Ladies and gentlemen, good day, and welcome to the Ahluwalia Contracts Q1 FY 2022 Results Conference Call, hosted by Ambit Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varun Ginodia from Ambit Capital. Thank you, and over to you, sir.
Thank you. Thank you so much, Melissa, and good afternoon, everyone. And, Ambit Capital welcome you all to Ahluwalia Contracts Q1 FY 2022 Earnings Call. We are pleased to have from the management, Mr. Shobhit Uppal, Deputy Managing Director, Mr. Vikas Ahluwalia, Director, and Mr. Satbeer Singh, Chief Financial Officer. In terms of the format, Mr. Uppal will give brief remarks on Q1 results, and then we will open the floor for Q&A. Sir, over to you.
Thank you, Varun. Good afternoon, everybody. Ahluwalia Contracts (India) Limited announced the financial results of Q1 FY 2022 on tenth of August. During Q1 FY 2022, the company has received a turnover of INR 580.10 crores and a PAT of INR 34.79 crores, in comparison to a turnover of INR 249.85 crores and a PAT of INR 7.48 crores in Q1 of FY 2021. The company has registered year-on-year growth of 132% in the revenue and 365% in PAT. EPS of the company to Q1 FY 2022 is 5.19, as compared to 1.12 in Q1 of FY 2021.
During Q1 FY 2022, the company's EBITDA margin is 10.84%, as compared to 7.42%, and a PAT margin of 6%, as compared to 2.99% in the corresponding period of the last financial year. Net order book of the company as on thirtieth June 2021, stood at INR 7,115.33 crores, to be executed in the next 2-2.5 years. The company is L1 in two tenders, having an aggregated value of INR 1,160 crores. Thank you. We are open to questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may enter star and one on their touchtone telephone. If your questions have been answered and you wish to withdraw yourself from the queue, you may enter star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, you may enter star and one. We have the first question from the line of Sitaraman from Spark Capital. Please go ahead.
Hello. Thank you. So my first question is, what is the big pipeline that you see across for the rest of the year?
Yeah, Mr. Sitaraman, I can barely hear you. I heard your question, but sound clarity नहीं है. Our tenders that we have submitted are about INR 6,500 crore-
Okay
-under submission.
Okay. Okay, and then now you are able to hear me, sir? Hello.
Yeah, I can. I can.
Okay.
Voice is a little muffled.
Okay, for me, it is clear. Okay.
Uh,
I'm also on the speaker.
Um-
Uh, hello.
Are you using-
Yeah, yeah. Okay, go ahead.
No, no, I'm, I'm also on the speaker.
Okay.
Okay. So what is the guidance that you for FY 2022, for FY 2022 that you see, and what is the CapEx that you are expecting to invest?
I think last time around, I'd given a guidance about INR 2,500 crore, fresh orders in this financial year. You're talking about order inflow, right? Guidance for that.
Yeah, the revenue guidance also.
I said about 15%-20% growth.
Okay, fine. Because right now, the COVID situation has also improved, so I was just asking from that side. The EBITDA margin will be around 11%-12%?
Yes.
Okay. And then what are the segments that you see, like to the private sector and also how what is the confidence level in the market, and can you give some idea on that?
Look, there seems to be in the private sector, there seems to be in some, some geographies, there seems to be an uptick in the residential, side of private sector, works. But, you know, having said that, we, we continue to kind of be risk-averse as far as private sector development is concerned, especially residential. It's not a focus area for us.
Uh-
On the public sector side, hospitals continue to be an area where the various governments are investing. Just yesterday, we submitted for the Delhi government; there were three large tenders, which we submitted. The aggregate value was close to about INR 2,000 crore, approximately, for these jobs.
Okay, okay. And, what can you give an idea about the various unbilled revenue, the receivables, and all those things? Can you give me an idea of that, how it stands at the end of Q1, June 2021?
Satbeer will answer this question. Please go ahead.
This is Unbilled Revenue, INR 399.40 crores.
Sir, three?
INR 359 crore.
INR 359 crore, okay.
What about other?
And, receivables and,
Receivables, that is around INR 619 crores, including retention money of INR 198 crores. Mobilizations are INR 327 crores. Trade payables , INR 588 crores.
Trade payables is INR 588 crore, okay. Okay, and is there any signs of weakness that you see in the with respect to the state government, with respect to handing, handing over projects or with coming up with new projects because their resources-
Repeat that question, please. Not very clear.
