PNC Infratech Limited (PNCINFRA) Earnings Call Transcript & Summary

Mr. Kandpal it's like that. See, we are we are on the process. We are very keen and we're very eagerly going for that. Already you received the MBOs. Now we are evaluating and shortly once we give a go ahead to the selected investor, then followed by the due diligence, the due diligence also we're asking them to quickly do it in an expeditious manner. So then a definitive agreement will be signed, before the calendar year. And before we would see even third quarter, then followed by the [ pro-jos ] and other things. So we are looking forward to have everything completed and unlock our equity before the end of the current financial year. So we have 2 things are lagging behind our peers. And we start all HAM assets. And by the time all this 11 HAM assets would have received the final CoD also, and locking periods also have been completed. So there should not be any issue in transferring the assets.

Okay. I wish you all the best, that we expeditiously close this deal by Diwali or third quarter, so that would help us unlock a lot of value. My second question is on the Jal Jeevan Mission projects now. So we have been somehow lagging behind again on execution. So the guidance which we have given earlier also have not been -- the number is below INR 1,000 crores even this year. So next year, we are saying in FY '24 that INR 2,500 crores. So how confident are we on closing these in this year? And also, if you can touch upon what is the big pipeline in the JJM segment for us?

See, in the Jal Jeevan Mission what has happened. These projects are spread across various places, there are 3,000 locations we need to do with an average revenue of INR 2.25 crores at each location in each scheme. The geographical spread in the one thing. And also, as we move ahead, if you see that in FY '23, in the first quarter, we could be able to do only INR 80 crores, whereas in second, we have done INR 160 crores. In the third quarter we have done INR 270 crores. In the fourth quarter, we have done a worth of INR 415 crores. So we are progressively improving our progress and work done. So in a year, we closed at INR 925 crores. So going forward, we are confident of completing INR 2,500 crores work in the FY '24. Because from INR 80 crores to -- we scaled up to INR 415 crores as you get on new projects. As of now, work is -- our of 2,885 schemes, work is going on at 2000 locations. And at the 450 locations, we already started providing drinking water to the rural household, and we got the certificate from the Har Ghar Jal certificate for quite a few. So we are confident we'll be able to do around INR 2,500 crores worth in FY '24 and then remaining in FY '25. So from improved -- so we scaled up to INR 415 crores in the 4 quarters of FY '23.

And what is the bid pipeline, sir?

Hello?

Bid pipeline?

What is the bid pipeline of Jal Jeevan?

As I mentioned, INR 14,000 crores worth of projects are bid out by Jal -- this SWSM of Government of Uttar Pradesh. So the bid due date is 3rd June -- 2nd June. So we'll be bidding those projects. So we expect around INR 1,000 crores worth of new business from the water sector in this quarter. Going forward, in case any new projects comes up in many other states, then we'll evaluate those opportunities and see whether we can bid for those projects also in FY '24.

Sorry to interrupt, may we request that you rejoin the queue for follow-up questions as there are several participants waiting their turn. Our next question is from the line of Jiten Rushi from Axis Capital.

Congratulations on good set of numbers. Sir, first on the debt numbers. On the balance sheet, the debt number is around INR 450 crores. So you said in the opening remarks, the debt number at the stand-alone level, INR 337 crores. So are we missing anything?

Pardon?

Sir, the borrowings in the balance sheet, the number seems to be higher than what you said in your opening remarks. So the number is around INR 450 crores, and you said in the opening remarks like INR 337 crores. So there is the lag? Actually, working capital loan is INR 200 crores, term loan is INR 127 crores, that is INR 337 crores, remaining in the unsecured loan taken from the SPVs. So that is why the total amount is INR 440 crores. Borrowing is INR 337 crores only, sir. So, this unsecured loan has been repaid back to SPVs?

Yes. No, it's still outstanding.

How much, sir?

It is INR 140 crores.

So any -- so what is the reason why we have taken this unsecured loan from the [ SPV ], any reason for that or?

So there is a surplus in that SPV, there is no debt in that SPV.

Which SPV, sir?

That is Delhi-Narela Industrial Estate and Kanpur-Lucknow-Ayodhya. That was the only project, that will be completed, and Delhi-Narela Industrial Estate those are senior debt in that project, SPV.

Can you give me, sir, the toll numbers now, sir, for the SPV, including the Narela Industrial Estate?

The Narela Industrial Estate was INR 14.37 crores in this quarter, and MP Highway were INR 12.46 crores. Kanpur Highway were INR 23.5 crores. And Bareli is INR 14.37 crores -- I'm sorry Narela is INR 10.35 crores.

INR 10.35 crores?

Narela was INR 10.56 crores.

