• 6 months ago
Transcript
00:00Hello and welcome. You are watching the Small and Midcap show. I am Mahima Vacharajani and
00:13with me is Anushi Vakaria. Well, before we speak to the managements that we have today
00:18on the show, let's take a quick check on how the markets are panning out to be. Well, Nifty
00:2250 is off from its day's highs. It's really making us wait for that 24,000 mark. At present,
00:28if we see, the Nifty is trading flat at 0.1%. It's trading in a range of around 170 points,
00:35roughly 70 points away from its day's high. In terms of Sensex, Sensex has a wide range
00:39of around 560 points today in terms of trade. However, Sensex is also trading flat at 0.1%.
00:45Roughly 200 points away from its day's highs. In terms of the broader markets, if we can
00:51pull up the Midcap 150, well, the Midcap 150 is trading a bit better than the benchmark
00:57indices at 0.3%. However, Small Cap is trading completely flat as we speak. In terms of the
01:04Nifty contributors, if we can pull up that, something like RIL, ICICI, Ultratech and Grasim
01:11is weighing positive to the Nifty today and something that's weighing down the Nifty is
01:15HDFC Bank, L&T, Maruti and M&M. If we can quickly pull up the breadth of the market,
01:22of course, the breadth of the market is skewed towards the buyers today. No, it's changed
01:27now. It's skewed towards the sellers right now as we speak and around 880 advances versus
01:34declines of 1187. So, almost 1.2 is the ratio. In terms of the sectoral indices, well, something
01:42like Nifty Metal is doing good today. If we can pull up the contributors to the Nifty
01:46Metal, Nifty Metal is up around, Nifty Metal is up around 0.3%, Nifty FMCG is also up around
01:530.3%. But in terms of Nifty Metal, JSW Steel, Tata Steel, Hindustan Zinc are something that
02:01are contributing positively towards the Nifty Metal. Nifty FMCG also, if we can pull up
02:06the contributors, it's doing well in trade today. Radico Khetan is up 2.8%, Varun Beverages
02:14is up almost 2%, Colgate is up 1.3%. But in terms of sectors that are not doing well,
02:20the banks, the PSU banks and the bank is taking a hit today in terms of Nifty, PSU banks,
02:26if we can pull up the contributors there, there you go, almost all stocks in red except
02:33for two. But some stock specific action here, if we can quickly pull up India Cements, well,
02:41after Altrotech acquires 23% of India Cements, the stock is doing well in trade today, there
02:48you go, up 8.6%. The stake was bought at around 267 per share and the valuation that we arrived
02:56at was around $90 per tonne. Let's pull up something like Whirlpool also, because as
03:03per Reuters report, Bosch is set to acquire the parent company Whirlpool and which is
03:09why Whirlpool India is up around 9.5% as we speak. Let's pull up something like KEC International,
03:17the company has received an order worth rupees 1025 crore. It's an order for transmission
03:26and distribution of cable business, the stock is up around 5.16%. But let's shift focus
03:34and let's cut straight across to President Draupadi Murmuru, who is about to address
03:40the joint sitting of Parliament.
06:04President Draupadi Murmuru, who is about to address the joint sitting of Parliament.
06:34President Draupadi Murmuru, who is about to address the joint sitting of Parliament.
07:04President Draupadi Murmuru, who is about to address the joint sitting of Parliament.
07:34President Draupadi Murmuru, who is about to address the joint sitting of Parliament.
08:04President Draupadi Murmuru, who is about to address the joint sitting of Parliament.
08:35Well, okay, that was President Draupadi Murmuru addressing the joint session. But we have
08:44a breaking news update on the earlier India Cements and Altratech news. Sources have now
08:49told NDTV Profit that Rakesh Damani and entities have sold the stake in India Cements. My colleague
08:56Sajid joins in with more information.
