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Power Mech Projects Limited Q4 FY2023-24 Earnings Call Summary
Financial Performance • Q4 FY24 Total Income: INR 1,312 crores (11% increase from Q4 FY23) • EBITDA: INR 160 crores (14% increase) • Profit After Tax (PAT): INR 84 crores (12% increase) • Full Fiscal Year Total Income: INR 4,234 crores (17% increase) • EBITDA for Full Year: Up 25% • PAT for Full Year: Up 19% • Order Book: INR 57,053 crores • Revenue Growth Target for FY25: 30%
Business Segments Performance • Mechanical Business Revenue: 19% increase • Operations and Maintenance (O&M) Revenue: 43% increase • Order Backlog: Increased from INR 13,733 crores to INR 17,362 crores (26% growth) • O&M Backlog: 266% increase • Electrical Sector Growth: Significant due to railway electrification projects
Mining Development Operations (MDO) • Kotre Basantpur Project: Stage 2 forest clearance received; mining expected to start by September. • Tasra Project: Produced 2.88 lakh tons; target of 1.45 to 1.5 million metric tons for next year. • Expected EBITDA Margins: 18-20% for Kotre Basantpur; 27-30% for Tasra at peak capacity.
Flue Gas Desulfurization (FGD) Projects • Adani Order Backlog: INR 5,000 crores within a total of INR 17,000 crores. • Udupi Project: Progressing well; INR 1,200 crores in orders with expected revenue of INR 300-350 crores. • Challenges: Delays due to local issues and Power Purchase Agreement (PPA) complications.
Capital Expenditure (Capex) Plans • Total Capex for Current Year: Approximately INR 340 crores • Regular Equipment: INR 100 crores • Washery Project: INR 240 crores • Funding Sources: Term loans and internal accruals.
Future Outlook • Revenue Growth Projections: 30% for FY25, targeting INR 5,500 crores; 25% growth for FY26, aiming for INR 7,000 crores. • Tax Rate Projection: 25% to 26% for FY25 and FY26. • Management's Optimism: Strong order base and expected improvements in margins.
Earnings Call Overview • Date: February 20, 2024 • Hosted by: Nirmal Bang Equities • Key Management: • S.K. Ramaiah (Director, Business Development) • Rohit Sajja (President, Business Development and Operations) • N. Aravind (Chief Financial Officer) • Transcript available on the company's website, compliant with SEBI regulations.
Financial Performance • Total Income: Rs. 1,115 crores • EBITDA: Rs. 141 crores • PAT: Rs. 61 crores • Year-on-Year Growth: • Revenue: 22% • EBITDA: 34% • PAT: 21% • Revenue Mix: • Civil: Rs. 596 crores • Mechanical: Rs. 231 crores • Electrical: 71% growth • Mechanical: 60% growth • Total Income for first nine months: Rs. 2,923 crores (20% YoY increase) • Domestic Market Contribution: 94% of revenue
Business Outlook • Anticipated shift in business mix in FY '25 due to healthy order book. • Order backlog: Rs. 55,858 crores, with expected inflow in Q4. • Bids worth Rs. 5,500 crores pending. • Projected revenues for FY '24: Rs. 4,500 to Rs. 4,700 crores.
Sector Growth and Opportunities • Significant growth expected in power sector, especially in O&M, mechanical, and civil construction. • Mechanical backlog: Rs. 7,034 crores (22% increase). • Civil projects backlog: Rs. 7,800 crores (27% increase). • O&M backlog: Rs. 1,260 crores (from Rs. 600 crores). • Anticipated opportunities in power sector: Rs. 15,000 to Rs. 20,000 crores.
Mining Operations Update • Coking coal mined: 85,000 tons in 1.5 months, targeting 250,000-280,000 tons by year-end. • Delays in new site in Jharkhand due to political issues, expected to start in May. • Expansion in overseas operations in Qatar and Bangladesh.
Competitive Landscape • BHEL noted as a significant competitor. • Challenges for smaller EPC contractors and potential market consolidation. • Power Mech's strong execution capabilities and comprehensive service offerings highlighted.
Financial Guidance and Capital Expenditure • Current debt: Rs. 499 crores, with plans to maintain low levels. • Capital expenditure: Rs. 690 crores for EPC business. • Projected revenue growth: 30% to 35% in FY '25.
Closing Remarks • Optimistic outlook on growth driven by MDO and international operations. • Strong investor confidence in ongoing projects. • Anticipated profitability growth and enhancement of order backlog, particularly in the power sector.
