Gayatri Projects LtdQ2 FY20Construction

Gayatri Projects Ltd

Q2 FY20 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

0 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 3

→Gayatri Projects Ltd aims to grow its topline by 15-20% over the next two to three years.
→The company plans to maintain an order inflow target of Rs. 30-40 billion annually.
→With a strong EPC order book of approximately Rs. 12,000-13,000 crore, the company has visibility for the next 2-3 years.
→Execution and revenue for FY21 are expected to be similar to FY20, with significant execution pick-up anticipated from H2 FY21 onwards.
→The focus remains primarily on EPC road projects and expanding water segment projects, including irrigation and water supply, which are seeing gradual uptick.
→The order book's diversification geographically, with about 30% exposure to UP and Maharashtra, provides a stable growth foundation.

Category 3

→Gayatri Projects Ltd expects to maintain FY21 revenue at similar levels to FY20 despite Covid-related challenges.
→The company aims for EBITDA margins of at least 14-15%.
→Plans to achieve 15-20% topline growth over the next 2-3 years by winning new orders and maintaining a strong order book of ₹12,000-13,000 crores.
→Order inflow target for FY21 is ₹30-40 billion, focusing mainly on EPC road and water projects.
→Execution levels expected to return to pre-Covid normalcy by October 2020, boosting operating earnings.
→Strong EBITDA to free cash flow conversion and claims monetization expected to generate ₹400-600 crores cash over 8-12 months aimed at debt reduction.
→De-leveraging and balance sheet strengthening are strategic priorities, with a goal to be debt-free in the next 12-18 months.
→Overall, steady margin maintenance and controlled bidding strategy positioned for measured profit growth.

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→No indication of current or planned equity fundraising; the promoters currently hold a significant 45% stake and are focusing on shareholder value rather than increasing promoter holding.
→The company is comfortable with its current working capital and bank guarantee limits (~₹4400-4500 crores), which are revolving and allow rebidding on projects.
→The company is undergoing debt restructuring with banks, including signing an inter-creditor agreement (ICA) to reduce interest rates.
→They have availed moratoriums under RBI relief but are now up to date and expect to service loans comfortably.
→The management aims to reduce long-term debt over the next 12-18 months via cash flows and claims monetization, targeting a debt-free status in 2-3 years.
→No aggressive bidding is planned to increase order book with debt; they are maintaining disciplined bidding aligned with current financial strength.

→Gayatri Projects Ltd has a pure play EPC order book of approximately ₹12,600 crores (126+ billion INR).
→The order book provides a book-to-bill ratio of about 4 times, offering high growth visibility over the next three years.
→Geographically diversified, with about 30% exposure in Uttar Pradesh (UP) and Maharashtra.
→Road EPC segment constitutes over 60% of the order book.
→The company aims for order inflow of ₹3,000-4,000 crores (30-40 billion INR) in FY21.
→Currently participating in bidding for EPC road projects worth about ₹22,000 crores.
→Over the next 2-3 months, bidding opportunities (NHIDCL, MORTH, NHAI) exceed ₹20,000-30,000 crores.
→Has a comfortable working capital position with bank guarantee limits of ₹4,400-4,500 crores to rebid for new projects.

→The company is primarily focusing on being a pure EPC business, particularly in road and water projects.
→There is an emphasis on irrigation and water supply projects, with recent wins like a 1.4 billion rupees irrigation water supply project.
→No specific mention of new or large-scale capex/capital investments or strategic investments in the transcript.
→The management is concentrating on executing current order book projects and maintaining sustainable bidding to keep margins intact.
→Debt reduction and balance sheet strengthening are key strategic priorities rather than new capital investments.
→Expectation to monetize existing assets (like power assets) to reduce debt, rather than investing fresh capital.
→Focus is on growth through bidding in EPC projects, maintaining order inflows of INR 30-40 billion, and expanding within existing business segments rather than new capital expenditures.

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