Release Date: October 25, 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) was awarded six projects in Q2 FY25 and twelve projects in H1 FY25, indicating strong project acquisition capabilities.
- The company completed seven projects during the quarter, showcasing its ability to execute and deliver projects on time.
- The outstanding order book grew by 34% year-on-year, reaching INR6,446 crores, reflecting a healthy pipeline of future work.
- The company has a diverse project portfolio, including high-rise residential, commercial buildings, and government projects, which can mitigate risks associated with sector-specific downturns.
- PSP Projects Ltd (BOM:540544) is optimistic about revenue improvement from Q3 FY25 onwards, with several projects expected to start contributing to revenue.
Negative Points
- Revenue from operations decreased by 4.8% year-on-year in Q2 FY25, indicating challenges in maintaining growth momentum.
- EBITDA for the quarter fell by 47% year-on-year, highlighting significant pressure on profitability.
- Net profit for the quarter declined by 71.3% year-on-year, reflecting substantial financial strain.
- The company faced higher expenses due to unexpected costs in utility business projects, impacting overall profitability.
- There were delays in project execution due to extended monsoon and pending clearances, affecting revenue recognition and project timelines.
Q & A Highlights
Q: Can you provide clarity on retention money, mobilization advance, and unbilled revenue figures?
A: Retention money non-current is INR100 crore, current is INR132 crore, mobilization advance is INR262 crore, and unbilled revenue is INR539 crore. (Prahaladbhai Patel, CEO)
Q: What is the outlook for revenue growth in FY25 and FY26 given the current challenges?
A: Despite the challenges, we expect to achieve a revenue of INR2,800 crore for FY25, with a potential 20% growth in FY26. The impact of the monsoon and project delays are being managed, and we anticipate improved margins moving forward. (Prahaladbhai Patel, CEO)
Q: Are there any significant projects in the pipeline, and what is the status of current order inflows?
A: We have an order inflow target of INR3,500 crore, with several projects in the pipeline. We are L1 in some projects, and the order book is expected to grow significantly. (Prahaladbhai Patel, CEO)
Q: How is the company managing the increase in working capital days, and when do you expect it to normalize?
A: The increase in working capital days is due to delayed payments and project completions. We expect it to normalize by the end of FY25 as projects progress and payments are received. (Prahaladbhai Patel, CEO)
Q: What is the impact of the government's increase in minimum wages on PSP Projects?
A: The increase in minimum wages is not expected to significantly impact our operations as we have measures in place to manage labor costs effectively. (Prahaladbhai Patel, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