09:01What we understand is that the block deal that happened in the first session of the
09:08market which is between 8.45 and 9.00 where we saw nearly 23% stake of India Cements being
09:14acquired by Altratech. The seller in that stake was Radhakrishnan Damani and his entities
09:22who owned little over 21% stake in the company. Now, as per the March shareholding of India
09:30Cements, Radhakrishnan Damani along with associates are owning nearly 21% stake in
09:36the company and there is additional 2% stake which either they have increased the stake
09:41over a period of time or there are other entities which were involved and that was acquired
09:45by Altratech in the morning block deal. Just to clarify, this is a non-controlling financial
09:53investment made by Altratech in India Cements which basically means that it will not lead
09:58to any open offer. Also, it will not give Altratech any board seat in India Cement.
10:06It could be a long drawn strategic plan of increasing its presence in the certain market
10:13and maybe in the near future there could be a consolidation that could happen with India
10:18Cement as a whole because India Cement is facing some kind of working capital issues
10:23and it has lined up some kind of capex but it needs funding for that kind of capex which
10:27is there. So, the next move that may come in would be from the India Cement board how
10:34they are going to look at this acquisition by Altratech in their company and whether
10:40they would now bring them on board or they will come out with any fundraising plan so
10:46that they can show up there on balance sheet.
10:48Right. Well, Sajid, thank you so much for breaking that down for us. Please note this
10:53is an NDTV Profit Exclusive that Radha Kishan Damani has sold his stake to Altratech Cement.
11:00But let's move on ahead in the show. We have with us today Mr. Prasad Patwardhan, CFO of
11:07ITD Cementation who joins us now. Well, ITD Cementation has had an order win of almost
11:131000 crores and he will be discussing with us the revenue potential for the same. Welcome
11:19to the show, sir. My first question to you is that new order win on cards, I want to
11:24understand as to what are the execution timelines for the same and how much of a revenue potential
11:31are you expecting from this?
11:32Good morning and thank you for having me on your show. The order value is about 1080 crores
11:38including taxes and is to be executed over roughly two and a half years. So, on an annualized
11:45basis, we should expect around 300 plus crores of revenue to come through for the next couple
11:50of years plus.
11:51Mr. Patwardhan, I know she's joining from the other side. Now, this was on one order
11:58that you specified, but now if I look at your overall order book, I want to understand the
12:02similar question here. What is the kind of execution that we look with the 19,000 crore
12:07of an order book that we currently hold? And along with this, what is the kind of order
12:11wins and where are we looking more order wins coming in from with your year going forward?
12:17Well, before this order came through, our order book was a little under 20,000 crores
12:22and now we are at about 21,000 crores and the average execution timeline for our order
12:27book is about two and a half years. So, you know, that is where we stand right now and
12:32there is a large pipeline of projects that we have either bid for or we are in the process
12:38of submitting our bids and we expect some of these orders to materialize during this
12:43financial year and it's a pretty healthy pipeline and now with, you know, the government in
12:50place and continuity in terms of policy, we hope that and we expect that more orders will
12:55come our way during this year.
12:57So, Mr. Patwardhan, I want to understand that since you mentioned a bid pipeline which is
13:02around 25,000 to 30,000 crores as per your last call, I want to understand that how much
13:07is the conversion ratio that you are expecting in terms of if you can quantify that for us
13:11one thing and what is the kind of order book growth that you are looking at when it comes
13:16to FY25?
13:18Well, our conversion rate in the last year has been, you know, it varies, you know, because
13:24some of these orders that we bid for are pretty large orders. So, if we were to miss a single
13:29order, then the percentage could vary. But over the last few years, we have seen that
13:33the conversion rate varies between 15 to 20% or maybe a little higher than 20% also
13:39on a few occasions. During this year, you know, looking at the immediate bid pipeline
13:45that we have and the new orders that we have on our radar and some of the projects overseas
13:51also that we are evaluating, we expect the new order flow this year to be anywhere between
13:5910,000 and 12,000 crores as of now. You know, maybe we will know better in a few months'
14:04time. The order inflow number could change but as of now, we expect order flows of about
14:1110,000 to 12,000 crores at least in this year.
