Dilip Buildcon Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Dilip Buildcon Limited (DBL) Q2 FY24 Earnings Concall

• Company Strategy Updates
  • Reduced debt by INR300 crores so far in FY2024.
  • On track for INR800-1000 crore reduction to get to INR1300-1500 crore net debt by end of FY24.
  • Aims to become debt free in FY2025.
• InvIT Partnership
  • Partnering with Alpha Alternatives who will invest INR2000 crore.
  • Alpha taking 10% stake in company and 26% stake in completed/near complete HAM projects.
  • Additional 26% stake in under-construction HAM projects.
  • INR700-800 crore investment expected in FY24, INR1200-1300 crore in FY25.
  • Company to get InvIT units worth INR2500-3000 crore in FY2025 and FY2026 as HAM projects complete.
• HAM Projects Update
  • Won 37 HAM projects worth INR45,000 crore till date.
  • Divested 19 HAM projects worth INR24,000 crore so far.
  • 18 HAM projects worth INR24,000 crore balance.
  • Strategy is to retain EPC profits and return equity investment quickly to parent company.
  • Alpha investment will reduce DBL’s equity needs in 10 under-construction projects.
• Financial Highlights
  • Revenue up 7.3% YoY to INR2,400 crore.
  • EBITDA up 12.3% YoY to INR294 crore.
  • PAT up 86.5% YoY to INR120 crore.
  • Reduced debt by INR300 crore, improved net debt/equity ratio.
• Growth Outlook
  • Expect to achieve 13-16% revenue growth in H2 FY24.
  • Targeting 5-8% revenue growth in FY24 vs previous guidance of 10%.
  • Guidance of 11,000+ crore revenue in future years with diversified portfolio.
  • Maintaining EBITDA margin guidance of 13-14%.
  • Targeting same new order inflow guidance of INR10,000-12,000 crore for FY24.
• Debt Reduction and Cost Savings
  • Expects INR50-75 crore lower finance cost in FY2024 with further reduction in FY2025.
  • Targeting INR300-350 crore lower finance cost in FY2025.
  • Aiming to be net debt free in FY25 with lower interest costs.
• Margin and Order Inflow Outlook
  • Maintaining EBITDA margin guidance of 12-14%.
  • Margins used to be 2-3% higher due to bonuses, now targeting 14-15% without it.
  • Seeing robust pipeline across sectors like roads, water, railways, metro, mining.
  • Aiming for measured growth in orders at 1.5-2x revenue levels.
• Working Capital Management
  • Saw marginal increase in working capital days in H1 FY24.
  • Aiming to reduce by 10 days through better collection, inventory reduction.
  • Expect reduction by year-end as execution picks up pace.
  • Expects approved proposals to get disbursed and aiming to see lower double digit growth in corporate loans.
• Growth Strategy
  • Targeting 5-8% YoY growth over next few years which is consistent but not aggressive.
  • Growth to come from diversified sectors DBL operate in, beyond roads which has high competition.
  • Have enough assets to sustain target growth, so will not need significant capex.
  • Will continue to selectively look at PPP projects in sectors like water and railways.
• Order Book Update and Partnership
  • Bid for 10,000 total projects where results are pending.
  • Large investor looking to build infrastructure portfolio across sectors like mining and railways.
  • Partnership allows company to expand into new infrastructure sectors.