NBCC (India) Limited (534309) Earnings Call Transcript
August 16, 2022
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to NBCC (India) Limited Q1 FY '23 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Modi from ICICI Securities. Thank you, and over to you, sir.
Thank you, Jahnavi. Good afternoon, everybody. On behalf of ICICI Securities, I welcome you all to the Q1 FY '23 Earnings Call of NBCC (India) Limited. From the management, we've got Mr. P.K. Gupta, Chairman and Managing Director; Mrs. B.K. Sokhey, Director of Finance; Mr. Rajendra Chaudhari, Chief Executive Engineering; Mrs. Reshma Dudani, Executive Director Engineering NBCC; and Mr. Pradeep Sharma, GM, Engineering. We will start the call with a brief opening remarks followed by Q&A. I will now hand over the call to Mr. Gupta. Thank you, and over to you, sir, all the best.
Good afternoon, and welcome to all the participants in this investor conference of NBCC after the results of first quarter of financial year '22, '23. Your company is able to achieve INR 1,853 crores total income on consolidated level and INR 105 crores PBT at consolidated level, which is 31% and 112% higher, respectively, in comparison to previous year's respective quarter results in comparison to the results of '21, '22. However, NBCC has made a provision for expected loss of INR 110 crores in NBCC green view Sector-37D, in Gurgaon. So we have booked the entire expected loss in this project except any future uncertainties. So results are, net profit is close to 0, after booking a loss, which is an exceptional items. As on date, our order book position is stand-alone order book is INR 46,480 crores. We have deleted some which are not expected to continue. And consolidated order book is INR 56,000 crores. Ongoing work in consolidated orders are INR 20,235 crores, and out of which NBCC is having around INR 16,153 crores, going well. We have secured a stand-alone business of INR 420 crores in first quarter. The works are Puducherry Smart City INR 314 crores, Aligarh Smart City INR 50 crores and National Cooperative Union of India INR 33 crores. On consolidated level, we have secured a business of INR 660 crores, out of which HSCC has secured a work of hospital in Mauritius at INR 107 crores and HSCL has secured 2 works, 1 is sports academy at Jajpur INR 45 crores and IISER, Kolkata INR 40 crores. We have awarded the tender for INR 1,340 crores on stand-alone basis and INR 1,517 crores on consolidated basis. And tenders in pipeline, which are under the various stages of [ Award ] are INR 1,507 crores. Now I'll briefly tell about our 2 flagship major projects. One is Amrapali and other is 7 GPRA redevelopment project. In Amrapali projects, we are going very well. We have been able to take a loan of INR 1,500 crores from a consortium of bank which has expedited the progress of this project. We have completed around 3,400 flats in various projects, out of which INR 1,600 -- total 1,600 flats have already been handed over to homebuyers. And we plan to complete 8,500 flats by October 2022. Of course, services for these flats will take some more time. But otherwise 8,500 flats will be completed. Regarding 7 GPRA redevelopment project. In Nauroji Nagar, we have been able to sell total [ INR 4,500 crores ] worth of property till now, out of which INR 341 crores worth of property has been sold in quarter 1 of financial year '22, '23. In Nauroji Nagar project, the work is going on very well and 52% of the work has been completed. And in Netaji Nagar, our 1 contract is going on of the value of which is INR 1,356 crores. Sarojini Nagar, we have 3 projects going on. The total value of INR 1,650 crores. Recently, we have launched the sale of Sarojini Nagar commercial, which is near to metro station of Sarojini Nagar. And we have been able to sell property worth INR 24 crores. So we expect to sell the property in this project very quickly. This is a commercial high street market. And this is parallel to Sarojini Nagar and Sarojini Nagar market is already very congested, we hope to sell this property soon. For major projects, the business that is in pipeline is the construction of defense land parcels in Delhi, modernization of government of India [indiscernible] and redevelopment work in various locations. So this is all about my opening remarks. So the investors are welcome to ask the question.
[Operator Instructions] The first question is from the line of Rohit from Antique Stock Broking.
So you said that your stand-alone order backlog is close to INR 46,000 crores. What was the quantum of order cancellation in this quarter, which projects are there?
You see, we had some projects which are not materializing like State Guest House at Visakhapatnam INR 133 crores and redevelopment company of Jaipur joint venture with Jaipur, Rajasthan government INR 495 crores. Likewise, IT park Jammu & Kashmir INR 92 crores and monetization of RINL real estate properties, assets, Visakhapatnam INR 58 crores. Likewise, so we had very -- we had possibility of getting net rent is -- in this quarter, we have deleted these works. And that is why...
