Any current/future new fundraising through debt or equity?

The company currently has working capital limits of INR 300 Crores (Q1 FY24) and expects to increase this to INR 400 Crores by the end of FY24. Debt reduction has been a focus, with gross debt down by INR 48 Crores over 24 months, though gross debt increased by INR 31 Crores this quarter due to new joint ventures and higher CC utilization. The company has borrowed from NBFCs (e.g., Prachay Capital) for unsecured loans at higher rates (around 3%-3.5% higher than bank borrowing) to fund joint ventures where bank financing is unavailable. On equity/fundraising, talks with merchant bankers for a s

Any current/future capex/capital investment/strategic investment?

The company is actively seeking strategic partners or suitors for divestment but has not accepted any offers yet, aiming for an equity value upwards of INR 200-250 Crores. Merchant bankers are exploring options like SME or IPO for monetization; however, the focus is on ensuring Vascon can liquidate its 85% stake effectively. Plans include potentially using unsecured loans to fund joint ventures (JV) to enhance the real estate portfolio. Vascon prefers partnering with equity investors in real estate projects rather than deploying its own equity or borrowing significantly. The company has ongoin

Future growth expectations in sales/revenue/volumes?

EPC business targets revenue growth to INR 1,000 Crores by FY25, up from current levels (Page 13, 12). Order book over 3x FY23 revenue, providing strong visibility of growth for 2-3 years (Page 3). Management expects 10-15% growth in EPC revenues for FY24 (Page 8). Real estate revenues expected to be modest in FY24 as most projects are completed, but significant growth anticipated from FY25 onwards, targeting INR 150-200 Crores and steady growth from FY26 (Pages 15, 12). Real estate gross margins projected around 25-30%, EBITDA around 15-18% (Page 13). Management confident of consistent perfor

Future growth expectations in earnings/operating earnings/profits/EPS?

EPC business targeting revenue of INR 1,000 Crores by FY25 with 9%-10% PBT margin; gross profit at 13%-15%. Real estate revenues expected to reach INR 150-200 Crores in FY25 with EBITDA margins around 15%-18%. FY24 EPC growth projected at 10%-15% YoY; Q3 and Q4 expected stronger due to new projects. From FY26 onwards, real estate revenues expected to grow steadily beyond FY25 levels. Tax benefits to end this year; from next quarter onward, expect 25% tax on profits impacting PAT. Improved credit rating (BBB+ long-term, A2 short-term) and increased BG limits to support order book grow

Current/ Expected Orderbook/ Pending Orders?

As of Q1 FY24, total order book stands at INR 1,980 Crores (3x FY23 revenue). External EPC orders are around INR 1,600 Crores; internal orders approx. INR 383 Crores. About 78% of order book is government projects, ensuring faster execution and steady cash flows. Company aims to increase EPC order book to around INR 3,000 Crores to target INR 1,000 Crores EPC revenue in FY25. Management expects to bag over INR 1,500 Crores of new orders in the next 2-3 months. Current Bank Guarantee (BG) limits are around INR 300 Crores, with plans to increase to INR 400 Crores by year-end to support order boo

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Vascon Engineers LtdQ2 FY23Realty

Vascon Engineers Ltd Q2 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹36P/E: 16.2Market Cap: ₹791 CrSector: Realty

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Capex

Yes

2 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→EPC business targets revenue growth to INR 1,000 Crores by FY25, up from current levels (Page 13, 12).
→Order book over 3x FY23 revenue, providing strong visibility of growth for 2-3 years (Page 3).
→Management expects 10-15% growth in EPC revenues for FY24 (Page 8).
→Real estate revenues expected to be modest in FY24 as most projects are completed, but significant growth anticipated from FY25 onwards, targeting INR 150-200 Crores and steady growth from FY26 (Pages 15, 12).
→Real estate gross margins projected around 25-30%, EBITDA around 15-18% (Page 13).
→Management confident of consistent performance and order inflows to support growth over next 7-10 quarters (Page 17).
→Increased BG and credit limits to support larger order bookings, targeting INR 1,500+ Crores soon (Page 5, 8).

Margin guidance

Category 3

→EPC business targeting revenue of INR 1,000 Crores by FY25 with 9%-10% PBT margin; gross profit at 13%-15%.
→Real estate revenues expected to reach INR 150-200 Crores in FY25 with EBITDA margins around 15%-18%.
→FY24 EPC growth projected at 10%-15% YoY; Q3 and Q4 expected stronger due to new projects.
→From FY26 onwards, real estate revenues expected to grow steadily beyond FY25 levels.
→Tax benefits to end this year; from next quarter onward, expect 25% tax on profits impacting PAT.
→Improved credit rating (BBB+ long-term, A2 short-term) and increased BG limits to support order book growth and execution.
→Overall, company expects continued growth in revenue, profitability, and operating efficiency driven by EPC and real estate segments.

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Fundraise plans

Yes

→The company currently has working capital limits of INR 300 Crores (Q1 FY24) and expects to increase this to INR 400 Crores by the end of FY24.
→Debt reduction has been a focus, with gross debt down by INR 48 Crores over 24 months, though gross debt increased by INR 31 Crores this quarter due to new joint ventures and higher CC utilization.
→The company has borrowed from NBFCs (e.g., Prachay Capital) for unsecured loans at higher rates (around 3%-3.5% higher than bank borrowing) to fund joint ventures where bank financing is unavailable.
→On equity/fundraising, talks with merchant bankers for a strategic investor or an IPO/SME listing are ongoing to monetize certain stakes, but no firm deals have been closed as current offers were unsatisfactory.
→The priority is for Vascon to liquidate its 80-85% equity stake in certain projects to realize significant equity value (upwards of INR 200-250 Crores).
→No immediate fundraising finalized; efforts are continuous for suitable offers and funding arrangements.

Order book

→As of Q1 FY24, total order book stands at INR 1,980 Crores (3x FY23 revenue).
→External EPC orders are around INR 1,600 Crores; internal orders approx. INR 383 Crores.
→About 78% of order book is government projects, ensuring faster execution and steady cash flows.
→Company aims to increase EPC order book to around INR 3,000 Crores to target INR 1,000 Crores EPC revenue in FY25.
→Management expects to bag over INR 1,500 Crores of new orders in the next 2-3 months.
→Current Bank Guarantee (BG) limits are around INR 300 Crores, with plans to increase to INR 400 Crores by year-end to support order book expansion.
→Additional INR 40 Crores BG limit recently added, enabling capacity to bid for INR 1,000+ Crores in orders.
→Internal EPC orders from real estate projects (like Santacruz, Kalyani Nagar, Baner-Pashan) expected to add approx. INR 500 Crores to order book within 8-12 months.

Capex plans

Yes

→The company is actively seeking strategic partners or suitors for divestment but has not accepted any offers yet, aiming for an equity value upwards of INR 200-250 Crores.
→Merchant bankers are exploring options like SME or IPO for monetization; however, the focus is on ensuring Vascon can liquidate its 85% stake effectively.
→Plans include potentially using unsecured loans to fund joint ventures (JV) to enhance the real estate portfolio.
→Vascon prefers partnering with equity investors in real estate projects rather than deploying its own equity or borrowing significantly.
→The company has ongoing and upcoming real estate projects, with several launches expected, and completion targets indicating steady revenue from FY25 onward.
→No large-scale land acquisitions are planned currently; any future acquisitions would be with capital partners to share risk and capital allocation.

How does Vascon Engineers Ltd rank vs peers in Realty?

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