INR 10.56 crores. Right, Bareli you said INR 14.37 crores?

Right.

And [ Rae Bareli ] is an annuity asset. Got it, Got it.

That is INR 32.1 crores.

Yes. Sir, on the railway projects, so we have received the project from Haryana. So when do we expect the execution to start in this project? And how is the payment cycle from the government from that region?

Yes, yes. This execution is already started there. Now earth work is going on, it's 26 kilometer long civil words for the broad gates, double broad gates. The Haryana government -- what we were told that Haryana government is getting funds from the NDB, New Development Bank. So they're getting funded from them, so they promised that there should not be any issue for the pre-payments and other things.

Mr. Jiten Rushi, may we request you to rejoin the queue for follow-up questions. Our next question is from the line of Nikhil Abhyankar from ICICI Securities.

Sir, my first question is, given our higher concentration towards HAM has improved. So are we looking at any segmental diversification? And id yes, then which all segments?

As we had already have diversified into road sector. As you said, as we had already mentioned, 33%, our order book is -- unexecuted order book is there, water supply and irrigation, and 67% is from roads and highways. Similarly, our revenues also would be also like that 33% from this water supply and irrigation, and -- see as a part of diversification, we also did this Haryana Orbital Rail Corporation project. So many state governments are coming out with similar kind of a Orbital Rail, Metro Rail kind of a thing, light rails projects across the country. So that is another area we are looking at and we secured one project from Haryana Government. So wherever there is some synergy and particularly with respect to road work. This Haryana is a -- we have synergy over there. And in the water sector also, we look forward to have new projects. If other state governments also come out with similar porters, both rural drinking water, ground as well as surface water.

Okay. And sir, of the INR 12,000 crore order inflow that we are targeting, can you give us the target for each segment for FY '24?

See, it would be around 70%, you can say, 70% from the roads and highways and 30% from the non-road sector.

[Operator Instructions] Our next question is from the line of [ Vaibhav Shah ] from JM Financial Limited.

Yes, sir. Sir, for the Badadal-Maradgi S we had received 18, 28 December '22, but the execution for the quarter is 0 for the project. So any particular reason why the execution has not started? Hello?

Pardon, which?

Which project?

Badadal-Maradgi.

Akkalkot?

Hello? Can you hear me, sir? Hello?

There the work has started. Akkalkot project, what we call it as Akkalkot to Karnataka's Telangana state border. So, there work has started. So in this quarter, we'll be raising invoice towards the [ micro limits ].

Okay. Okay. Sir, and secondly, you gave a guidance of INR 2,500 crores of revenue for the Water segment for FY '24. So does that include irrigation project as well?

See, irrigation project, we don't expect secured with revenue there, because we have another hardly 1.5 months working time there, because once in the July, if they leave the water inside a canal system. So this goes up to again, January end of '24. So this is mainly -- significantly from Water sector only, there will be some marginal amount from irrigation.

Then we had a time line of around 3 years for the project. So the completion is March '24. So has there been extended from the client?

We had already applied for extension of time quoting that very limited working period is available. So we had already asked for an extension time of 2 years beyond 2024.

We move to our next question. Mr. Vaibhav Shah, we would request you to join the question queue for follow-up. Our next question is from the line of Deepika Bhandari from PhillipCap.

Congratulation on good set of numbers. Sir, first thing, I just beg your pardon -- I think, I missed, the equity requirement. Can you bifurcate the requirement for FY '24 and '25?

FY '24 to INR 540 crores and FY '25 to INR 450 crores.

INR 450 crores Okay. Also can you give me a geographical breakup for order book, exact data for the year ending FY '23? What was the U.P. percentage? And Bihar and Haryana?

Calculated. We'll share you. We'll share you separately. We share with you.

Our next question is from the line of Prem Khurana from Anand Rathi Shares.

Sir, just to understand our receivables a little better. I think, we've seen significant jump during the quarter and a large part of this seems to be because of our own SPVs, hybrid annuities which are under construction. So is it that we are ourselves delaying drawdowns in these SPVs and because we were sitting on some cash. And I mean, obviously, and the cost of borrowing for the stand-alone entity would be somewhat better than SPVs. Is it that, I mean, we are intentionally delaying the drawdown? Or you're seeing delayed disbursals by these lenders or the bankers?

[ Out of ] lenders, actually, we have executed around INR 400 crores of newly 7 HAM projects in the month of February and March. For that, we have taken the disbursals subsequently in the month of April and May. So in the starting -- for taking the disbursement, it takes around 30 to 40 days.

