Captains Speak     

Published: January 31, 2024
Updated: January 31, 2024

Kalpataru Projects International

Confident of Rs 25k cr. order inflow

Pointing out that the consolidated order book of Kalpataru Projects International at the end of September 2023 was Rs 47,040 crore (up 20 per cent yoy), of which 60 per cent is domestic and the balance 40 per cent international orders, CEO and MD Manish Mohnot added, “Of the international order book, about Rs 13,700 crore is R&D and the balance is other civil works such as B&A water and airports, as well as roads.” Mr Mohnot added, “For the year to date, the order inflow stands at Rs 12,178 crore. The company received new orders of Rs 1,562 crore in October and November 2023. The order inflow, including L1 orders, stands at Rs 16,400 crore.” According to him, the various businesses of the company are performing strongly, and “we are confident of achieving the company’s fiscal 2024 order inflow guidance of Rs 25,000 crore.”

He added, “T&D ordering remains robust with YTD order wins in excess of Rs 5,300 crore. We are favourably placed in the first underground tunneling project for the Kanpur metro. We will strengthen the B&F business with the addition of new clients, institutional building, data centre projects and international expansion. We expect a standalone revenue growth of 25% and PBT margin of 4.5-5% as the company is confident of an order intake of Rs 25,000 crore for the current fiscal.”

According to Mr Mohnot, for FY24, the company expects consolidated revenue growth of 25%-plus, EBITDA margin of 8.5-9% and PBT margin of 4-5% (with more bias towards 4%). Revenue growth guidance was cut to 25% from the yearstart guidance of 30%, largely due to the delay in a couple of large projects as well as the exit from the Australian project (from which some revenue is factored in), which forced the company to reduce the STO guidance. “We expect H2FY24 to be strong, facilitating 25% growth in revenue. The company has complete visibility of projects to be completed/delivered in the next 6 months and thus does not see any further worsening in the balance period of the current fiscal,” he said.

BEYOND SOUTH

He added, “We are ramping up the B&F and urban infra business beyond the South, especially in the North and Western India markets. The margin largely depends on the project mix. We are not expecting a margin ramp-up in the next 2 quarters. But next fiscal, the company expects improvement in margins. Ramping up new business, including ramping up non-South B&F and UI , moderates the margin in the established business. And a lot of legacy orders are getting closed in the current fiscal. The company is also looking at monetisation of non-core assets. It will be out of the Indore real estate project by December 2024-end.”

He continued, “On road BOT projects, we are looking at signing non-binding agreements in another couple of quarters, and once that happens the company will announce it. Road projects are currently in the last leg of debt repayment and maintenance. We have infused about Rs 43 crore in road BOT projects in H1FY24, largely towards debt repayment.”

Reviewing the performance of the company during Q2 FY2024, Mr Mohnot said that for the quarter ended September 2023, consolidated net sales (including other operating income) of Kalpataru Projects International increased 18.96% to Rs 4,518 crore. The operating profit margin declined from 9.19% to 8.19%, leading to a 6.02% rise in operating profit to Rs 370 crore. Profit before tax fell 11.41% to Rs 132 crore. The effective tax rate was 31.82% compared to 31.94%. Net profit increased 3.49% to Rs 89 crore.

Year-to-date (YTD) net sales increased 17.18% to Rs 8,759 crore. The operating profit margin declined from 8.88% to 8.59%, leading to a 13.25% rise in operating profit to Rs 752 crore. Profit before tax grew 3.13% to Rs 297 crore. The share of profit/loss was nil in both periods. Provision for tax was an expense of Rs 94 crore, compared to Rs 85 crore. The effective tax rate was 31.65% compared to 31.37%. Net profit rose 22.16% to Rs 204 crore.

ROBUST ORDERS

Commenting on the results, Mr Mohnot said, “We have delivered another quarter of good performance driven by robust execution and strong order inflows in our major business verticals. We achieved Rs 8,759 crore in revenues, representing a growth of 17% YoY, and Rs 752 crore of EBITDA, resulting in a 8.6% margin for H1FY24 at a consolidated level. As we move into the latter half of FY24, we believe a favourable shift in the business environment, especially in T&D and select civil business verticals, will help us strengthen our position further in the EPC market. Our order book at Rs 47,040 crore and L1 of over Rs 4,200 crore till date in the current financial year provides good visibility for growth in the coming quarters.”

He added, “We continue to drive growth and create differentiation by strengthening our capabilities organically and through strategic business development in newer areas like data centres, airports, heavy civil, designbuild B&F projects, industrial projects and manufacturing expansion. KPIL has established a strong and diversified order book, expanded its global reach and has robust execution capabilities, which makes it well poised to deliver profitable growth while maintaining a strong balance sheet.”

Revenue growth in Q2FY24 was led by robust execution and a healthy order book in the T&D, B&F and water business. The EBITDA margin at 8.6% in H1 FY24 and 8.2% in Q2FY24 saw a change in project mix and lower profitability in international subsidiaries.

The company expects to bring down the net WC days below 100 days by the end of the current fiscal.

T&D revenue was up 24% YoY in Q2FY24 and 16% YoY for H1FY24. Growth was largely due to strong execution and a healthy order book. LMG and FAsttel reported revenues of Rs 427 crore and Rs 356 crore respectively for H1FY24. The order book of LMG and Fasttel at the end of September 2023 stood at Rs 1,457 crore and Rs 448 crore respectively.

ROBUST T&D

T&D business visibility remains robust, propelled by the growing adoption of renewables, new T&D infra development and grid integration/upgradation. The T&D bidding pipeline is strong, with domestic T&D tender activity showing a strong rebound with opportunities in excess of Rs 50,000 crore, as well as $ 3 billion of international T&D business visibility in key markets. The company is transitioning with a focus on margin-accretive and high-value differentiated projects.

Mr Mohnot pointed out that the company has exited from the Australia JV and the order. However, it continues to work on establishing an EPC project in Australia.