14:15Alright, Mr. Patwardhan. Now, I just want to, I am looking at the overall overseas mix.
14:20You have a strong focus over here, 30% expected in next 2 to 3 years. I want to understand
14:26where are you seeing this growth coming in from and even here, we are looking at the
14:30focus continues to remain on the marine contract side. So, how is this compared to the other
14:36segments? What is the kind of margins that we see in this one?
14:40Well, in the overseas market, we are primarily focusing on the marine segment. About a year
14:46or 15 months back, we completed one project in Myanmar. Currently, we are executing one
14:50project in Bangladesh and one project in Sri Lanka and we are looking at opportunities
14:55in these geographies and also in Africa and in the Middle East as well. Largely in the
15:00marine segment and there are good opportunities that we see coming up in these segments and
15:05typically when we go overseas, the idea is to make better margins and that is what we
15:11are hoping for. We have seen that happen in the first project that we executed in Myanmar
15:15and we are pretty confident that we will be able to replicate that in the projects that
15:20we have under execution in Bangladesh and Myanmar. So, we are hopeful of getting good
15:26orders overseas and we are now focusing a bit more after our recent successes in Myanmar
15:31and what we are seeing in Bangladesh and Sri Lanka as well. We are looking at more projects
15:36overseas but largely in the marine space only.
15:39So, considering all of these orders being executed, the 10,000 to 12,000 order book
15:45that you are looking at for FY25, what is the kind of revenues that you are expecting
15:50in FY25 and in terms of operating margin, when you say you expect your margins to expand,
15:55I believe your operating margins were around 10% this year. So, from that 10%, where do
15:59you see them going?
16:01Well, this year we have already indicated in our previous call as well that we expect
16:06the top line growth of anywhere between 15% to 20% or maybe 20% plus as well. Last couple
16:12of years, we have grown at 37-38% and last year we grew at more than 50% and on top of
16:19this growth, we are expecting a growth of at least 15-20% in the current year and in
16:24terms of margins as well, we have seen consistent improvement in our margins in the last financial
16:29year and we hope that we will be able to continue with the same tempo in this year as well and
16:36there should be some improvement in the margins although I will not be able to comment on
16:41the improvement that we hope to see but we are expecting some improvement in the margins
16:45in the current year as well.
16:47So, improvement in the margins going forward that we are looking at. Now, I want to understand
16:52what are your CapEx plans for this year going forward?
16:55Well, CapEx plans are twofold. One is replacement CapEx for our existing plant and equipment.
17:02Once the useful life nears its end, we replace the equipment with new ones and the second
17:07part of the CapEx is largely related to new order bills and if we need to spend anything
17:11on CapEx to execute the new orders that we have done, then we need to invest in construction
17:16plant and equipment as well. This year, we hope to incur CapEx. We have plans of roughly
17:22200 products of CapEx in the current year.
17:25Okay. Well, Mr. Patwardhan, thank you so much for breaking that down for us and taking our
17:30time and speaking with us at NDTV Profit. Now, we are going to speak to NCC Limited
17:35and we are joined by Mr. Neeraj Sharma, the Head Strategy at NCC who joins us now. Welcome
17:41to the show, sir. My first question to you is that in terms of your order book growth,
17:47something like 27,000 is what you have clocked for FY24 but you have guided for a slightly
17:54lower order book guidance for FY25 which is 22,000 and I reckon that this is because
18:01elections were ahead of us but now that elections are behind us, is there any change in the
18:06guidance that you have given us?
