PNC Infratech Limited (PNCINFRA) Earnings Call Transcript

Good afternoon, ladies and gentlemen. On behalf of JM Financials, I'm pleased to welcome you on the call of PNC Infratech Limited Q1 FY '26 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of the future performance and involves risks and uncertainties that are difficult to predict. [Operator Instructions] Please note this conference is being recorded. I now hand the conference over to Mr. Vaibhav Shah from JM Financial. Thank you, and over to you, sir.

Yes. Thank you. On behalf of JM Financial, I'm pleased to welcome you all to the PNC Infratech Q1 FY '26 Earnings Conference Call. We have with us the Managing Director of the company, Mr. Yogesh Jain, along with the senior management team. We will begin with the opening remarks from the management, followed by interactive Q&A session. Thank you, and over to you, sir.

Yes. Good morning, everyone. On behalf of PNC Infratech Limited, I extend a warm welcome to all of you for joining us today on this call. Today, I have with me Mr. T.R. Rao, Director, Infra; Mr. D. K. Agarwal, CFO; Mr. Pankaj Agarwal, VP, Finance and Account and Strategic Growth Advisors, our Investor Relations Advisors. The financial results and investor presentation have been uploaded on the stock exchanges and the company website for your reference. Initially, I would like to mention key updates of the industry, followed by operational development of the company and highlights of financial performance during the quarter ending 30th June '25, post which we will be happy to answer your questions. The Indian roads and highway sector has faced notable headwinds in recent years with a slowdown in both project awarding and construction activities. Between April and July '25, NHAI awarded only 180 kilometers of highways. However, long-term outlook looks robust as MoRTH, including NHAI and NHIDCL aim to award new highway, and expressway project of INR 7 lakh crores before end of the current financial year. In line with these targets, NHAI intend to bid out more than 120 highway and expressway projects worth over INR 3 lakh crores before the end of financial year. The proposed NHAI project cover a diverse network comprising economic corridor, digital corridors, expressways, intercorridor and feeder routes and port connectivity highway. Turning to water infrastructure, Jal Jeevan Mission has shifted focus on infrastructure creation to ensuring long-term sustainability. With over 14 [indiscernible] rural household now having access to tap water connections covering nearly 75% of rural India. As part of expansion and upgradation of rail network in the country, India Railways launched a series of new projects across all its railway zones, generating new business opportunities to the infra developers. A sizable number of new projects are also coming up in renewable energy, power transmission, coal mining and development, water resource management, industrial area development and other infrastructures at both center and state levels therefore diversified business opportunities for the stabilizing infrastructures there. On the project front, the company has strategically expanded into 2 new business segments, renewal energy and coal mine. In the month of July, the company forayed into renewal energy space by securing L1 bidder position for 300-megawatt solar power projects with 600-megawatt hour battery energy storage system, project floated by NHPC. The project is to be implemented in 24 months and operated for [indiscernible] post commissioning. In August '25, the company being declared as L1 bidder received letter of acceptance from Southeastern Coal Field Limited for overwater removal and coal extraction at Gevra mines in the state of Chhattisgarh for a contract value of INR 3,489 crores including GST to be executed in 5 years. On asset monetization side, company and its 100% subsidiary PNC Infra Holdings Limited successfully completed sale of 100% equity stake in PNC Bareilly Nainital Highways Private Limited. A BOT Toll State Highway Project to Highway Infrastructure Trust promoted by KKR and its affiliates. The above transaction was concluded on 31st July 2025 at an enterprise value of INR 716.2 crores, out of which INR 153.48 crores received towards equity and INR 239.35 crores received against the unsecured bond. In addition to the consideration received as above by the company, there are certain other receivables amounting to INR 80 crores for the same project, which would be received by the company from HIT as distributed in the definitive