© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good evening, ladies and gentlemen. I am Repatha, moderator for this conference. Welcome to the Conference Call of Ircon International Limited arranged by Concept Investor Relations, to discuss its Q4 and FY '21 results. We have with us today Shri M. K. Singh, CMD and Director Finance; and Shri Surajit Dutta, CGM, Finance and Chief Financial Officer. [Operator Instructions] Please note that this conference is recorded. I would now like to hand over the floor to Shri M.K. Singh for his opening remarks. Thank you, and over to you, sir.
Thank you very much. Ladies and gentlemen, whoever are listening to me, I extend a very good evening to all of you. I welcome you all to the con call from Ircon to discuss the financials for the fourth quarter as well as for the fiscal year ending 31st March 2021. I hope that all of you are safe and sound from this ongoing COVID-19 pandemic. We have had our shares of difficulties so far as this pandemic is concerned, both in terms of physical performance as well as in terms of a few of us not having good times in terms of health and so on. We have been regularly conducting con calls. So I assume that most of you are familiar with the working of Ircon. So without taking much time, I would put in front of you the highlights of the year and our financial performance. Let me start with a good thing. Ircon has secured orders for INR 4,157 crores during -- for the year FY '21, means from 1st April 2020 up to 31st March 2021, we secured fresh order for INR 4,157 crores, taking the total order book to INR 34,689 crores as on 31st March 2021. And it's more heartening to share with you that we have secured 99% of these orders on a competitive bidding basis. The total order book of the company, we -- consists of 95% of the rail-related projects and 5% of highway projects. And even in the first quarter, let me inform you that we have recently bagged an order of INR 700 crores from railways regarding railway electrification. So this was the order book front news. Now I will talk about the financial performance for the full year ended 31st March 2021. Revenue from operations for the full year stood at INR 4,948 crores as compared to INR 5,200 crores for FY '20. So there was a decrease of around INR 250 crores, and that was mostly to do with the performance in the Q1 of the previous year. The core earnings before interest, tax, depreciation and amortization, that is core EBITDA stands at INR 361 crores against INR 476 crores in FY '20. The company's core EBITDA margin stood at 7.30% in FY '21. The PBT is INR 574 crores for FY '21 as compared to INR 673 crore in FY '20. The PBT margin is 11.04%. PAT is INR 405 crores for FY '21 against INR 490 crores in FY '20. The company's PAT margin stood at 7.78%. The EPS for the year ended FY '21 stood at INR 4.30. In the BOD meeting, a dividend of INR 1.32 per equity share, face value of INR 2 per share has been recommended. Earlier, Ircon has declared and paid interim dividend of INR 1.30 per share before issue of the bonus shares of face value of INR 2 per share. After closing of the financial year, the company issued fully paid up bonus shares in the ratio of 1:1. So these were the information, which I wanted to share with you. And now I will request the moderator to please take the proceedings further in terms of question and answer, et cetera.
[Operator Instructions] The first question is from the line of Shreyans Mehta from Equirus Securities.
Sir, my question pertains primarily on the operating margin front. If you see this quarter, we have done lower than what we had guided for. So we were targeting roughly around 9%, 9.5%. But this quarter, the margins are very low. So any particular -- are there any one-offs or any particular reason why the margins are on the lower side?
Okay. You are talking of core EBITDA margin of 7.3%, right?
Right.
For the 12-month period and 7.24% for...
Fourth quarter.
7.82% for Q4.
Right, right. So particularly fourth quarter, sir.
Yes. Fourth quarter, if you compare it with the Q-on-Q, it was 7.24%, now it is 7.82%. So I don't see that there is a decrease in the core EBITDA. And even in EBITDA, after taking the other income in account, then we have -- how much is the percentage? 9.38% again -- sorry, 12% in Q4 of FY '21, against 9.38% Q4 of last year. So if you check the figures, core EBITDA against last year of 7.24%, it is 7.82%. And EBITDA, 9.38% -- 12% against 9.38%. So there is no decrease on Q-on-Q.
