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Questions across 2 calls

Ragini Advani

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Ircon International Limited

Ircon International Limited CC-Dec24.pdf · 2025-02-12
So, first, coming to the fact of your guidance for FY’25. FY’25, we should be in the range of Rs.10000 to Rs.11000 crores in turnover. Shreyans Mehta: And in terms of standalone or...? Ragini Advani: I am talking about stand-alone. Another Rs.400-500 crores is what you add for consolidated. Shreyans Mehta: Okay. Ragini Advani: Yes. In terms of my margins, I see my PAT margin was about 7.12% or a little more, 7.2% last year. I see about half a percent dip there. Shreyans Mehta: Okay. Ragini Advani: And going forward, FY’26, currently, my order book is on a strain. I will come back to the question on order book later. But having said that, my revenue numbers again should be in the range of Rs.10,000 crores as of now based on the orders that I see right now or which I am expected or I am very confident that I will get. However, my PAT margins will go down further because as I mentioned, right now, my scenarios become very, very different. The market is going on an extremely competitive basis. So, one, the projects that are coming out are of a small size. Two, I see that there are bidders as many as 20 to 25 and three, they are all quoting below the estimate in many of the jobs. So, given all this, my margins, when I get volumes or when I try to get an order, definitely, I will not get them on losses. But yes, I will have to take a hit on my margins. That's why I am saying that going forward, we will have about 1.5 to 2 percent dip from a midterm perspective on our PAT numbers. Shreyans Mehta: Got it. Sure and then on order inflows? Ragini Advani: Order inflows, see, right now in this financial year for nine months or till date, I think we have had an order inflow of about Rs.1700 crores and given the reality that I have just mentioned, I am hopeful of getting another Rs.1000 to Rs.1200 crores by the year end. But I do not see a very significant order book or I cannot commit at this stage that we will have some major order book before March end. But we are making all our efforts. We are trying to continue to get some orders in this kind of a difficult market scenario and let us see how it proceeds. But yes, another Rs.1000 crores is what I would like to say right now.
I know you're asking something about Chennai Metro, but I'm not able to understand the full question. Pending order book of Chennai Metro is about 200 plus crores. But we have taken the total hit right now. Periwal: Okay and second, have we started executing... Moderator: Sorry to interrupt, Mr. Periwal. Your audio is not clear. Please go off the speakerphone. Since there is no response, we can move on to the next question. We have the next question from Jaiprakash, an individual investor. Please go ahead. Jaiprakash: Good evening, madam. Can you hear me? Yes, we can. In the recent budget allocation for the PSU, compared to FY’25 and FY’26, they have reduced 5000 crores, which is their... For the railways, the government, he said, for the PSU allocation, CAPEX, compared to FY’25 to FY’26, they have reduced 5127 crores. Ragini Advani: Who has reduced 5%? Jaiprakash: CAPEX. Government CAPEX allocation. Ragini Advani: CAPEX allocation by Government of India? Jaiprakash: Yes. So. how do you foresee that for the next 4 quarters, how you are going to get orders? The government itself, is not increasing the CAPEX allocation for the PSU? Which is your direct offline growth? Ragini Advani: PSU does not get any project on nomination basis. We have to compete in the market and whatever is the CAPEX that is being planned by Government of India in infrastructure projects, railways or roadways, we are like any other private player. So, as and when they bring out the tenders, we plan to bid for them and go ahead and see how many of them we can win. Jaiprakash: Okay. The government is not willing to spend more on the CAPEX. How you are going to increase your top-line growth? If you don't get opportunities, more opportunities, how do you foresee that? How it is going to affect your margins? Ragini Advani: The 5% decline is not making too much of a difference to my top-line because it is a huge number that government is spending. So, it is about 2.65 lakh crores is the budget for railways and I think almost a similar amount or more for roadways. So, there is a huge amount still of CAPEX that government plans to spend on projects. Not all projects is what I am interested in. I don't bid for rolling stock and those kind of projects. But whatever are the projects relating to my area, there are enough opportunities that will come. That is not an issue. But the point is how many of them I am able to bid in this competitive environment. Jaiprakash: So, you are optimistic about your next 4 quarters you are going to get more orders? Ragini Advani: I haven't said that. I have only said that next 4 quarters we will continue to target getting more jobs. But I haven't quantified the number that we will be getting. Jaiprakash: Okay, fine. My second question is have you completely exit the Chennai Metro or still you are interested with Chennai Metro? Because you said that you have booked loss in this quarter. Ragini