Ahluwalia Contracts Q4FY17 Concall Summary

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Financial highlights 

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  • The Company achieved a turnover of Rs.471.84 Crores and PAT of Rs.20.35 Crores in Q4 FY 2017 in comparison to a turnover of Rs.383.69 Crores and PAT of Rs.26.71 Crores in Q4 FY2016
  • EPS of the Company for Q4 2017 was Rs.3.04 as compared to Rs.3.99 in the corresponding quarter last year.
  • During FY2017, the Company achieved a turnover of Rs.1426.52 Crores and a PAT of Rs.86 Crores as compared to a turnover of Rs.1249.58 Crores and a PAT of Rs.84.41 Crores in FY2016.
  • EPS of the Company for FY2017 was 12.84 as compared to 12.60 in FY2016.
  • During FY2017, the Company’s EBITDA margin was 12.72% as compared to 13.95% in the corresponding year in the last year and PAT margin 6.03% as compared to 6.75% in the corresponding period.
  • Target set by the company are for a growth of about 12% to 13% top line and EBITDA also should be in the range of 12% to 13%
  • There is an increase in costs of about 3% to 4% if labour and sub-contracting costs are combined
  • The effect of sub-contracting costs will be there in Q1 but after that it will taper off, which will result in weaker margins in Q1
  • The effect of sub-contacting cost will taper off because traditionally the end of Q1, witnesses labour shortage is easeing off. There is plenty of labour available from July. In the last quarter,  the shortage was brought on by demonetisation, the effect so which has worn off now
  • The bids bidded in last quarter would be around Rs.700 Crores to Rs.800 Crores
  • The company is lowering their projections slightly 12% to 15% top line
  • Capex is approximately Rs.15 Crores from this financial year
  • FY2017 is Rs.15 Crores capex and in future approximate Rs.15 Crores to Rs.20 Crores
  • Long-term debt is 19000 and short-term debt is Rs.89 Crores.
  • The company won’t become debt free in May of this year but in the subsequent year it will
  • This year, finance cost is 36 Crores and in the next year 20 to 24 Crores Outstanding contract is 3,553 Crores and government is 69% of that
  • The company will be giving dividends starting next year
  • The private residential space is still not doing well
  • The company is being cautions for next year or so based on informed guidance over increased competition
  • Segment wise revenue has declined from only FY2017 not for FY2016, FY2016 it had a full revenue of 1249 in some contractual work
  • The tenders being prepared by government now are all 8% to 10% below estimate
  • All the projects are from residential are suffering from slow-moving issues
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 Projects 

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  • The Company secured new orders worth Rs.1450 Crores until date. Net order book of the Company as on March 31, 2017 was 3553 Crores to be executed in the next two to two and a half years
  • Order pipeline is about Rs.1500 Crores and the company is bidding for selective tenders only
  • The company is being prudent and won’t be bidding for projects like Pragati Maifan or Sarojini Nagar
  • They are primarily bidding for government projects, redevelopment projects with CPWD and NBCC coming out with redevelopment projects. These are ranging from about Rs.300 Crores to about Rs.500 Crores
  • There are also certain auditorium projects, which again various states or state capitals are coming out
  • There is some delay happening in education both on the government side and on private side
  • The Order Book consists of government projects 69% and 31%  private projects, segment wise commercial 5%, hospitals 21%, infra 29%, residential private 24% and residential government 8%
  • Only one project is a fixed-price contract worth Rs. 100 crores
  • The company has made provisions of about Rs.4.5 Crores towards the Kota Project charges and have equalized the charges, the lease rents that they have to pay on the Kota projects over the next 30 years
  • Next year these provisions for the Kota will be about Rs.6 Crores every year.However, it is a non-cash expense and won’t impact their cash flows
  • Approximately 300 to 400 Crores orders are slow moving
  • About 43 Crores is the value of the flats of slow moving orders
  • With market improvement there are plans to monetize the Kota Project
  • Only NBCC project is worth Rs. 100 crores 

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