agreement going forward. With the successful transfer of PNC Bareilly Nainital Highways Private Limited, the company has now completed 100% equity divestment in 11 out of 12 assets under the definitive agreement executed for the equity sale last year. The 12th and final asset, PNC Challakere Karnataka Highway Private Limited is expected to be divested in quarter 2 financial year '26 upon fulfillment of remaining conditions precedent. Now moving on to the operational and financial performance of the company. The company is presently having a fund-based portfolio of 16 projects, out of which 1 is BOT toll project, 2 are BOT annuity projects and 13 are HAM projects. Aggregate bid project cost of 13 HAM projects is over INR 14,800 crores. Out of 13 HAM projects, 3 projects achieved PCOD, 6 projects under construction, 3 projects achieved financial closure and appointed dates are expected to be declared in quarter 2 and quarter 3 of financial year '26. Remaining HAM project of MPRDC document for financial closure has already been submitted and appointed date is expected to be declared in quarter 2 of financial year '26. Total equity requirement for the 13 HAM projects stand at INR 1,744 crores, out of which the company has already infused equity of INR 1,019 crores till June '25 and the remaining equity of INR 725 crores to be infused over the next 2 to 3 years. The internal approvals that would be generated over the next 2 to 3 years should be adequate to meet the further equity investment. Now moving on to our order book. As on 30th June '25, the company's unexecuted order book stands at over INR 17,000 crores, which includes EPC value of Varanasi-Kolkata Package 2, 3 and 6 and Bhopal Bypass HAM project of MPRDC and the flyover project of Rajasthan PWD in Bharatpur. The unexecuted order book does not include the recently secured renewable energy project of NHPC and mining project of South Eastern Coalfields Limited, having an aggregate value of over INR 5,000 crores. Considering these 2 projects, the total order book comes to over INR 22,000 crores as of now. Out of the unexecuted order book of over INR 17,000 crores as on 30th June '25, highway and expressway contract contribute 67%, while water canal area development contract contribute 33%. Now I would present the results for the quarter ended June 30, '25. The stand-alone revenue for the first quarter of financial year '26 is INR 1,136 crores. EBITDA for the first quarter of financial year '26 is INR 141 crores. EBITDA margin for the first quarter of financial year '26 is 12.4%. Profit for the first quarter of financial year '26 is INR 81 crores. PAT margin for the first quarter of financial year '26 is 7.1%. Consol revenue for the first quarter of financial year '26 is INR 1,423 crores. Consol EBITDA for the first quarter of financial year '26 is INR 367 crores. The EBITDA margin for quarter 1 financial year '26 is 25.8%. Consol PAT for the first quarter of financial year '26 is INR 431 crores with PAT margin for quarter 1 financial year '26 is 30.3%. Our stand-alone net worth as on 30th June '25 is INR 5,557 crores, whereas stand-alone debt from banks and financial institution is INR 20 crores. This translates to net debt to equity 0.07x. We have also a net surplus of INR 483 crores as on 30th June '25. Our net worth on a consol basis as on 30th June '25 is INR 6,421 crores, whereas total debt is INR 4,712 crores. This translates to net debt to equity of 0.73x. The total cash and bank balance, including current investment is INR 2,672 crores. With this, we now open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Shravan Shah with Dolat Capital.

A couple of questions. So first on the guidance front. So last time we said INR 6,600 crores revenue, which is a 20% growth for this year. And this quarter, we have seen a degrowth of 13%. So for in balance 9 months, we need a kind of a 45% kind of a growth. So just wanted a revised guidance number on the revenue for this year and also for next year, FY '27, we have talked about 15%, 20% kind of a growth. So if you can let us know.

As of now, we still maintain a 15% to 20% growth for FY '25. Because the first quarter, if you compare to the last year first quarter, corresponding quarter, we received arbitration award amounts as well as the bonus amount. That's -- it's not an objective comparison. So nevertheless, we expect an improved turnover during the Q3 and Q4 with the new projects flown in and also once this rainy season gets over. So still we maintain 15% to 20% growth over the previous year as a guidance for FY '26.

