PNC Infratech Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from PNC Infratech Limited (PNCINFRA) Q3 FY22 Earnings Concall

Management Update:

• PNCINFRA commented that given the strong pipeline of upcoming projects from NHAI and MORTH, its focus area would continue to be the road sector.

Q&A Highlights:

• Vibhor Singhal from Phillip Capital asked about reasons for weak order inflow. Bhupinder Sawhney CFO said that the competition was higher. However, the company said it has submitted bids worth INR17,000 crores which are under evaluation and out of that it is expecting 3-4 bids for the company that will be opened before FY22.

• Parikshit Kandpal of HDFC Securities enquired about the JJM project that out of the INR3200 crore order book, what is the pending order book and revenues for nine-month and 3Q22. Yogesh Kumar MD answered that under Phase II out of the 2,476 villages the company has got, it has submitted DPR for 2003 villages. On the order book, PNCINFRA said that will be known only once these all DPRs are approved, and sign the cover agreements.

• Mayur with Profitmart Securities asked about the outlook for 4Q22. Yogesh Kumar MD said that for FY22, the company is expecting the topline growth of around 20% compared to FY21, which is achievable.

• Jiten Rushi from Axis Capital queried about order backlog breakup project wise of Delhi Vadodara package 31, Delhi Vadodara package 29 and Mumbai-Nagpur.  Yogesh Kumar MD replied that for package 31 outstanding is INR637 crore, package 29 is INR590 crore and Mumbai-Nagpur INR110 crore.

• Jiten Rushi from Axis Capital asked why the debtor days were high like 96 days compared to a usual run rate. Yogesh Kumar MD answered that PNC Infratech was not utilizing the limit, the company was not taking the disbursement from the HAM project from the lender. Irrespective of that some amount the company is discounting on the rate of 4%. That is why debtor days was slightly higher because of the outstanding in the HAM project.

• Jiten Rushi from Axis Capital also asked about the outstanding number from the HAM project. Yogesh Kumar MD said INR940 crore is outstanding from HAM project as on Dec 2021, which is 61% of the total debtors.

• Jiten Rushi from Axis Capital enquired about the toll collection numbers for the projects. Yogesh Kumar MD replied that toll collection in MP highway is about INR12.8 crores and OMT project Kanpur Ayodhya is INR121.5 crore, Kanpur highway INR33.5 crore, Narela is INR10.7 crore and Bareilly Almora is INR14.30 crore.

• Jiten Rushi from Axis Capital asked about capex for 4Q22 and FY23. Yogesh Kumar MD answered that capex was informed of around INR125 crores for FY22, but in nine-month the company has taken only INR20 crore and expects around INR40-50 crore in FY22. For FY23, the company expects INR125 crore in capex.

• Jiten Rushi from Axis Capital asked about revenue guidance for FY23. Yogesh Kumar MD replied that for FY23 the company is expecting 10-15% growth from FY22.

• Faisal Hawa of H.G Hawa asked if the company is seeing any kind of risk emerging from NHAI’s high debt levels.  Yogesh Kumar MD answered that as of now PNCINFRA is not foreseeing any major risk on the debt aspect. The company expects the opening up of financial bids and the awarding activity to pick up in maybe next 1.5 months before end of FY22 so that NHAI could meet their targets.

• Alok Deora from Motilal Oswal asked about the recent water project the company won and when is that expected to start. Yogesh Kumar MD said that the company got the water project in the month of January of 2,337 projects. Once the DPRs are approved, the company will commence these projects from 2Q23.

• Bharanidhar Vijayakumar of Spark Capital asked about the cost pass-through mechanism in the Jal Jeevan Mission projects and if there will be any problem with material cost increases. Yogesh Kumar MD replied that any steep increase or any unexpected increase in the basic input material will have some pressure on the margin. But already something is built-in in these rates.

• Bharanidhar Vijayakumar of Spark Capital also asked about the expected margins from JJM projects, including some margin pressure in the next one month. Bhupinder Sawhney CFO replied that it will be something around 14% EBITDA margin.