Ceigall India Limited, an infrastructure construction firm specializing in complex structures, reported a strong first quarter performance for FY25, showcasing robust revenue growth and a positive outlook for the future. The company's revenue for the quarter surged by 26.5% year-on-year to reach ₹822 crores, driven by a healthy order book and the successful execution of ongoing projects.
Financial Performance:
- Revenue: Q1 FY25 revenue stood at ₹822 crores, marking a significant increase from ₹650 crores in the corresponding quarter of the previous fiscal year.
- EBITDA: EBITDA margins expanded substantially, with a growth of 65.10% to ₹144 crores in Q1 FY25 compared to ₹87.30 crores in Q1 FY24.
- PAT: Profit after tax (PAT) also witnessed a remarkable surge of 76.5%, reaching ₹77.90 crores compared to ₹44.10 crores in Q1 FY24.
- Debt: Standalone debt as of June 30, 2024 (pre-listing) was ₹629.70 crores. The company raised ₹413 crores through its IPO, which will be utilized to reduce debt, leading to a significant reduction in the debt-equity ratio. Consolidated debt stood at ₹1,195 crores.
Operational Updates:
- Order Book: Ceigall's order book remained strong at ₹9,470 crores as of June 30, 2024, slightly higher than ₹9,225 crores at the end of FY24. NHAI projects constitute 80.31% of the order book.
- Project Execution: The company has successfully completed 34 highway projects, including 16 EPC, 1 HAM, 5 O&M, and 12 Item Rate projects. Currently, Ceigall is managing 18 ongoing projects across various states in India.
- HAM Projects: Ceigall has completed 7 out of 16 HAM projects ahead of schedule and earned bonuses for early completion on 3 projects. The first HAM project, Malout Abohar Sadhuwali, was completed 214 days ahead of schedule.
- New Contracts: The company recently secured two new contracts: one for the Bhubaneswar Metro project worth ₹900 crores and another for the development of the Kanpur Central Bus Terminal (BOT project, LOA pending).
Management Insights:
- Growth Strategy: Ceigall is focused on diversifying its expertise and order book across various business sectors, including EPC, PPP, and geographical regions. This strategy aims to optimize business volume and profit margins.
- Market Outlook: Management expressed confidence in the Indian infrastructure sector's growth, driven by government initiatives and investments. "The infrastructure sector is pivotal, contributing 3.5% to the GDP with the investments in industry anticipated to reach 52,962 billion between Fiscal 2024 and Fiscal 2028," stated Mr. Ramneek Sehgal, Managing Director.
- NHAI Bidding: Ceigall is actively participating in NHAI bids and expects a steady flow of projects in the coming years. Management anticipates a continued focus on maintenance and O&M projects, along with the completion of ongoing expressway projects.
- Asset-Light Model: Ceigall follows an asset-light model and is open to selling completed HAM projects at attractive valuations to reinvest in new projects with higher returns.
Future Outlook:
- Revenue Guidance: Management expects to maintain double-digit revenue growth in FY25, driven by a healthy order book and strong project execution.
- EBITDA Margin Target: The company aims to sustain EBITDA margins in the range of 13% to 15%, similar to its performance in recent years.
- Order Inflow Guidance: Ceigall anticipates an order inflow of around ₹4,000 to ₹5,000 crores in FY25, driven by new tenders and project awards.
- Equity Investments: The company outlined its equity investment plans for upcoming HAM projects, emphasizing the availability of internal accruals, unencumbered FDRs, and proceeds from the IPO to fund these investments.
Q&A Session Highlights:
- NHAI Bidding: Management addressed concerns about muted NHAI bidding in recent years, attributing it to the budget cycle and elections. However, they anticipate a pick-up in bidding activity in the coming years, driven by government focus on infrastructure development.
- Punjab Projects: Management acknowledged challenges related to land acquisition and farmer protests in Punjab, but expressed confidence in resolving these issues. They emphasized their strong presence in the state and the potential for termination payments from NHAI if projects are stalled.
- HAM Project Monetization: Ceigall reiterated its willingness to monetize completed HAM projects at attractive valuations, highlighting the strong investor interest in these assets.
Key Takeaways:
- Ceigall India Limited delivered a strong Q1 FY25 performance with robust revenue growth and margin expansion.
- The company's order book remains healthy, supported by a diversified project portfolio and active participation in NHAI and other infrastructure bids.
- Management expressed a positive outlook for the future, driven by growth in the Indian infrastructure sector and the company's strategic initiatives.
- Ceigall's asset-light model and focus on HAM projects provide flexibility and opportunities for value creation.
Read the full concall transcript
Disclaimer: This article summarizes an earnings call and reflects the views expressed by company management. The content is for informational purposes only and does not constitute financial advice. Readers should conduct their own research and consult certified experts before making investment decisions. Acme Inc is not responsible for any actions taken based on the information presented in this article.