NBCC (India) Limited (534309) Earnings Call Transcript
May 31, 2023
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to NBCC (India) Limited Q4 FY '23 Earnings Conference Call hosted by Nomura. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Priyankar Biswas from Nomura. Thank you, and over to you, Mr. Biswas.
Thank you, [ Nirav. ] So good afternoon, ladies and gentlemen. So we welcome everyone to the fourth quarter FY '23 results call for NBCC, so NBCC is a leader in project management, engineering and consultancy services. So we have the management here today represented by Mr. P.K. Gupta, the CMD; Ms. B.K. Sokhey, Director of Finance; Mr. K.P. Mahadeva Swamy, Director of Commercial; Mr. Saleem Ahmad, Director of Projects; Mr. Rajendra Chaudhari, Senior Executive Director of Engineering; Mrs. Reshma Dudani, Executive Director of Engineering and Investor Relations. So we thank the management for providing us with this opportunity and without any further delay, I am handing over the floor to Mr. P.K. Gupta, the CMD, for his opening remarks. Over to you, sir.
Good afternoon, and a very warm welcome to all the investors of NBCC. I'd like to share a few highlights of the financial year '22, '23, major happenings of this year. Our most important projects and the largest value projects of Amrapali Housing, which has been awarded by Honorable Supreme Court, which is costing around INR 8,200 crores. So in this project, we have achieved a turnover of INR 1,750 crores, that is about 25% of the total turnover of the company. We have successfully sold around 26 number units already and the sale value of these units is INR 1,500 crores. Work on all the houses are going on, and by the end of '24, we plan to complete these works. During the year and before that, we got the loan from SBICAP and a consortium of 7 banks, and they have disbursed the money, and homebuyers are paying the amount successfully and some money is coming from the sold and unsold inventory. And as of now, project is running smoothly. In this project, we plan to get an additional business of INR 7,000 crores to INR 8,000 crores that is construction of additional FAR that is lying vacant in these projects, that is 1 highlight. And second is that our trademark project, World Trade Center in Nauroji Nagar. In this, we have sold inventory of INR 2,100 crores during the financial year '22, '23, that is the largest value sold in 1 financial year. And we hope that during the current financial year, complete inventory will be sold out. And this project is nearing completion, and by September, we hope that this project will be completed. As far as financial highlights are concerned, the turnover that we have achieved is 21% more than the last year, on a year-to-year basis, and it's close to INR 7,000 crores. And profit before tax, there is an increase of 31%. Profit before tax is INR 312 crores and 31% more than the previous financial year. EBITDA margin has also improved substantially as compared to 2.8% during '21, '22, we have achieved an EBITDA margin of 4.5%. Consolidated profit before exceptional items, there is an increase of 40% increase, while after exceptional item is 31% increase. The order book of NBCC stands at INR 45,000 crores, which is roughly 50% is redevelopment projects and 50% is other PMC and EPC projects. And in the coming financial year, we are targeting a business development of INR 12,000 crores to INR 15,000 crores. And we are in discussions with various state governments and central government and PSU for award of works. Already signed an MOU with Zambia for construction of mass housing units, and we hope that this order will [ fructify ] shortly. Now I open the floor for questions. Our directors and myself, we are ready to answer the question.
[Operator Instructions] The first question is from the line of Rohit Natarajan from Antique Stockbroking.
So my first question is to do with the monetization part of the redevelopment projects. From what we know last time, it's not more than INR 6,000 crores of the total target of INR 22,500-odd crores. What is that position looking like at this point in time?
Regarding redevelopment projects, [indiscernible], that is World Trade Center and Downtown Sarojini Nagar. In World Trade Center, like, already told that we have sold INR 2,100 crore worth of property during the last financial year. And this year, we plan to end up this property, around INR 5,000 crores worth of property still to be sold, and we hope that this complete property will be sold within the current financial year. As far as the sale of Downtown Sarojini Nagar is concerned, we are launching a bulk sale for this property for which the required approval has been obtained. The sale has already been [ last. ] Only thing is that some conditions have to be modified, and we hope that if this bulk sale is successful, total property worth INR 1,350 crores will be sold.
So if I add up together, INR 1,350 crores and maybe World Trade Center, INR 2,100-odd crores .
INR 2,100 crores is the value of the property sold during last financial year. Total value of this property is around INR 12,000 crores.
And how much do you have realized till date for World Trade Center?
For World Trade, INR 6,300 crores worth of property has been sold.
Okay, okay. Sir, in terms of Amrapali project, how many -- what are the remaining tenders to be done in FY '24?
