Road Construction players - Who will win the race along the upcoming freeways?

chikspat · March 25, 2021, 6:32am

Harmonious Substitution of a Road Project in Kerala with project cost of 1900cr.
Agreement with other company to do construction and procurement of project worth 2366cr. Design will be done by partner.
EPC order book of 10400 cr.

With TTM sales of 1431 cr. I expect significant revenue growth in coming 2 years.
As company always bid/substitute projects which have margins protected. Accelerated growth and top line and bottom line is expected.

Disclosure: Invested

chikspat · June 9, 2021, 7:34am

Welspun Enterprize covered by Anil Singhvi

Good order book.
5000 cr asset, 500cr annutiy income ( EBIDTA)
Low Debt.
Gas discovery can be huge. According to me if it comes out as expected, huge re rating.
Cheap Valuation.
Strong promoter group
Sector rotation to infra, low interest cost to continue.

Disclosure: Invested

chikspat · July 31, 2021, 9:09am

Welspun Enterprises conference call highlights:

Total Order Book is 8100 cr. 5500 cr. Road. 2550 cr. Water. It excludes Kazikhode bypass project as NHAI take stand which company not confident to encorporate.
Intestity in Road projects are increased in terms of no. of players as well as aggressive bidding.
Nal se Jal is huge opportunity.
Continue to pursue in organic growth if meets required return ratios.
Investment cycle is over. Only 207 remaining.
Get AA- rating from Brickworks. It is with few infra projects such as l&T. With the investment cycle is over, It will be a move to AA, which will give company loans at 7.45% from 7.75%.
Order inflow: Will take one/two more projects this year. After that one project every quarter.
Company is L1 for 3500cr. the project however bid time is up to December. After that only it can be concluded.
If no challnage from COVID/Farmere agitatios, revenue can move to 600cr. from Q3 as order book of 8100 cr to be executed in 30 months.
Monetization: 3 projects are operational and getting regular annutiy. Q2 will give 2 HAM and 1 BOT project PCOD. Then, 6 projects ready for monetization, will start looking to monetize from Feb 2022 on wards.
Lucknow railway station re development is 1000 cr. + project ( ball park). It is design, build, monetize kind of project.
Oil and gas technical data is under evaluation, will finish by December 2021.
Company have key equipment to mitigate risk of sub contractors not available. Though there are enough sub contracors available.

You can here conference all here: Welspun Enterprises Ltd - RB Company Profile.
Disclosure: Invested

Prashantnegi76 · November 10, 2021, 3:40pm

Subramaniyam · February 3, 2022, 9:51pm

Can any one here explain why cash flow is so low for infra companies. In HG INFRA you can see cash flow from operations is not good as compared to declared profits

Subhendu_Pattnaik · March 27, 2022, 6:36pm

I have tried to briefly analyse the fundamentals of the company and its business landscape and created a short video - HG Infra Engineering share analysis. Hope you find this video helpful. Would appreciate your feedback.

Subhendu_Pattnaik · March 27, 2022, 6:39pm

These are capital intensive companies. And because of ongoing projects which need capital and if you see the overall working capital days are high too, so net cash flow is small from operating activities.

nish_shah161 · August 2, 2022, 1:08pm

Hello folks,

Any views on corporate governance quality at Ashoka Buildcon or KNR constructions?

Thanks in advance

akhidsabak · October 27, 2022, 5:04pm

The OB for HG infra engineering looks impressive. Did anyone take heed to the last concall? Is there any red flags that I’m missing out

Nitya_Shah · December 22, 2022, 12:09pm

H.G. Infra Engineering Ltd(Initiating Coverage).pdf (1.2 MB)
Initiating coverage on HG Infra

nandan_ganatra · December 30, 2022, 2:00pm

6726b900-9a92-4f6b-a1d9-a0021d054c4f.pdf (1.7 MB)

#HGINFRA

New order from Delhi Metro. First ever.

Company is diversifying it’s business vertical. Earlier it was only a road player.

One of the best balancesheet amongst the infra players.

Way to go! Long growth ahead.

Disc: Invested since 2 years, biased

nandan_ganatra · February 8, 2023, 3:16pm

Today two infra companies posted results. And they were blockbusters.

HGINFRA
Consistent performance, as always!

Revenue 1189 Cr. Vs 960 Cr YoY
Highest ever PAT 130 Cr. Vs 105 Cr. YoY
Stable margis of 16.7%
EPS of 20 vs 15.4 YoY

NCC

Great improvement allround!

Revenue of 3903 cr. Vs 3032 Cr.
PAT of 157 Cr. Vs 76 Cr. YoY
EPS of 2.53 Vs 1.25 YoY

Both companies are trading at single digit PE with excellent balancesheet control.

I believe that Infra companies ( who has good balancesheet ) will do well this year, as goverment is highly focused on infra growth of the country.

Disc: Invested in both HGINFRA & NCC. My views are biased.

james_kerala · February 20, 2023, 1:41am

Why Ashoka buildcon languishing though it has profit and sales growth over the years.

This came up in my screener for companies trading cheap, but have topline and bottom line growth over 5 year period.

It is trading at very low multiple. Unforruntely, i Do not have much in-depth understanding of construction players.

Disc: Not invested

nandan_ganatra · February 26, 2023, 8:25am

Googled about it ( Ashoka ) & came across some articles of bribery, IT raid, Political involvement etc.