So all put together what is the amount?
Pardon?
All put together, this canceled projects, what is the amount?
It is around INR 3,000 crores.
Sir, is it fair to understand that this is -- or by not giving anybody in cost plus model PMC model?
Yes. Some of them were PMC and some of them -- major are PMC.
Okay. Second thing is that, sir, you highlighted out that the tendering stage is almost like INR 1,500 crores we are planning to order. This year, our target is if the last call is anything to go by, you were looking at INR 8,000 awarding, what seems to be the number over there and how -- where we're in a track to achieve it?
We will be -- you see the presently the tenders to be awarded in progress of INR 1,507 crores. And we will be -- likewise, we'll be for the year, will be around INR 8,000 crores.
Sure. Sir, and the second question is on margin spot. Sir, we have seen provision -- I mean, this 3-point kind of EBITDA margin that we have reported, is there any provision write-back or any such provision made? What is that amount looking like?
Write-back is INR 4 crores, which is a reversal of ECL provisions.
Okay. Sir, final question from my side is on the other income. How much of the other income is -- and nearly an accounting income? Or what is the cash realization against it -- can you explain about that?
This is the other income consist of INR 46 crores, out of which interest -- larger part is the interest received from the [ FDR ] and money interest on the seed money which will be given to the [indiscernible] for redevelopment projects. So in this quarter, where the [ FDR ] interest have been received in full, the seed money interest in this quarter has not been received in the cash. But so far we have received around INR 250 crores of the total interest view.
Sir, what was the total interest booked so far to date, I mean, from this particular project?
On the seed money, we have booked INR 450 crores out of which INR 250 crores have been received on the interest portion. [ INR 220 crores ] is still due on the part of this interest.
[Operator Instructions] We have a question from the line of Anshuman Ashit from ICICI Securities.
Sir, what is the cash that we have in our hands currently at the end of June?
Yes. On a standalone basis, we are having the INR 2,100 crores of cash and bank balance as on 30th of June, 2022.
And sir, for the current year FY '23, what is our revenue and margin expectations, both on stand-alone and consolidated level?
The EBITDA portion will remain the same. But the overall margin, the EBITDA we have shown. EBITDA margin is 3.56% in this quarter, it will remain around the same and the PBT margin is 6.89% before the [ exceptional ] items, we are not expecting any further loss on 37D. So PBT margin will remain around 7% and EBITDA margin will remain around 3.5% to 4% in the coming quarter.
Both on the stand-alone and consolidated?
On the stand-alone basis.
And for the consol?
Consol will more or less remain same, see the major portion is on the [ NBCC ] stand-alone basis. So there is hardly any decrease on part of it.
Okay. Just the revenue guidance of INR 8,000 crores, that is for the consol level?
Yes. INR 8,500 is on a consolidated basis, we expect INR 7,000 crores on a stand-alone basis in this year.
And sir, do we have any projects outside of India also currently that we are executing, if you can throw some light on that?
We are executing in Maldives. Maldives, we are executing. Dubai has been completed. We are also going to have a project in [indiscernible] with a [ $13 million ] project for construction of building. And then there is another project which is almost final of Burundi, another building of Burundi and 3 other projects where we have been shortlisted for project as a project management consortium. Land, there is another place for [indiscernible].
Okay. And we'll be awarding most of this in the current fiscal year?
Yes. In the current fiscal, we will be getting this award.
[Operator Instructions] The next question is from the line of Meet Parikh from Anand Rathi.
I just wanted to ask regarding the Amrapali, how many flats have been handed over? And how many you intend to hand over in the current fiscal? That will be my first question.
We have handed over 1,600 flats till now. And total 3,400 flats have been completed. And the handing over is pending due to various reasons, like the known payment or finance by the homebuyers or such similar issue and [ 8,500 ] flats, we are planning to complete by October, except the services part. So total 12,000 flats will be completed. So these 12,000 hopefully will be able to hand over by the end of fiscal year.
By end of?
In this fiscal year, we should be able to hand over 12,000 flats.
12,000 flats. Okay. So have you handed over around 600 flats during the quarter because last quarter was 1,000 flats. And this is 1,600 at the end of this quarter.
Yes. Total 1,600 we have handed over.
Okay, sir. And sir, on the funding of the project it hasn't been completed with the consortium of the banks?