[Technical Difficulty] on the lower side versus 20%. So is it fair? So let's put a number would be a better. So at least INR 6,300 crores plus kind of a number should be there on the top line front?

Yes, if that comes to that 15%, then INR 6,300 crores.

Yes. And on the margin front, this quarter was also on the lower side, 12.4%, but we are looking at a 13% margin. So that still remains intact?

Yes. That will remain because this year [indiscernible]. So fixed overheads are same being the same. So there is a pressure on the margin. But 13% EBITDA margin, we should be able to maintain for the FY '26.

For next year now once we have this coal mining and the BESS, so both put together INR 5,100-odd crores. So for next year, how one can look at? Will the growth rate on the revenue front should be much higher? 20% plus should be there?

We have already given 20%.

So as of now, we are expecting -- this will again -- 15% to 20% we are expecting next year for FY '27. But we are expecting some appointed dates to be declared for the projects which have already been awarded last to last year. So once these appointed dates are declared for the 4 HAM projects and also the execution begin at this thing, so we'll be able to assess in a better way next quarter. But as of now, 15% to 20% for FY '27 over FY '26.

Yes. And in terms of the order inflow now, so if we consider this INR 5,200-odd crores for the BESS and coal mining, so now how much more are we looking to bag in this year? And also at the same time, if you can also specify in terms of the bid pipeline from which segments we are looking at?

See, order book last time we had mentioned INR 12,000 crores to INR 15,000 crores for FY '26. Since we have already secured over INR 5,000 crores, so we are expecting another INR 7,000 crores to INR 10,000 crores new orders in the next 3 quarters from Q2 to Q4. So INR 7,000 crores to INR 10,000 crores. And we are expecting orders from the -- primarily from highway sector. As our Managing Director has mentioned, NHAI is coming out with 120 major projects having a value of more than INR 3 lakh crores. So definitely, our focus will be on highway sector only. But roughly, you can say the majority of this remaining INR 7,000 crores from the highway sector, remaining from the other sectors.

Got it. And just how much revenue one can look at from the coal mining this year and from next year onwards, once it will be kind of stabilized on a yearly basis, how much revenue one can look at? And same way for BESS that the RE project that we have received. So this year on the EPC front, how much one can look at revenue and next year, how much one can look at?

In coal mining, if you see this INR 5000 -- INR 3,000 crores worth of project has to be executed in 5 years, with an average revenue of INR 600 crores per year. So this year anyhow, now post this rainy season and all will be beginning. So INR 300 crores to INR 400 crores, we expect in current year. And next year onwards, it should be INR 600 crores, slightly more than INR 600 crores per annum. So we should be able to complete this entire scope within 5 years what is stipulated in the contract. Uniformly INR 150 crores for each quarter.

Got it. And for BESS, sir, how much we are looking at this year and next year?

See, BESS still we had to receive the letter of award. Post that, there is a process involved. The NHPC has to sign a power sale agreement with the state government and then subsequently power purchase agreement signed with us and then post that we have to implement. So this year, we are not looking at a significant amount of implementation, but 24 months we have to implement this project of over INR 2,000 crores EPC vacuum. So we say one quarter in Q4, we'll be executing some work this year and major work will be executed next year [indiscernible] the quarter.

Yes. Sir, lastly, sir, balance sheet and project-wise order book data, if you can share. So inventory debtors, trade payable, mobilization, retention value as on June?

Mr. Shravan Shah, we will come back on these details. So let other people also [indiscernible]. This will come. We will share with you all these details going forward.

And project-wise order book, whatever is left, if I can name the project, if you can share the outstanding order book? Sir irrigation, what's the value as on June? Irrigation project. Yes, sir. Irrigation outstanding order value is how much?

It's INR 866 crores.

INR 866 crores. It seems some scope of increase has happened. Kanpur or Lucknow Package 1 and Package 2?

