Dharan Infra-EPC LtdQ2 FY18Realty

Dharan Infra-EPC Ltd

Q2 FY18 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Karda Constructions anticipates a minimum real estate market growth of 10-15% per annum in Nasik.
→The company expects sales momentum to continue, already having booked 75 units in Q1 FY19.
→Upcoming festive seasons like Ganesh Chaturthi, Diwali, and Navaratri are expected to drive further sales growth.
→Expansion plans focus on areas connected to Nasik, such as Igatpuri, Manmad, Aurangabad, Dhule, Mumbai, and Pune.
→Approximately Rs. 625 crore worth of construction area is under progress with Rs. 300 crore sales yet to be booked.
→About 60% of units under construction are completed; projects expected to be finished within 2 to 2.5 years.
→Introduction of RERA is enhancing customer confidence, aiding additional bookings.
→New projects will follow Ind AS 115 accounting, with minor revenue reversals (~Rs. 15-20 crore) expected in FY19 from completed WIP projects.

Margin guidance

Category 3

→Karda Constructions expects growth in the Nashik real estate market at a minimum of 10-15% per annum.
→The company plans to expand primarily in and around Nashik, including areas like Igatpuri, Manmad, Aurangabad, Dhule, Mumbai, and Pune.
→EBITDA margins are expected to remain around 30-32%.
→Revenue is poised to increase with upcoming festive seasons (Ganesh Chaturthi, Diwali, Navaratri) driving sales momentum.
→Implementation of RERA is positive, boosting customer confidence and leading to additional bookings.
→The company has recognized revenue reversals (~₹15-20 crore) in FY2019 due to completion certificate timelines but will comply with Ind AS 115 for ongoing projects, potentially stabilizing future revenue recognition.
→Continued focus on marketing and sales efforts is expected to support earnings growth going forward.

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Fundraise plans

The transcript provided does not mention any current or future plans for fundraising through debt or equity by Karda Constructions Limited. Key points relevant to financials include: - The company has been able to reduce its financial cost significantly (Rs. 4.04 crore in Q1FY19 vs Rs. 19.71 crore for the full previous year). - No specific discussion on raising new funds through debt or equity during the call. - Focus is on project completion, revenue recognition changes under Ind AS 115, and sales growth. - Expansion plans are focused around Nasik and nearby areas but no mention of funding requirements for expansion or capital raise. Thus, based on the available information, there is no indication of any current or future fundraising through debt or equity at this time.

Order book

→Rs. 625 crore construction area is currently under construction.
→Total sales yet to be booked from these projects amount to Rs. 300 crore.
→Approximately 60% units are completed.
→Completion timeline for ongoing projects is around 2 to 2.5 years.
→Majority of projects have received completion certificates.
→Only 1-2 projects remain under construction Work In Progress (WIP) as of 31st March 2018.
→Around Rs. 15-20 crore of revenue from under-construction projects is expected to be reversed in financial year 2019 due to Ind AS 115 compliance on project revenue recognition.

Capex plans

Yes

→Karda Constructions Limited is planning near-future expansion focused close to Nasik.
→Expansion areas include connected regions such as Igatpuri, Manmad, and vicinity towards Aurangabad, Dhule, Mumbai, and Pune.
→No specific mention of exact capital expenditure or strategic investment amounts, but the focus is on geographical growth around Nasik.
→The company is continuing with ongoing projects, with Rs. 625 crore construction area under progress and Rs. 300 crore sales yet to be booked.
→No direct mention of future large-scale capital expenditure or new strategic investments beyond expansion plans and ongoing projects in the transcript.

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