Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IRCON International Ltd (NSE:IRCON, Financial) reported a total revenue of INR 2,613 crore for Q3 FY25, maintaining a stable revenue compared to the same period last year.
- The company has a substantial order book of INR 22,000 crore, providing a strong pipeline for future projects.
- IRCON International Ltd (NSE:IRCON) has a diversified order book with 53% of orders on a competitive basis and 47% on a nomination basis.
- The company is actively participating in both domestic and international markets, with 90% of its order book being domestic and 10% international.
- IRCON International Ltd (NSE:IRCON) is focusing on expanding its project portfolio by bidding for smaller value projects and specialized jobs in electrical and S&T sectors.
Negative Points
- The company's core EBITDA declined significantly to INR 139 crore from INR 296 crore in the same quarter last year.
- IRCON International Ltd (NSE:IRCON) faced a provision for losses in one of its projects amounting to INR 38 crore, impacting profitability.
- The company anticipates a decline in profit margins by 1.5% to 2% in the short to mid-term due to competitive market conditions.
- Order inflow has been lower than expected, with only INR 1,700 crore secured in the first nine months of the fiscal year.
- The company is experiencing high competition in the market, with many projects being bid below estimated costs, affecting future margin expectations.
Q & A Highlights
Q: Can you quantify the one-off provisioning taken during the quarter?
A: We have taken a 38 crore loss in one of our projects and a major maintenance provision of 45 crore in our consolidated results. - Ragini Advani, Director of Finance
Q: How should we view the margins going forward, considering the current decline?
A: Margins are expected to decline by about 1.5 to 2% in the short to mid-term due to the completion of major projects and a competitive market environment. - Ragini Advani, Director of Finance
Q: What is the revenue and margin guidance for FY25 and FY26?
A: For FY25, we expect a turnover of 10,000 to 11,000 crore with a margin dip of about 0.5%. For FY26, revenue should remain around 10,000 crore, but margins may dip further due to competitive pressures. - Ragini Advani, Director of Finance
Q: How is the company planning to handle the competitive market environment?
A: We are focusing on volume to maintain minimum profits, despite lower margins. The market is highly competitive, and we are adapting by bidding for smaller projects and diversifying into pure electrical and S&T jobs. - Ragini Advani, Director of Finance
Q: What is the current status of the order book and its execution timeline?
A: The order book stands at 22,000 crore, executable over more than two years. However, some projects will extend beyond 2027-28, necessitating new orders to maintain revenue levels. - Ragini Advani, Director of Finance
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