No, basically, among the state governments, do you find any of the governments stressed because of the COVID impact, it would have-
Bengal, Bengal, Bengal is stressed.
Hello?
West Bengal.
Yes, West Bengal is the one which is, stressed with respect to... Okay, okay.
Yes.
With respect to other governments?
Look, the other states are also stressed, but relative. What I said is Bengal seems to be, you know, slightly worse off situation with COVID.
Okay, okay. Thanks, sure. Okay. Thank you, sir. Thank you.
Thank you.
Thank you. Participants, if you have a question, you may enter star and one. We have the next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hello.
Yeah, hello. Hi.
Hi, Parikshit here from HDFC Securities.
Hi, Parikshit.
Sir, Mr. Kandpal, please, use your handset. We cannot hear you clearly.
Okay, just one second. Yeah, hi, Shobhit. Shobhit, congratulations on a good quarter. So my first question is, was the quarter impacted in any way in terms of margins or costs related to COVID? Because, we do see improvement in margins, so is it like a normalized margin now, or there was some impact because of the COVID-related costs?
It's a loaded question, but, yeah, there was an impact, I can't deny that. You know, April and part of May, the second wave was there, so the impact obviously was there. But notwithstanding that, we have been able to achieve good results, because on the ground, the projects didn't really stop. But yeah, the impact was there.
Okay. Because the top line has also been quite good, I'm expecting like, better than expectation. So what could have been the missing revenue because of COVID in this quarter? So ballparks, like, potentially, there's a loss in revenue you could not book, because of COVID-related issues.
It's very difficult to give you a figure, but I can say if COVID wouldn't have been there, we've been impacted by about 10%.
About INR 60-70 crore worth of revenue.
Yeah, yeah.
Okay. Just on the ordering, because you already are earning about INR 1,300 crore worth of projects, new projects, 160 or 1,160 crore worth of tenders, and you are also bidding for more tenders. So you are still guiding a conservative number, about INR 2,500 crore. And I assume that Central Vista and all are still not figured out here. So if you take for that, so do you think that this number is quite conservative?
Look, there's a reason for that. As you know, the earlier question which was asked of me as to which states are impacted, financially. So what we are seeing is that healthcare aside, a lot of other projects may get impacted. The tendering is happening, but, you know, 20, 30, 40% into the life cycle of a project, we are seeing that they may get impacted because the government is stressed. So we are very wary, right? That's why it's better to be conservative going forward.
Okay. Just lastly, so all this cost overruns and escalations and issues regarding monsoon situation coming for fifth, Q4 . So has it, is it all behind, right? And nothing, no negative surprises, now, maybe next couple of quarters. So everything has been done and dusted, just to reiterate what you said last time?
Yes, yes.
Okay. Okay, thanks, Shobhit. That's all from my side.
Thank you so much.
Thank you. We have the next question from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Hi, sir.
Hi, Nitin.
Hi. Sir, just, you know, question on the order book. Can you throw some light specifically on orders of Jammu? Because in Q3, I think that order was closer to INR 1,240 crore. Q4, I think we didn't get the presentation, which, you know, obviously given by the company in terms of order, breakup. So can you throw some light how Jammu has moved, in the overall backlog?
...And also, if you can touch base on the Bihar projects. I think that Bihar projects also in Q3 was to the tune of what you have in the order book of INR 640. So can you touch base on these two, yeah, projects, how they are moving now of the overall backlog?
Okay, Jammu, the total, the order value is INR 1,253 crore. Obviously, last year, the calendar year last year, it was a non-starter because of COVID. But now, I did mention in my last con call, the project is now moving ahead and moving ahead fast. I think, we are now logging a monthly billing there of close to INR 20 crore, which will ramp up considerably, in this quarter and onwards. COVID third wave not happening, but, yeah, it is fully mobilized and moving full speed ahead on Jammu. As things stand today, we have done a billing of close to about INR 150 crore there, and, we hope to achieve a run rate there anywhere between INR 25 crore-INR 30 crore per month, rest of this financial year.
So that answers your query as far as Jammu is concerned?
Yes, sir. And what about Bihar, sir? I think that was total Bihar projects were I think INR 634 crores. How that is moving now?
So, Bihar is moving, but Bihar is not fully up to speed as yet. Rains are pounding that state, that is impacting our project run rates, monthly run rates. And, also, Bihar also seems to be stretched, though not as badly as Bengal, but yes, that's also stretched financially. But going forward, though, we foresee that the situation will improve there in the second half of this financial year.
