Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PSP Projects Ltd (BOM:540544, Financial) reported a 20% year-on-year growth in revenue, reaching INR 612 crores for Q1 FY25.
- The company's outstanding order book stands at INR 5,890 crores, indicating a strong pipeline of future projects.
- EBITDA for the quarter increased by 14% year-on-year to INR 73 crores, with an EBITDA margin of 12%.
- The company received a significant order of INR 229 crores for the construction of Palladium Mall in Surat.
- PSP Projects Ltd (BOM:540544) has a robust bid pipeline of INR 6,000 crores, showing potential for future growth.
Negative Points
- The company's net profit for the quarter decreased by 7% year-on-year to INR 34 crores, with a PAT margin of 5.56%.
- The EBITDA margin, excluding the SDB project, was significantly lower at 3.5%, indicating higher operational costs.
- The UP Medical projects incurred additional expenses of INR 25 crores due to material price escalation and scope changes, impacting overall margins.
- Receivables from the Surat Diamond Bourse project stand at INR 225.37 crores, with a delayed payment timeline extending to October 2025.
- The company faced labor shortages and weather-related disruptions in some projects, affecting project timelines and costs.
Q & A Highlights
Q: Ma'am, how much EBITDA margin we have booked on INR64 crores SDB revenue in this quarter?
A: See, basically, there are not much expenses, yes, but we have to incur certain administrative and some maintenance expenses also and some legal expenses. So around INR9 crores to INR10 crores we have to incur. So you can consider INR54 crores as the EBITDA margin.
Q: So entire INR64 crores revenue is this kind of flow to the EBITDA margin?
A: No, no, INR54 crores, 5-4.
Q: So that means if I remove that, then the core EBITDA margin comes at 3.5%. So how do we now look at -- so two things to understand, as you mentioned, the INR25 crores extra that we have spent on the UP Medical projects. So anything left to be more spent or any other projects where we have to do extra expenses because this 3.5% core EBITDA margin is, I think, of historical low EBITDA margin. So how do we understand now?
A: Shravan, you're absolutely right, 3.5% is lower what we expect ever. But as I said in the December quarter also, the first -- last quarter from January to March, we were in the process of ending. There were few materials which were yet to be purchased and yet to be installed as far as (inaudible) is concerned. (inaudible) cost has gone for higher on energy side. All these three months, again, the project was to be completed by March, but during this process of first quarter of earning however everything a little bit of the cost and overhead has also gone high. Third part was more related to some of the quotes which were -- which we were not touching, there was -- because there was a little bit technical conclusion in terms of whether scope was in our scope of work or not. That was also to be executed because that was more or less hampering the overall process. So all put together, (inaudible) INR20 crores to INR25 crores, which has majorly impacted on the EBITDA margin. And this is the last maybe what we can consider. For that, we can have expensive more than INR5 crores, INR10 crores, plus on the last quarter -- on the next quarter. Otherwise, none of the projects (inaudible) these types of expertise. But all other projects are in and this is what I always envisaged and I was expecting because, as I said, the project started initially in the month of March '21 just after corona and there was no escalation on this project and (inaudible) escalation, which we never expected to such a large extent on the project. The time line has gone a little bit high. So all put together, this (inaudible) quarter, but we assure it will not happen much longer, so we expect other projects.
Q: So now onwards, in terms of the -- our earlier guidance of 10% to 11% EBITDA margin, can we -- that start seeing from the second quarter itself?
A: Yes, we can expect, but I too expect as I said there can be some expenses to the last quarter, which is the replacing quarter for UP. So there can be some expense, but not to this extent, but that can interfere some scope otherwise we can expect 10% to 11% of all (inaudible) projects.
Q: Okay. And in terms of the revenue level, so excluding this SDB, so core level, it is 7.5% kind of a growth, if I look at. So we were looking at last time, say, it 15% kind of growth. So if I remove this INR64 crores and the core, so we are still maintaining that 15% revenue growth on the core level at revenue?
A: See INR2,008 crores, which is what we have thought of for this year, and I definitely feel that we should be in position to reach to INR2,800 crores.
Q: Sir, my first question is on the margin. Given the first quarter margin at (inaudible), what margin can we expect for the whole year basis adjusted for the SDB receivables?
A: See now receivable is not going to impact on the margins, but only the receivables because they are already good. So whatever margins we have always been in (inaudible) which will be in the range of 10% to 11%.
Q: So you're saying 10% for the rest of the three quarters?
A: Yes.
Q: Okay. Sir, my second question is on how much money is yet to be received from Surat Diamond Bourse and when will we receive it? Like what is the time line?
A: Yes. We have still to receive INR121 crores from SDB, and mainly time line will be by end of like October '25. So they will try to pay it earlier, but latest by October '25, they will be paying us. There will be (inaudible).
Q: Okay. But is there any dates in between when they will receive or they can give it at any time between from now until October 2025?
A: (inaudible) time every quarter and they have given the clear time line on which year they have to payment (inaudible). And so it is on the predefined time, but the time has been diverted till October '25. If their sales of the office goes little bit faster, they can give us early, but these are the latest results which they have -- latest time lines they have given.
Q: Sir, just have a couple of questions. So when we look at UP, so UP, we booked INR10 crores on an expense of INR25 crores. Q2, what is the expenses and revenues that we are looking at?
A: See, UP, now the work is not left too much. It will be in the range of INR25 crores to INR30 crores which we have to build. So probably, the overhead and if anything which has been left out, which we have to pay more on part of the execution, I presently expect that, obviously, there cannot be more difference between INR5 crores and INR10 crores.
Q: Okay. Understood. And sir, we recently raised an equity around of INR244 crores. So -- and we also received some money from Surat Diamond
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
