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Analyst Meet / AGM - Analyst Meet

Momentum in order inflow and execution likely to continue

Indian Hume Pipe

03-Aug-2016, 10:33
In interaction with Mr. Rajas R Doshi Chairman & Managing Director

Key highlights

In June'16 quarter, execution of much awaited Telengana and Andhra Pradesh orders were done, which should have happened in Mar'16 quarter. With better clarity and visibility, more orders and their execution from these regions are expected in FY'17 and in FY'18.

The order book position as on date is around Rs 3000 crore and most of them are from water and related services including irrigation, sewerage management system and drainage orders. Around 45% of order book position is from Andhra Pradesh and nearby region.

The order book is up by more than 25% YoY, but this is on a lower base of last year, where orders were under bidding process and were yet to be awarded. Overall, management expects to end the year with an order book growth of around 18-20% YoY.

Orders of more than Rs 4000 crore are under bid stage and the company expects the orders to be delivered in FY'17 itself, given the momentum particularly in region of AP, Tehlangana, Karnataka etc.

The company will be able to retain some margin benefits due to lower raw material prices, and higher execution is helping the margins. Around 11% OPM is the sustainable OPM going forward. However margins would vary on quarterly basis depending upon the execution, but on an annual basis, 11% is sustainable. Even in the new contracts and bids, the company is keeping this kind of margins.

Management has a vision to reach around Rs 2200 crore of revenues in next 5 year from FY'16. There are no plans on inorganic basis. But through higher execution and increasing the geographical reach its possible. Further the River Ganga project award allocation will start happening in FY'18 and management expects some orders from that project as well.

On real estate front, the company has around 19-20 lakh square feel of salable area of all the properties together. In the next 5 years, these properties will be developed and the company will earn revenues in form of sale and lease rentals from these properties going forward.

The company does not need funds as of now and don't expect any equity dilution to happen. In future, if the order size increases and higher execution is taking place beyond around 18% on YoY basis, then the company may think of some need of additional working capital. Equity is the last option which the management will think for.

Overall, after a consolidation in FY'16, management expects growth to continue in FY'17 and in FY'18 as well. Receivables are in control and management does not expect any working capital issues in short term.