Great. Basically, I was asking, you know, wanted to know from you, is if these two bigger areas, you know, because Central Vista, you have done a lot of billing already, and if these two doesn't move that far, do you see a risk-
It is moving now. Jammu is moving, I told you.
Got it. Got it. So you don't see a risk to at least 15% growth this year, in your revenue?
No.
Got it, sir. Got it.
But COVID situation, if things continue to remain the way they are, I don't see-
Right.
Any risk.
Right. Sir, generally, you know, a question on the margin, I understand, you know-
Just to further take that.
Yeah
Point forward, even our projects, hospital projects in Hamirpur and Chamba have started moving now, full steam.
Great. Great. Great to hear that, sir. So, generally, you know, given our margins are closer to 10% plus in this quarter, given our 15% guidance, you know, we'll be doing somewhat the similar revenues in the next three quarters, plus or minus here and there. Margins, we're still guiding 11%-11.5%. So this optically, you know, goes towards 11.5% consistent. You don't see that to this fact as well, given what you have done, I mean, whatever the risk or the provisions you are creating in the Q1 , you don't see much of the provisions to happen?
Yeah. So, yeah, I stand by my guidance. So what are you saying? Are you saying that, that guidance is conservative?
No.
Or you think there is a threat to that?
No. So I'm saying, sir, on a INR 580 crore top line, we are delivering 10.4%. And in our past, on such top lines, we have delivered more than 12%. So I would... And I understand it's a COVID quarter, there would be some initial provisioning would be done. So just trying to understand if the top line is largely remaining the same based on your 15% growth guidance, this margin, ideally, you think should improve towards 11%-11.5% in the next three quarters. That's the way to look at it.
Yes. As I said, I'm qualifying that statement, by saying, by adding that COVID situation, if it's, you know, everything keeps running the way it is right now, yes, I agree with you.
Got it. Sir, lastly, though, you touched base on the big pipeline of INR 6,000 crore-INR 6,500 crore, your big eight. Can you throw some light, which are these segments, which are these orders? If something new also we are trying to bid, that would be really helpful. Thank you, sir.
So as I said, 50%-60% of this order pipeline is hospitals. Then, some of this is about 20% is commercial, and rest is institutional.
Got it. Thank you so much, sir. I'll come back in touch with you. Thank you.
Thank you. Before we move to the next question, we request participants to use their handsets while asking a question. We have the next question from the line of Ashish Shah from Centrum Broking. Please go ahead.
Sir, question is, on the interest costs for the quarter. So we are seeing a quarter-on-quarter reduction in the interest. Can you note us why it would have come off, sharply on a quarter-on-quarter basis?
As we mentioned in our last call, the interest costs were primarily borne on account of mobilization advances. We have paid off, unfortunately. Yeah, Satbeer will give you the details.... Hello?
Yes, yes.
Can you hear us, Satbeer ?
Yes, yes.
Mobilization was interest INR 6.34 crores out of INR 11.47 crores. And also due to lease liability, that contract cost that is accounted for INR 1.09 crores.
Yes, it has come down.
Yeah.
That's come down because of-
Because of recovery.
Because of recovery of the advance. We paid off.
Okay.
Because of the unwinding of the mobilization.
Okay. Yeah. Sure. Secondly, sir, do our numbers include any provisions for any of the past legacy issues, or this is the normal level of expenditure?
Normal. Just normal age-wise provisions have been made.
Sorry, sorry, I couldn't hear you.
That due to age-wise, basically.
Break up.
Due to break up, more than 1 year, more than 2 years, more than 3 years, according to that percentage-wise provision has been made.
Right. But there is nothing pertaining to the legacy?
There is no strategic event.
Got it. So lastly, what would be the cash balance as of June?
That's INR 219 crore.
Okay. Sure, sir. Thank you.
Thank you. We have the next question from the line of Vibhor Singhal from PhillipCapital. Please go ahead.
Yeah. Good afternoon, sir. Thanks for-
Good afternoon, Vibhor.
Congrats on a very great set of numbers yet again.
Thanks. Thanks, Vibhor.
So just, basically wanted to get, sort of one clarity. You mentioned that you have bid for INR 2,000 crore of projects in Delhi. These are all hospital projects, is it?
Yeah, yeah. So Delhi government is, came out with, three packages, yesterday. Well, bid was yesterday. Interesting concept. They are... These are spread over seven locations. They want them to be built in an emergency for a potential third wave. So they want these hospitals to be completed in six, seven months.
