Ceigall India Limited (CEIGALL) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Ceigall India Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aryan Sumra from MUFG Intime. Thank you, and over to you, sir.

Thank you. Good evening, ladies and gentlemen. I welcome you all to the Q1 FY '26 Earnings Conference Call for Ceigall India Limited. To discuss this quarter's full year and business performance, we have from the management, Mr. Ramneek Sehgal, Chairman, Managing Director; Mr. Bhagat Singh, Group CFO; Mr. Kapil Agarwal, CFO. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking and may involve risks and uncertainties. For more details, kindly refer to the investor presentation and other filings that can be found on the company's website. Without further ado, I would like to hand the call over to the management for their opening comments, and then we'll open the floor for Q&A. Thank you, and over to you, sir.

Good evening, and good evening, everyone. This is Ramneek Sehgal. I'm pleased to welcome you to the Quarter 1 Financial Year '26 Earnings Call for Ceigall India Limited. Our financial results and investor presentation have been uploaded on the stock exchanges. I trust you had a chance to review them. I'm joined by today by Bhagat Singh, our Group CFO; and Kapil Agarwal, our CFO. Starting with the macroeconomic backdrop, the Indian economy continues to demonstrate strong resilience despite global headwinds, including the ongoing geopolitical tension and recently imposed tariffs by U.S., India's GDP is expected to grow by approximately 6.3% in financial year '26. Supported by robust infrastructure spending growth across key sectors as per the recent report by Fitch Rating, the first quarter of the financial year brought some initial headwinds, particularly due to the early monsoon activity in some states, which temporarily slowed construction activity. However, this space provided an opportunity to reinforce our operational foundation and enhance preparedness for the coming quarters. We are optimistic about business momentum improving as the year progresses. The government continued emphasis on the urban and the rural development, metro expansion, transport infrastructure, transmission and distribution, a strong way to growth in the renewable business. The NHAI, for instance, is expected to bid out 124 road projects worth INR 3.4 lakh crores in financial year '26 across HAM, BOT and EPC model. We are well positioned to leverage these opportunities. The recent 50 basis point rate cut by RBI is another positive development, making project financing more cost effective, thereby improving margins and further supporting the sector's growth. Coming to our performance, we maintained stable momentum in quarter 1, supported by the diversified mix of EPC and HAM projects. In line with our long-term strategy, we continue to expand our portfolio across segments and geographies. Our dependence on highway projects is steadily decreasing as we strengthen our presence in railways, metros, tunneling, T&D renewable business and other underground infrastructure. I'm pleased to share some exciting updates on our ongoing and upcoming projects. First, I'm happy to announce that both of our Ayodhya projects, Southern and Northern Ayodhya valued at INR 23,116 million have now started. These projects mark another important step in strengthening our presence in this region. I am confident they will set a new benchmark execution qualities and time line. In Punjab, out of 2 HAM projects, the date for one is scheduled before October, while the other is planned again before October. The company also infused INR 4,198.41 million of the equity into HAM projects up to June 2025, an addition of INR 759.6 million in July 2025, taking the total equity infusion to date to INR 5,129.2 million. Post IPO, equity of INR 2,592.5 million has been infused. This steady progress keeps us well on track with our commitment in the state. On VRK 11 and 12 front, we have positive development to report. We are now expecting the Stage 1 clearance as early as possible, which will be a significant milestone moving these projects forward. Adding to our momentum, the recent NHAI MORTH circular dated 11th July 2025, introducing the new qualifying criteria is a great and a welcome change. We have received 4 entities till date for Ceigall Malout Abohar Sadhuwali project amounting to INR 1,771.23 million from NHAI. This development aligns well with our capabilities and will further escalate our growth in the infrastructure sector. I am also delighted to share that we have now entered into transmission and distribution and renewable energy businesses. As a first win in this new vertical, we have emerged as L1 in Velgaon 400 kV substation tender worth INR 4,900 million. This is a clear sign of our ability to diversify and complete strongly in emerging sectors. These achievements are not just milestones. They're stepping stones towards our vision of becoming a leader across the multiple infrastructure domains. Let's continue to work with the same passion, precision and purpose that have brought us this far. On the legal front, the arbitral tribunal ruled in our favor in the matter of the Himachal Pradesh Works Department regarding the winding improvement of NH88. The award was of INR 19.36 crores along with the future interest. Additionally, in the ongoing matter with Punjab Small-scale Industry and Export Corporation, we received a alternative reward of approximately INR 3.17 crores, along with the applicable interest. Our order book is well diversified across 8 states, minimizing both regional and project concentration risk. We are currently executing multiple mid- to large-sized projects across different sectors, which supports more balanced cash flow and faster execution time lines. Now turning to the financials. Our stand-alone revenue from the operation, excluding the bonus and royalty rose to INR 8,183 million in quarter 1 financial year '26 at 8.7% increase from INR 7,513 million in quarter 1 financial year '25. EBITDA for the quarter stood at INR 935 million, reflecting a margin of 11.42%, while the profit after the tax came at INR 559 million with a PAT margin of 6.83%. At June 30, 2025, order book stood at INR 1,03,374 million, comprising 36.87% from EPC project, 61.75% from HAM project, 1.38% from BOT project. In terms of the verticals, 83.42% comes from elevated highways, structures and flyovers, 2.05% from tunnel, 13.15% from the railway and metro projects and remaining 1.3% from emerging segments like airport runway and bus terminals. Now I would like to hand over the call to Group CFO, Bhagat Singh, who will take you through the financial -- company's financial performance. Thank you.

