BEML Limited (BEML) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the BEML Q1F527 Mornings Conference Call. As a reminder, all participant lines will be in the listenerly mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touchstone phone. Please note that this conference is being recorded. I now have a conference over to Mr. Harshit Kapadia from Ilara Securities. Thank you and welcome to you, sir.

We will begin the call with a brief overview by the management, followed by a Q&A session. I will now hand the call to Shantanu, sir, for his opening remarks. Over to you, sir.

Hi. Good afternoon. Are you able to hear me, Harshit?

Yes, sir. We can hear you, sir. Please go ahead.

Good afternoon, all our investors. Thank you again for remaining invested. The last quarter has been quite an improvement, probably the best first quarter we have had in the last decade or so, with a top-line growth of 29%. This growth was led by, you know, a tremendous turnaround in the rail and metro segment, which grew by 178%. And mining was mutated. It went down by 14%, mainly because some of the projects where we are already L1, the contract finalization has got deferred. And in defense overall, we did a 25% improvement over the last financial year. First time, probably, again, we have hit a positive EBITDA. It has gone down by almost 50%. It also has improved, and, you know, the value added per employee also has gone up by around 8%. So, these, I am sure you already have worked out these numbers. I need not repeat all this. We are currently sitting at an order book of around 16,000 crores, a little more than 16,000 crores. We are looking at an opportunity size of 35,000 to 40,000 crores, mainly led by the metro and the rail, and of course, defense, and the mining, as I talked to you. Currently, we are L1 in around 900 crore value of tenders, and we have a very healthy export order book currently at around $115 million, and we should end the year with an export order book of around $200 million. So, looking at the performance of the first quarter, I expect similar or better growth in the second quarter and the quarters thereafter. We are ready to take any questions that you have.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Parin Parikh at Shri Capital. Please go ahead.

Hi, good afternoon. Am I audible? Yes, sir, you are audible. Yes, good afternoon once again, and thanks for this opportunity. Congratulations on good check of numbers. I have one simple question. Sir, basically a couple of years back, we had demerged surplus assets. of our company into a different company. And now, in the previous year, you have taken some 300 acres of Mysuru and some 36 acres of Mangaluru land back on lease from the same company. So, can you please explain as to what is the rationale of that? What are the, what, for what duration have we taken and what kind of plans do we have for that asset?

So, as you rightly said, first, BML Land Assets Limited was carved out as a fully-owned subsidiary, and some three years back, it was listed as a separate company. The land that we have decided to take on lease will be used for our production activities, some futuristic, some expansion activities as well. And, for example, the land at Bangalore, we have already started utilizing of LHB coaches, of the high-speed train. Mysore will be utilizing it more for aerospace. Recently, we got an order just a couple of days back for the fuselage of light combat helicopter from HAL. So, we will be utilizing these lands which were lying unutilized, basically. You know, even though it is a part of BLL, so by paying a small, you know, lease rental, we will be able to utilize that and equipment and systems from lease land and add to the revenue and the profitability of the company. Now, this lease is for the 99-year lease, currently, for five years or even before that, of BLA. So, this being a BML, what BLA is going to do, what BLA's plans are. The precise reason, Vaipur and 50 kilometers from Vilaspur, the state highway, and the nearest railhead is around 40 kilometers. The development of these places will take some time. So, in the meantime, we will be utilizing the land which is already available with BLL and adjacent to us. So, that is a thought. And, for example, in aerospace, we will be bidding shortly with our partners. So, if that happens, then we will be needing more space here. And the Bilaspur plant will be used for our wheeled, my sprinklers, motor graders and all. And the idea is that we should be near to our customer, our mining and mining equipment, Skoll India and its subsidiaries. So that is a place which is accessible to all the customers within 24 to 48 hours. And that is one of the reasons, you know, you might have heard earlier also and we have shared that Bilaspur, we are going to create a hub and spoke model, already the construction of the house ready. Basically, that will be used as a central place for servicing all our customers from there rather than doing it from our units that are a few thousand kilometers away, more than a thousand kilometers away from our customers.

Got it, sir. I think that's very helpful. Just a supplementary small follow-up on that. So, basically, both these places, as you mentioned, will be utilized for the production purpose. And as you mentioned, with Bangalore, you have already initiated the production over there, and Mysuru, you are planning to start soon. What kind of capex will be involved at both these places, sir? Any understanding?