Kanpur, Lucknow Package 1 is INR 67 crores and Package 2 is around INR 40 crores.

And Mathura bypass Gaju Village?

Completed.

And Haryana Orbit Rail?

Haryana Orbital Rail at INR 528 crores.

And Ganga bride?

Ganga bridge is around INR 230 crores.

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

My first question is, sir, on the RE asset portfolio. You have won 300 megawatts, 600 megawatt bid. The question is what is the aspiration of medium-term ambition in building up this business? And are you willing to -- and any capital allocation plan which you have for this particular business?

This is a first project in the renewable energy space for our company. We are looking forward to -- see this is the first project and as we go forward by implementing this project. So we'll also know what is deeper insights about this renewable energy space. So definitely, we look forward to more opportunities in this space going forward. But our focus will be first we implement this project.

Understood. So you expect a limited capital, right? What is the equity requirement for this particular project?

This depends upon the debt equity ratio that we are -- we will be discussing with the banks. Based on that, we'll be having an equity requirement of around INR 400 crores equity requirement would be there, assuming a debt equity of 80-20 as of now. But only final figures will know once we are in the process of financing closure for the project.

Understood, sir. My second question is, sir, how do you -- how should we think about the margin profile in coal mining project? And I believe this is our first project in the coal mining, right? And the related question is, do you -- what kind of CapEx you will require to execute this project?

We are expecting a CapEx of around INR 400 crores for this project -- for this coal mining project because it's a machinery-intensive project. So we are expecting INR 400 crores to INR 500 crores CapEx for this project.

And what about margin profile, sir? Margin profile? Do you believe it is similar to the existing business? Or do you think it will be different?

Yes, it will be similar. It will be around 13% EBITDA we are expecting from this project, similar to our other portfolio.

The next question comes from the line of Vasudev from Nuvama.

Sir, what is our current status of the irrigation Jal Jeevan Mission on the CIDCO project?

See, irrigation project, we have executed certain work during the current -- previous quarter. Now as of now, only peripheral works we are executing because the water is flown into the canal system. Again, we'll resume the project in the month of January. Overall, this year, we are expecting INR 150 crores work. Then next year, this will be further increased. So project is going on. They extended the time up to 2026 September, and we are expecting further extension of this project. So project is going on because hardly we'll get 6 months -- less than 6 months' time in a year to execute the project because remaining year for the irrigation purposes, water is left into the canal. And in Jal Jeevan Mission, Phase 3 -- Phase 2, we have completed 2/3 of the project, more than 67% physical progress, and nearly 55% to 58% we have completed in Phase 3. So overall progress is around 60%. So project is going on. We expect to complete in FY '27 and maybe some residual works later.

Sure, sir. And sir, on the CIDCO project, in the presentation, we have written that the project is subsidized. So what's the status here?

See, matter is still under sub judice. We halted the project -- implementation of the project we halted. Nevertheless, we have mobilized our resources. We set up our camp and other things. But as of now, physical execution of the project we halted it. That matter is before the matter sub judice. We don't want to share further on this project, matter being sub judice.

Okay. And sir, what is the CapEx that we are planning for the full year? And out of that, how much have we done in Q1? And lastly, can you also give the toll collection numbers for the quarter?

Our target for CapEx in this financial year is around INR 450 crores, including the CapEx of coal mining for the financial year. And the toll numbers are, please note down. For MP Highways, it is INR 12.34 crores; Bareilly Nainital, it is INR 19.65 crores; Narela the collection is INR 22.64 crores and for Rae Bareilly, annuity is INR 32.16 crores.

Okay. And sir, what is the CapEx that we have already incurred in Q1?

We have not incurred any CapEx in this quarter. We will do the CapEx in the next 3 quarters.

The next question comes from the line of Ketan Jain with Avendus Spark.

Sir, I just wanted to understand on the renewable project. So if I understand the CapEx involved is around INR 2,000 crores. Do we have the execution capability in-house to execute this project? Or how is the execution of the project going to be?