Thank you, Ramneek, sir. Good evening. Good evening, everyone. I will now take you through the financial highlights for the first quarter FY '26, beginning with the stand-alone performance. For Q1 FY '26, revenue from operations, excluding bonus and royalty stood at INR 8,183 million, representing 8.7% Y-o-Y growth from INR 7,530 million in Q1 FY '25. EBITDA, again, excluding the bonus and royalty stood at INR 935 million compared to INR 961 million in the same quarter last year. This translates into an EBITDA margin of 11.42%, which is within the guidance which we have given in the earnings call. Profit after tax came at INR 559 million compared to INR 691 million in Q1 FY '25. On the debt side, our stand-alone gross debt stood at INR 6,848 million, comprising of INR 160.85 million in equipment loan, INR 3,370.90 million in term loans and INR 3,316.42 million in the working capital loans. Moving on to the consol number for Q1 FY '26. Revenue from operations, excluding bonus and royalty, reached at INR 8,382 million, marking a 4.3% increase from INR 8,038 million in the corresponding quarter last year. EBITDA for the quarter stood at INR 1,091 million compared to INR 1,225 million in Q1 FY '25 with an EBITDA margin of 13.02%. PAT for the quarter came at INR 513 million, resulting in a net margin of 6.12%. On a consol basis, gross debt stood at INR 14,247 million, including INR 652.12 million in equipment term loan, INR 3,558.40 million in term loan, INR 6,720.06 million in the HAM term loan, and INR 3,316.42 million in the working capital. On net debt-to-equity ratio, it remained healthy for the company on a consol basis. We stood at 0.5 as on Q1 FY '26. In terms of working capital, our net working capital days stood at 75 days as of 30th June 2025. This figure factors in inventory days, WIP days, receivable days. On the execution front, we currently have 29 ongoing projects with a total order book of INR 1,03,374 million. This includes 13 EPC projects, 8 HAM projects, 1 BOT project, covering a wide range of sectors, including roads, highways, tunnels, railways, metros, airports, runways and bus terminals. Importantly, NHAI projects contribute at 80.47% of our total order book with a diverse portfolio, strong order pipeline and continued focus of the government on the infrastructure development, we are very well positioned to sustain momentum and drive long-term growth. With this, I conclude my opening remarks and open the floor for question and answer. Thank you.

[Operator Instructions] The first question is from the line of Vaibhav Shah from JM Financial.

Sir, firstly, we haven't removed the Bhubaneswar Metro from the order book. So there were some news that the project has been canceled. So what is the status on that?

So that happened in July. And yes, we have removed it in our grant thing. Yes, that project got terminated by Delhi Metro because they were unable to start. From our side, we mobilized. We started the initial diversion and the piling work. So the government of Odisha wants to change the project into underground with double decor and they want to get a fresh contract for that. So yes, it has been terminated. We have already uploaded that on SEBI.

So will we be interested in the newer tender which comes out?