Submission Details • Date of Submission: November 20, 2023 • Earnings Call Date: November 15, 2023 • Compliance: Submitted to National Stock Exchange of India and BSE Limited per SEBI regulations • Availability: Transcript available on the company's website
Key Management Participants • Host: Nirmal Bang Institutional Equities • Key Members: • S.K. Ramaiah (Director of Business Development) • Jami Satish (CFO) • Prasheel Gandhi (Nirmal Bang)
Financial Performance Highlights • Total Income: Rs. 937 Crores • EBITDA: Rs. 118 Crores • PAT: Rs. 51 Crores • Revenue Growth: 21% year-over-year • Order Backlog: Approximately Rs. 53,500 Crores • Net Debt Status: Effectively net debt-free
Growth Opportunities • Core Sector Focus: Increased opportunities in operation and maintenance (O&M) • Order Book: • Received orders totaling Rs. 1,800 Crores • Additional Rs. 1,800 Crores in L1 status • Identified opportunity size over Rs. 46,000 Crores • Target for FY 2024: Rs. 10,000 Crores in order bookings
Sector-Specific Insights • Power Sector: Anticipated capacity addition of around 20,000 megawatts • O&M Contracts: Secured major contracts with Hindustan Zinc and Adani • Water Projects: Potential of ₹18,000 Crores, with O&M contracts worth approximately ₹681 Crores
Infrastructure Expansion • Railway and Metro Projects: Significant growth opportunities in maintenance and repairs • Export Market: Expansion into West Africa and the Middle East
Q&A Session Highlights • Tax Provision: Confirmed a tax provision of 16 Crores • O&M Revenue Projection: Expected between 1150 to 1180 Crores for the year • Water Project Revenue: Projected execution revenue between 900 to 1050 Crores in FY2024 • Debt Requirements: Secured a 260 Crore loan; considering additional debt for larger projects
Future Projections • Flue Gas Desulfurization (FGD) Order: Revenue expectations of 50-100 Crores in Q3 and 250-300 Crores in Q4 FY 2024 • Margin Improvement Goal: Aim to restore historical margins of 13-13.5% by FY 2026 • New Power Sector Projects: Revivals under Corporate Insolvency Resolution Process (CIRP) with significant government interest
Conclusion • Overall Outlook: Optimistic about growth and execution capabilities, with no suspended projects and plans on track for future opportunities.
Compliance and Call Details • Date of Submission: August 18, 2023 • Earnings Call Date: August 10, 2023 • Management Present: S.K. Ramaiah (Director of Business Development), Jami Satish (CFO) • Moderator: Prasheel Gandhi from Nirmal Bang Equities • Transcript Availability: Publicly accessible on the company's website
Financial Performance Highlights • Total Income: INR 871 crores • EBITDA: INR 105 crores • PAT: INR 51 crores • Year-on-Year Growth: • Total Income: 16% • EBITDA: 22% • PAT: 29% • Revenue Mix: • Civil Projects: INR 493 crores • Operation and Maintenance: INR 224 crores • Decline in Electrical Business due to strategic order reduction
Strategic Goals and Future Outlook • Working Capital Cycle: Reduced to 128-135 days • Order Book Target: INR 10,000 crores for the year • Key Projects: Major MDO contract with SAIL worth INR 30,438 crores • Revenue Expectations: Over INR 100 crores from new projects in FY’24 Q4 • Projected Revenue from Projects: INR 350-450 crores next year, potentially over INR 2000 crores in the future
Order Backlog and Market Opportunities • Order Backlog Increase: From INR 8,855 crores (end of 2022) to INR 13,732 crores (March 2023) • Power Sector Contribution: INR 8,781 crores of the backlog • Ongoing Projects: Significant initiatives in power and road sectors • Growth Potential: Domestic and international markets, particularly in maintenance and operational services
Revenue Execution Plan for FY '24 • Target Conversion Rate: 37% to 40% from an opening order book of INR 13,600 crores • First Half Conversion Expectation: 35% to 38% • Second Half Conversion Expectation: 60% • Letters of Intent (LOIs): INR 720 crores secured, with an additional INR 2,000 crores anticipated
Mine Development Operations (MDO) Insights • Revenue Projections: • FY '24: INR 100 crores • FY '25: INR 300 crores • FY '26: INR 1,250 to INR 1,300 crores • Funding Strategy: 70-75% debt and equity mix • Target for New Orders: INR 11,000 to INR 12,000 crores for FY '25 and FY '26
Margin Improvement and Market Position • Margin Goals: Exceed previous margins of 13-14% starting FY '26 • O&M Order Book: Robust at over INR 2,500 crores • International Opportunities: Contracts in Nigeria and the Middle East • Current Debt Levels: INR 490 crores gross, INR 284 crores net
Conclusion • Optimism for Revenue Growth: Anticipated CAGR of over 35% for FY '25 and FY '26 • Sustainability Concerns: Addressed regarding projected INR 3,000 crores revenue from MDO, with no specific risks identified.
