ITD Cementation: Q2-25 Earnings Call Highlights
Strong performance in H1-25. Confident about growth, driven by healthy order pipeline & benefits of Adani Group acquisition. Focus on core competencies while exploring new areas within infra sector
itdcem.co.in | NSE: ITDCEM
1. Key Takeaways
1.1 TLDR
ITD Cementation reported strong financial and operational performance in Q2 and H1 FY25.
While EBITDA margins were slightly lower due to project mix and monsoon impact, the management maintained its positive outlook and provided strong guidance for revenue and margins.
Management is confident in the company's growth trajectory, driven by a healthy order pipeline and the potential benefits of the Adani Group acquisition.
The focus remains on leveraging core competencies while exploring new growth areas within the infrastructure sector.
1.2 Operational Highlights:
Financials:
Q2 FY25: Total income INR 1,991 crore (24% YoY growth), EBITDA INR 204 crore (18% YoY growth), PAT INR 72 crore (34% YoY growth).
H1 FY25: Total income INR 4,372 crore (27% YoY growth), EBITDA INR 442 crore (27% YoY growth), PAT INR 172 crore (63% YoY growth).
Balance Sheet: Remains strong with low leverage (Debt/Equity ratio ~0.4x).
Operational Performance:
Impact of Monsoon: "This quarter, revenue is a little bit affected due to monsoon....So that has affected a little bit."
Political Issues in Bangladesh: "In general, Bangladesh, we are working for one transmission line. And because of the political scenario, we could not do much during last quarter."
Project Progress: Ganga Expressway (50% complete), Chennai Metro (40%-41% complete), Bangalore Underground Metro (tunnel completed), Project Varsha (10% complete).
Order Book and Growth:
Current Order Book: Around INR 18,000 crore.
Order Inflow: Orders worth INR 3,850 crore secured in the last six months and October.
Pipeline: INR 30,000 crore worth of projects in various stages (INR 12,000 - 13,000 crore bids already submitted).
We are not at all worried about that. We still maintain that 20%-25% growth is possible.
Revenue Guidance: 20% growth expected for FY25, potentially tapering to 15% in subsequent years.
Impact of Adani Group Acquisition:
Client Perception: Management believes there will be no negative impact on client relationships as ITD Cementation will remain an independent listed company.
Increased Opportunities: Expectation of more work from Adani Group and potential for international expansion leveraging Adani's global presence.
"Maybe we will do a little bit of more job for Adani... And maybe we'll be getting some more jobs from Adani."
"Definitely, it will impact positively... they have got plenty of work, and they have got their presence all over the world. So those things will help us to do more jobs abroad..."
Strategic Focus:
Core Strengths: Maintaining focus on marine and underground construction expertise.
New Segments: Exploring opportunities in data centers, green energy, renewable energy, high-speed rail.
Margins:
Guidance: Maintaining 10%+ EBITDA margin despite short-term pressures.
Manpower:
Challenges exist for labor-intensive projects, but management doesn't anticipate significant impact.
1.3 Key Themes:
Financial Performance: Strong revenue growth (24% YoY) driven by project execution. EBITDA margins slightly lower due to monsoon impact and project mix, but guidance remains at 10%+. Working capital increased due to new projects and payment cycles.
Operational Performance: Steady progress on key projects like Ganga Expressway and Chennai Metro. Challenges in Bangladesh due to political situation now resolved.
Order Book and Outlook: Order book currently lower than previous year due to faster project execution. Strong order pipeline of INR 30,000 crore with INR 12,000-13,000 crore bids already submitted. Expecting to secure INR 5,000-6,000 crore orders in H2 FY25.
Adani Acquisition: Positive outlook on the acquisition with potential for increased work from Adani and international expansion opportunities. Company will remain independent and continue to serve existing clients.
Strategic Focus: Maintaining focus on core competencies in marine and underground construction. Exploring new opportunities in data centers, green energy, and high-speed rail.
1.4 Key Quotes
On order book and growth: "Sometimes those statistics are misleading...The execution rate has increased... Whatever job we get now, we do it fast."
On Adani acquisition impact: "Definitely, it will impact positively...They have plenty of work, and they have their presence all over the world."
On international market outlook: "I think the Middle East market has shown very good promises. A lot of things are happening there... the market is going up."
On exploring new segments: "We also can keep our eyes open for new segments like data center, green energy, renewable energy. There are many new types of structures that are going to come."
ITD Cementation India Limited Q2 FY25 Earnings Call FAQ
1. What were the key financial highlights for Q2 FY25?
ITD Cementation India Limited reported strong financial results for Q2 FY25, with:
Total income: INR 1,991 crores, representing a 24% YoY growth.
EBITDA: INR 204 crores, an 18% YoY growth.
Profit after tax: INR 72 crores, a significant 34% YoY growth.
For the first half of FY25, the company achieved:
Total income: INR 4,372 crores, a 27% YoY growth.
EBITDA: INR 442 crores, a 27% YoY growth.
Profit after tax: INR 172 crores, an impressive 63% YoY growth.
The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.4x.
2. What were the key operational highlights for Q2 FY25?
Despite challenges posed by monsoon season and political issues in Bangladesh, ITD Cementation India Limited made significant operational progress. Key highlights include:
Ganga Expressway project: Achieved 50% progress and expects substantial completion by June-July 2025.
Chennai Metro project: All TBMs are operational, with substantial tunnel completion in certain sections and 40-41% overall progress.
Bangalore underground metro project: Tunnel work is complete, with finishing work in progress.
Project Varsha (Indian Navy project): Picking up well with around 10% progress.
Colombo overseas project: Progressing ahead of budget and targets.
3. What is the outlook for order inflow and revenue growth?
ITD Cementation India Limited has a strong order pipeline of around INR 30,000 crores, with INR 12,000-13,000 crores already bid on. The company aims to secure INR 10,000 crores worth of new orders in this fiscal year.
The management remains confident in achieving a 20%-25% revenue growth in FY25, with a potential tapering down to 15% in subsequent years as the base becomes larger.
4. How will the acquisition by Adani Group impact ITD Cementation India Limited?
The management anticipates a positive impact from the acquisition, expecting increased business opportunities, both domestically and internationally. Adani Group's vast network and project portfolio are expected to fuel ITD Cementation India Limited's growth in the coming years.
While the company will likely undertake more work for Adani Group, it will continue to operate as an independent listed entity and serve its existing clientele.
5. What are the key strategic priorities for ITD Cementation India Limited?
ITD Cementation India Limited will continue to focus on its core competencies, particularly in the marine sector. They aim to further strengthen their capabilities in this segment and leverage it to expand into other related areas.
The company also sees potential in infrastructure development projects, such as airports, buildings, and industrial structures. Additionally, they are exploring opportunities in emerging sectors like data centres and renewable energy.
6. What is the company's approach to managing working capital?
ITD Cementation India Limited experiences fluctuations in working capital requirements depending on the project mix and timing of payments. The recent increase is attributed to the nature of new projects and the typical payment cycle of government clients. The management actively manages working capital to ensure it remains under control and aligns with their plans.
7. How is ITD Cementation India Limited addressing manpower challenges in the industry?
The company leverages technology and high-tech machinery to mitigate manpower challenges in specialized areas like underground metro and marine projects. While acknowledging the difficulties in labor-intensive sectors like building construction, the management has implemented strategies to manage the situation effectively and minimize any potential impact on operations.
8. What are the capex plans for FY25 and FY26?
Following significant investments in the past two years, ITD Cementation India Limited anticipates controlled capex spending in the coming years. The company does not foresee any major capital expenditure requirements in the near future.
Source: Link to Earning Call Transcript
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