Yes, why not? We already bid everywhere for metro. And we have already won a new vertical project, which is a T&D in Maharashtra, Velgaon, which is closer to INR 500 crores. And in that, we have to build it in Velgaon and their annuity for next 35 years, annuity of about INR 58.5 crores every year.

Okay. And sir, what work have been already done in the project Bhubaneswar? And what are the receivables? And have we received any mobilization advance from the client?

Yes, we have received one shot of mobilization vans, but other we haven't received it. And in fact, the department has to return our bank guarantees also. But they want to settle it. The discussion has already started. Yes, there would be a claim. We have already put one claim. The second claim is ongoing, and it should be submitted very soon.

So what are our net receivables as of now from the project -- from the client?

From this Bhubaneswar?

Yes.

One second. How much is the -- So we have already spent close to INR 30 crores on this project and the claims are underway besides the machinery. Machinery, we have sent a lot of new machinery for this project, and we have established the camp also. So the team is already on the job to evaluate and submit a claim. And receivables, yes, as I said before, they have given us one part of the mobilization one. The second was never given. And the mobilization part, BG is also to be returned. And we are going to submit a fresh bill where diversion was done or other works were done. So it will be submitted very soon.

Okay. Sir, so mobilization advance would have been somewhere around INR 30-odd crores, assuming it would be 5%?

INR 21 crores, INR 21 crores.

INR 21 crores. Okay. Sir, secondly, on the equity infusion front, so what our pending equity to be infused? And how much will be putting in '26, '27 and '28?

So I think it should be around INR 800 crores. Exact number, Bhagat will tell.

INR 872 crores.

INR 872 crores. So typically, these large projects of 30 months, and we are targeting to put in the next 2.5 years. And the equity, which we've already infused, we've already shared in the call.

So can you give guidance for the entire year for '26, '27 and '28?

So only VRK 11 and 12 have not started. Otherwise, equity for Ludhiana, Bathinda and Ludhiana Southern bypass as per the requirement of the sanction letter, we will be putting our equity in next, say, about 24 months.

Okay. Okay. Sir, when do we expect to receive the appointed dates for VRK 11 and VRK 12?

So VRK 11 and 12, we've been getting a positive response from the government of Jharkhand, where we are expecting to get the Stage 1 approval any time. Once the Stage 1 approval is there, I think we should get a appointed date.

So any guidance per se in 2Q or 3Q, are we targeting?

So we are targeting that we should get it in 3Q, quarter 3.

For both the projects?

Yes, yes, yes. We should. So they're at the same stage. And for Punjab, we should get it one by next month. Conservative...

Southern Ludhiana?

Southern Ludhiana, October.

October. Moga-Barnala?

Moga-Barnala is the same Ludhiana–-Bathinda -- that we should get it next month. We've already started the mobilization and the preconstruction activities there at the site.

Okay. Okay. And sir, lastly -- last question from my end. In terms of guidance, so given the delay in ADs for VRK 11 and 12, and you are factoring a good amount of execution in '26 itself. So are you revising the guidance for FY '26?

No. So since certain approvals are delayed by the government, so there, we are helpless. Otherwise, we are on track in terms of -- we already started 2 projects in UP, that's Ayodhya. And as per the earlier guidance, we are trying our level best to achieve that.

Sir, also -- metro project also canceled. So revenue from that also has been...

Yes. So the first quarter only got affected because of the metro project and the monsoon season, which started early because 3 of our sites have got affected due to the monsoon.

So we maintain our revenue guidance of 10% to 15%?

Yes, yes, yes.

And margins of 11% to 12%, pure EPC?

Yes.

The next question is from the line of Mohit Kumar from ICICI Securities.

Is it fair to assume that all 6 projects where the work has not started, especially on HAM, we expect the date to be in place by this fiscal year? Is that a fair assumption?

So thank you for the question. We have already started 2 projects, which is Southern Ayodhya and Northern Ayodhya bypass. Third one is getting started next month. Fourth one is getting started in October. And we are targeting quarter 3 for VRK 11 and 12. So we are really expecting all these projects will be started next year.

Understood. Sir, my second question is, can you help us understand your entry in T&D, especially on TVC side? And what is your aspiration for this segment in medium term?