Submission Details • Date of submission: June 5, 2023 • Earnings call date: May 31, 2023 • Management present: S.K. Ramaiah (Director, Business Development) and Jami Satish (CFO) • Transcript availability: Publicly accessible on the company's website • Compliance: Signed by Mohith Kumar Khandelwal, Company Secretary, per SEBI regulations
Financial Performance Highlights • Q4 Results: • Total income: INR 1,183 crores (32% increase YoY) • EBITDA: INR 140 crores (43% increase) • PAT: INR 75 crores (58% increase) • Full Year Results: • Total income: INR 3,618 crores (33% growth) • EBITDA: INR 421 crores (39% increase) • PAT: INR 209 crores (50% increase)
Market and Operational Insights • Revenue Sources: • Domestic market: 91% of revenue • Growth in civil and operation & maintenance sectors • Financial Health: • Improved cash flow and reduced debt levels • Net current days decreased from 150 to 130 • Order Backlog: • Current backlog: INR 23,000 crores • Target for new orders in FY '23-'24: INR 10,000 crores
Future Outlook • Order Bookings: • Target of INR 10,000 crores supported by a project pipeline of over INR 40,000 crores • Significant international orders expected, including INR 500 crores from Nigeria • Business Segments: • Focus on power, water distribution, and specialized construction • Plans for a recurring income model of over INR 3,000 crores by FY26
Infrastructure Sector Growth • Order Book Increase: • Bookings rose from INR 4,231 crores (2021-22) to INR 8,479 crores (2022-23) • Key projects: FGD retrofits, railway, metro, and drinking water initiatives • Market Contribution: • Domestic market: 97% of backlog • Diversification into mining and material handling
Project Opportunities • Investment Potential: • Projected opportunities in railways and roads: INR 2-2.5 lakh crores • Active pursuit of INR 2,000 crores in domestic O&M opportunities • Metro Expansion: • Plans to expand metro network from 700 km to 1,700 km across 27 cities
Execution and Financial Targets • Execution Capacity: • Capacity to execute INR 900 crores to INR 1,500 crores per quarter • Current execution rate: INR 900 crores to INR 1,200 crores • Revenue Visibility: • Expected revenue for FY '24: INR 5,000 to INR 5,500 crores • Margin Goals: • Target EBITDA margin for FY '24: 12.5% to 13% • Potential for margins over 18% by FY '25-26
Key Projects for FY '24 • Focus on FGD, Water UP, and various railway and metro projects • Improved working capital management contributing to reduced debt levels
Future Projections • Target for FY '25: INR 11,000 crores in orders • Expected execution rate for FY '25: 37% to 40% • Commitment to provide further updates in the following month
Power Mech Projects Limited Earnings Call Summary
Earnings Overview • Date of Call: February 8, 2023 • Total Income for Q3 FY'23: Rs. 912 crores (40% YoY increase) • EBITDA: Rs. 106 crores (47% increase) • PAT: Rs. 51 crores (54% increase) • Total Income for Nine Months FY'23: Rs. 2,435 crores (34% growth)
Revenue Mix • Contributions: • Erection Business: Rs. 458 crores • Civil Projects: Rs. 1,235 crores • Operation & Maintenance: Rs. 682 crores • Electrical Business: Rs. 52 crores • Other Income: Rs. 8 crores • Market Distribution: 86% domestic, 14% international
Growth and Order Book • Order Book: Rs. 24,200 crores • Order Book Target for FY'23: Rs. 10,000 crores (Rs. 8,500 crores achieved) • Monthly Project Handling Capacity: Rs. 400-450 crores
Future Projections • Revenue Target for FY'24: Rs. 7,500 to Rs. 8,500 crores • Order Book Growth: Increased from Rs. 8,854 crores (March 2022) to nearly Rs. 15,000 crores
Key Projects and Opportunities • Flue Gas Desulfurization (FGD): • Significant business potential estimated at ₹2,500 to ₹3,000 crores • Regulatory mandates for FGD systems by COP 2026 • MDO Project: Ground activities expected to start by June 2024
Financial Management • Gross Debt: Stable at Rs. 535 crores • Cash Flow: Positive operating cash flow with improved monthly collections • Payment Practices: 70-75 days for existing clients, 40-45 days for new clients
Bidding and Contracting Strategy • FGD Bidding Opportunities: Estimated potential bids around Rs. 5,000 crores with a 30% win rate • Contract Types: Complete EPC packages and segmented contracts
Conclusion • Management Outlook: Optimistic about growth, improved cash flow, and working capital efficiency • Future Opportunities: Anticipated growth in infrastructure and private capital investments, targeting Rs. 30,000 to Rs. 40,000 crores in opportunities.