Advani: We are not investing in Chennai Metro. We are doing an EPC project for them. In that project I am going to have losses, which is what I have booked. Out of those projects that I am doing one of my projects is going into losses. And therefore, I have booked a loss on that project. Jaiprakash: Okay, fine. My third question is in your investor presentation page number 32 that is in your order book you have said that you have 89 crores of others, right? Ragini Advani: 89 crores of others in the other, order book? Jaiprakash: Yes. Primarily you are in railways and highways in that others you have you are willing to explore any other areas like airport construction that UDAAN Project Government is more interested about because... Ragini Advani: In airport we have right now only one or two jobs which are PMC and other than that we are doing some civil building set up for MSME industry. These are technical centers that we are going to be setting up for them. So that is where 89 crores of the order book is coming. Jaiprakash: Okay, fine. Thank you. I wish that next 4 quarters you must try to keep on growth trajectory. Ragini Advani: Sure. We need wishes from you all. Thank you. Moderator: Thank you. Participants who wish to ask a question may press “*” and “1” on your touchtone telephone. Participants who wish to ask a question may press “*” and “1” on your touchtone telephone. We have the next question from the line of Dheeraj Kripalani from Avendus Spark. Please go ahead.
Ircon International Limited CC-Dec23.pdf · 2024-02-09
As far as this corridor is concerned we are also aware as much as you are based on the announcements that were made in GCC and recently some activity is happening at a government level or at a ministry level, but not something at which we would be aware at this stage. So, we will not be able to comment on it any further till we get more details. Sujit Jain: Just to understand in this which Indian entity would be at the forefront? Would it be RVNL or would it be Ircon or would it be some other railway entity? Ragini Advani: Nothing has been so far discussed in those lines. I think it's still at a preliminary stage. I don't think those discussions have right now been done or deliberated. Sujit Jain: And ma’am just to understand the difference between us and RVNL, is it safe to understand that we engage in material sourcing and management of overall contracts as well and so therefore our staff is much higher than let's say an RVNL? Ragini Advani: So, our model is that we actually work like an EPC company. Therefore, we will do certain works in house. We will have material procurement, design and many other works that we like to do ourselves and that is the reason we have that kind of strength of manpower available with us. Sujit Jain: And do we also eventually intend to get into consulting business which is more like a DPR viability etcetera which is mainly done by RITES? Ragini Advani: So, there are two things. One, we offer a concept to commissioning to all our clients. Two, we have a subsidiary called IISL which does PMC as well as some of the initial consultancy work, but typically where the consultancy work is aloan standalone. Either we will have our IISL the subsidiary to do to some extent. But we may not like to do that directly in our company if it's pure consultancy because then a consultant versus an EPC there could be a conflict of interest going forward. So, that is where we tend to prefer going into EPC role because that's where our strength is, but if it is a part of the overall opportunity then we are definitely also doing that. Sujit Jain: And just to understand more about the 11 subsidiaries that you spoke about, are there any asset ownership businesses residing in those subsidiaries and what is our position there in terms of capital allocation? Will we undertake, will we not? Ragini Advani: Other than subsidiaries other than IISL which is a perfect management consultancy company essentially rest all are asset owned companies they all have assets, but these are long term PPP assets that you have. Sujit Jain: And in the field of railways or it is in the field of other infrastructure? Ragini Advani: So, our joint ventures are in railway connectivity projects. Our subsidiaries are mainly into roads and highways. There is one which is in renewable, and the rest are roads and highways. Sujit Jain: And in terms of more capital allocation to asset owned projects what is our thought process? Ragini Advani: Yeah. So, we'll continue to do that as well and if you see that we started with some 2 or 3 projects then moved on to 5, then we took another 5. Currently we have something like total of about 9 road and highway projects, another 4 to 5 coal connectivity projects and we continue to doing that. As a part of our business, we will be doing both PPP as well as EPC. Sujit Jain: And ma'am one last question so as I understand international is 9%, 10% not large. Right now the IMEC corridor is at a very conceptual stage. So, the main growth driver would be railway CAPEX and you have small portion in infrastructure. So, how do we view this company in terms of on a medium term let's say 3 to 4 year horizon from today from then, what kind of growth one can expect? Would this be a 13% to 15% kind of a growth company? Would it be lesser, how do we view this?