So there are a lot of works and a few days back also, there was a news that government is going to spend in INR 100 billion on T&D business. And we also see -- as you know, we've acquired CNC, which has some machinery and expertise and PQ and in fact, team for working the team also has joined us. We are really looking forward to growing this business as a lot of projects are available in the market in terms of the tariff-based plan. We've already are successful in one project, and we are waiting for the LOI. And we have quoted for other transmission line business also in the same department. And we are looking forward to add a good order book from this particular division. We've already quoted for a renewable business also. That is the KUSUM scheme in Madhya Pradesh.

Understood, sir. My last question, sir, are you seeing the tenders pipeline from NHAI building up since NHAI is INR 3.8 trillion? Or do you think this will most likely will happen in the second half of the fiscal?

So good question. NHAI have done a cleanup in the last 1.5 years, where they were not going for tendering till the time land is available, like in the cases of our where the tenders are lotted and land was not available. Now till the time, the availability of the land is not bidding out. Now NHAI has announced 20, 25 days back that they're coming up with a lot of tenders worth INR 3.4 crores or something and in which about 70% is HAM, 20% is BOT and 10% is EPC. My figures might vary 10%, 15%. This is what we've understood and we've got the list. So these tenders, we are targeting to launch in this year. And good thing about NHAI and MORTH, NHIDCL is they have changed the qualifying criteria, which happened on 11th of July last month, with which I really feel they would be a great tutor in our industry because earlier the competition level was crazy and now it will be a healthy competition because larger the net worth, you can get more contracts. The prequalification, which was earlier diluted during the COVID has been reinstated and made a better one for large companies and companies like us. And we really look forward to it. And I think there will be no dearth of getting worse in NHAI as well. And in HAM also, so people will be -- people have to plan and have to pick and choosy for these large projects from NHAI and MORTH.

The next question is from the line of Darshil Jhaveri from Crown Capital.

So sir, just wanted to know like I think since the last few quarters, our order book has been in the range of around INR 10,500 crores. So now how do we see that going forward? And just wanted to know like I think we have around INR 5,000 crores of EPC contracts, right? So what is the execution period for same? And why the guidance for revenue is around 10%, 15% when we have such a decently big order book?

So good question. Thank you. So the -- we have a mixed order book of HAM, BOT and EPC. So typically, when we get a HAM tender, it takes about 1.5 years to 2 years to start the project. And EPC, it takes almost 5 to 6 months to start a project. Whereas these projects, the tenure of the projects ranges from 2 years to even 5 years. So typically, our projects because we are doing specialized structure projects, we are doing country's longest elevated, one of the longest elevated, which is Danapur-Bihta. So these projects are typically for 30 to -- which goes up to 40 months also. And the revenue is divided into all 30 months. So it's typically it's like 2.5 years. So the order book, which we have guided before, which is about INR 10,000 crores. So if we have to do it, it will be spreaded into 2.5 years.

Okay. Okay. Fair enough, sir. So based on that also, I think per year, we should be crossing INR 4,000 crores, right, even that base. And -- I don't know if we'll be able to reach that this year. Is that a fair assumption, sir?

So we have a target to reach there. And since we have got this new T&D business also, we are trying to get more orders also. And gradually, the order book value will also be increasing going -- coming months in progress.

Okay. Okay. Fair enough, sir. And sir, the new NHAI order that you're speaking about that can come in. So what will be our targeted order inflow for this year?

So our target is INR 5,000 crores.

Okay. Okay. INR 5,000 crores is our target. And I just wanted to know like how is the competition intensity that you feel? Like is there very high? Will there be pricing pressure that can lead to some kind of margin issues? Or how do we see it, sir?

So it was there before earlier. But now since the qualification criteria has been changed, so I think now the position will be changed, and we really look forward for doing healthy competition.

So there would not be a situation of undercutting or something, everyone can enjoy healthy margins?

Yes, yes, yes. So the large companies can only bid. More the network you have, you can get more contracts if you see this qualification.

Okay. Okay. Fair enough, sir. And sir, just wanted to know just like I think pre-IPO, we were able to grow at 40% plus. So when do we see -- be able to reach at least more than 25% growth target? Like how do we see ability to reach that, sir, again?

We always try our level best, best of the team. They are putting the best ability and trying to execute at the level best and this team has done before, and we, as a Board, always try and management always try to push them for the best results and best. But as I said before, whatever we guide, we really want to achieve and maintain our stability there. Organically growing always helping companies becoming larger companies.