This renewable energy project?

Yes, sir, renewable energy.

No, renewable energy project -- see we'll engage the specialized agencies and also we already engaged the consultants who have an adequate expertise in these projects, and holding expertise in these projects. So we certainly -- we are in the process of recruiting the people also and certain team is also there already with us. So we should be able to execute in-house only this project by having some partnership with the technology providers and specialized vendors with the support of [indiscernible].

Understood. Okay. That was my question. And the CapEx is INR 2,000 crores, right, sir?

Please come again?

CapEx INR 2,000 crores, right, for the project, sir?

No. For this particular project, whatever the equipment of solar panels as well as the battery banks will be -- but since that is a part of project cost only, which will be capitalized. There will not be any separate CapEx on the PNC books.

Understood. No, I was thinking that the project cost is around INR 2,000 crores, sir?

Yes, over INR 2,000 crores.

The next question is from the line of Sarvesh Gupta with Maximal Capital.

[indiscernible] the project.

Sorry to interrupt Mr. Gupta, we are not able to hear you. Can you speak a bit loudly?

So first question is on this INR 4,500 crores worth of MSRDC projects. So if you can update us with the progress on these two, what is going on in these two?

See, MSRDC projects of INR 4,500 crores comprising Jalna-Nanded Expressway as well as Pune ring road. So both projects are going on. We started in the -- commencement of execution during the fourth quarter of last year and first quarter of this year also, we have executed certain work and projects are going on as of now. Only because of the current quarter -- ongoing quarter because of the monsoon and intense rains, project is slightly -- progress is slightly affected. Otherwise, projects are progressing as per the schedule.

And sir, secondly, on the orders, which the industry is hoping to get. So now I think in the past 2, 3 quarters, we have been always been expecting that orders will come eventually, but I think that is getting delayed, or not getting received every quarter. So I think 2, 3 quarters back, we had a revenue growth guidance of 30% for FY '26, which got revised down to 20%, and now 15% to 20%. So 2x already we have taken downward revision because obviously, there is nothing which not just you but other players are also not getting. So what gives us the hope that we will be able to get these orders? I mean, are there some tangible changes that has come in from NHAI side that you feel confident that they will be giving out these orders? Or if you can update on that because otherwise, we don't have enough of road orders to be able to sort of meet the guidance, even the revised one?

No. See, last 2 years, everybody knows the awarding activity by NHAI is subdued, so which is reflecting into the low construction activities in the last year as well as the current year. But as announced by NHAI, from Q2 onwards, they're going to award major projects of -- large number of major projects of INR 3 lakh crores. So we are positively thinking that, okay, we'll get a certain amount of projects from this thing. And the second thing, the reason for the downward in the last year turnover, as we had already mentioned, because of the 4 projects which for the concession agreement we have signed in FY '24, those projects we could not start because the delay in declaration of appointed date due to non-sufficient land is available, a prolonged delay in acquisition of land in the state of Bihar. So that is the reason. But now the land acquisition process has improved. So we are expecting appointed dates during the Q2 and Q3. Certainly, these projects will generate income in the current financial year as well as the next financial year substantially. So we should be able to maintain the revenue guidance what I have given. But we don't remember that we have ever given any 30% guidance for FY '26. Last time, we mentioned up to 20%. Now we say about 15% to 20%, so which we should be able to maintain, we should be able to achieve, given the fact that we received around INR 5,000 crores new projects and also the 4 projects which have been awarded last to last year are going to be commenced once the appointed dates are declared.

And sir, even if the orders were to come, so from an industry perspective, now what has happened is all these -- all the players are having a balance sheet, which is probably the best that has been in the history. So everyone is sitting with a lot of cash and everyone is sort of starved of any orders in the last 18 months to 24 months. So given that sort of a scenario, how do we feel about the margins that can be expected on these future orders, if at all they come? Because everybody is hungry for orders and everybody is sitting on a lot of cash.

