Vascon Engineers Ltd Q2 FY23 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
N/A
Order
Yes
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- EPC revenue target for FY23 is around Rs 600 crores, with a planned 20-30% growth in FY24 to Rs 750 crores or more.
- Order book provides strong visibility of EPC revenue growth over the next 2-3 years, with a target to maintain or grow order book around Rs 1,500-2,400 crores.
- Real estate launches: Five projects expected to be launched within 12-18 months, targeting Rs 2,400 crores in sales value potential.
- Real estate revenue recognition expected mainly in FY25 and FY26 due to project completion and OC timelines, with cash flows starting earlier.
- Revenue from Ajanta project (Rs 230 crores) to be executed over next three years, with gross profits of ~35%.
- Real estate and EPC expected to contribute jointly to growth over the medium term.
- GMP expected to stabilize and see better performance over the next 4-6 quarters, with exit planned post stabilization and improved valuation.
See what Vascon Engineers Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no explicit mention of any current or planned new fundraising through debt or equity in the transcript.
- The company has focused on reducing its gross debt by Rs 59 crores over the past 18 months, bringing net debt down to Rs 41 crores as of September 30, 2022.
- Debt-to-equity ratio improved to 0.19x from 0.30x, and credit ratings were upgraded (Acuite BBB stable and CRISIL BBB stable).
- The company emphasizes liquidity management through monetization of non-core assets (e.g., Aurangabad land parcel).
- No direct plans were stated regarding raising fresh capital via equity or debt; the focus is on improving cash flow, reducing costly debt, and stabilizing businesses before considering divestments.
- Future divestment of GMP Technical Solutions is expected in 1-2 years when valuation is more favorable, but not immediate fundraising.
See what Vascon Engineers Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Vascon Engineers plans investments to grow its EPC business beyond the current Rs 1,000 crore execution capacity in about three years, requiring additional assets, capex, and senior staffing.
- The company is focusing on execution of EPC projects and real estate projects via joint ventures, avoiding large investments in land parcels.
- No immediate divestment plans for GMP Technical Solutions; expected to stabilize over the next 1-2 years before valuation and potential exit.
- They are working on launching several real estate projects and expect to share cash flow projections and cost structures soon.
- No specific large capex announcements were made during the call, but emphasis on steady growth and infrastructure expansion in EPC and monetization of non-core assets like Aurangabad land to support liquidity and reduce debt.
Track Vascon Engineers Ltd — get its next earnings analysis in your feed
Margin guidance
Category 3- EPC business targets Rs 600 crores revenue for FY23 with 20-30% growth to Rs 750 crores in FY24.
- Expectation of EBITDA margin over 10% in EPC and PAT moving towards 9-10% in FY24.
- Real estate revenue recognition will mainly occur in FY25 and FY26, with cash flows starting earlier.
- Real estate projects pipeline valued over Rs 2,000 crores expected to execute over next 4 years.
- Ajanta project Rs 230 crores to be launched over next three years, with 35%+ gross profit margin.
- Overall order book of Rs 1,800 crores (74% government projects) provides visibility of steady EPC revenue growth for 2-3 years.
- Company plans to stabilize and exit GMP for better valuation to focus on core strengths.
- Dividend payout under board consideration after next two quarters based on cash flow and investments.
Order book
Yes- As of September 30, 2022, the total EPC order book stands at about Rs 1,800 crores (Rs 1,500 crores external orders and balance internal).
- The EPC order book forms approximately 3.9 times the FY '22 EPC revenue, providing strong visibility for revenue growth over the next 2-3 years.
- Current EPC execution run rate is Rs 156 crores for the quarter with expectations of improved performance in the next two quarters.
- EPC revenue target for FY '23 is around Rs 600 crores.
- Expecting 20-30% growth in EPC revenue next year, i.e., Rs 750 crores and upward.
- Company aims to maintain or slightly increase the order book by the end of FY '23.
- Management targets order bookings of Rs 2,400 crores by next financial year.
- EPC execution bandwidth currently supports Rs 1,000 crore annually; further growth beyond will require investments.
How does Vascon Engineers Ltd rank vs peers in Realty?
Pro featureHow does Vascon Engineers Ltd rank in Realty?
Compare Vascon Engineers Ltd against every Realty company (Q2 FY23) on revenue, margins and earnings-call signals.
Continue your research
What Vascon Engineers Ltd's management said in earlier quarters
Others in Realty this season
- Nexus Select (Q1 FY27)
Consumption growth was robust at 17% year-on-year in Q1 FY27, with positive momentum continuing into July. Key concall takeaways from Nexus Select Trust's Q1…
- Omaxe (Q4 FY16)
2,300 crores in NCR and other regions. Key concall takeaways from Omaxe Ltd's Q4 FY16 earnings call — and how it ranks against sector peers.
- Godrej Propert. (Q1 FY27)
Business development reached INR42,000 crores last year, providing a robust pipeline for future sales. Key concall takeaways from Godrej Propert.'s Q1 FY27…
- Nexus Select (Q4 FY26)
Consumption growth assumption for FY27 is around 8%, reflecting sustained demand. Key concall takeaways from Nexus Select Trust's Q4 FY26 earnings call — and…