Okay. Sure. Sir, but anyway if we adjust with this INR 400 crores, we still would have more than INR 600 crores, INR 700 crores of number due from SPVs. So would this be the number? I mean, if you were to run the same run rate in terms of revenues, and this is the number that we need to kind of settle for or I mean, this could go down?

It will go down, certainly.

Okay. And second, if you could help us understand. So when I look at our -- the P&L for the year, we've grown pretty fairly good. I mean, in terms of top line profitability again, has been fairly stable. But for some is, our employee cost is down. I mean, since we are growing, I was under the impression that you would have more people come onboard and work for you. How do I explain the employee costs going down? Are we I mean trying to kind of have more of mechanization of automation, which is where the manpower requirement has come down? Or was the last year number of a one-off?

Actually, percentage-wise, it will go down, because of the around INR 1,000 crores, we have executed Water project, where the element of labor is much more than this...

Machinery.

Machinery.

Sir, our absolute number is down.

Through a sub-contractor. That is also to sub-contractor.

Okay. And just one last from my side, I mean, if you could help with the EPC potential for these 4 hybrid annuities and you've given us a bid project cost, I mean, if you could help us with the EPC part of the total number? How much would be the EPC, which would come in our stand-alone books, I mean, on order backlog side?

Around INR 4,500 crores or something. INR 4,000 crore.

INR 4,500 crores?

Yes, yes. We are -- since we are in the process of.

So far, we have not finalized.

Okay. Sure, I have a few more, I'll come back in the queue. All a very best for future.

Our next question is from the line of an Uttam Kumar Srimal from Axis Securities Limited.

Congratulations on good set of numbers. Sir, have you received any bonus in this quarter? Early completion bonus in this quarter?

No.

No, not this quarter.

We have not -- in the fourth quarter, there were no borders.

Okay. And sir, any bonus that we are expected to receive in this year from any of the projects?

See, 1 or 2 HAM projects we expect to complete before schedule of time, particularly Aligarh-Kanpur Package 5. So then for that project, we expect to receive bonus during FY '24.

Okay. So can you quantify the amount, sir?

See, until unless we know the data of PCoD, then what is the scheduled days is, then the bonus will be calculated accordingly. We can't say right now, but we give certain amount of bonus from that particular project.

Our next question is from the line of Shravan Shah from Dolat Capital.

Yes, sir. Sir, just to clarify, you mentioned in terms of the monetization that you expect that the definite agreement likely to be signed before December and deal to be completed by FY '24. Does that mean that are we also expecting the entire cash to be received before FY '24 ends?

Yes.

Yes. Entire conservation amount of equity, we expect to receive. That is our target. We are endeavoring towards the thing.

Our next question is from the line of Nikhil Kanodia from HDFC Securities Limited.

Sir, all our questions have been asked -- answered.

Our next question is from the line of Prem Khurana from Anand Rathi Shares.

Sir, on monetization efforts that are underway for 12 assets, the 4 prospective buyers that you have in place and all these are interested in all the 12 buses or they want to take it as if I mean, they have -- let's say they like some asset, they will wait for these 4, 5, 6, 7 assets? Or you want to sell this as an entire single booking?

They are for all 12 projects.

They are interested in all 12 assets.

Our next question is from the line of Jiten Rushi from Axis Capital.

Just harping on the monetization thing only. So sir, are we also thinking of an alternate process of invit. We have seen [ certain investments ] in the past, in this 4 prospective buyers discussion, call gets called off. Then are we looking for any invitation option also in alternate? Are we working towards it or we are looking only for a complete exit?

For these 12 assets, as of now, we are not looking at, because we received good response from the potential buyers for the toll assets. Out of these 12 assets, 7 assets are already operational, only 5 assets will be operational in next 3 to 4 months. So we -- at this point of time, we are not looking at alternate thing for these 12 assets. Going forward, as we have remaining fund-based assets, we'll look at that option.

Which is the toll asset, which you're looking to sell? I just forgot. Can you just help me with the names?

Bareilly Almora project, it's a BOT Toll of state.

Any targeted valuation you're looking for in terms of the book venue like what is the -- because we see a strong valuation coming from the recent lease, which is almost 1.5x and above any targeted valuation that we are targeting in terms of project?

We are looking at a very reasonable valuation, [ it is based on ] because we can't disclose the figure as of now. See, talks are going on with the investors through our Strategic Advisor. So some clarity would emerge maybe next 10 days. So then anyhow we'll share with the exchanges and then we'll come to know once we sign the agreements.

Our next question is from the line of Shravan Shah from Dolat Capital.

