RPP Infra Projects LtdQ3 FY17Construction

RPP Infra Projects Ltd

Q3 FY17 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→FY2018 revenue guidance: Rs. 475 Crores to Rs. 500 Crores
→FY2019 revenue expectation: Around Rs. 650 Crores
→FY2020 target: Rs. 1000 Crores
→Order book outlook: Current order book of Rs. 1044 Crores with 2-2.5 years visibility
→Plans to bid for higher ticket size projects up to Rs. 200-250 Crores independently and above Rs. 300 Crores through JVs
→Opportunities driven by government focus on infrastructure, especially in Tamil Nadu, with projects worth Rs. 1 lakh Crores in pipeline
→Expecting order book to grow to Rs. 3000 Crores by 2020 if current momentum continues
→Entry into new geographies like Karnataka, Madhya Pradesh, Sri Lanka, and Bangladesh supports diversification and growth

Margin guidance

Category 3

Future growth expectations for R.P.P. Infra Projects Limited as per the discussion: - Revenues expected to grow from Rs.475-500 Crores in FY2018 to Rs.650 Crores in FY2019 and target Rs.1000 Crores by FY2020. - Order book anticipated to increase to Rs.3000 Crores by 2020 if current growth momentum continues. - EBITDA margins expected to be maintained between 13.5% to 14.5%, with potential for improvement if payment cycles improve and procurement costs reduce. - Profit after tax (PAT) showed 11% YoY growth in Q2 FY2018 and 22% in H1 FY2018, indicating steady earnings growth. - With government focus on infrastructure and rural development, significant order inflows and execution growth are anticipated. - Entry into higher ticket size projects (up to Rs.250 Crores independently and Rs.480 Crores via JV) supports scaling profitability. - Working capital cycle improving, facilitating smoother operations and potentially better margins.

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Fundraise plans

Yes

→For the current order book size, R.P.P. Infra Projects has already diluted equity in the previous quarter.
→The company has received good support from banks, with enhancements in non-fund based limits.
→Projects funded by NABARD or World Bank include mobilization advances, aiding cash flow management.
→Before March 31, 2017, bank funding was difficult, but post-May 2017, banks have been very supportive and have provided enhancements.
→Working capital is being managed effectively through bank support and advances.
→There is no explicit mention of planned new fundraising through debt or equity in the near future during the call.

Order book

Yes

→Current order book stands at approximately Rs.1,044 Crores as of November 2017.
→Order inflow in H1 FY2018 was around Rs.350 Crores.
→L1 orders amount to around Rs.106 Crores.
→The company expects to increase the order book to about Rs.1,200 Crores by the end of FY2018.
→Actively bidding for higher ticket size projects in the range of Rs.150 Crores to Rs.300 Crores.
→Focus on rural EPC segments: water management (irrigation, canal lining, drinking water), infrastructure (roads, factory buildings), and buildings.
→Plans to bid for Rs.10,000 Crores out of the Rs.1 lakh Crores infrastructure spending in Tamil Nadu, expecting to secure around 2% (Rs.1,000 Crores).
→Company can independently bid up to Rs.130 Crores and participate in JVs for projects up to Rs.480 Crores.
→Diversifying geographically into Karnataka, Madhya Pradesh, Sri Lanka, and Bangladesh.

Capex plans

Yes

→The transcript does not explicitly mention any current or future capex or strategic investments by R.P.P. Infra Projects Limited.
→The focus is primarily on bidding for and executing higher ticket-size projects, especially in irrigation, waterline, road, affordable housing, and infrastructure sectors.
→The company has plans to expand geographic presence beyond Tamil Nadu to Karnataka, Madhya Pradesh, and other southern states.
→They aim to complete existing large projects (e.g., Rs.190 Crores TWAD Board project, Rs.140 Crores irrigation JV project), which will enable bidding for bigger projects (up to Rs.250-350 Crores) independently.
→Emphasis is on leveraging government infrastructure initiatives and increased order inflows rather than on direct capital investments.
→No specific details on new plant/equipment purchases or strategic joint ventures beyond existing JVs for bidding higher-value projects.

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