No. In Amrapali, we have done all the tenders, only 1 tender of INR 100 crores approximately for the remaining work -- some additional works were required in some of the projects, only that is to be done. Otherwise, all the tenders have been finalized and work is going on all the projects -- one tender of around INR 82 crores for some additional work in some of the projects.
And when is this project expected to be fully completed as in -- how much is you're expected...
By the end of '24, this project is likely to be completed.
How much would be the contribution to the stand-alone revenue, sir, from Amrapali?
Stand-alone revenue will be around INR 8,000 crores since the time it started 2021, '21-'22, '22-'23, '23...
No, in '24, how much will be recognized?
'24, it should be around INR 2,000 crores, maybe a little more than that.
Okay. Sir, if I can ask you on the subsidiary part, how much is the HSCC revenue and Hindustan Steelworks revenue? Similarly, the EBITDA and net profit for this full year FY '23?
HSCC has achieved a turnover of INR 1,100 crores, and their PAT is INR 23 crores. HSCL has achieved the turnover of INR 791 crores and their PAT is also around INR 23 crores. And [ 1 of our more subsidiary, NSL, ] INR 177 crore turnover has been achieved, and they have achieved the PAT of INR 7 crores.
Sure. My final question from my side, what is the total projects awarded at this point in time in the cumulative order backlog of INR 45,000 crores?
Pardon me, you want to know the...
The projects awarded -- total projects awarded from INR 45,000 crores order backlog that you have in hand?
Total projects -- no, this INR 45,000 crores is the value of work which have not been awarded. Apart from this, there are running projects of INR 20,000 crores, but this INR 45,000 crores is in addition, which have not been awarded.
Okay. Okay. And sir, how much you plan to award it in FY '24?
INR 10,000 crores to INR 12,000 crores.
[Operator Instructions] Next question is from the line of Nalin Shah from NVS Brokerage.
Very good afternoon to everybody. I have 2 questions, sir, overall broad questions that in spite of having a turnover, I mean, total, I would say, the revenue at something like almost INR 8,000 crores, INR 9,000 crores, why is in last 3 years, I have been seeing that our PAT level margin is hardly above 3%? There is all the -- last about 2 to 2.5 years, all the real estate companies are doing extremely well. Even if I see your return on net worth, it is hardly anything which we are earning, so what is the reason for such a pathetic, I think, performance?
Our PAT is 7.25% -- PBT margin is 7.25%.
PBT margin, I'm seeing the 2023, our PAT is at INR 238 crores. Am I right? On the top line of INR 7,884 crores which is hardly 3%. Again, in the previous year also, I see it is 3%.
I mean last year -- actually, in these 2 years, we have to book some exceptional items due to which PAT has been -- remains at the same level. Otherwise, if you will see our EBITDA margins, there is a drastic change in our EBITDA margin from 2.82% to now we have achieved the 4.47%.
Correct. But I think in the overall context of the volumes, there is hardly any profitability like if I see 3% margins, if you see, in many projects in Mumbai. I'm talking of Mumbai because I'm more this thing conversant with Mumbai. I mean the real estate companies pay even 2% and 3% brokerages to the brokers, whereas we are earning hardly about 3%. What is the, I think, reason for such a poor profitability. It is because of the -- I think the tender system in which we are growing at a very, very cheap rate we are quoting that is the reason or what is the reason?
NBCC's total revenue is from the project management consultancy work, it constitutes around 95% of the total turnover, right? Our real estate portion is hardly 2% to 3% and rest is EPC, so if you -- you are comparing our turnover with the other developers in the Mumbai that is not the case. But definitely, our real estate projects have contributed this time a huge margin, we see a sale of INR 195 crores. There is a gross margin of INR 68 crores in the real estate projects, but that constitute a very small portion of our total revenue.
Exactly. So my point is that only that company is, if I see your net worth, your net worth today, what you are using is almost about maybe INR 2,000 crores. So we are hardly earning maybe even a little over 10% on that.
No, our net worth is not INR 23,000 crores.
Our net worth is INR 1,900 crores...
Approximately INR 2,000 crore, I'm saying -- INR 2,000 crores.
We are having completed real estate inventory of INR 674 crores out of which we are focusing on that. Our net worth mainly constitute that real estate [Foreign Language]
Consultancy.
Yes, right, right [Foreign Language] So we still have the land banks of INR 619 crores, which will be developed in the coming years. We have the plans for that, and we are going to rather develop at Patna initially and then at Coimbatore and then might be at Jaipur.
Okay. And current year, I think you mentioned, if I remember correctly, the order book stands at around INR 45,000 crores. Am I right?
Yes.
Yes, yes.
