Any current/future new fundraising through debt or equity?

The company has recently issued a small unsecured NCD of Rs. 10 Crores at a high cost (18%) for very short-term capital needs to fill certain tenders requiring large EMDs. This debt is expected to be extinguished quickly. There is no plan to take significant high-cost debt; the NCD is a specific short-term arrangement. For the real estate business, the strategy involves joint ventures or redevelopment, which does not require land funding or significant debt. Construction finance will be limited and project-specific, at reasonable rates, and short-term. The company is actively seeking to

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

Vascon Engineers Limited did not specifically mention any major current or future capex or large-scale capital investment during the Q3 FY2023 call. The company is focusing on expanding its real estate projects cautiously, primarily through joint ventures and redevelopment projects, thus avoiding large capital outlays for land acquisition. Any borrowing for real estate is limited to small amounts for construction finance and marketing expenses, which are project-specific and short-term. There is no plan to hold land on its books or fund land acquisition heavily through equity or debt. The comp

Future growth expectations in sales/revenue/volumes?

Over the next four years, Vascon expects to achieve more than Rs. 1,000 Crores in real estate revenue, averaging Rs. 250 Crores per year. Real estate topline breakeven is at Rs. 100 Crores, with profitability expected above Rs. 200 Crores annually. The company targets 20% growth in EPC segment next year, aiming to grow order book beyond Rs. 2,000 Crores. EPC revenue growth expected from about Rs. 600 Crores this year, with potential to increase steadily. Real estate growth is cautious, focusing on 4-5 new projects over next 3-4 years with revenue recognition lag. GMP and EPC divisions expected

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

Over the next four years, Vascon expects real estate revenue to average Rs. 250-300 Crores per year, potentially generating healthy PBT (~15%) once annual topline crosses Rs. 200 Crores. EPC business aims to maintain 20% growth year-on-year, targeting Rs. 600 Crores+ revenue this year and a sustained run-rate with an order book of Rs. ~1,800-2,000 Crores. EPC gross margins goal is 15%, translating to 9-10% PBT; real estate targets 25% gross profit translating to 15% PBT in the medium term. The company aims to achieve net debt close to zero, improving EBITDA margins and profitability. M

Current/ Expected Orderbook/ Pending Orders?

As of December 31, 2022, the total EPC order book stands at Rs. 1,625 Crores, providing visibility for the next 2-3 years. Of this, Rs. 1,321 Crores are external EPC orders; Rs. 300 Crores are internal orders. Around 74% of the order book comprises government projects, ensuring faster execution and steady cash flows. Current Bank Guarantee (BG) limit is Rs. 180 Crores, with Rs. 25 Crores unutilized. Due to BG limit constraints, bidding has been cautious, but the company expects to bag Rs. 500 - Rs. 600 Crores worth of new orders in the next 2-3 months. Target is to start next year with Rs. 1,8

Vascon EngineersQ3 FY23Realty

Vascon Engineers Q3 FY23 Earnings Call Analysis

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

Price: ₹32.6P/E: 28.3Market Cap: ₹805 CrSector: Realty

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

Over the next four years, Vascon expects to achieve more than Rs. 1,000 Crores in real estate revenue, averaging Rs. 250 Crores per year.
Real estate topline breakeven is at Rs. 100 Crores, with profitability expected above Rs. 200 Crores annually.
The company targets 20% growth in EPC segment next year, aiming to grow order book beyond Rs. 2,000 Crores.
EPC revenue growth expected from about Rs. 600 Crores this year, with potential to increase steadily.
Real estate growth is cautious, focusing on 4-5 new projects over next 3-4 years with revenue recognition lag.
GMP and EPC divisions expected to grow at about 20% annually as well.
Consolidated revenue projected to grow from approx. Rs. 1,000 Crores this year to Rs. 1,200 Crores next year and upwards.
Real estate PBT margin expected to reach 15% when achieving Rs. 200-250 Crores topline.

Margin guidance

Category 3

Over the next four years, Vascon expects real estate revenue to average Rs. 250-300 Crores per year, potentially generating healthy PBT (~15%) once annual topline crosses Rs. 200 Crores.
EPC business aims to maintain 20% growth year-on-year, targeting Rs. 600 Crores+ revenue this year and a sustained run-rate with an order book of Rs. ~1,800-2,000 Crores.
EPC gross margins goal is 15%, translating to 9-10% PBT; real estate targets 25% gross profit translating to 15% PBT in the medium term.
The company aims to achieve net debt close to zero, improving EBITDA margins and profitability.
Management conservatively guides Rs. 1,000 Crores+ real estate revenue over four years, supporting overall consolidated growth beyond Rs. 1,200 Crores next year.
Profitability improvements expected from operational margins, with no reliance on one-off asset sales.

See what Vascon Engineers management said on margin guidance — free account, 30 seconds.

Fundraise plans

The company has recently issued a small unsecured NCD of Rs. 10 Crores at a high cost (18%) for very short-term capital needs to fill certain tenders requiring large EMDs. This debt is expected to be extinguished quickly.
There is no plan to take significant high-cost debt; the NCD is a specific short-term arrangement.
For the real estate business, the strategy involves joint ventures or redevelopment, which does not require land funding or significant debt. Construction finance will be limited and project-specific, at reasonable rates, and short-term.
The company is actively seeking to enhance its Bank Guarantee (BG) limits (currently Rs.180 Crores with Rs.25 Crores unutilized) to support bidding and growth but does not intend to raise large debt.
Overall focus remains on maintaining low debt, with net debt near zero as a goal to optimize profitability.
No mention of equity fundraising in the current call.

Order book

Yes

As of December 31, 2022, the total EPC order book stands at Rs. 1,625 Crores, providing visibility for the next 2-3 years.
Of this, Rs. 1,321 Crores are external EPC orders; Rs. 300 Crores are internal orders.
Around 74% of the order book comprises government projects, ensuring faster execution and steady cash flows.
Current Bank Guarantee (BG) limit is Rs. 180 Crores, with Rs. 25 Crores unutilized.
Due to BG limit constraints, bidding has been cautious, but the company expects to bag Rs. 500 - Rs. 600 Crores worth of new orders in the next 2-3 months.
Target is to start next year with Rs. 1,800 - Rs. 2,000 Crores order book to sustain growth.
Efforts are ongoing to enhance BG limits, which will enable more aggressive order booking beyond Rs. 2,000 Crores in the future.

See what Vascon Engineers management said on order book — free account, 30 seconds.

Capex plans

Yes

Vascon Engineers Limited did not specifically mention any major current or future capex or large-scale capital investment during the Q3 FY2023 call.
The company is focusing on expanding its real estate projects cautiously, primarily through joint ventures and redevelopment projects, thus avoiding large capital outlays for land acquisition.
Any borrowing for real estate is limited to small amounts for construction finance and marketing expenses, which are project-specific and short-term.
There is no plan to hold land on its books or fund land acquisition heavily through equity or debt.
The company intends to exit non-core assets such as GMP Technical Solutions at an appropriate valuation but no fresh strategic investments were disclosed.
Focus remains on utilizing existing capacity and optimizing operations with minimal additional capital expenditure.

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