net Working Capital 99 days

What they filed

Q1 FY27: revenue up 8.8%, net profit up 31.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,136 4,826 6,204 5,040 5,419 +31%5,788 +20%6,964 +12%5,482 +9%
EBITDA348 402 523 428 447 +28%481 +20%672 +28%488 +14%
Net profit132 157 242 201 200 +52%211 +34%220 −9%265 +32%
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.

Segment breakdown

  • T&D
    30% Revenue Growth₹11,150 Cr Order Inflow₹20,678 Cr Order Book
  • Buildings & Factories (B&F)
    16% Revenue Growth₹6,528 Cr Order Inflow₹11,000 Cr Order Book
  • Oil & Gas
    ₹822 Cr Revenue₹7,953 Cr Order Inflow
  • Urban Infra / Water
    75% Urban Infra Revenue Growth₹3,500 Cr Water Revenue34% Water Revenue Growth

Guidance & targets

Revenue

  • Consolidated Revenue Growth Revenue · FY25 · High confidence >20%
    For FY25, we are targeting a revenue growth in excess of 20% with PBT margin closer to 5%

    — Manish Mohnot, MD & CEO

Profitability

  • PBT Margin Profitability · FY25 · Medium confidence 5%

    Previously 4.6% → 5%

    We believe we should be able to give a minimum 25 basis point improvement in margins. I have guided for 25 to 50 basis points, given the size and scale.

    — Manish Mohnot, MD & CEO

Capex

  • Annual Capex Capex · FY25 · High confidence ₹500 crores
    In the current year we are targeting a capex of closer to INR 500 crores with significant focus in Urban infra, the tunnel boring machines which should be coming in in the current year and B&F.

    — Manish Mohnot, MD & CEO

Debt

  • Promoter Pledge Reduction Debt · by March 2025 · High confidence 30%

    From 59% today

    The promoter has guided to reach 30% by March 25. We're already at 31% today.

    — Manish Mohnot, MD & CEO

Other

  • Indore Real Estate Divestment Other · next 12 months · High confidence ₹170 crores
    On the Indore real estate, we expect the entire INR 170 crores to come in the next 12 months and that would be a good inflow for us.

    — Manish Mohnot, MD & CEO

Risks & concerns

  • Supply Chain Bottlenecks

    medium

    Lead times for transformers and reactors have doubled from 2 to 4 months.

    Both acknowledged

  • Intense Competition in Railways

    medium

    High competitive intensity with 20-25 players has led KPIL to consciously scale down bidding in this segment.

    Management acknowledged

  • Election-Related Slowdown

    low

    Domestic tendering has been slightly dull in recent months due to elections, but a strong pipeline exists post-June.

    Management acknowledged

Areas of evasion (1)

  • Specific order inflow guidance for FY25 was deferred until Q1 results for post-election clarity.

Q&A highlights

3 direct
Spike in Other Expenses Direct
The other expenses went up significantly primarily because of specific areas of ECL and exchange loss... We have done an additional ECL provision of closer to INR 70 crores in the current year.

Clarifies that the expense spike was due to one-off provisioning and FX volatility rather than structural cost increases.

Asked by Jonas Bhutta, Birla Mutual Fund

Margin Reset and Long-term Guidance Direct
We believe margin improvements should come sooner than later... we should see at least 50 to 75 basis point increments coming even in FY25-'26... But double digit isn't happening soon.

Sets realistic expectations that while margins are improving, the company is not returning to pre-COVID double-digit levels in the near term due to its diversified mix.

Asked by Parikshit Kandpal, HDFC Securities

Supply Chain Issues in T&D Direct
We're seeing some issues in a few specific areas like transformers and reactors... whatever earlier what used to come in two months would now take four months and that's been budgeted already.

Acknowledges industry-wide bottlenecks in critical T&D components but confirms management has factored these delays into their execution timelines.

Asked by Ashwani, Emkay Global

2 min read 5 chapters

Detailed narrative

Record Order Book and Revenue Growth

KPIL concluded FY24 with its highest-ever consolidated revenue of ₹19,626 crores, representing a 20% YoY increase. This growth was underpinned by robust execution across all segments, particularly T&D which saw 30% growth. The order book stands at a record ₹58,415 crores, providing strong visibility for the next 2.5 to 3 years. Order inflows for the year were also at an all-time high of over ₹30,000 crores, driven by significant wins in international T&D and Middle East Oil & Gas.

Strategic Breakthrough in Oil & Gas

The Oil & Gas segment achieved a major milestone by securing a large-scale international order in the Middle East, contributing to a total segment inflow of ₹7,953 crores for the year. Management highlighted that this project has an execution timeline of 36 to 42 months and offers high single-digit EBITDA margins. This shift toward international markets is a deliberate strategy to avoid the high competition and low order flow currently seen in the domestic PSU Oil & Gas sector.

Margin Expansion and Synergy Realization

Following the merger with JMC Projects, KPIL has successfully realized synergies, particularly in finance costs which were maintained at 2% of sales despite a high-interest environment. The company is targeting a PBT margin of closer to 5% in FY25, an improvement of 25-50 basis points over FY24. Management expects further margin expansion of 50-75 basis points annually over the next 2-3 years as higher-margin international projects enter the execution phase.

Balance Sheet Discipline and Asset Monetization

KPIL demonstrated strong financial discipline by reducing standalone net debt by 29% in a single quarter to ₹1,833 crores. Working capital was brought down to 99 days, meeting the management's long-standing target. Asset monetization remains a priority, with the Indore real estate project expected to yield ₹170 crores in FY25. Additionally, the company is reviewing non-binding offers for its road asset (VEPL) and aims to reduce promoter pledging to 30% by March 2025.

Segmental Pivot: Scaling Urban Infra, De-prioritizing Railways

The company is aggressively scaling its Urban Infra and Water businesses, which grew by 75% and 34% respectively in FY24. Conversely, KPIL is consciously de-prioritizing the Railway segment due to extreme competitive intensity involving 20-25 bidders per project. The focus has shifted toward complex underground metro tunneling projects where the company has committed significant capex for Tunnel Boring Machines (TBMs) to maintain a competitive edge.

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