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.