Mysuru, we are yet to formulate the capex, whereas at Bangalore, you know, last month all our esteemed investors, you were here, We have seen the production has already started, and I think it's almost a month now, and in one month we have made great progress. So the capex, the overall capex, I mean, I cannot say that, you know, a tract of land, what is the exact capex, it may be hardly 3-4 crores of capex, not more than that. But the overall capex that we have put in Aditya, it's in the range of around 250 crores, that is for the entire high-speed train complex.

Got it, sir. Thank you so very much, and all the very best.

Thank you.

Thank you.

Participants who wish to ask a question may press star and one. The next question comes in the line of Pratik Dugarh with IntelSense.

Please go ahead.

Hello, my audience.

Yes.

Sir, actually, I wanted to ask about the Mumbai Rail Vitas Corporation tender. So, is there, I mean, has that tender been cancelled or what is the situation because it's been delayed for so long, sir?

It has been cancelled. That is what has come to us.

Okay, and sir, just some days back, I heard you in an interview where you talked about a 40,000 crore bidding pipeline, but sir, as per our understanding, sir, MRVC itself was supposed to be 20,000. So, how come we are still expecting a 40,000 crore bidding pipeline, and if you could check that breakup of the pipeline, that would be great, sir.

You are very right that 40,000 crore had two components. One was MRVC, the other is the MIMU, which is still alive. But apart from that, we have some six tenders which are live for the metro. And the six tenders are the Chennai Metro, Delhi Metro RS-20, Delhi Metro RS-21, UP Metro Extension, Mahan Metro, that is Pune, Nagpur, and there is another one. Pucci will come, but just give me a sec. Line 12 where we have already paid. The ordering is yet to be done. So, the six metro projects are there. Now, apart from that, you know, the market is very dynamic. So, currently, we are working on export opportunities for the metro sector. The export opportunity size is around 15,000 crores. We are working in two export opportunities. I will not be able to share with you the country, but it is around 15,000 crores. Apart from that, we already have submitted the bid for 16 train sets for the B28, that is the 280 km per hour high-speed train project. So, considering all this, you know, overall 20,000 crores of order and flow, I am talking only about the rail and metro, whatever opportunity we discussed. 20,000 crores is from the entire company, from all the business verticals. Now, defense, we are looking at a number of around 4,000 to 5,000 crores, which is definitely going to come to us. And apart from that, mining construction, 9,000 crores, we are L1. We are bidding for another 500 to 600 crores of tenders, and we are bidding for a big export opportunity from West Asia. I hope the number is tally, correct?

Yes, sir. And, sir, can I get one more question? It was regarding the HEMM, sir. I mean, NMDC has a big CapEx plan forward, and a large component of that is going to be the heavier moving machineries. So, are we getting any inquiries on that front, sir, for the HEMM?

You see, HEMM, we are already, wherever there are opportunities for us, there we are bidding. So, it's not only NMDC, it's Singrani Collieries, it's Coal India and its subsidiaries. So, recently, you know, this month itself, we got two orders from Coal India and its subsidiaries for some mining equipment. We also are looking at, you know, some export orders for the HEMM in the next two to three months, which is apart from the tender where we are going to participate shortly. So, this opportunity that I am talking about from exports is from the Middle East, and it is apart from the tender that we are participating for in the West Asia.

And, sir, in the near to mid-term, anything on the Goliath crane or the cutter section dredgers, I mean, on the marine side, is there anything expected in the medium term?

You see, these are all developmental projects. Let me give you a picture. So, looking at tunnel boring machine, the design itself will take one year to one and a half years, followed by the development phase and the manufacturing. And it will take us at least three years to develop a tunnel boring machine. I mean, after which it will go for a bulk production. As far as the Goliath crane is concerned, more than the Goliath crane, we are focusing on the STS, that is the shift to shore crane. And again, the entire process cycle, it will take us at least three to four years. Nothing in the short term, but yes, medium to long term. So medium term, I am taking as three years. So, we can expect once the development happens and we go for the bulk production, something sizable will come three to five years from these two segments.

And, sir, anything on the dredgers, sir, cut-off section dredgers we had done, some tie-up we had done first time.

So, cut-off section, already we have submitted our offer for a few numbers of cut-off section dredgers. And we expect that the ordering will be done in the coming two to three months. It should be done.

