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00:00You are watching the F&O show, where the focus remains on earnings. Let us fill up Kalpatru
00:15Projects and see what the stock is getting up to. It has been a pretty solid quarter
00:19for the company. It would be good to know what it looks like going ahead. The stock
00:22though is not looking great for some reason, even though they had a beat on top line and
00:26bottom line. Amit Upleshwar, Director of Kalpatru Projects now joins us.
00:31Amit, good morning. I know the stock performance right now doesn't reflect how well you have
00:35done for the quarter, but we will put it down to a weak market sentiment. It has been a
00:39good quarter. Your top line has seen an impressive improvement. Revenues are up 22%. EBITDA is
00:44up 36%. On back of strong execution, margins have also improved. Going into FY25, help
00:50us understand what we can expect. 20% plus revenue growth expected and what is the margin
00:57outlook as well for FY25? Thanks a lot for having us on your show. Just
01:05a context before I get to FY25, and I think it is important for you and your viewers to
01:10know this. We started out in 2021 with a goal of getting to a certain stage at FY25, which
01:18is a year away. We had set out with a $3 billion revenue, $6 billion order book, and
01:28rose 20% and above. I think by the end of the year, we have already breached our order
01:36book position. We are at close to 63,000 crores, including L1 as we speak. The revenue is at
01:4320,000 crores at a console basis almost, which is up 20% from last year. So we are
01:50quite stoked with the kind of performance that the team has done. As leadership, we
01:56are very happy to see this kind of progress. For FY25, we certainly hope that we should
02:04be able to continue the streak and get to a 20% revenue growth also for FY25.
02:11Amit, we had L&T's management commenting and post their earnings, even though they posted
02:17a good set of earnings as well, indicating that the next two quarters will be slow because
02:22of elections and execution may be a little bit of a challenge. Do you resonate with that?
02:27Are you feeling the same sort of emotion that the next two quarters may see a little bit
02:32of a downtick before we return back to serious business?
02:37So I think we would have probably thought we could do more than 20%, but there's plenty
02:42of factors. One, almost 50% of our business is coming from outside of India, which is
02:48robust. Also in India, most of our projects are agnostic of election outcome because they
02:59are all PSU projects, they're all funded. Yes, in terms of new project guidance for
03:05next year, we have to still see how the government outlay pans at the end of the election outcome.
03:12And at the end of Q1, we'll be far more precise in terms of where our guidance would be for
03:18FY25 order booking target. But at the current order book, we are already sitting at two
03:24plus years of revenue. So we are very, very comfortable in terms of our order book positions
03:31and the diversification of order across sectors of oil and gas, building, railways, transmission,
03:38and water.
03:40Well, right, Amit. We're moving, of course, beyond looking beyond elections and potentially
03:45what we can expect from the upcoming union budget. I reckon a lot of that will also depend
03:51on the government in power. That said, at the moment, where do you think and what
03:59areas do you think that there is an opportunity in terms of orders coming through? What do you
04:04think that Kalpataru could do and what gaps could it fill as we move into FY25?
04:11What sort of orders of inflows can we start expecting perhaps as we move into the next
04:16couple of quarters? So, Agam, an interesting question. If you look at our order book split
04:22today, we are evenly spread. That's a good situation for a diversified company to have.
04:29So today, out of my 58,000 crores of order book, I've got almost 35 percent coming from
04:34my transmission, which is both domestic and international. I've got almost 30 percent coming
04:39from my building division and, sorry, 19 percent coming from my building division and even spread
04:45between water and oil and gas. So across sectors, we've got orders in hand today.
04:52And if I look at the future today, the transmission domestic looks after a lull for the last three
04:58years. It's finally on a big uptrend. Oil and gas international, for which we've been putting
05:05seeds for the last three, four years in terms of qualification, effort, market intelligence has
05:10bore fruit. We've got a very large order in the Middle East for a prestigious global client.
05:16And we see that market for us for the next few years looking also robust. Water in India has
05:24been a focus for all governments. And for the last five years, it had been heightened in terms
05:30of Jaljeevan mission, river linking, so many different schemes that are announced or to be
05:35announced. We've got our building and factories, which is seeing a huge surge in terms of high
05:41value project, factory spend coming back again in terms of both government as well as private sector
05:48capex. Our urban infra, we've got two very large and crucial orders for underground metro using
05:56a tunnel boarding machine, which also is a segment that has great promise as metros keep expanding
06:01across the length and breadth of the country. So looking at our different segments and order,
06:07you know, the profile for next few years looks very good.
06:11You know, just quick mention on the oil and gas space, because you had in fact, you know,
06:17spoken about it right now. There's quite a bit of competitive intensity when it comes
06:22to that specific region and orders here. Of course, you've spoken about a client there.
06:27Can you give us an idea about the pricing environment of whether or not that could
06:31in fact have some sort of an impact as far as margins go as well?
06:36So I think we've consistently maintained our margin. If you look at the components of margin
06:41in terms of our interest costs, we are stable at 2% of revenue. Our other cost in terms of debt has
06:48remained absolutely at the same level as last year, both at net and gross, very few, you know,
06:55hardly any increase for the 20% revenue growth that we've had. We've got our capex for the last
07:01five years at close to 2000 crores. And for the five year block prior to that was at 1000 crores.
07:07And we've done that all with internal accruals, our debt not going up significantly at all.
07:12So looking at that, our oil and gas focus has been to go outside because in India,
07:18oil and gas spend in terms of government capex from PSUs has been slowing down over the last
07:22couple of years. The competitive intensity has been quite high. And hence looking at our oil
07:30and gas margins, hopefully we do better outside because the payment terms are better. There is
07:35hardly to no retention that is there on our projects. And so we hope that those margins will
07:41be better than what it will be in India in that sector given the competitive intensity.
07:45I mean, just a quick one. This is the Aramco deal you're talking about?
07:49So unfortunately, you know, this is we are constrained in terms of naming who our client
07:53could be, because we are in the final stages. Okay. Yes. Okay. Yeah.
08:00Good luck. Good luck with that. It's looking good. The stock is up about 100% in the last
08:05six months. So the euphoria clearly of what we've seen is auto wins from the likes of Aramco to
08:10other big Middle Eastern clients that they've picked up is reflecting in terms of stock
08:15performance and its earnings.