Okay. Are these like some kind of makeshift hospitals which are going to be dismantled later on, or is it like permanent structures which are gonna stay, and they can probably be later converted into bigger ones or something like that?
Yeah, the second part of what you're saying seems to be right. We have seen structures, you know, they would be, I think, retained as some other. They would be converted into something else. So let's see. It's not that they'll be dismantled.
Right. Sure, sure. Got it, sir. Sir, as you mentioned, I think the execution on the Jammu AIIMS is on track. Just wanted to basically get some status update on other projects like AIIMS Kalyani, Nagpur project, and also the Alipore auditorium and the two projects in Bombay.
Okay. So AIIMS Kalyani and Nagpur handing over stage. I'd mentioned last time that in September, October, we will be handing them over. So that's what's happening. In fact, half of the project, the academic part areas, that we've already handed over both locations. And the main hospital blocks, we've already handed over two floors each, but complete, I think it will be completed by September end, both these jobs. As far as the auditorium is concerned, project is moving. We are logging a billing of INR 8-9 crores every month. But as I said, Bengal is cash-strapped, so but I think completion is around March, next calendar year.
The Bombay projects?
As far as Mumbai... Vikas, you want to take that question?
Mumbai. Yeah, hi, Vibhor. Mumbai is, they started off a little slow, initially, because, you know, immediately the lockdown came in and then the rains.
Right.
Rains were not so kind to Maharashtra this time, especially Mumbai. But now for the last two months, now they are on track. Sion is going to be a little slow project because it is to be done in parts. We have to make just one building and then couple of buildings are going to be demolished. Regarding the other one, which is the depot, that is now on track. So we are back on, you know, whatever time we've lost, we are going to cover it up.
Right. Great to hear that, sir. Also, sir, if I could just check, there is no debt on the balance sheet, right, at the end of the quarter, as it was last quarter as well?
No debt.
Twenty-two.
No. Yeah, there is a small amount of debt.
INR 22 crore.
The claim is clarified, yeah. INR 22 crore.
INR 22 crore. Sure, sir. Lastly, sir, just one bookkeeping thing. If I could get the order of the breakup in terms of the commercial and all those numbers that you provide.
This is commercial, 5%, hospital, 53%, and infrastructure, 13%, institutional, 14%, and residential, 15%.
Right.
Structure-wise, government 81%, private 19%.
Region-wise, sir, north, east, south?
Region-wise, it's 33%, north, 45%, and west is 21%.
North is 45%, right, sir?
West, 21%?
North is 45, yes.
45. North is 45. Yeah. Okay, sure. Great, sir. So just one last, if I could just squeeze in maybe one more question. I know I have asked many. Just one more question, if I could squeeze in.... So in terms of, the order flow, I think for the last couple of years, we have been, very, very strong. And as you have mentioned before, that I think the government focus on healthcare is also quite strong, which should order well for us based on our expertise in this segment. Any plans of, of going into the, affordable housing segment, which is also seeing quite a push from the government, or is that going to be a no-no for us?
No, not in the short term. No.
Not in the short term. Okay, so thanks for that, to-the-point answer. I wish you all the best, sir.
Thank you. Thank you very much.
Thanks.
Thank you. We have the next question from the line of Charanjeet Singh from DSP Mutual Fund. Please go ahead.
Hello, sir. Good afternoon.
Hello, Charanjeet.
Mr. Singh, I'm sorry to interrupt. Please use your handset.
Okay, sure. Hello, can you hear me, sir?
Yes, Charanjeet, yes.
So, sir, congrats for a good set of numbers.
Thanks.
First question is, you talked about, you know, there could be some stress in some of the state government finances. So in terms of the working capital front, how do you see things panning out? Could we see, you know, stress on the working capital side, and how we are trying to manage that? That's my first question.
There, there is a bit of a stress, but we are managing it through internal accruals.
In terms of the number of days, you see, you know, how much it could inch up? And, specifically, you know, generally, we have followed the policy that you tend to see the payments and then deliver on the work. So how does that pan out? Because these are more state government projects which have fixed timelines. And, so on overall number of working capital days?