No, that is there. See, the particularly infrastructure cycle, if you see over the last decade, it is cyclical. See, there are downs and there are ups in the infrastructure and how the government and the order inflow is happening. So yes, people are there. Everybody is very eager to garner the new business. But what we feel there is enough cake for everybody because railways are also coming with a large number of projects and also metro rail projects are coming, and also then apart from NHAI and the renewable energy transmission line, a lot of projects are coming up. So we feel that, okay, there are separate players. We are very much hungry to secure move, but sufficient business is available as the government trust on infrastructure development for overall socioeconomic development.

[Operator Instructions] The next question comes from the line of Vaibhav Shah with JM Financial.

Yes. Sir, what execution do we expect from the existing MSRDC orders, Pune ring road and Jalna in FY '26?

See, this figure is not readily available. We'll share with you. But we'll have a substantial amount to be executing in Q2, Q3. And Q2 may be slightly less, but Q3 and Q4 there will be -- progress will be expedited. So we'll share with you offline. The figure is not readily available.

Okay. And sir, we were L1 in Bhandara-Gadchiroli as well. Any status -- any update on that?

For all practical reasons, that project is [indiscernible]. And also this -- we are not considered it as a thing. And -- so if anything is there, any development in the thought process, we'll share with you through the stock exchanges.

Okay. Okay. Sir, secondly, on the JJM side, what would be our receivables outstanding right now?

The receivables are as of 30th June, it's more than INR 700 crores receivables are there because there is a paucity of funds. The government of India just halted the funds, so they are reviewing the whole program. We are expecting funds will come in the current quarter, then these backlogs will be cleared.

Sir, I missed the number you mentioned. What was the number?

INR 700 crores.

INR 700 crores. And the same for irrigation project?

Irrigation project actually, since last year, we received more than INR 200 crores amount. Now the outstanding is around INR 90 crores. Because the government of Andhra Pradesh has paid during the 1 year, progressively they paid. They paid more than INR 200 crores out of the total outstanding amount. Now the outstanding amount is less than INR 100 crores.

And sir, what execution are we targeting from JJM segment in FY '26?

We are targeting INR 900 crores in FY '26. So we'll more focusing on making this project into O&M stage. We are also consolidating, wherever the 80% to 90% works are completed, we are trying to take them to O&M stage and commissioning the project. But still we are targeting, as of now INR 900 crores, but we should be able to tell a more tangible figure, more precise figure during the next quarter.

Sir, the entire backlog of almost INR 2,900 crores, that should be completed in '28 -- FY '28?

Yes, FY '28. As per the budget speech, they extended the JJM up to FY '28.

Okay. And sir, guidance on the ADs for the 3 packages of VRT and Western Bhopal bypass.

See, we are expecting the appointed dates for these 3 projects of NHA, VRK and 1 project of MPRDC, Bhopal bypass during the current financial year, maybe 1 project in Q2 and the remaining 3 projects in Q3. So initial stages -- because since the initial works will not be high-value work, so we are not expecting very high value of this project. But this project will give some sizable amount. All 3 projects -- all 4 projects should give more than INR 1,000 crores turnover during the current financial year.

All the 4 together?

Yes.

Okay. Okay. And sir, lastly, on the monetization front. So just a question on the accounting. So how are we accounting for the money inflow? So in the stand-alone books, we don't see any cash coming, right?

No. Actually, the money is flowing to the main company, PNC Infratech Limited and Infra Holding, 100% subsidiary of PNC Infratech Limited. The shareholding -- the money has come in PNC and PNC Infra Holding both.

Okay. Sir, so last time, we had mentioned that the total amount of cash that we have received in the deal, so around INR 2,200 crores had come, INR 1,660 crores from the Phase 1 and INR 584 crores from the change in scope. Correct? So of this INR 2,250 crores, how much has come in the stand-alone books and how much is in the consol books in the SPV?