18:09We do not have any change in the guidance but we need to be cognizant of the fact that
18:16about three months are already over. We are already at the end of June. So, the budget
18:24is scheduled to be presented in second to third week of July. Then we expect to see
18:32some movement, let us say that maybe in August or September. So, what essentially means is
18:40about five, six months of the current financial year is already going to be over by that and
18:46it takes time. It takes time for the government departments, government machinery to work
18:53out the new tenders which are the new projects which are expected to be awarded. So, that
18:58is the reason we have decided to possibly, if you prefer to use that word, tone down
19:03the guidance a bit because we are practically talking about a financial year of about six
19:11to seven months only, effectively. So, that is the reason, this band and that is the reason
19:17what appears to be a bit toned down order inflow guidance.
19:23Hi Mr. Sharma, Anushi joining in from you. Now, I just want to continue with this order
19:28book discussion, 57,500 crore that you had recorded in FY24. I want to understand the
19:34kind of execution that we should be looking for and for the order inflows that were mentioned
19:39above, what are the kind of projects that we are looking for?
19:46Firstly, we already have a very healthy order book of more than 57,000 crore and the revenue
19:54growth, you are aware that we have talked about a guidance of at least 15% revenue growth.
20:02So, bulk of this growth in the revenue is going to come from these existing order book
20:09that we already have with us. We have to wait and watch. Let us wait for a couple of months
20:16to see what is the priority of the different department, different arms of the government,
20:21which projects are the projects which are, you know, get awarded on the priority.
20:26So, let us wait for a couple of months to get some clarity. That said, if you ask about
20:34my opinion, I would prefer to say that I see a lot of pipeline of projects that should
20:42be built out in buildings, transportation. When I talk about transportation, I am talking
20:48about metro projects, you know, all the elevated structures, the flyovers, you know, those
20:53kind of projects, as well as, you know, the electrical T&D in which, you know, we do transmission
21:00distribution kind of business. So, primarily these three verticals and we might see some
21:06traction in, you know, the award of water supply, water treatment, sewage treatment,
21:11you know, sort of projects as well.
21:14Right. I take your point, Mr. Sharma. You know, now I shift focus to the financial side
21:19of things, you know, you have guided that you want to reduce your debt from almost 1000
21:24crores to 500 crores, which is almost half. So, I want to understand that what are your
21:28plans with respect to that? How are you planning to reduce that debt? Is it through internal
21:32accruals or are you planning to raise any kind of funds going forward? What is the plan?
21:38We do not have any plans really to raise any fund. We have not really shared any guidance,
21:45you know, for reduction in debt. Let me also add this, you know, the most of the debt that
21:51we have with us is a working capital, you know, debt. We have to cognizant of the fact
21:57that, you know, last three years we have delivered a growth of, you know, in the range of 30
22:02to 35 percent. So, you need working capital to fuel your growth. This year also we are
22:08talking about 15 percent revenue growth. So, primarily that is, you know, the working capital
22:15and we do not have any plans to raise any debt, any fresh debt as we speak. And, you
22:22know, the debt at the end of, you know, March 31st in our books is about 1,005 crore. And
22:31if you really take the cash and cash equivalents out, the net debt would be, you know, in the
22:36range of 500 odd crores, you know. And we hope to, you know, maintain same kind of debt
22:42level going forward. All right, Mr. Sharma. Now, one of the key developments of FI24 had
22:49been your smart meter projects. I wanted to understand, there were some discussions going
22:54on with the investment bankers for some of the equity investments of the projects over
22:59here. What's the progress on that front? Yeah, firstly, you have asked a very good
23:05question. Give me a couple of minutes to give you an update. You know, we have three smart
23:09meter projects. Two projects are in the state of Maharashtra and one project is in the state
23:16of Bihar. For the Bihar project, we have already started the trials. And for the Maharashtra
23:24project, you know, I mean, we will take a final call in next couple of quarters, you
23:29know, as and when we need the equity investment, we'll take a call. Okay. Well, Mr. Sharma,
23:35thank you so much for sharing those insights with us. And of course, taking our time and
23:39speaking with us at NDTV Profit. Well, with that, it's all that we have on the show for
23:46now. Stay tuned for more news and updates on NDTV Profit on the other side.
23:54Thank you.

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