Analyst Meet / AGM - Analyst Meet
Outlook on T&D order inflows during FY'16 is very strong
The company held its analyst meet on 8th June'15 and was addressed by Vimal Kejriwal Managing Director & CEO
Key Highlights
The company has an order book position of Rs 9508 crore as on Mar'15 as compared to Rs 10200 on Mar'14. As on May'15, the company has order book position of Rs 10370.
Order inflow for the Q4 FY'15 quarter stood at Rs 2800 crore up by 41% YoY. KEC has already announced orders worth Rs.1400 crore in April 2015 and is L1 in orders worth Rs.3000 crore as on May'15.
About 51% of order book is from India, 17% from Mena, 11% from Africa & CIS, 10% from America, 9% from Saarc and 2% from East Asia Pacific region.
T&D accounts for 75% of order book, 6% from cables, 5% from railways, and 4% from water and rest from other sectors.
The company is expected to complete the telecom tower business sale to ATC by Q2 FY'16 at consideration of around Rs 81 crore.
The company has legacy orders in T&D business, which it expects to be over by Q2 FY'16. The new orders including the order book after the completion of legacy orders have better margins.
EBITDA margins for KEC fell from 11% in FY09 to a low of 5.3% in FY15; however, low margin orders in Railways and Water segment built PQ (pre-qualification) in this new business, while cost overruns in these projects led to margin erosion. Since the PQ has been successfully built-in this business, KEC is taking fresh orders at a much higher margin.
Overall, the company expects steady improvement in margins, driven by reducing backlog of low margin legacy orders, improved margin profile in new orders and breakeven in tower and cable business.
As per the management, outlook on order inflow in FY'16 is very strong in T&D business especially from Power Grid.
The company has seen improved traction in T&D business, both from Domestic and International markets. In Domestic markets, apart from Powergrid, the company is seeing lot of tenders from SEBs like Tamil Nadu, Karnataka, West Bengal, and even from States like Rajasthan. Few SEBs like UP, Bihar and Odisha have also started seeing improved traction in terms of activity. In International markets like KSA (social spending by the new king), Oman, Abu Dhabi, Africa (growing at 15% CAGR) and SAARC countries, KEC is seeing increased bid tenders.
The company has also taken various corrective steps to bring water and railway business back on track. KEC has brought in new CEOs and also decided to limit the scope of bidding in water segment to waste water treatment jobs. KEC expects Water and Railways business to consolidate for few years with new team and expect this business to be 10% of sales in the next 2-3 years.
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