Key takeaways of the call
Order book as end of March 31, 2009 is Rs 12197 crore. Of which the share of orders of Building is 21%, roads 8%, water and environment 20%, electrical contracts 5%, irrigation 5% , mining 3%, international orders 21%. The balance comprises of orders from power, metals, oil & gas and others.
Order intake in FY09 is Rs 6600 crore and during the fiscal (FY09) the cancellation of orders amounts Rs 1226 crore. Thus the net accretion to order book is around Rs 5400 crore.
The company expects a sales turnover of Rs 4800 crore on standalone basis for FY2010. On consolidated basis the company expects a turnover of Rs 5500 crore. EBITDA margin for FY10 could be around 9.5% compared to 9% last fiscal.
In the last four months there is slowdown in awarding orders due to elections. But the company expects an order intake of Rs 6500 crore in FY10.
NCC has clocked 12% drop in standalone revenue (to Rs 1098.05 crore) for the quarter ended March 2009. With operating margins contract by 110 basis points the degrowth in profitability at operating level were accentuated to 23% to Rs 83.77 crore. With lower other income and higher interest cost adding woes further resulting in 37% drop in profitability at PBT level. As lower tax incidence gave some comfort, the company has finally concluded the quarter with 27% drop in net profit to Rs 38.21 crore.
Standalone sales for the fiscal were up by 20% to Rs 4151.41 crore. With OPM contract by 140 bps to 9% the operating profit was limited to Rs 373.67 crore, up by just 4%. With lower other income and higher interest cost the PBT was lower by 7% to Rs 228.17 crore. With taxation lower by 11% to Rs 74.31 crore the company closed the fiscal with a net profit of Rs 153.86 crore, with fall in profitability limited to 5%.
Fall in revenue and reason for failing to achieve the stated sales guidance for FY09 (of about Rs 4500 crore on standalone and Rs 5000 crore on consolidated basis) is due to combination of factors: cancellation of one oil & gas order bagged in consortium resulting in reversal of revenue to the tune of Rs 120 crore, delay in payment from clients in some of the electrical orders (amounting Rs 50 crore) and revenue/business loss on account of cancellation of orders (amounting Rs 100 crore in relation to Rajivgandhi University of Health Sciences & Rs 50 crore on account of Maytas imbroglio) and slowdown in real estate sector amounting Rs 22-25 crore.
On profitability side, at EBITDA level the margins were hit as the company has incurred loss to the extent of 25-30 crore on account in some of the road projects. Fall in margin on account of road projects at EBITDA level is about 1-1.5%. At net level the company is not claiming 80 IA benefits and this hit the margin on yoy basis.
In FY09 the international subsidiaries clocked sales of Rs 550 crore and in current fiscal (FY10) the company expects a turnover of Rs 700 crore from its international subsidiaries. The EBITDA expected is around 10-12% with PAT at 6%.
Expects vertical such as Building, Water and Environment along with international projects are going to be the growth drivers for next 2 years for the company. The company even though has stepped into metals and mining sector projects, it will take at least 2 years to have a firm hold on these segment to really become a significant growth drivers. On the other hand the company is conservative on road projects. The power sector also looks bullish for the company.
Planned capex in FY10 in capability buildup is Rs 100 to 110 crore. The company has also has an equity infusion commitment of Rs 140 crore in its subsidiaries or SPVs in current fiscal.
Secured and unsecured loans is about Rs 1244 crore as end of March 31, 2009. Cash on hand is Rs 134 crore. The gross block is Rs 487 crore and investment in B/Sheet is Rs 740 crore as end of March 31, 2009.
Dubai order out of international orders is Rs 800 crore. These projects are on schedule. NCC Urban has a realty project NCC Urbane at the cost of 200 crore in Dubai and it was hit by slowdown. Tower one is already sold. Gone for design modification so as to tower 2 can be build latter.
The international orders includes the realty project contract amounting Rs 900 crore issued to the international subsidiary by NCC Urban and that sector going downturn the company is not expecting much of revenue from that.
Sales turnover of NCC Urban, the real estate subsidiary of the company was Rs 140 crore in FY09 and the PBT is Rs 9.92 crore.
In FY10, NCC Urban is expected to clock a turnover of Rs 150 crore. The debt on the books of NCC Urban is Rs 193 crore including the Rs 102 crore debts for the Ranchi project. The equity base of the company is RS 150 crore.
The company is looking at an EBITDA margin of 10-12% for its recent projects.
On the reversal of turnover of Rs 120 crore on account of O&G project bagged in consortium with Naptho Gas of Ukraine, the company has retained a profit of Rs 7 crore that being assured profit as per the JV agreement.
Irrigation projects – The Company has not bagged any irrigation orders in last one year. Though the incumbent government was voted back in AP the state is expected to focus more on the entire irrigation project already tendered out and awarded rather than taking up new projects. However the company expects significant irrigation order to flow in from states such as MP, Orissa, Gujarat and the irrigation orders from these states are actually picking up.
Ranch project Phase I is completed. The games will happen in current fiscal. Out of total 990 dwelling units the company has already sold about 200 odd dwelling units and the demand is picking up.
Interest cost is at 11.5%. The short-term loan rates have come down and the company has recently raised a short term loan with an interest rate of bout 9.5%.