Okay, sir. Thank you. Thank you so much, sir.

Thank you. The next question comes from the line of Jyoti Gupta with Ashika Broking. Please go ahead.

Good evening, sir. Thank you for the opportunity. One request, if you could put this corporate presentation, quarterly presentation, whatever possible information that can be given, that would be great. Second thing, I wanted to know, we have large margins in quarter one. What are we, I just wanted to have an FY27 outlook in terms of revenue. What are you estimating revenue growth to be a bit of margin for the full year? And where are we, and what about the revaluation reserves? You know, last quarter, we had a major quarter four. Do you still think there could be some impact of that? Because a lot of our exports are locked in. So could there be, because of foreign currency fluctuations, should you, will that impact the financials going forward? Some light on that, please.

All right. So, yes, we will, on a quarterly basis, we will put up our presentation. That we will do. Anyway, next time we have this, it will be, I think, a physical meeting with all our assumed investors. On the numbers, so as I mentioned, the first quarter was around 29% growth, and I expect similar growth in every quarter. So overall, CAGR should be, I mean, for this year, it should be by 20s, if all goes well, and it should go well because we have the executable orders now. All the orders that we had, it has reached the stage of bulk production. For example, the LHB, the one-day sleeper, we are going to complete shortly. The high-speed also, we will start delivering during this financial year. The Metro, Bangor Metro, has already, yesterday we had the CRS inspection, and very shortly it will be put into commercial use, and this year we should expect at least 20-25 trains for Bangor. So, plus, we are already L1 in many of the tenders for HEMM, and defense, there is a pipeline which is continuous. So, with that, this year, the revenue, I'm quite bullish about the revenue as far as EBITDA is concerned. So, 24-25, we did around 13, 13.3%. Last year, because of a one-off correction, it went down. But this year, my expectation is we'll again get back to at least 13% of EBITDA. And your last question was regarding, you know, the impact that we had in the last quarter. So whatever impact was there, we have considered it. And this year, when we start realizing the sales, I think I have mentioned it in one of the discussions earlier as well. Since these contracts are in foreign currency, one is a deemed export. When we are executing with the sales field, we realize there is a process that we have already booked.

The groundbreaking ceremony which happened in Bhopal, I think from that we were expecting in 18 months a plant would be commissioned and will start producing. What's the status on that Bhopal project?

You see, 18 months from the start of the construction, we have already completed the boundary wall, we have tendered out the civil part, and, you know, we'll be finalizing it in, I think, next two to three months. At the same time, we are working on arranging the debt finance for this project. So, the day the construction begins, after that, 18 months' time, we will be able to roll out the first equipment, and the total time which will be required for completing this project will be around 24 months. You see, we did, if I give you the example of Aditya, we did the groundbreaking on 1st September, And the 25th of April, the plant was inaugurated. So, it was ready. Bhopal will be done much faster than that.

Great. Sir, could you also give me a breakup of the segment-wise breakup of revenue? We have seen that at the consolidated level, I believe defense is 35%, rail and metro is 24%, mining and construction 41%. Does that stand corrected, or correct me if my numbers are slightly screwed?

I think your numbers are correct. I can only give you the growth grown by 178%, defense is grown by 25%, and mining and construction, that is the HEMM segment, has gone down by 14%.

Can you please come back in the queue for further questions? Yeah, thank you. Thank you. The next question comes from the line of Pasant Kumar Banchal with NBG Investments. Please go ahead.

Yeah, good afternoon, sir. My question was on the segmental breakup of the revenue, So, which my previous participant has asked, may I make one request that why don't you recognize, you know, these three segments as a segment and report them as a, you know, segment, under segment reporting. So, that will be very helpful in terms of revenue and the margin. And second question is, how do you see this mixed fire down the line?

From segmental reporting, that is number one. Number two, you know, I'll be happy if instead of these three verticals, they are hyped off as three separate companies and BML becomes a holding company. Then it becomes easier for us. Right? I think you will, I hope you will agree. Thank you. The trend will continue, and the trend should be, in my opinion, and it is also evident from the order book opportunities and our aspiration to grow, it should be around 65-70% rail metro and defence and 30% HMM. So, current book, 65% is rail metro only. So, I think that is the story.

And can this defense go up to 50% or more?

