Ircon International Limited (IRCON) Earnings Call Transcript

Good afternoon, everyone, and welcome to Q2 and H1 FY '26 Post-Result Earnings Call of Ircon International Limited. I'm Bhoomika, the moderator for this conference call. From the management side, we have with us Smt. Ragini Advani, Director Finance; Mr. Alin Roy Choudhury, CGM Finance and CFO; Mr. Ram Kumar Goyal, GM Finance; Mr. Sachin Garg, DGM and Investor Relations. Please note that this conference call is being recorded. [Operator Instructions] I would like to remind you that some of the statements that will be made in today's discussion may be forward-looking in nature. It is subject to several risks and uncertainties, and the actual results could materially differ. I would now like to hand the conference over to Smt. Ragini Advani, Director of Finance, for the opening remarks, after which we will have the forum open for the interactive Q&A session. Thank you. And over to you, ma'am.

Thank you. Thank you so much, Bhoomika. Good afternoon, everyone. I'm Ragini Advani, Director of Finance, Ircon. I apologize. Earlier, CMD sir, was scheduled to join this call, but a last minute visit has taken place in one of our projects for some senior level review by Ministry of Railways. And therefore, he also was required to personally attend the project site. On behalf of my team, I extend a very warm welcome to all of you, and thank you for your presence today at the Ircon's earnings call for Q2 and H1 FY '26. Although this quarter has been challenging for the company, we have been striving hard to sustain and improve our performance. Financial results as well as presentation have already been uploaded on the stock exchanges. I'm sure that all of you have had the opportunity to review these documents. Let me briefly give you a snapshot of our financial performance for Q2 FY '26. The company has reported a total revenue of INR 2,112 crores, a PAT of INR 137 crores and a core EBITDA of INR 162 crores in Q2 FY '26. Earnings per share stands at INR 1.47 per equity share in Q2 FY '26 on half yearly basis, and this is on a face value of INR 2 per share. Order book of the company stood at INR 23,865 crores as of 30th September '25. About 63% was from competition and balance from nomination, and about 91% of our order book is relating to domestic projects and the balance, international. Ircon has 11 subsidiaries and 7 joint venture companies, including a renewable power company. Now without taking much time, I would like to open the floor for a Q&A session. Thank you.

[Operator Instructions] The first question comes from the line of Gaurav Jagirdar, an Investor.

I had 2, 3 questions, which I'd like to get answered. One was the other income has come. Any specific reason for this, ma'am?

You're talking on other income on consolidated basis?

Yes. Yes, ma'am.

So other income has actually gone up.

My apologies. Stand-alone, I was talking about.

Even in stand-alone, it has gone up.

Okay. Other income, yes.

Yes.

Okay. My bad. Ma'am, share from the profit sharing from the JVs, can you shed some light on it? How will it be going forward?

So in our joint venture companies, we have one of our highway projects, it's called Ircon Soma Tollway Limited. That has been giving us profits. And going forward, this should be ending -- the concession period is ending next year, but this has been giving us good profits over the past few years and is expected to do so for the current financial year as well. We have some coal joint venture companies in which CERL-I, which is one of the coal connectivity projects, that is only operational as of now. The balance are all under construction. So in CERL Phase 1, there have been losses, and we expect it to break even by the year or 2 years later. So right now, this project is undergoing losses. And the reason for that is that while our track is ready mainly, but the mines, which had to come up around that area, some of them have come up, some of them have not come up. There is a spur line that we are going to be ready with by the end of this financial year, after which there should be traffic enhancement. But for it to break even, it will take another, let's say, about 18 months to about 20 months period. So that is about the coal JVs. And we also have another joint venture company, which is IRSDC, Indian Railway Station Development Corporation. That is under closure. So we are at the final leg now where we are in the process of appointing liquidator for that company. So we shall be getting back our investment, again, spread over a period of time, but maybe a significant amount should come back to us by about beginning of next year.

And my another question is we are doing quite well on the international front. We will be maintaining the same margins or they are poised to go upwards from here?

So on international front, while we definitely have better margins; also, the foreign exchange has played its own it's given us a benefit as we are all aware about the rupee depreciation that's been happening. And therefore, we've had good foreign exchange earnings in this year. One of our projects, which is in Bangladesh, Khulna-Mongla. We've had roughly about INR 20 crores of realized foreign exchange earnings from there because of the exchange rate differences.

Got it, ma'am. And what will be the split, ma'am, between domestic and international projects?

From a turnover perspective is as much as 96% to 4% when it comes to turnover. And from an order book perspective, it's about -- we have international order book of about 10%.

The next question comes from the line of Shreyans Mehta from Equirus.

My first question is on margin front. So any specific reason why the margin has dent in this quarter? And how one should look at the full year for FY '26 and FY '27?

So yes, margins have taken a dent. We have had a series of reasons. One, of course, has been that, as I mentioned, that in CERL, we've been continuously having losses on a consolidated level, which has resulted in our reduction in income. Also on a consolidated basis, we have had some adverse impact in our subsidiaries, which are also under construction, but that should get negated or kind of offset by next financial year. And that itself has also contributed to our lower margins. Having said that, as I had mentioned in my earlier calls also, we were expecting 0.5% to 1% reduction in our margins in terms of our normal projects that we had and which has been the case. The new projects that we've been winning are on lower margins. And some of my projects, in fact, 2 of them, we've had some losses, which we have booked; partly in March, we had booked and some more came up, which is what we have reflected in this half yearly result. So all these are the reasons for slightly lower EBITDA margins as well as PBT and PAT. But having said that, we continue to say that our PAT margins going forward will be in the range of 6% to 7%.

Got it. Got it. And my second question is on order inflow side. So how much we are targeting for the full year? And my third, the last question on the revenue front. As 1H is on the lower side, so how we are looking the execution for second H and for the full year next year, FY '27?

Yes. So the first -- in terms of order book, we have got orders more than INR 4,000 crores in the first half of this financial year, and we expect something of a similar range going forward. In terms of turnover, yes, our 6 months turnover has been slightly on the downside, but it's normally the latter half, which picks up. So we expect that on a consol level, we should be having an operating revenue in the range of about INR 10,000 crores to INR 11,000 crores. And for -- going forward, for the next year also, we maintain a similar level, which will be around INR 10,000 crores. Does that answer your question, Shreyans?

Yes. Yes, ma'am. Got it. Got it.

[Operator Instructions] The next question comes from the line of Vishal from Antique Stockbroking.