Total order book, so what is the likely -- I think the execution part, which will give, I mean, reflect into the top line approximately?
In the current financial year '24, top line will be around, stand-alone basis, INR 9,000 crores, that is what we are targeting.
Around INR 9,000 crores. Okay. Okay. And do you see some improvement in margin, sir on that?
I guess with improvement in top line because some of the expenditures are constant when improvement...
Right, economies of scale will follow.
Yes.
[Operator Instructions] The next question is from the line of [ Vasudev ] from Nuvama Wealth.
Sir, for this INR 45,000 crores of order book, which you said that is on stand-alone or consolidated basis?
That is on stand-alone basis.
So then on consolidated, what would be this figure?
Consolidated is INR 54,200 crores.
Okay. And the split between PMC and redevelopment would be same 50-50?
[Foreign Language] for stand-alone, yes, right.
And for the consolidated it would be?
Rest of the companies are having only PMC. They are not having any redevelopment projects, you can say around 40% on consolidated basis is redevelopment and 60% is PMC.
Okay. Got it. Then what would be your order intakes and ongoing works on consolidated basis for FY '23?
Please repeat your question.
What will be your order intake on consolidated basis for FY '23? And as on March, how much is our ongoing work?
Sir, your voice is not coming clearly. So can you please repeat your question again?
[ Vasudev, ] can you speak through the handset.
Am I audible now?
Yes, yes.
Yes. So I was asking that what is our order intake on a consolidated basis for FY '23? And as on March '23, how much is our ongoing work?
Our ongoing works are INR 20,000 crore for NBCC and another INR 5,000 crores for rest of the company, so around INR 25,000 crores. And as far as the inflow of orders is concerned, on a consolidated basis, we received an order of INR 6,500 crores in the financial year '23.
Okay. And sir, for stand-alone, you guided for INR 9,000 crores of revenue. So for consolidated basis, what would be your guidance for FY '24 for revenue and EBITDA and PAT margins?
It will be around INR 11,500 -- consolidated revenue will be INR 11,500 crores. And the EBITDA will be around 5%.
Okay. And PAT margins?
That will also improve at the same ratio, you can say approximately 4% to 4.15% or so.
Okay. Okay. Then next is how much have we sold in Sarojini Nagar in total in FY '23?
In Sarojini Nagar, we sold property worth INR 47 crores. We decided to go for bulk sale. So we have launched a bulk sale where entire property will be sold in 1 go and will receive a revenue of INR 1,350 crores.
Okay. So total, what is the value of real estate that was sold in FY '23?
Total -- real estate total was INR 200 crores, turnover at least were INR 200 crores of our own real estate and around INR 2,200 crore of real estate of redevelopment projects that we are doing on behalf of the Ministry.
Okay. And what are we projecting for FY '24 then?
FY '24, our real estate -- our own inventory is around INR 250 crores projection. And Ministry's projects we are planning to wind up both the projects, and it will be around INR 6,000 crores.
Okay. And sir, then what is our status of the Netaji Nagar project?
Netaji Nagar, we have -- 1 contract is already awarded, construction of GPOA and Sartac Hostel, and for rest of the projects, we have received all clearances, including tree cutting permissions and other statutory approvals, and we are planning to launch those projects shortly.
So can we expect in H1...
[indiscernible] 2 tenders for Sarojini Nagar. And after that, we'll be floating tender for construction of housing in Netaji Nagar.
Okay, okay. And lastly, sir, what is the seed money as on March and the interest on that?
The seed money as on today is INR 969 crores and outstanding interest is INR 259 crores. And during the financial year '22, '23, we have received the payment for [ the MoHUA ] to the extent of INR 50 crores.
[Operator Instructions] Next question is from the line of Pankaj Kumar from Kotak Securities.
Congratulations on good set of number in this quarter. The question is related to the international opportunity that we are looking at. So what kind of order book that we have as of now -- order backlog that we have as of now from there? And what all we are targeting? And how do you see international order book going ahead?
Currently, we have a major project in Maldives, construction of 2,000 number of social housing. The total cost of this project is INR 1,000 crores. And we have a few projects in Mauritius. Currently, work is going on in these 2 countries. And for future, we are tied up -- tying up with the government of Zambia for construction of social housing, and other projects where the Ministry of External Affairs [indiscernible] then Burundi is the -- for government of Burundi and Jeddah for Ministry of External Affairs Chancery Building, these projects are in pipeline.
Okay. And sir, if you can also help us with the domestic prospect pipeline. So which all tenders we are -- which all projects we are targeting and especially on the redevelopment side, what is there on cards?
