AVP InfraconQ3 FY24Construction

AVP Infracon

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 1

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 1

→FY25 turnover target: INR 250 crores, with confidence in achieving this; anything above is a bonus.
→FY26 turnover target: INR 500 crores, backed by a strong order book expected to reach INR 750-1000 crores.
→Order book pipeline: Currently around INR 600-700 crores in bids, primarily EPC projects.
→Growth drivers: Expansion into new geographies like Karnataka, Hyderabad, Madhya Pradesh, Telangana, Maharashtra, and Uttar Pradesh.
→Solar EPC segment: Targeting revenue generation starting FY26, with potential early orders in FY25.
→Margins: Sustainable net margins of around 13% expected with cost control and escalation clauses in contracts.
→Strategic investments and joint ventures planned to boost capabilities and support expansion.
→Focus on improving debtor days from current ~81 to 60 days by March 2025 to improve working capital.

Category 3

→Targeting INR250 crores turnover in FY25 and INR500 crores in FY26, both achievable with any excess considered bonus.
→Net profit margins expected to be maintained around 13%.
→Earnings per share (EPS) saw a 26.39% YoY increase to INR5.11; growth momentum expected to continue.
→75% YoY growth in H1 FY25 net profit attributed to increased turnover and decreased interest costs; similar growth is expected going forward.
→Expansion into new states (Karnataka, Telangana, Madhya Pradesh, Andhra Pradesh) and strategic investments support sustainable growth.
→Order book anticipated to grow to INR750 crores in FY25 and INR1,000 crores in FY26, supporting higher revenues and profits.
→Solar EPC segment targeted for revenue addition next financial year, offering new growth avenues.
→Margins are expected to sustain at current levels due to disciplined cost management and escalation clauses in contracts.

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→No immediate plans for equity dilution or preferential allotment; the company recently completed its IPO about six months ago and intends to complete a year before considering additional equity fundraising.
→The company has increased short-term borrowings mainly due to bill discounting/co-factoring to manage receivables with typical 60-90 days collection periods.
→No concern expressed about long-term loans; short-term loans provide liquidity for current growth.
→The company is focused on sustainable growth leveraging existing capital and credit facilities, with no current plans for fresh capital infusion via debt or equity.
→Non-fund based limits stand at INR55 crores with around INR20 crores utilized, allowing bidding capacity without immediate need for additional financing.

Yes

→Current unexecuted order book is approximately INR 250+ crores, consisting of running projects (Page 5).
→Received a new order of INR 17 crores recently, not yet included in the order book (Page 5).
→The company aims for INR 400-500 crores order book for the current financial year, confident of covering the gap in H2 (Page 11).
→Bidding pipeline is around INR 600-700 crores (Page 13).
→Targeting fresh orders of INR 750 crores by FY25, including bids across Tamil Nadu, Karnataka, Hyderabad, and Madhya Pradesh (Page 13).
→The order book to billing ratio is maintained around 1:2 historically (Page 9).
→No orders currently from private clients; 100% order book is from government projects (Page 10).

Yes

→AVP Infracon Limited has made a strategic investment by acquiring a 90% stake in Kanthan Blue Metals with a capital contribution of approximately INR 3.6 crores.
→The investment aligns with their broader vision of sustainable expansion and value creation.
→The company inaugurated its third ready-mix concrete plant in Dharapuram, Tirupur district (90% stake), to meet growing regional demand.
→No immediate plans for fresh capital dilution or preferential allotment post-IPO; any future capital raise will be planned after completing one year post-IPO.
→The company is exploring opportunities for joint ventures and strategic investments to strengthen capabilities further.
→Focus is on organic growth and expanding into new states with larger, complex projects rather than immediate large-scale capex announcements.

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