NCC Eyes Order Inflows Of Upto ₹22,000 Cr In FY25
Transcript
00:00We're joined by Mr. Neeraj Sharma, Head Strategy at MCC Limited, who joins us now.
00:04Welcome to the show, Mr. Sharma. You know, my first question to you is,
00:08your sense of how the quarter has gone by and how FY25 is shaping up for you?
00:14Very good morning. There are two parameters in the first quarter. You are aware about the fact
00:22that we have, you know, we have had MCC in place, that is, Model Code of Conduct.
00:28Because of this reason, the award has been, you know, a bit sluggish in the first quarter,
00:33across the board. This is not a statement on MCC, across the board. Whenever elections are
00:40announced, you know, you are aware that government machinery sort of, you know,
00:45freezes and awards are, you know, very, very sluggish.
00:52The second thing that I wish to talk about is the revenue. Despite the fact that we have had
00:57elections, you know, federal elections across the nook and corner of the country, we have been
01:03able to deliver one of the best first quarter revenues in last several years. So, we continue
01:11to see ramp up in the execution and we are quite confident that award pipeline should also,
01:18you know, start rolling out now. Everything seems to be in place now.
01:23Mr. Sharma, everything seems to be in place, execution well on track over here.
01:28Now, you mentioned about the revenue growth being at a higher side. Now,
01:32you have carded for about a 15% of a revenue growth for the full year.
01:35Considering that in Q1, you clocked in about a 26% growth. So, going forward for the whole year,
01:40do we expect a revision in this number after you are looking at the H1 trend in general?
01:45We don't wish to revise the number as we speak, you know. Still, we have about, you know,
01:53two and a half quarters to execute. So, let us wait and watch, you know. And I also take this
02:00opportunity to share with you and your viewers the very fact that, you know, in the last three
02:06years in a row, we have been able to deliver a growth of, you know, upwards of, you know,
02:1230% each year. So, that is what has given us, you know, very little higher base. So, we believe
02:20this 15% upwards revenue is a good guidance, you know, good target to have and achieve.
02:28Right. Mr. Sharma, you know, I want to shift focus to your order book. You know, in Q1,
02:33your order inflow was roughly 400 crore and your L1 was approximately 8,000 odd crores.
02:38And you've guided that your order book will be in the range of, the inflows will be in the range
02:44of 20 to 22,000 crore in FY25. Do you still maintain that guidance or will there be some
02:49revision considering how Q1 has performed? We don't wish to revise the order inflow guidance
02:56that we have shared with the street. And if I take this opportunity to extrapolate, you know,
03:02you have yourself just shared that, you know, we are L1 in about 8,500 plus 400 odd crore we
03:09have reported in the first quarter. If you add these numbers, we are looking at, you know,
03:13something close to 8,900, 9,000 crore, which is approximately about 45 to, you know, 44 to 45%
03:24of the lower band of the guidance that we have shared with the street. So, we are quite hopeful
03:29to, you know, very much achieve the number that we have shared with the street.
03:36Okay, that's a fair point. We remain optimistic on the guidance that you've given so far now.
03:40But now coming to your order book, which stands at about 52,000 crore, roughly around 53,000
03:46crore as we speak. What is the execution for the current year of this 52? How much are we planning
03:51to execute in FY25? Primarily in our line of business, most of the execution, you know,
03:59that we really report is from the existing order book. The orders that we bag in a financial year
04:06hardly contributes, you know, anything. That said, you know, so roughly if you, I mean,
04:12if you want a number about 85 to 90% of the execution would come from this 52,000 odd
04:20crore that we have with us. Okay, Mr. Sharma, you know, if I see your geography wise breakup,
04:27you know, 20% of your orders are from Andhra Pradesh and seeing, you know, the current budget
04:32allocation for Andhra Pradesh, what are the kind of opportunities that you're seeing from that
04:36particular state? And what is the kind of revenue uptake will you expect if you are particularly
04:42targeting that state? We don't have that much, you know, percentage from the state of AP.
04:48We don't have really. Okay, so then what? The, yeah, the, you know, the most of the orders that
04:58we have is from two states, that is UP and Maharashtra. Okay. I don't think, I mean,
05:08let me go back to the, let me back to the question that you put to me.
05:12So, we are eagerly waiting for, you know, the bidding process to start in the state of AP.
05:21I believe, you know, this process should start in about a quarter's time or so.
05:26So then you will be looking for opportunities in Andhra Pradesh and if yes, is there some kind of
05:33internal target that you have that you're, that you'll be bidding for in Andhra Pradesh particularly?
05:38Ma'am, we do not have any target as such, you know, because at the end of the day, it depends
05:43what kind of projects really do come up for bidding. What is the size of the project? What
05:48is the nature of the project? Then only we decide, you know, evaluate the project thoroughly and then
05:54we decide whether to bid or not. So, I do not really have a number really to share with you
06:00as we speak. But let me add that, you know, as and when the process of bidding starts,
06:06we would be eagerly, you know, studying all the projects and then decide to participate.
06:13All right, that's fair. But now coming to some of the key projects which have remained in focus
06:17over here, were the Jaljeevan Mission Project and the Smart Metering, which is your recent foray.
06:22I want to understand what is the current status on this front in terms of completion,
06:27in terms of FY25, where are we looking it at for both of these?
06:32The first project that you talked about is the Jaljeevan Mission Project.
06:38We have, you know, we have had an order book of close to 17,000 crore, that is 6,900 crore.