Sir, just a humble if I understand there are many questions people are asking, but at least allow the participant to complete the question, so it seems like insulting the person to cut in between or rather we should be sharing all the basic data in the presentation so that we should not be asking all this basic question and asking the relevant proper question on the business and strategy. So that's the humble request even before just we are about to ask the questions, or in between the guy seems to cut the client, this should not be happening. That's a humble request. So now my question is on the bonus part, I was just clarifying last time we were talking about INR 15 crore bonus we were looking in Aligarh-Moradabad in the fourth quarter. So what's the status on there? Mumbai-Nagpur, we were expecting, but some decision from the Authority, then we were expecting Delhi-Vadodara package 29, 31. So, so all these 4 projects now there will be no bonus or do some bonus will come?

See, in case of Aligarh-Moradabad, what we expected bonus would be realized by 31st March, because the final bill completion and there are change of PAU people at NHAI headquarter, there many changes have happened right from CGM down to the manager, people have moved and new set of people have come. So the process is getting delayed. And second thing, in case of [ DAV ] 29 Delhi-Vadodara, because of some hindrances and other part, even today, 150 meter length of land is not available. But anyhow will be completing that purple project by the scheduled time, we don't expect any bonus there 29, because the delays happened beyond our control. In case of DAV 20 -- 31, there's a lot of HD high-tension power lines are going on. Again, there is a delay in shifting of these things despite our best efforts, the things are not happening because of some latency from NHAI side and other things. So there also, whatever bonus we expected that did not get in.

We have completed more than 90% work.

Yes, yes. There also we completed more than 90% work. In case of DAV 29, we completed almost 100% of work ex-the land hindered. In case of Nagpur-Mumbai, the government has not taken decision, again, there is political change in the state government in the land, so they are not taken final decision yet.

So net-net, nothing to come as a bonus not for even Aligarh-Moradabad also the INR 15 crore, very less probability that the bonus to come.

No, no.

We may get in Aligarh-Moradabad, no doubt about it. And we are also expecting some Aligarh-Moradabad Package 5.

HAM project.

HAM projects.

Okay. Second is on the JJM, we say INR 2,500 crores revenue in FY '24. So this INR 2,500 crores, so if I just look at the -- in terms of the order book, so excluding the irrigation part, if I remove, so INR 5,700 crores out of the INR 2,500 to be done in FY '24 and the entire remaining should be to INR 3,200-odd crores should be in FY '25? Or it will extend to even FY '26?

Entire by '25.

FY '25, we'll be able to complete, except normally, they keep some amount retention amount and other things. Otherwise, we will complete our works in FY '25.

Okay. And then the irrigation, you mentioned till January because of the rains and water to be in the canal very, very marginal revenue to come and the deadline will be extended to FY '25 or '26?

FY '26 figures, we asked for 2 years of extension, we asked for, so last [ month ] we applied to Water resources to the government.

Okay. And in terms of the HAM requirement, whatever you mentioned, that is only for 18 HAM projects. So the 4 HAM projects where we said INR 500 crores more equity. So assuming, as you mentioned, [ appointed ] by December this year, then how much equity to be infused from that in this year and FY '25 and '26. So broadly INR 1,700-odd crores, if you can help me break up in '24, '25, '26?

Next, the total equity requirement including on the 4 HAM project is INR 1,690 crores as on-date. So around INR 540 crores FY '24, and INR 460 crores FY '25. FY '26, it's INR 365 crores and remaining INR 327 in FY '27.

Our next question is from the line of Deepesh Agarwal from UTI AMC.

I have just one question. If I look at your segmental reporting, it seems the margin on the Water segment, the EBITDA is quite high versus although the Water margins were at almost like 17% for the year versus 10.8% [ for '22 ]. Is it a sustainable margin for Water? And if that so, with the share of Water revenue going up next year? Why do we still stick to that 13%, 13.5% guidance?

It will maintain around 16% to 17%.

Okay. So if the Water share goes up in our revenue margin will ideally have an upside risk, right?

Mr. Deepesh Agarwal, sorry to interrupt. May we request you to use the handset, please? The audio is not very clear.

Yes. So my question is, is the share of Water segment goes up and it's a higher margin. So ideally there should be upside risk to our guidance on the margin of 13%, 13.5%.

The guidance overall is 13.5%, yes.

Guidance is around 13.5%, average.

It may vary around 16%, 15% to 17% Water. But that part is very -- 1/3 portion of the turnover.

Our next question is from the line of Jainam Shah from Equirus Securities Private Limited.

There are no further questions. So sir, we would request you for some closing remarks.

Yes. Thank you, everyone, for your participation in our earnings call. We have uploaded the presentation on our company's website as well as on exchanges. In case of further queries, you will get in touch with the Strategic Growth Advisors, our Investor Relations Advisors, or feel free to get in touch with us. Thank you very much.

Thank you. On behalf of Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.