So, as Satbeer, you want to answer that, then I-
That working capital has been days has increased to 107 days, 50 compared to the last quarter, that was 97 days. And that, but there is slightly improvement in better days, but definitely due to increase in the unbilled revenue, that has increased. Because of the certification that is taking place in another 1 or 2 months, that's why there is. And due to GST, we are taking that in unbilled revenue. Otherwise, that is part, was part of the revenue in every quarter. So that's why, but there is not a major increase in working capital days. So still, that gap has been filled up by our out of our internal accruals, and there is not any major increase in debt also. So that's it.
So, as you yourself said, like Bengal, we see the state strength. So we have two projects directly with the state government. So we are monitoring the cash flow situation and executing work on the ground based on whatever the indications from state PWD. But these projects, I am confident that we'll be able to finish both these projects before the end of this year, financial year, that is, because these are very visible projects and close to the powers that be.
Okay, sir. The other question is on the margin front. While I understand this is a COVID-impacted year, we had been, you know, doing certain provisioning in the past couple of quarters. So we had seen a peak margin of more than 13%. And if we have to, you know, just understand from a maybe the two-years trajectory perspective for annual year contracts, how do you see this margin trending upwards or remaining at 11.5%-12%? If you can just give some color on that based on the order backlog which you have here.
So as I mentioned last time, in about 2 years' time to 3 years' time, I expect us to be back at the peak margins that we had achieved around 2010. As far as this year is concerned, I foresee headwinds continuing to be there, the impacts of COVID continuing to be there, and then, you know, cash flow issues. So, that's why we have given a guideline of about 11%-12% as far as this year is concerned.
Okay, sir. Just a last question on my side is on the competition front. So, you know, we see a lot of road contractors talking about entering into the building space and expanding their own, you know, segment portfolio. So how do you see that in different, you know, government projects-
In the short term, I, again, I'm repeating myself, I said this last time around also, the competitive intensity is increasing. That's why our order guideline is conservative to this year, because we don't want to be too aggressive.
Okay, sir. And just on the hospital side, but still, you know, the competition tends to be lesser. Is that right understanding?
No, it is increasing there also.
Okay, sir. Okay. Thanks. Thanks a lot for taking my questions.
Thank you, Charanjeet. Thank you.
Thank you. Before we move to the next question, we would like to remind participants, to ask a question you may enter star and one. We have the next question from the line of Vasudev from Edelweiss. Please go ahead.
Hello, am I audible, sir?
Yes, Vasudev, you are. Hi.
Yeah, hi. Thank you for the opportunity. If you could help us with the CapEx that we did in Q1, and what is the amount that we plan to spend for the rest of the year?
Okay, can you repeat the question?
Q1 CapEx. Q1 CapEx.
Q1 CapEx is INR 7 crore.
7 crore, and what do we plan for the remaining part of the year?
It will be more or less the same every quarter, so it'll be around INR 30 crore for the next total year.
Okay, okay. That's, thank you, sir. And, one last thing, if you can tell me the inventory balance that you have as on 30 June?
This is INR 41 crore.
Forty-one crore.
Yes.
Okay. And our gross debt, just to confirm, is INR 22 crores, right?
Yes, sir.
Okay, yeah. That's it from my side. Thank you, and all the best.
Thank you.
Thank you. Participants, if you have a question, you may enter star and one. We have the next question from the line of Parth Bhavsar from Dolat Capital. Please go ahead.
Yeah, hi, sir. Thank you for the opportunity-
Hi.
And congratulations for a really good set of numbers.
Thank you.
So just wanted to know that, the L1 that you said that, you've been awarded L1 of around INR 1,160 crores. So if you could help me with the breakup, like in terms of location and value, and when do you expect to get the LOA?
One is in Kolkata, Rajarhat. This is INR 250 crore. It's a government tender, residential, for HIDCO. That the award should be happening in the last week of this month. The other is for BCD, Building Construction Department . It's a large, animal husbandry and veterinary university for INR 890 crore. That should also be awarded in this month.
Okay. Okay, perfect. Thank you. That's it from my side.
Thank you.
Thank you. Participants, if you have a question, you may enter star and one. As we have no further questions, I would like to hand the floor to Mr. Varun Ginodia. Please go ahead.
Thank you. Thank you, Melissa. So, thank you so much, sir, for answering all the questions patiently, and I'll hand over the call back to you for any closing comments.
Thank you, Varun. Thank you, everybody, who joined in, and look forward to interacting with all of you again in a few months' time. Thank you so much. Bye.
Thank you, members of the management and Mr. Ginodia. Ladies and gentlemen, on behalf of-
Thank you.
Thank you.
Thank you.
Ladies and gentlemen, on behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.