Yeah. So, I think we've mentioned earlier also that in the next 4 to 5 years we see our doubling our turnover. Sujit Jain: And that is mainly riding on the CAPEX in budgeted CAPEX in the railway sector? Ragini Advani: So, it would be a mix of railway roads and highways and some related infrastructure activities that we may foray into, but yeah it would be driven mainly by railways, roads and highways. Sujit Jain: Because when you say doubling in 4 years, it's 18% CAGR? Ragini Advani: Yeah. Sujit Jain: I'm sure you would have worked it backwards? Ragini Advani: So, 4 to 5 years if I may use that word. Sujit Jain: Yeah, 5 years then that would be about 14%, 15%? Ragini Advani: Yeah that is what we would like to target. Sujit Jain: And one last question is 45% nominated and remaining is a competitive bidding if you can give us a flavor which contracts with some examples where those are nominated contract and which contracts were competitively bided just to understand that in terms of future pipeline what would be coming directly to us on nomination basis and what would be bided out? Ragini Advani: Going forward nothing will come to us on nomination that practice has been stopped. So, whatever existing nomination business we have it should get completed in the next 2 to 3 years one of them being let's say, a Sivok project, USBRL we are in the process of completing, so it should get completed in this year and similarly we will have some other railway projects which were on nomination basis. Usually we have one nomination project internationally. This is the Myanmar project which has been given to us by MEA, but that is again an exception which has come to us. But typically, the way ahead as a rule would be competitive basis. Any new orders would be on a competitive basis. Moderator: Thank you. The next question is from the line of Rohit Natarajan from Antique. Please go ahead. Rohit Natarajan: My first question is more to do with what Ircon is doing as compared to competitors. For instance, I was on another call with RVNL they were saying they are looking at orders. In fact, they have bid for a $10 billion Trans-Kalahari in South Africa, $4 billion in Kyrgyzstan even a company like RITES they are in discussion with a country like Chile to export Vande Bharat whereas Ircon by design was supposed to be an international railway execution agency as well. We have had a rich history of doing projects in the past in international countries like Sri Lanka. We were talking about Malaysia, Singapore, one MDB that particular high speed rail contract, somewhere this international picture is nowhere to be seen in the discussion stage where exactly is that disconnect? Ragini Advani: While I may not like to comment on what RVNL, RITES are doing, but from Ircon perspective yes you are right. We were internationally very strong till about couple of years back so much so that we had most of our turnover coming from international projects and we continue to enjoy that credibility or that respect that we have in those countries. In the past jobs that we got internationally were of two types. One which were mainly funded through some kind of government grants for MEA funding. So, the projects which we negotiated on a one-to-one basis and managed to get good returns there on. There have been changing scenarios all over the world. It is not that your Ircon is not making efforts. We are making efforts right now we are doing it in our neighboring countries as well as in the Middle East. But having said that the window which is right now currently drying up is where Government of India or MEA used to fund projects. Though that kind of projects are not coming as of now. They may be coming in future, and we are very much in touch with MEA. As far as one to one projects are concerned typically most of these countries when they talk of such large size projects are also looking for project financing. It is not that they're sitting with this kind of finance, and they just want you to come and execute. The project financing by itself is a difficult task if Government of India is not a part of it and therefore when we are looking at international projects we are essentially trying to look at the projects where either they have already tied up. The financing from somewhere and we are doing the EPC or where we are confident we'll be able to manage some kind of a structuring in which those kind of financing would be possible. Having said that yes we still need to work a lot on our international business. Our business development and marketing teams are looking into it so is our CMD, but what is very important is to really understand that which are the projects which are tangible, and which are actually on paper and which are the projects where we are looking at some kind of an MoU and not knowing when they're actually going to come ahead. So, I think I'll leave at that point and I think it would be best if we speak with our results as and when they happen. Rohit Natarajan: My second question is more to do with the domestic opportunities. There was a time when all this network debottlenecking, electrification, doubling, all those orders came to you nomination, but if you look at the National Rail Plan as such the scope of conventional works is very limited. Going ahead, the CAPEX is largely confined to high-speed rail, rolling stocks and dedicated freight corridor where technically speaking Ircon hasn't proved its credential probably dedicated freight corridor could be an exception? Ragini Advani: Both high speed and dedicated freight corridor, Ircon has the advantage. It's the only CPSE which has that credential.