CONFERENCE CALL - from Capital Markets
NBCC
Benefits of strong order intake will be visible in FY18
NBCC hosted a conference call on Feb 12, 2016 to discuss the performance of the company for the quarter ended Dec 31, 2015. In the conference call the company was represented by Anup Kumar Mittal, CMD of the company.
Key takeaways of the call
Order book currently stands at Rs 35000 crore and this does not include few projects such as that of DDA worth about Rs 15000 crore. Order intake so far in current fiscal is about Rs 17000 crore.
About 50000-60000 crore worth of redevelopment projects are in active negotiations including that for 4 colonies in Delhi, the proposal from the state governments of Rajasthan & Orissa as well as Indian Railways, New Delhi Municipal Corporation etc.
The award of redevelopment project of 4 colonies in Delhi, will happen for certain by Q2FY17. The redevelopment project of 4 colonies in Delhi is worth about Rs 20000 crore.
PMC projects – the company operates at zero risks with only fee incomes come to the company with others being a pass through. The margin has to be seen on annual basis. The company in addition to fees will earn some interest on the advances which is invested in fixed deposits before paid out to the contractors. During the quarter in some projects the advances might not paid by the customers.
In redevelopment projects apart from project management fee alike PMC projects the company will get marketing fees.
Real Estate – Not going to start any project till the market improves. The company’s land bank are historical and purchased from own funds and not through debt. So it will wait. The company currently has ongoing projects of 5-6 projects.
Inventory in completed project is just 130000 sft in the OKHLA commercial project worth Rs 300 crore. Inventory in the under construction projects largely residential are in addition to this. Overall value of unsold inventory both from under construction and completed projects is about Rs 1000 crore.
Strong traction in order book happened in FY16 especially in second half of FY16. For this to get reflected in top-line will take at least 12 months as work on these projects to commence and cross revenue recognition threshold. So the benefits of strong order intake will get fully reflected only from FY18 onwards. The company expects about 20-25% growth in FY17 as well.
Out of the Rs 15000 crore of orders not yet included in the order book the share of DDA projects (2 projects) was about Rs 8000 crore, which will get added to order book in Q4FY16. The balances are from some small redevelopment projects from Rajasthan, Orissa and Indian Institute of Public Administration and Policy.