Sir, I'm not talking about the decrease on Q-on-Q. I'm saying again, so if I compare even the full year '21. On '21 basis, we have done an EBITDA margin of 9.3%, whereas last year, we had done 9.15%. And our guidance is generally in the 9% to 10%.
Yes, that is right. Because in FY '20, we had a special item of INR 84 crores which came to us by way of write back arrangement of one of the turnover items of the previous year, that was pertaining to agency commission payment. So that is why there is a stark decrease in this year. There was no exceptional item in nature in this year. So because if you take out that INR 84 crore, then it is comparable.
Okay. Got it. Got it. So sir, coming to our -- on the guidance front, what would be -- I mean, should we stick to that INR 7,000 crores and INR 10,000 crores number for '22 and '23? And in terms of operating margin, what is the guidance now?
So far as turnover is concerned, if you see Q4 of FY '20 and Q4 of the FY '21, then there has been an increase of 30%. So even on year -- so I suppose that this will be a year, which is not going to create much of trouble for us. That is how we are praying. So we expect a turnover increase of around 25% to 30% minimum. So that takes us to around INR 6,800 crores, INR 7,000 crores from the present level. And EBITDA margin will be in double digits. This is what we'll be aiming for because we are going to have a mix of projects in our turnover, which will have higher margins, which will be in the nature of consultancy, et cetera. That is what we are aiming so that we can improve the bottom line also.
Got it. So sir, when you are saying double digit, does that include the other income? Or you're talking about the core EBITDA margin?
No, I am talking of EBITDA, including the other income.
Okay, okay, okay. Fair point. Fair point. Sure, sir. And sir, one more question pertaining to what would be the CapEx number for this year and next year?
Yes. Just to add to the last question, EBITDA, even for Q4, was 12%. So we are hoping that EBITDA, including other income should be around 14% to 15%. That is what we are hoping in FY '22. And core EBITDA will be around 9.5% instead of 7.82% in Q4 of the FY '21.
Okay. Okay. So we are looking at, say, on core EBITDA front, we are looking at, say, around 150 to 200 basis points improvement?
Correct.
So that would be primarily because of the project mix or...
Project mix. Essentially project mix.
Okay. Okay. Got it. Got it. Sure. Sir, and...
And also, we are trying to change the composition of the workforce. Because that is a single biggest expenditure item for us, around INR 270-odd crores a year. So we will be engaging more and more contractual staff who will be a little less on the [ upper ] and the same on the output.
Got it. Got it. Got it, sir. Sure. Sir, and the CapEx number this year and next year?
CapEx number will be around INR 225 for -- what was FY '21 CapEx?
INR 190.
INR 190, including your equity investment for the run?
[ Yes ].
It was only INR 190?
[ INR 190 crore ].
Including our equity investment in SPV, it was INR 193? [Foreign Language] I will get back with the figures of the CapEx for FY '21. But for FY '22, we have investment lined up, including our financial investment in the form of equity to the special purpose vehicles. Those, also, we classify as CapEx only. So that will be roughly INR 500 crores.
So this includes the core CapEx plus the equity investment in the HAM road projects?
Right. That's true.
Okay. Okay. Sir, can you just break that up? How much will be rolled out those...
All on equity, which we put in the HAM SPVs or the BOT SPVs are nothing but project finance.
Okay. Okay. Got it. Got it. Got it. And sir, one last question pertains to our other income. Other income...
Last year it was INR 442 crores.
INR 442.
Yes. For FY '21, the CapEx, including our investment into SPVs, et cetera, was INR 442.
Got it. Got it. Got it. Sure, sir. And sir, one last question pertains to our other income during the quarter. I mean, it's abnormally high this quarter, it's at INR 107-odd crores. So any particular reason for it?