Yes. Initially, from SBICAP, we got a funding of around INR 600 crores. Then for the rest of the projects, we have tied up with a consortium of 6 banks, public sector banks for an amount of INR 1,500 crores. This amount should be sufficient, and we have started the sale of the flats also, and the sale is going out very nicely. So all this combined should be able to meet the financial requirements of the project.
So how much fund have the funds has been released till date from the consortium of banks?
From the consortium of banks, I don't have the exact amount, but whatever are the requirement of the project, they are releasing without any delay.
Okay, sir, no problem, no problem. Sir, on this Nauroji Nagar, what is the status on that Nauroji, Netaji and Sarojini Nagar project?
Nauroji Nagar, we have been able to sell INR 4,500 worth crores of properties, out of which INR 341 crores of property has been sold in the current financial year. And the project is about 52% complete and that section is going on with full speed.
Okay. And the other 2 projects, sir?
Other 2 -- we -- in fact 5 contracts are in operation in 7 GPRA volume. One is in Netaji Nagar and 3 are in Sarojini Nagar. In Sarojini Nagar, we have 2 residential projects which are coming up and 1 commercial project. And for this commercial project, also, we have started the sale recently.
Yes. So apart from that, you had last time said that we have a capital -- captive real estate of around INR 700 crores. And you -- and also, you plan to monetize the land in Alwar of around INR 150 crores -- the inventory in the next few years. So any progress on that? Any guidance?
Yes, the occupation of certificate of -- this was standing for some reason, Alwar that's likely to be received shortly. And immediately after that, we will start that sale of Alwar.
So when do you expect it to receive the occupation certificate?
Within August, we should be able to get it.
Okay, sir. Okay. Okay. And sir, just I missed out on 2 numbers, if you can give it to me. One is the stand-alone order book at the end of the quarter? And the consolidated order book.
INR 46,500 crore.
INR 46,500 crores is the stand-alone. And the consolidated sir?
INR 56,000 crores.
INR 56,000 crores. And you -- sir, you mentioned around how many -- INR 8,000 crores worth of projects to be awarded this year, correct?
Yes, yes, yes.
The next question is from the line of Rohit from Antique Stock Broking.
Sir, if I could get the details of the breakup in INR 46,500 crores. What is the PMC and how much is redevelopment portion?
So 50% is redevelopment portion and 50% is PMC.
Sir, if I remember my numbers correctly, the redevelopment portion, the monetization is extremely slow. I mean, we are looking at that INR 4,500, [indiscernible] kind of growth for a long time. I mean, what is it that is actually active as a binding constraint over there?
Actually, this Nauroji Nagar property initially, we had a court case for around 2 years. And then the -- due to COVID, the sale of commercial property was very sluggish. But hopefully, now it will pick up. And another project we have launched a near metro station of Sarojini Nagar. Hopefully, now it will pick up.
But when you had this MOU with the ministry, there were some deadlines beyond which the MOU would not have actually materialized, there were some numbers or dates that we have talked about. What exactly is your status over there because recently saw the dates, you have exceeded on this project so long back.
With ministry though, dates are extendable as well that MOU will note less.
Okay. Sir, out of this -- yes, so out of this INR 23,000 crores PMC, how much is being awarded to contractors at this point in time? Essentially, I'm looking at that INR 16,500 crore locks on ground, the split between PMC and redevelopment.
Around INR 5,000 crores is redevelopment project, rest are PMC.
Okay, sir. Sir, if you could help me with the revenue during this quarter among the top 7 projects that you have Amrapali, Nauroji Nagar, AIIMS, Bharat Vandana, [ AIIMS/both ] Sarojini, and IIT Bhubaneswar. What are those numbers looking like?
Yes. The Amrapali has given the revenue of INR 319 crores. Redevelopment of Nauroji Nagar and 7 GPRA has contributed INR 202 crores. AIIMS at Bilaspur has contributed INR 100 crores, IIT [ P.U. ] has contributed INR 93 crores. IIM Visakhapatnam had contributed INR 45 crores, AIIMS Jaipur has contributed INR 33 crores. These are the top 6 projects. The 7th was at Chamba, Jawahar Lal Nehru Medical College, which has also contributed INR 32 crores.
Okay. Sir, Amrapali in no fund scenario, that is if all the finances are there in place, approvals are there in place, what is the best case execution we can do in 1 year?
Pardon me?
Amrapali's execution, Amrapali projects best case execution in 1 year -- the best.
This year, we plan to execute around INR 2,000 crores. INR 2,000 crores turnover from Amrapali.
And next year, we will be left off with how much more?
I think another INR 4,000 crores we will left with.
