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    Man Infra

    MANINFRAGood
    Construction·5 Feb 2024
    Management Summary

    Man Infraconstruction reported a mixed Q3 FY24 with a decline in revenue but a significant expansion in EBITDA margin, driven by the DM model in real estate. The company successfully completed a substantial fundraising round and launched two major luxury real estate projects in Mumbai, with strong initial sales. Management expressed high confidence in future growth, backed by a robust project pipeline and a debt-free balance sheet, despite some year-on-year fluctuations in quarterly financials due to project completion cycles and accounting norms.

    Highlights

    8

    • Q3 FY24 Revenue from operations stood at INR 242 crores, compared to INR 457 crores in the previous year.

    • Q3 FY24 EBITDA was INR 103 crores, with a margin of 42.5%, significantly up from 28.2% in the previous year.

    • Net Profit for Q3 FY24 was INR 83 crores, slightly down from INR 85 crores in the previous year.

    • 9M FY24 Net Profit recorded a jump of 33% year-on-year to INR 235 crores, from INR 177 crores.

    • The company successfully raised INR 543 crores through a preferential route, with INR 136 crores already received.

    • Two ultra-luxurious projects, Aaradhya One Park (4.1 lakh sq ft) and Aaradhya Avaan (6.5 lakh sq ft), were successfully launched.

    • Aaradhya One Park achieved INR 333 crores in sales, representing approximately 25% of total estimated sales potential, within days of launch.

    • The EPC order book stands at INR 1,047 crores as of December 2023, including a PMC contract for Aaradhya Avaan (18 lakh sq ft construction area).

    What Changed2

    vs Q4 FY24

    Guidance items12 → 9 (-3)Risks discussed1 → 3 (+2)
    Key financials

    Metrics

    6

    Periods

    2

    Headline

    5
    • Revenue from Operations
      ₹242 Cr
      YoY-47%
    • Total Income
      ₹261 Cr
      YoY-44.7%
    • EBITDA
      ₹103 Cr
      YoY-20.1%
    • EBITDA Margin
      42.5%
    • Net Profit
      ₹83 Cr
      YoY-2.3%

    9M

    1
    • FY24 Net Profit
      ₹235 Cr
      YoY+33%

    Segment breakdown

    • Real Estate₹124 Cr51.2%
    • EPC₹118 Cr48.8%
    Donut· Share of Revenue (Q3 FY24)

    Guidance & targets

    9
    CategoryTargetPriority
    Fundraising
    Remaining preferential issue funds
    INR 407 crores
    		High
    Real Estate Sales
    Aaradhya One Park sales completion
    2 years
    		Medium
    Project Launch
    Aaradhya Avaan sales reflection
    mid of April
    		High
    Project Launch
    Pali Hill project launch
    by end of next year
    		Medium
    Project Launch
    Goregaon West (Royal Netra) project launch
    last quarter of next year
    		Medium
    Project Launch
    Vileparle project launch
    next year, first quarter
    		Medium
    Investment
    Investment capacity without debt
    more than INR 1,000 crores
    		High
    US Project
    US project profit recognition
    2026 onwards
    		High
    Business Outlook
    Overall business performance
    good
    		High

    Risks & concerns

    4
    RiskSeverity

    Seasonality and monsoon impact on EPC execution

    EPC work, especially in the port sector, is significantly impacted by the monsoon season, leading to reduced activity for about 3 months each year. — Management acknowledged

    medium

    Real estate revenue recognition delays

    Revenue from real estate projects can only be booked once 25% of sales and 25% of construction are complete, leading to lags between sales and financial reporting. — Management acknowledged

    low

    Delays in land acquisition and regulatory approvals for new projects

    Acquiring land and obtaining necessary approvals (IOD, CC, environment clearance, high-rise committee approval) for new real estate projects typically takes 1.5 to 2 years. — Management acknowledged

    medium

    Areas of Evasion(1)

    • One analyst question on operational cash flow from residential segment in FY24 was asked to be taken offline by Yashesh Parekh.

    Q&A highlights

    3

    “So, this year we have got multiple projects which are in pipeline, like Ghatkopar project we have already launched. We have seen good momentum. This year, last quarter, we are hoping to, but most probably the next year, first quarter, we would be launching our Vileparle project also.”

    Analyst sought clarity on the company's pre-sales trajectory given current numbers and the contribution from newly launched projects, which is crucial for future revenue visibility.

    asked by Dhananjay Mishra, Sunidhi Securities

    3 min read7 chapters

    Detailed Narrative

    01

    Robust Fundraising and Strategic Capital Deployment

    Man Infraconstruction successfully raised INR 543 crores through a preferential issue, with INR 136 crores already received from the allotment of INR 3.5 crores convertible warrants. The remaining INR 407 crores is anticipated within the next 18 months. This capital infusion is earmarked for future expansion, existing projects, and maintaining liquidity, with management stating they can invest over INR 1,000 crores in new projects over the next three years without debt.

    02

    Successful Luxury Project Launches and Strong Sales Momentum

    The company launched two ultra-luxurious projects in Mumbai: Aaradhya One Park (4.1 lakh sq ft) in Ghatkopar East and Aaradhya Avaan (6.5 lakh sq ft) in Tardeo. Aaradhya One Park achieved INR 333 crores in sales, representing 25% of its estimated sales potential, within days of launch. Aaradhya Avaan, poised to be one of India's tallest residential towers, is closing its EOI route by March 2024, with sales to be reflected by mid-April.

    03

    Diversified Project Pipeline and Business Development

    Man Infra has acquired three new projects in FY24, adding 22 lakh sq ft of carpet area, bringing its total real estate portfolio to 5.7 million sq ft. Key upcoming projects include Pali Hill (expected INR 500 crores sales, launch by Dec 2024), Goregaon West (Royal Netra, launch Q4 FY25), and a Vileparle project (launch Q1 FY25). The company is also bidding for another project in Ghatkopar and exploring opportunities in Marine Lines and Western Suburbs.

    04

    EPC Business Performance and Order Book

    The EPC business contributed INR 118 crores to Q3 FY24 revenue. The order book stands at INR 1,047 crores as of December 2023, up from INR 980 crores in March 2023. This includes a PMC contract for the Aaradhya Avaan project (18 lakh sq ft construction area). For the BMCT port project, INR 1,060 crores of work has been executed out of a total INR 1,830 crores order, with INR 1,200 crores collected.

    05

    Financial Performance and Margin Expansion

    Q3 FY24 revenue from operations was INR 242 crores, a decline from INR 457 crores YoY, primarily due to the DM model where revenue isn't booked but profitability is. Despite this, EBITDA margin significantly expanded to 42.5% in Q3 FY24 from 28.2% in the previous year, reflecting the higher profitability of DM model projects. 9M FY24 Net Profit jumped 33% YoY to INR 235 crores, demonstrating strong bottom-line growth.

    06

    US Real Estate Ventures Progress

    The company has invested approximately INR 190 crores in US real estate projects and maintains INR 110 crores in cash liquidity there. One of two bungalows in the first project has been sold, with the second expected to close by month-end. In Miami's Coral Gables, RCC work for a high-end bungalow is nearing completion by March/April. Profits from US projects are anticipated to be recognized from 2026 onwards.

    07

    Dividend Declaration and Liquidity Position

    Man Infra declared a fourth interim dividend of INR 0.54 per equity share (27%) for FY24, bringing the total dividend for FY24 to INR 1.62 per equity share (81%), amounting to INR 60.15 crores. The company maintains a net cash positive position with INR 545 crores in consolidated reserves as of December 2023, underscoring its prudent financial management and strong liquidity.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.