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00:00 Rohan Suryavanshree, Head Strategy and Planning at the Lib Bill Con joins in to break it down
00:04 for us.
00:05 Afternoon Rohan, thanks for joining in.
00:08 Your stock has been quite a star performer in the last couple of months.
00:12 Today of course, the market sentiment is not very supportive, but it's been a good quarter
00:16 from your stable.
00:17 You want to walk us through what the last quarter F524 looked like and looking into
00:22 F525, what sort of guidance are you giving us?
00:25 Hi, coming out, pleasure to be on your show.
00:30 Yes, it was a good quarter for us, but then it's a good quarter for the infrastructure
00:35 sector in general when we look at the final quarter.
00:40 And this pace is kind of continuing into the quarter one till the rainfall bit.
00:45 So it was a good one.
00:46 We did almost about 2,900 rows of top line on a standalone basis.
00:54 And even the EBITDA was good at almost 350 crores.
00:57 PAP was also good at almost about 120.
01:00 And for overall year, we closed at about the full year at about 10,500 crores.
01:06 So it was a good year.
01:09 The EBITDA was healthy about almost 1,300 crores of EBITDA and plus of 420 crores of
01:15 net profit.
01:16 So we were happy with the performance.
01:20 In this financial year, we've kind of guided towards a similar kind of number right now
01:27 in terms of top line of Francine EBITDA of 12 to 14 percent range and improving PAP margins.
01:35 The bigger thing that we've talked about in this year is we have already reduced debt
01:41 by 860 crores in FY24.
01:45 And right now our current debt to EBITDA is almost 1.1 times net debt to equity is 0.29
01:53 times.
01:54 So our total net debt is about 59 crores.
01:59 Now we're going to reduce this by at least 500 crores more in this financial year and
02:04 bring it down to 1000 crores.
02:06 And the idea is to be a completely debt free company by FY in the next couple of financial
02:13 years.
02:14 So that's the broad idea for us in FY26.
02:18 Those are the kind of focus areas for us.
02:22 And in terms of revenue, I think we've said that we will kind of upgrade you guys or tell
02:27 you more as the year progresses because of this being an election year, the ordering
02:31 was weaker, but as soon as results are announced, we expect the ordering to be strong.
02:36 I'm glad you bring that up Rohan because when we spoke to L&T earlier this last week, they
02:41 indicated the same thing.
02:42 They said the next two quarters will remain slow because of election.
02:47 Employees and workers have already left for their villages, which of course, on the back
02:51 of voting.
02:53 So all that would mean that the next two quarters or the first two quarters of FY25 will be
02:58 slow.
02:59 Is that a similar sort of trend we can be expecting from you?
03:02 Quiet next two quarters and a pickup from third and fourth quarter?
03:06 Yeah, in terms of ordering, it will, you know, once the government, whatever government comes
03:11 to power, I think because so if I talk specifically about just NHI and MORTH, the road ministry,
03:18 there are almost one lakh twenty thousand crores of orders which have been floated for
03:23 a while, but they were not awarded.
03:25 So we feel there will be a flurry of ordering activity as soon as elections start.
03:30 Now how that pace will look at whether this will be more muted in the coming quarter and
03:36 then pick up from quarter three or quarter four is anyone's guess.
03:39 We, you know, we will see, depending on who the minister comes in, you know, what the
03:44 government is.
03:45 So all those things will definitely matter.
03:46 But the orders are already kind of floated, even in other sectors where we are actively
03:50 looking at, whether it's railways, whether it's water resources, all those areas, there
03:55 are a bunch of orders.
03:56 And I think they're just waiting for this.
03:58 So I wouldn't want to venture into the area of when the ordering activity would really,
04:03 really pick up.
04:04 But ideally, I would definitely agree with our friends at LNG that the ordering activity
04:10 tends to be stronger in the second half of the financial year.
04:14 No challenges in execution, right?
04:16 You want to tell me what your order book is and what the execution timeline is looking
04:19 like with everything that are currently sitting on?
04:22 Currently, our order book is 17,000 crore plus.
04:26 So to do that 10,000 crores of revenue, I don't really see a challenge.
04:30 I think we are in good space from that perspective.
04:35 The year after is where we would want to have comfort and for that, where, you know, the
04:40 new ordering activity can really help.
04:43 But I don't see it as a big concern because of the number of orders that have already
04:47 been floated and my team's been working very, very actively on working all those different
04:55 tenders.
04:56 Also, I mean, you are from a capital intensive business and it's very impressive to know
05:02 that you have successfully reduced your debt significantly and plan to do so furthermore.
05:06 We will talk about that in a minute.
05:08 But your margins have improved substantially this quarter.
05:11 I think you are up around 9, 9.5 versus 6.5 odd that we have seen in the same quarter
05:18 last year.
05:19 Going into FY25, you think this could be the lower end of the margin band, double digit
05:25 margins can be expected?
05:27 I mean, our margins are improving primarily because, you know, in during COVID time, we
05:32 suffered a whole bunch of losses and we were carrying a lot of projects where timelines
05:37 expanded because of which those projects gave us certain losses.
05:41 But now as those projects have been completed and handed over and as new projects are coming
05:46 in, so margins are obviously improving continuously based on that.