So is it fair to assume that Amrapali project is on the way through, FY '25.
Sorry to interrupt, your voice is not very clear.
Yes. So my question is, is it fair to assume that Amrapali will grow in revenue recognition until FY '25? Or will we see some bump-up in revenue in next year?
No, I think next year, we should be able to finish Amrapali.
So you mean to say the INR 4,000 crore entirely will be executed in FY '24?
Yes. FY '24 will be very high revenue for Amrapali, because recently, we got funds and the projects have picked up. So FY '24 Amrapali, [ INR 2,000 crores ] I'm keeping on very reasonable but it could be reaching INR 2,300 crores, INR 2,400 crores.
The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.
Couple of questions from my side. First, would it be possible to get a split of the INR 56,000 crores consolidated order book between PMC and redevelopment?
We will share the details of entire INR 56,000 crores at the consolidated level. Out of INR 56,000 crores, INR 46,480 crores is of NBCC stand-alone. HSCL stands at INR 5,190 crores, and HSCC is INR 4,519 crores. And if you still want the detailed breakup, we can mail you.
HSCL and HSCC will all the PMC orders, right?
Yes, all PMC orders.
What would be your consolidated cash levels currently?
Consolidated cash levels. It will be around INR 5,000 crores -- more than INR 5,000 crores consolidated cash balance as on June 30.
Yes. And last question is, you had given a breakup of the INR 16,000 crore ongoing work at the stand-alone level. So INR 5,000 crores was PMC or INR 5,000 crores on the redevelopment project?
INR 5,000 crores was redevelopment project.
That's it from my side and all the best for future.
[Operator Instructions] The next question is from the line of Pankaj Kumar from Kotak Securities.
A question on this order book. So right now, on stand-alone, we have INR 46,500 crores order. So is there any other slow-moving project which is likely to be canceled in, say, next 1 year or something? Or we are done with all the cancellations?
No further orders likely to be canceled.
Okay. And on the Amrapali project, the outstanding work contract in value terms is around INR 6,000 crores. So am I right on that?
Yes.
So you're assuming -- you are expecting INR 2,000 crores in this current year and another INR 4,000 crores in the next year, mostly likely?
Yes.
Okay. And sir, on the future pipeline that you stated. So can you help us with the size of those projects that you're looking at?
Actually, we are looking at around INR 6,500 crores worth of projects this financial year, out of which we have already secured around INR 420 crores worth of projects. And major projects which we are envisaging to be awarded this year with a different brand partners in Delhi, they are around INR 2,500 crores. Modernization of government press is around [ INR 500 crores ]. Then we have also -- in fact, we have already signed an MOU with the MEA for the construction of the hotel in Delhi, around INR 180 crores. Then center for development of Telematics is also going to awarded another campus development work for around INR 400 crores. Then we are also in talks with the government of Haryana and Government of Uttar Pradesh for their various construction projects. They will be around INR 2,000 crores worth of projects. And then in [indiscernible] SEZ also we are going to be awarded another INR 150 crores worth of projects. So like this in this financial year, we expect to get the award of around INR 6,500 crores.
So out of this INR 6,500 crores, how much is the redevelopment?
Redevelopment will be around INR 3,000 crores.
Okay. Okay. And sir, on the margins, we have seen very good margins in this quarter vis-a-vis and I compare to previous quarters. So if you can help us with key drivers for that? Are we executing high-margin orders or it's the more of certain leverage?
We have an 8% margin on Amrapali project and 8% of the redevelopment project. So both are contributing in a much better way than the previous year. The main increase is -- main increase in the margin is due to these projects only. Otherwise, there are a margin of 5% to 6% on the other side. And there is a reduction in the overheads also, which has contributed in the PBT margin.
So you said 4.5% to 5% kind of margin you expect this year.
3.5% EBITDA margin, but we have other income also to consider that we will -- we are expecting a margin of -- PBT margin of 6% to 7%. It can value up to -- it can go up to 7%. In this quarter, it was 6.89%.
The next question is from the line of Anshuman Ashit.
So sir, I don't have any questions. I think there are no questions in the queue as well. So if we have your permission, we conclude this call. So on behalf of ICICI Securities, I thank the management of NBCC for giving us this opportunity to host their call. I also thank all the participants for joining this call and making this a very interactive session. In case, any participants have any questions, you may please contact Mr. Balkishan Singla of the Investor Relations team of NBCC. Thanks, everyone, and have a good day.
Thank you so much. Thanks to all the investors who are present and [indiscernible].
Thanks a lot.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
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