Didnt deepdive into it. However, generally such news may have kept company at supressed valuations.

There are lot of options in infra space with relatively good corporate governance.

Disc: Not invested, just sharing for info.

Nitya_Shah · February 27, 2023, 8:37am

Dhruv Consultancy Services can be a good indirect play on roads through infra consulting

Disc - holding and recommended
Dhruv Consultancy Services Ltd (DCSL) - IC (changes made).pdf (1.5 MB)

joinjp2003 · September 1, 2023, 4:55pm

Hi Nitya, i was going through dhruv consultancy. I note it has 43 crore of unbilled revenue vs. 80 crores revenue. Any color on it?

Lavanya_Tomar · September 1, 2023, 11:48pm

joinjp2003 · September 4, 2023, 4:15am

Nitya thanks for your comments. Please see below management highlighiting that they are working on POC (proof of completion) method.

Another point is they mentioned unbilled revenue is mainly from IHCML and DPR project. However, both of these projects are only 30% of revenues while unbilled revenue is over 50% of revenues. Also if i add receivables then over 60% of revenue is in receivables and unbilled revenues.

Please help provide color on same.

Thanks in advance.

santoshj · August 17, 2024, 8:52am

Ashoka Buildcon Q1 FY25 concall:

Poor connectivity during concall. MD was travelling during the concall. Maybe he needs to take investors seriously.

Expecting road orders (national level) of ~3700 km amounting to ~Rs. 93000 cr. Ashoka will bid for ~2400 km (Rs. 78000 cr). Major inflows should come in Q3 / Q4.

PAT margin will be in range of 8 - 10% by H2.

Revenue guidance for FY25: 15 - 20% growth; for FY26 targeting 20% growth

Order inflow guidance: addition of 10000 - 12000k during FY25. Currently, company is having 1x order/ sales. This is low. Ideally this should be 2.5 / 3x. However, new orders from NHAI was very low over last 1 year. This should revive now that the elections are over.

Getting into EPC for water projects. Currently working on 1 project. Hired new person to lead this vertical. Margin will be in range of current EPC projects (8 - 10%). Slowly this vertical will be 18-20% of business few years down the line.

International business is currently focusing on 6 countries. 2nd generation is focusing on international business development. This will work independent of India operations. Over the next 2-3 yrs, they should be contributing 20% of revenue. EBIDTA margin from international business is in line with India business (may be 1-2% more)

Asset monetization: Sale of 5 BOT & 11 HAM projects are in advance stage of signing SHA. Should be announced soon.

working capital loan in standalone entity will be ~Rs. 1200 Crs. (increased due to increase in business)

In HAM projects, Rs. 120 Cr equity is pending to be infused, to be done in FY25 itself (so far infused Rs. 919 Cr)

Capex of Rs. 100 - 110 Cr for FY25, of this Rs. 10 Cr done during Q1.

I have not mentioned many data points discussed in concall as the same are available in investors presentation

For power T&D, we quality for projects upto 300 kV. Can’t bid for higher voltages.

Depreciation: existing depreciation should be ~Rs. 20 Cr / quarter. For capex done during current year, next year depreciation will be additional 20-25 Cr.

santoshj · August 30, 2024, 9:20am

KNR Construction
Q1 FY25 concall highlights:

Company has total order book of Rs. 6122 cr. They plan to execute the same in next 1.5 yrs. I.e. Rs. 4000 cr revenue in next 1 yr.

FY24 sales was Rs. 4429 cr. This means negligible growth in FY25.

Targeting new orders of 6000 - 8000 cr by FY25 end.

Waiting for NHAI to start ordering. Have order pipeline in Kerala & North-east. Keen to work with Maharashtra MSRDC but since they don’t qualify directly, JV with Patel Infra. have placed bid for Metro with JV partner NCC.

Planning to participate for irrigation projects in MP, Chhattisgarh and also under Jal Shakti Mission projects. Telangana govt also coming up with irrigation project.

Examining mining contracts too. Working on JV.

So far have bidded (tendor pending) for 1-2 projects only. Hoping for new projects to be offered for bidding.

2nd quarter will be disappointing due to rains. 3rd and 4th quarter will be good. Company aiming to touch FY24 sales in FY25 too. So definitely not gonna grow revenue over FY24. (For irrigation segment, targeting revenue of Rs. 200 - Rs. 250 cr for FY25 full year)

FY26 & FY27 could see limited growth as getting order take time and then starting executing is also time consuming.

They are largely into subcontracting. Main developer gets the contract from authority and subcontract the manufacturing part to KNR. In Joint bidding too, they look after EPC. However for some HAM projects, they do all on their own.

Targeting Rs. 1200 cr orders from Andhra Pradesh during current year.

Targeting overall EBIDTA margin of 15-16% for FY25 and FY26.

Appointment Date for 2 projects (KNR being lowest bidder) is delayed amounting to Rs. 1200 cr. Delay due to land acquisition. in 1 project 82% acquired, in another project 70% acquired. Should get AD by Sept-end or Oct.

Capex of Rs. 10 cr during Q1. Might do 80 - 100 cr during rest of the year.

looking to monetize 4 assets by Sept-25 to keep business asset-light. Looking for 1 buyer to take all 4 assets.

KNR has net profit margin on ~17%. Ashoka has ~8-10%. Ashoka has use debt (D/E 2.6). KNR D/E is 0.4.