Actually, we got a claim settled in our favor from NHAI, okay, and a lot of interest was paid to us by the arbitration panel. So whatever claims we are getting, that we are bifurcating into the actual work down revenue and the interest portion. And that has given a normal rise to other income. In fact, INR 32 crore came on account of one claim only by way of interest from NHAI.
Sir, can you repeat the number?
One claim was containing INR 32 crores of interest income which we received from NHAI. So INR 107 crores, which you are seeing is only because of the settlement of the claims and taking the interest portion out of the claim amount and booking them into other income. But money is money. It has no -- all money are of the same color.
Other income. Got it. Got it. Got it. Sure, sir. Correct. Correct. I agree. I agree. So I mean just wanted to check, is there anything exceptional or something...
It is -- no -- no exceptional in other income, yes.
[Operator Instructions] The next question is from the line of Mahesh Kabra from Purnartha Investment Advisors.
Congratulations to both Mr. M. K. Singh and Surajit Dutta are for their respective promotion to MD and CFO position. Question -- the one question I have is already asked by the previous participant, but I could not hear. That was about the margins. I could not hear your answer about the explanation of EBITDA, why EBITDA is low in last couple of quarters. That was the one question.
Okay. So if we take the EBITDA, including the other income, then it is 12%, which is not too bad for Q4 '21. It was 9.38% for Q4 '20. Even core EBITDA, it is 7.82% compared to 7.24% of the previous financial year, Q4 '20. So yes, core EBITDA has come down because it was 9.15% for the entire financial year FY '20. And 7.82% is not a very happy occasion. In fact, for the entire year, it is only 7.3%. So against 9.15%, 7.3% is not a very happy occasion. Actually, let me share with my investors that we are going through execution of 2 projects, which are not too profit-making for us, not very heavily profit-making for us. So we are getting a lot of turnover from these 2 projects where the profit margin is a little less. So that is why you see a drop in the core EBITDA, even though the turnover hasn't dropped proportionately. So 2 projects we have, which are giving us headaches, but we will be trying to make this up with great -- a good combination of projects which will have higher profit margin. We'll have some consultancy projects lined up for Ircon or those projects which are in the nature of providing technical services so that our bottom line improves and, consequently, core EBITDA also touches the double digit.
How much of these 2 projects are still to be executed?
Actually, out of INR 4,947 crores, we have 2 projects which have lesser margin of profit, and their turnover coming from this was roughly INR 1,200 crores -- sorry INR 900 crores.
How much of it is still going to come up in the coming quarters?
In coming quarters, 1 of the projects will finish in FY '22. But then we have certain claims lined up in that project. So even though the profitability per se from the work done may not be really great, but we have certain claims against dedicated freight corridor, which, in principle, they have agreed. And once those claims materialize to us, then the profitability takes a shoot up and we are comfortable.
Any idea about -- rough idea about the amount of the claim?
No, I can't disclose that now because that is still a work in progress.
Okay. So the impact basically is on the gross margin front of these 2 projects, right?
That's right. These 2 projects were responsible largely for bringing down the core EBITDA from 9.15% to 7.3%.
Do we have some of our order book where we don't have accretion cost and the material costs going up also impacting our margins?
No, not really because most of the projects which we have where the cement and steel are being used very extensively are well covered by the price variation or those are cost plus. So those are not making any difference to us in terms of increasing the project cost.
[Operator Instructions] As there are no further questions, I would now like to hand over the conference to the management for their closing comments.
So thank you. Thank you very much from -- for Concept IR for organizing this con call, and I express my gratitude to all my analysts and investor friends who have taken time out. And so please engage with us in case you have any further query, we'll be very happy to be associated with all of you and answering your queries. Thank you very much.
Thank you all for being a part of conference call. If you need any further information or clarification, please mail at gaurav.g@conceptpr.com. Ladies and gentlemen, this concludes your conference for today.
Thank you.