A very big project that we are targeting is construction of balance FAR of Amrapali. And we are in touch with several other state government for redevelopment of their dilapidated properties.
So what would the value of this Amrapali...
Amrapali will be INR 7,000 crores to INR 8,000 crores.
Of similar size that we are...
Yes, a little less than that. This will all be new construction.
Okay, okay. And sir, out of this 7 GPRA Colony project, what is -- out of this INR 25,000 crore total order book that we had, so out of that, how much we have awarded and what value of the real estate that we have sold till now?
Total value was awarded is around INR 5,000 crores. And total property that has been sold is around INR 6,300 crores.
INR 6,300 crores. And by when we are targeting to fully monetize this whole INR 25,000 crores of...
Two commercial projects we are targeting to monetize in the current financial year, financial year 2024. And then regarding the monetization of residential property, that will be taken up subsequently.
This 2 commercial project of value...
Total value of these 2 commercial projects is INR 13,300 crores.
And this we are targeting in the current year itself?
Current year.
So how is the demand, like who all are going to be the investor in these...
For Sarojini Nagar downtown, we have already launched bulk sales where any developer will purchase the property and further sell it. And for World Trade Center, both government sector, public sector and some private sector companies, they are the targets customers.
So in Sarojini Nagar, we'll be basically selling out the land to the private developers, you are saying?
No. It will not be land. It will be constructed property.
Okay. So right now, this is funded through what proceeds we are getting through Nauroji Nagar.
Yes.
[Operator Instructions] The next question is from the line of Rohit Natarajan from Antique Stockbroking.
So my question is out of this INR 25,000 crore of works that -- where the work is happening on ground, can you give us the top 5 projects value-wise?
Yes, our biggest project is Amrapali, total value of that project, INR 8,000 crores.
No, sir, the outstanding work that is pending as in Amrapali only INR 2,000 crores is work left, right?
Amrapali is around INR 3,000 crores worth of work is pending. [indiscernible] the biggest project.
Okay. No, sir. In the INR 25,000 crore works where the work is actually happening on ground, of which the unexecuted portion, how much that value is, which are the top 5 projects.
I think the largest will be 7 GPRA, total value of works awarded is INR 5,500 crores, out of which around INR 2,500 crores worth of work has been executed. Little more than INR 3,000 crores worth of work [ yet ] to be done. And second is Amrapali, out of INR 8,000 crores, around INR 5,000 worth of work has been done and INR 3,000 crores worth of work is yet to be done. Then, East Delhi have Karkardooma, so around -- out of total INR 1,200 crores worth of projects, around INR 200 crores worth of work has been done and balance INR 1,000 crore is pending. These are the major...
Sir, this is if I add up it's only INR 7,000 crores and INR 25,000 crores is the total work that is happening on ground. So there will be still big, bigger ticket items, right?
In 7 GPRA, we have currently 4 tenders on pipeline where we were to award, valuing around INR 4,000 crores.
Additional in 7 GPRA.
Yes.
Okay. But sir, that is not yet included in the INR 25,000 crore works, right?
[indiscernible]
The works which are going on are INR 20,000 crore value, not INR 25,000. And these 4 works for INR 4,000 crores, they are not included in there.
Already, we have called 2 tenders, another 2 we will call.
Okay, okay. And though -- which are -- okay, so these are the INR 7,000 crores out of INR 20,000 crores is [ known, ] the remaining, I can assume, it will be less than INR 1,000 crores. Is that the way a fair assumption to be made?
Yes.
Yes, yes, yes.
Definitely.
[Operator Instructions] Since there are no more questions, I now hand the conference over to Mr. Priyankar Biswas for closing comments.
Thank you, [ Nirav. ] And I'd thank all the participants and management for taking their time out to make this eventful call. So I will now hand it over back to the management for any further closing remarks.
We are looking for a very bright future in the current financial year and in further years to come with 7 real estate markets coming through the [indiscernible] and redevelopment projects, particularly state government and several central government departments are very keen to take up the redevelopment projects because they don't have to spend their money in these projects, so we are looking for a very bright future. And the problem which we had in 1 of the project is over, and we don't see any provision for any exceptional items in future. So the profit before tax and turnover will be substantially high as compared to the current financial year, and with pandemic also over, I don't think there is any problem with the company. So our investors can look for a very bright future.
Thank you very much. On behalf of Nomura, that concludes this conference.
And just one minute. So just adding on, so in case any investors has any further queries, so we have Mr. Balkishan Singla from the Investor Relations of NBCC to address any further queries, so he will be available as well even after this call. So you can get direct in touch with him. So, [ Nirav, ] back to you.
Thank you very much. On behalf of Nomura, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.
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