Ahluwalia Contracts Q1FY18 Concall Summary

Ahluwalia Contracts.png

Financial highlights

Ahluwalia Contracts Q1FY18 Financial Performance.png
  • The company achieved turnover of around 504.20 Crores and PAT of Rs. 29.52 Crores in comparison to turnover of Rs. 306.26 Crores and PAT of Rs. 21.22 Crores in Q1 FY17.
  • The company achieved drop in Y-o-Y basis 55% in revenue and 35% in PAT and EPS of the company has also improved during the year Q1 financial year 2018 that is now 4.21 compared to 3.26 in corresponding period last quarter
  • The EBITDA margin is 10.63% as compared to 14.15% in corresponding quarter and PAT margin is at 5.85% compared to 7.12% in the corresponding period.
  • Net order book is around 3040 Crores which is to be executed in next 20 months
  • The impact of GST will be about 35 to 40 Crores.
  • Will be able to hit 15% to 20% as far as their turnover top line increase is concerned
  • Receivables will increase approximately 50 to 60 Crores
  • Increase in work WIP and stock in trade is because of the major portion that is to be allocated to all type of expenses
  • Labour charges and subcontracts cost will be increased.
  • EBITDA margin is between 12% and 12.5%.
  • Growth target to be 15% to 20% over the next two to three years.
  • The gross debt is 80 Crores
  • Customer advances by the end of this year will be significantly lower than what they were last year
  • Full year depreciation will be around 18 Crores to 20 Crores.
  • The life of every asset is for 10 years
  • Borrowing cost is 9.5%.
  • Cash and bank balance is around 66 Crores right now as of June 30 and it includes majorly around 45 Crores in FDR lying with the bank as a non-fund basis
  • The inventory of the flats right now in terms of value is 48 Crores .This has been shown in short-term loans and advances and whatever the cost of acquisition of that so that has been shown short-term loans and advance
  • Service tax was about 6% on the cost of the project. It averages out to about 6% now that 6% is included in 18%, 18% is the GST rear on this 6% has become a part of this 18% and also WCB/VAT was about 5% to 6% that has also become a part of GST
  • Company’s target is to become an almost zero debt company over the next two years

Interest cost

  • They are two part of their interest cost, one is mobilization advance and second is bank borrowing. So in the last quarter or this quarter they have almost repaid 20 Crores to 25 Crores from bank.
  • The company has a mobilized advance in mostly three or four projects and their interest cost will be down and ITT Patna or Patna two project Bihar they have initially full payment of the mobilization advance
  • Interest rates are also coming down right now to around 9.25% or 9.50% against last quarter, which was around 11%
  • Thus interest costs are down due to :
    • Interest rate
    • decrease in borrowing and
    • decrease in mobilization amount

Order Book

Ahluwalia Contracts Q1FY18 Order Book.png
  • The new order inflow is to be about 1200 Crores. Over next month and a half they should be having incremental orders worth about 350 to 400 Crore
  • Order book will go up by 6%, 7% because of GST so that the cost increase pass onto all clients
  • Order book in government is 68% and private is 32%. Segment wise break up is: commercial is 5%, hospital 22%, infra 13%, institutional 27%, residential private 25%, residential government 8%.
  • This year they should end with an order book of roughly about 3000-odd Crores

Projects

Ahluwalia Contracts Q1FY18 Top Ongoing Projects.png
  • In Surat the bid has been floated to concerned parties and they are waiting for the replies
  • They are L1 in government projects, which is about 250 Crores, which should translate into their orders in the next month or so, and the order pipeline stands at about 2000 Crores
  • 80 Crores of orders are under fixed order contract
  • Around 300 Cr of projects are slow moving 
  • The criteria for NBCC and DDA have become a little diluted and there is more competition
  • Not bidding for NBCC N Nauroji Nagar project
  • Education, healthcare, institutional and affordable housing are the upcoming sectors
  • As far as the government is concerned depending on the qualifying criteria they can bid for projects worth 700 to 800 Crores
  • Government to Private projects ratio will be about 60:40
  • There is no significant news regarding arbitration with MR
  • Will continue to bid in the metro sector
  • They are bidding for IIT Bhubaneswar, which is in excess of 500 Crores, there is IT Kanpur coming, there is IIT Roorkee coming, which are on similar side then there are redevelopment projects, which are in excess of 350, 400 Crores
  • There are number of institutional projects they are bidding for an auditorium again with NBCC which is about 400 Crores we are bidding for a few hospitals which are in excess of 350 Crores
  • Q2 will be more or less sluggish because of labour issues due to demonetization and also because of seasonal thing as such.
  • The true effect of RERA will be seen after six to nine months more
  • Kota Project
    • Kota Project is around on lease rental that is around 26 Crores this quarter and going forward they are expecting that during this year also it is around 2.5 Crores lease rental revenue and that is to including their depreciation and license fee, notional fee would be 8 Crores to 9 Crores loss would be there but we will say cash loss would be around 75 lakhs and going forward in next year they are expecting 10 to 12 Crores lease rental and we are expecting that in next year we will earn cash profit and slightly I think profit in the books also
      • Currently occupancy is about 62
      • Once the occupancy crosses about 80% to 85% then they will look at and will be able to get the right value
Ahluwalia Contracts Q1FY18 Projects Update.png

Downloads