Man Infra — Q2 FY24 earnings call

Call held 7 Nov 2023

Management summary

Man Infraconstruction reported a mixed Q2 FY24, with revenue declining due to project completion cycles and revenue recognition methodology, but strong growth in net profit for both Q2 and H1. The company highlighted significant new project launches and acquisitions in Mumbai's luxury and redevelopment segments, with substantial revenue potential. Management expressed a bullish outlook on the Indian real estate market, driven by income growth, and maintained a strong balance sheet with healthy liquidity.

Highlights

  • Q2 FY24 Revenue from operations stood at INR215 crores, a 46.4% decline YoY.

  • H1 FY24 EBITDA grew 8.1% YoY to INR174 crores.

  • Q2 FY24 Net Profit increased 32.1% YoY to INR70 crores.

  • H1 FY24 Net Profit jumped 65.2% YoY to INR152 crores.

  • Declared a total dividend of INR1.08 per equity share for FY23-24.

  • Maintained net cash positive balance sheet with over INR600 crores liquidity as of September 2023.

  • Launched 'Aaradhya Avaan' (Tardeo) with an estimated revenue potential of over INR3,000 crores.

  • Acquired Goregaon West project with a revenue potential exceeding INR4,000 crores over five years.

Key financials

3 periods

Headline

  • Revenue from Operations
    ₹215 Cr
    YoY -46.4%

Q2 FY24

  • Net Profit
    ₹70 Cr
    YoY +32.1%

H1 FY24

  • Total Income
    ₹767 Cr
    YoY -0.9%
  • EBITDA
    ₹174 Cr
    YoY +8.1%
  • Net Profit
    ₹152 Cr
    YoY +65.2%
  • Interest Cost
    ₹15.7 Cr
    YoY -46.4%

What they filed

Q1 FY27: revenue up 4.0%, net profit down 1.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue71 86 131 99 58 −18%64 −26%65 −50%103 +4%
EBITDA14 20 21 27 11 −21%11 −45%13 −38%71 +163%
Net profit30 43 39 61 30 +0%30 −30%33 −15%60 −2%
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

Share of Revenue
₹215 Cr Total
  • EPC ₹122 Cr 56.7%
  • Real Estate ₹93 Cr 43.3%

Guidance & targets

Revenue

  • Revenue Potential (Ghatkopar East Redevelopment) Revenue · next four years · High confidence >INR1,200 crores
    This project spans redevelopment of 10 societies having a revenue potential of more than INR1,200 crores over the next four years.

    — Manan Shah, Managing Director

  • Revenue Potential (Goregaon West Project) Revenue · next five years · High confidence >INR4,000 crores
    This project entails a carpet area of sale for more than 17 lakh square feet and construction area of over 55 lakh square feet, which is expected to generate a revenue of more than INR4,000 crores in the next five years.

    — Manan Shah, Managing Director

  • Revenue Potential (Aaradhya Avaan, Tardeo) Revenue · High confidence >INR3,000 crores
    The project is estimated to have a revenue potential of approximately more than INR3,000 crores.

    — Manan Shah, Managing Director

  • International Revenue Start (US Market) Revenue · down the line two years · Medium confidence two years
    As far as the revenue is concerned, the revenue will start coming from US market down the line two years and within four years whatever the investment we did that will be free along with the project completion.

    — Parag Shah, Chairman Emeritus

Project Launch

  • Ghatkopar East Gated Community Launch Timeline Project Launch · Q4 2024 · High confidence last quarter of 2024
    Expected to launch in the last quarter of 2024, it marks a pioneering milestone introducing the first 12,000 plus square meter gated community in Ghatkopar East.

    — Manan Shah, Managing Director

  • Goregaon Project Launch Timeline Project Launch · Q2 FY25 · Medium confidence Q2 next financial year
    We will be launching it but it would probably be in the second quarter of the next financial year.

    — Manan Shah, Managing Director

  • New Projects (Pali Hill, BKC, Ghatkopar, Wadala) Start Timeline Project Launch · Q1 or Q2 FY25 · Medium confidence first quarter or second quarter of next financial year
    But these all projects will start in the first quarter or second quarter of next financial year.

    — Parag Shah, Chairman Emeritus

Sales

  • Pre-sales Booking (FY25) Sales · next financial year · High confidence similar to more than INR1,000 crores

    From INR1,000 crores (FY23) today

    That kind of numbers for the next financial year we are comfortable where we are looking at because lot of these other projects which we have added will generate these kind of revenues and we are confident on achieving similar to more.

    — Manan Shah, Managing Director

  • Estimated Project Sale Value (Aaradhya Avaan, Tardeo) Sales · by the end of the completion of the project · High confidence INR3,500 crores to INR4,000 crores
    Now, in this DM model, we have to understand that the Tardeo estimated sale is approximate by the end of the completion of the project it will be somewhere around INR3,500 crores to INR4,000 crores.

    — Parag Shah, Chairman Emeritus

  • Sales Volume (Ghatkopar Project, Jan launch) Sales · by next March · High confidence 1.5 lakh square feet to 2 lakh square feet
    Ghatkopar, we are launching the project in the month of January which is around 4.5 lakhs square feet and we are 100% confident that by next March, we will be able to sell almost 1.5 lakh square feet to 2 lakh square feet out of that.