06:46We have executed, you know, substantial chunk of the project in the last two years.
06:52What remains to be executed is about, you know, 16,000 crore.
06:57In the last two years, what remains to be executed is about, you know, 6,000 crore of the project.
07:03And as we speak, the execution is going smoothly and we hope to complete all these projects,
07:08you know, well on time or possibly ahead of the schedule.
07:14The second question was about the Smart Metering project.
07:19I take this opportunity to share with you the fact that we have back three Smart Meter projects.
07:25The total order value from these three projects would be about 8,080 crore.
07:32The two projects are from the state of Maharashtra.
07:35The order value of these two projects would be 5,700 crore.
07:40The third project is from the state of Bihar.
07:43The order value of that project is 2,300 crore.
07:47As we speak, I am happy to report that we have only started the trials
07:53for the Smart Meters in the state of Bihar.
07:58And hopefully, we will, you know, start the same thing for
08:02the Smart Meter project for the state of Maharashtra as well.
08:06Okay.
08:07Mr. Sharma, you know, now I would want to shift focus to balance sheet side of things.
08:11You know, your net debt has increased to roughly 1,800 odd crores.
08:14And this is versus 1,000 crores in Q1 FY24.
08:19And your highest debt level has remained around 1,900 crores.
08:22So overall, I want to understand that why has the debt increased, first of all?
08:26And secondly, where will the debt level stand at by the end of FY25?
08:32Two questions, ma'am.
08:33Firstly, you know, across the board, you know, in this, in our line of business,
08:39generally, this infrastructure business is a business that is continued to be,
08:44you know, continued to be dominated by the government and their agencies.
08:50In the first quarter, if you traditionally see the debt level, you know, generally goes up,
08:54we have to start investing the working capital projects, many of the projects to start.
09:00So this is a tendency that we have seen in the past as well.
09:06I think it is important to compare this debt number with the
09:11first quarter of the last financial year, that is, you know, Q1 FY24.
09:18If you really compare, you know, there is an increase of debt only for, you know,
09:22four days, four days, about four or five days in that range.
09:26So it has not really, you know, gone up substantially.
09:28This is a trend that you will get to see in the first quarter, in the second quarter as well,
09:33you know, then it continues, then it, you know, starts coming down from third quarter and,
09:38you know, it's sort of, you know, it's the lowest level in the Q4.
09:44The second question was about the debt, we have already shared a number with you
09:50for the FY25, which is close to 500 crore.
09:55Okay, so a reduction in the number that we are looking at 500 crore at the year end,
09:59and we'll expect this from Q3 onwards.
10:02Fair enough.
10:02Now, I want to understand on your bid pipeline going forward.
10:05So buildings, electrical, transportation have remained your major segments over here.
10:10Where are we seeing the current order inflows coming from in which segment particularly?
10:15What is your bidding pipeline looking at?
10:17And what is the conversion ratio for a company like NCC?
10:24Three questions, you know, firstly, I mean,
10:27we continue to see a very healthy prospective pipeline of projects,
10:33if you, I would put a number close to 2 lakh crore,
10:36but this is the prospective, you know, pipeline of projects.
10:40These projects are going to, you know, get the light of the day in next 12 to 15 months.
10:48The second question was about the segments.
10:51We have four large divisions, that is buildings, transportation,
10:55electrical, T&D, and water.
10:58These are the four large divisions that we have,
11:01and relatively three small divisions, irrigation, mining, and railways.
11:06In the first four large divisions that I just shared with you,
11:09we think the bulk of the projects, you know, would get awarded in these four segments.
11:15We might see some traction in the railways as well, but we have to wait and watch.
11:21Okay, Mr. Sharma, you know, one short and quick question.
11:25What are the kind of CAPEX plans that you have for FY25?
11:29And what will, I mean, for which particular segment will the CAPEX be used for?
11:37The CAPEX plan for the FY25 is about 250 crore.
11:43And, you know, it would, we would, you know, spend most of these,
11:49this CAPEX in these four large divisions that I just shared with you.
11:53Okay, and Mr. Sharma, you know, like you rightly mentioned that,
11:57you know, your major presence is in Maharashtra, UP,
12:01and you also have presence in Jharkhand, Karnataka as well.
12:05Any new geographies that you're planning to expand into?
12:11See, at the end of the day, our business is a play on the opportunities available in the market.
12:17If you really see the history of the company in last about four and a half decades,
12:23we have bagged and executed projects in almost all the nooks and corners of the country.
12:29So wherever the projects are about announced, you know,
12:34we do not have a choice but to go there.
12:37Wherever, you know, the projects are, we try to go there, try to study the projects.
12:42But we have the capability and, you know, in-house to
12:46go to any part of India and execute the projects.
12:49And this is what we have successfully demonstrated in the past.
12:54Mr. Sharma, but now a quick question on the Maharashtra side.
12:58Maharashtra is your biggest contributor.
13:00With the elections coming in over here,
13:02do you expect an impact on any of the projects that you currently have in place over here?
13:09We really don't.
13:10I mean, it depends.
13:11It depends on, you know, it's a call that our clients have to take, you know.
13:18It is difficult really to, you know,
13:21foresee all these possibilities and possibly put a number because
13:25elections still have not been announced for the state of Maharashtra.
13:28We have to wait and watch.
13:32Okay, well, Mr. Sharma, thank you so much
13:34for taking your time and giving us those answers so comprehensively.