05:51 And this should continue to happen because debt will be keeping paid down, it's getting
05:56 paid down.
05:57 We are not investing a lot in new equipment.
05:59 Earlier, Dilip Pilpon used to invest almost 500 crores ballpark every year in new equipment,
06:05 which has come down to 50 to 70 odd crores now.
06:10 So we have a great asset base already.
06:14 We are looking at securing good orders.
06:17 We are looking at focusing on cash flows and bottom line improvement rather than making
06:22 large capex investments.
06:25 And even so, equipment investment was one area where we made investments, then there
06:29 was working capital.
06:30 And then the third was equity in our PPP projects.
06:33 Both the equipment and the working capital we have been, you know, consciously and very
06:38 aggressively reducing.
06:39 We look at, you know, the debt reduction and all, so that that has been constant sort of
06:45 planned.
06:46 So we have done a lot of investment into equity of PPP projects.
06:48 There, what we've done, we've also partnered with funds.
06:52 A, we were earlier monetizing our assets as they were completed and using that capital
06:57 to then reinvest into new assets.
06:59 Now, we've also, along with that, partnered with Alpha Investments, Alpha Alternative,
07:04 where we are setting up an in-bid together.
07:06 So even that progress is going pretty at a pace.
07:09 Rohan, bring us up to speed with timelines there, because I know there'll be significant
07:14 cash flow generation from there, which will flow back into the business.
07:20 Has it started yet?
07:21 When can we see that cash flow flowing in?
07:24 First quarter F525, maybe a few months out.
07:27 You want to just give us a sense of a timeline so we get a better understanding of the strategic
07:31 tie-up?
07:32 Sure.
07:33 So the in-bid would be set up sometime in the, I mean, the process is on, it's with
07:39 saving consideration.
07:40 That would be set up in, I think, quarter three to quarter four is anyone's guess based
07:44 on when we have the final sort of go ahead from saving.
07:50 Once that is done, so the deal with Alpha is we are giving them 18 projects in total.
07:55 So eight projects are going in the first bit of it, and then the 10 projects will be going
07:59 by FY26 completion.
08:01 So these eight projects and those 10 more projects in total would be giving us a cash
08:11 flow of almost 450 to 500 crores every year from these assets, besides the monetary sort
08:19 of compensation that we're having for the 74% units that we'll be holding in the in-bid,
08:25 which will be worth of like four and a half to 5,000 crores kind of ballpark figure, like
08:29 based on what the final valuation comes out.
08:32 So that would be giving us that, like I said, 450 to 500 crores of free cash every year.
08:39 So that will be rose Rohan to retire 500 crores of debt this year and an additional thousand
08:46 next year?
08:47 No, so this 500 crore number we will hit from FY26 end onwards, because these projects will
08:53 come on to the in-bid.
08:54 So I think in the first of the first eight projects, if I was to, you know, and I'm ballparking
08:59 it, so somewhere in 200 something odd range is the money that we will get by the end of,
09:05 you know, whenever there's a first full year completion of the in-bid cash flow.
09:10 For the first eight projects, about this much and when the other 10 projects add up, it
09:14 will jump up to 450 to 500.
09:16 The first eight, about 200 to 250 ballpark figure.
09:23 So I do understand that this is capital intensive and that in-bid cash flow will only flow for
09:29 the next year, and that will flow in later on.
09:31 And you have an ambition of reducing your debt.
09:35 Is it at all task to turn debt free?
09:37 Is that even a potential likelihood over the next couple of years?
09:43 And also what I want to understand from you is while everything is status quo and you're
09:46 not going to be looking at more investments in the business, is there a possibility that
09:50 over the course of the next one, one and a half year, you may actually revisit those
09:54 plans and reinvest in the business?
09:56 So it's not required at this stage.
09:59 So we will be continuing to invest in, you know, PPP assets and that is a separate cash
10:04 flow that we're getting.
10:05 When it comes to debt reduction, there are strong cash flows that the company is generating
10:10 on its own.
10:11 Those are the ones which are primarily being used to retire debt.
10:15 Along with that, we had also issued warrant to Alfa Alternatives of about 500 crores out
10:21 of which, so 533 crores to be exact, out of which about 130 odd crores of capital has
10:28 already been converted and has come into the company.
10:31 The rest of these almost 400 crores worth of warrant need to be converted by June of
10:36 25.
10:37 So we have another year or so that's left.
10:41 So that capital coming in plus, you know, our internal cash flows being very solid.
10:48 And then the monetization capital from Alfa, so because Alfa is buying out that 26% in
10:54 all these assets, so that capital coming in.
10:57 So I don't foresee it to be a challenge given our current business sort of opportunities
11:05 that we've invested in.
11:06 Right.
11:07 Thank you, Ron.
11:08 It's always great talking to you and it's always good to know that things are looking
11:11 great for the Lipple Corn.
11:13 Of course, the investments made in the past are paying up and the legacy projects that
11:17 you were, of course, putting pressure on Marge, it's also now behind the company.
11:22 But thank you.
11:23 We'll try and connect with you again soon to get a better understanding and a more in-depth
11:25 conversation of business.
11:27 Up until then, good luck and congratulations.
11:29 [Music]