    — Parag Shah, Chairman Emeritus

Debt

  • Interest Cost Outlook Debt · second half of the current financial and the next year · High confidence further down or it will be same
    Yeah, it will be further down or it will be same. Because we have not taken any further loan and neither we are intending to take any further debt in near future. We don't need also.

    — Parag Shah, Chairman Emeritus

Investment Return

  • International Investment Payback (US Market) Investment Return · within four years · Medium confidence within four years
    As far as the revenue is concerned, the revenue will start coming from US market down the line two years and within four years whatever the investment we did that will be free along with the project completion.

    — Parag Shah, Chairman Emeritus

Risks & concerns

  • Thin margins in certain infrastructure segments due to heavy competition.

    low

    Management stated they avoid road and other infrastructure work due to heavy competition and thin margins, focusing on higher-margin port and real estate projects.

    Management acknowledged

Q&A highlights

3 direct
Pre-sales booking guidance for FY24/FY25 given new project launches (Tardeo, Ghatkopar, Goregaon). Direct
That kind of numbers for the next financial year we are comfortable where we are looking at because lot of these other projects which we have added will generate these kind of revenues and we are confident on achieving similar to more [than INR1,000 crores].

Provides forward-looking sales targets and management's confidence in the new project pipeline to drive future revenue.

Asked by Dhananjay Kumar Mishra

Comparison of H1 FY24 sales performance (0.9 lakh sq ft, INR235 crores) with FY23 (4.34 lakh sq ft, INR992 crores) and FY24 outlook. Direct
As per the accounting standard, we cannot recognize the sales till we complete the 25% construction work... in this DM model, we have to understand that the Tardeo estimated sale is approximate by the end of the completion of the project it will be somewhere around INR3,500 crores to INR4,000 crores. But it will not reflect in the balance sheet of Maninfra. We will get 12.6% on that INR4,000 crores.

Clarifies the revenue recognition methodology and the impact of the Development Management (DM) model on reported sales vs. actual project value, which is crucial for understanding the company's financial statements.

Asked by Manish Ostwal

Macro real estate market outlook, demand resilience despite RBI interest rate hikes, and comparison to previous cycles. Direct
See, we are very bullish on the market. And we strongly believe that India is really doing good... Interest cost has shoot up, but peoples are income has been shoot up. The people's requirement because of more income has been shoot up.

Provides management's perspective on the broader market environment, key demand drivers (income growth offsetting interest rates), and their long-term positive outlook.

Asked by Manish Ostwal

3 min read 6 chapters

Detailed narrative

Q2 & H1 FY24 Financial Performance Overview

Man Infraconstruction reported Q2 FY24 revenue from operations at INR215 crores, a significant 46.4% decline YoY from INR401 crores in the previous year, primarily due to revenue recognition cycles. Despite this, H1 FY24 EBITDA grew 8.1% YoY to INR174 crores, and net profit for H1 FY24 jumped 65.2% YoY to INR152 crores. Q2 FY24 net profit also saw a robust 32.1% YoY increase to INR70 crores. The company maintained a net cash positive balance sheet with over INR600 crores in liquidity as of September 2023 and declared a total dividend of INR1.08 per equity share for FY23-24.

Strategic Project Launches and Acquisitions

The company launched 'Aaradhya Avaan' in Tardeo, South Mumbai, an ultra-luxury residential tower with an estimated revenue potential of over INR3,000 crores. They also acquired a redevelopment project in Ghatkopar East (10 societies) with a revenue potential exceeding INR1,200 crores over the next four years, and a large 10-acre project in Goregaon West, expected to generate over INR4,000 crores in revenue over five years. These new projects significantly expand MICL's real estate portfolio to 5.9 million square feet of RERA carpet area.

Real Estate Sales and Inventory Status

In H1 FY24, MICL achieved sales of 92,000 square feet of carpet area with a value of INR235 crores, and collections of INR465 crores. The company emphasized its strength in having zero inventory for completed portions of 'Aaradhya One Earth' at Ghatkopar East and negligible inventory (90%+ sold) for the two delivered towers of Atmosphere O2 at Mulund West. Management clarified that sales from new DM model projects like Tardeo, with an estimated sale value of INR3,500-4,000 crores, will reflect as 12.6% DM fees on the balance sheet rather than full project revenue.

EPC Division Order Book and Execution

The EPC division's order book stood at INR1,156 crores as of September 2023, encompassing over 110 hectares of port work and 4.8 million square feet of other infrastructure residential works. MICL has executed over INR1,000 crores of work for the BMCT port project and received nearly INR1,000 crores in collections. The company also added a PMC contract for the Aaradhya Avaan project, covering 18 lakh square feet of construction area, further diversifying its EPC revenue streams.

Market Outlook and Growth Strategy

Management expressed a very bullish outlook on the Indian real estate market, citing India's economic resilience, increased disposable income, and rising aspirations for home ownership as key demand drivers. They noted that increased income is offsetting higher interest rates. The company's strategy focuses on financial discipline, timely project completions, and maintaining a healthy balance sheet. They specifically avoid highly competitive infrastructure segments like roads due to thin margins, preferring higher-margin real estate and port projects.

International Investment Update

MICL has invested approximately $29.5 million in three to four real estate projects in Florida, USA. Management expects revenue from these US market investments to start coming in within two years, with the entire investment becoming free within four years. However, the company is not intending to invest significantly more in the US market at this moment, believing that the Indian market offers much better opportunities for growth and returns.

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