No, I don't want to speculate, but as of now, I don't like that. It's better that, you know, we talk about rail and metro and defense together. So, it will be around 65 to 70. In that, defense may go up to 50, rail may go down to 20, but I don't see that possibility immediately looking at the opportunity size in rail.

And sir, one last thing from my side is that which verticals has a high margin potential?

Sir, all verticals have a high margin potential. Again, if you look at the biggest margin contributors, sustenance, that is the spare parts and services, the second highest contributor to margin is exports.

Okay, okay. Okay. Not in terms of defense railway or mining or so on?

It is applicable for all.

Okay.

You know, finance has the highest margin, and export follows it very closely.

Okay. Okay. Thank you. I think this is very helpful.

Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star N1. The next question comes from the line of Sagar Gandhi with Invesco Mutual Fund. Please go ahead.

Good afternoon, sir. Am I audible?

Yes, yes, good afternoon. We are very much audible.

Yeah, thank you so much, sir. Sir, if you can highlight the size of the opportunity that we can capitalize on, specifically from the high-speed rail project, which is the Mumbai Ahmedabad bullet train project, if my understanding is correct, you are the prime rolling stock manufacturer for this program. So, given that government has very keen to operationalize this project over the next one year or so, how large an opportunity it can open for us?

Mumbai-Amathabad corridor, already the number of trains is fixed. We are mandated to build two trains of 280 km per hour, and after that, what is in the public domain is, we have submitted an offer for 16 trains. Now, when it happens, how much it happens, only time will tell. But yes, once we deliver these two trains and they undergo all the tests and all, it will open up a huge opportunity for us for the upcoming seven corridors. And in my opinion, the upcoming seven corridors will require at least 600 trains. And the 600 trains open up around 50% of that market for us Because I don't think one single company will be able to cater to these many number of trains. So there will be two companies at least who will be rolling stock for the forthcoming high-speed train projects. But it is in the next 10 years. It's a 10-year pipeline, 10 to 15-year pipeline. But it's a huge opportunity. It's not only about the domestic seven high-speed train corridors, But it also opens up the export market. Wherever there is a high-speed train requirement, at least we can tie up with somebody. And we will, India as a country and BML as a company, we will be at a different level. So that is the biggest gain from the rolling stock being manufactured, designed, developed, everything done here in the country.

On the two train sets which you are already building, the prototype one, where is it in what you call execution stage? I mean, is it done, is it certified? Where is it exactly?

You know how it can be certified so quickly. We have just started the production. I guess you were not there with other esteemed investors who visited. So, we started the production sometime in April and July. So, we had started building some modules and all. Now, we have reached the level of, you know, the complete shell, the car body shell, we call it, right? So we have reached that stage. If it's a clean sheet design, every stage has a lot of carried out, which we expect four to five months from now, maybe five months from now. The train goes out from our factory. It will also undergo extensive tests at the car level, at the brake level or the train level. By this time, the testing should be over. Then only we can say that yes. It is too early. It is too early in the day. But we are quite confident we are on the right path.

Okay. Thank you so much. Thank you.

Thank you. Participants who wish to ask a question may press star and one. The next question comes from the line of Amit and Mani with BL Capital. Please go ahead.

Hi, sir. Good afternoon.

Good afternoon.

Sir, my first question, again, a follow-up on High Street Rail. And we said that probably by next year, we'll be done with the testing. So just wanted to understand what is the kind of per course cost of production and what is our scope in that. And once the testing is done, if I take just probably just two, three years view, any expectations on what kind of HSR order which can come to you? And you highlighted the long pipeline, but anything in near term, we expect that probably can come. There are a lot of corridors and DPRs are getting prepared, so anything on that would help.

So, that's what the Mumbai-Yamdabad corridor, we have submitted our offer for 16 train sets, and the decision will be taken based on which, you know, we'll execute further trains. As far as the other corridors are concerned, it is too early for me to speculate also, right? It will be speculation and it will be wild speculation. But what is important is that we will be ready. We will be ready for that. We have already started working on, you know, the 350 kmph. That is the next level that I expect the new corridors to be. As far as the cost of production is concerned, you see, it's a development stage, and we ourselves are not, I mean, once the train is manufactured, it is tested, then probably I will be able to comment on the cost of production. How much it is ours? It is 100% ours. It is 100% Indian, including the IP. Intellectual property is Indian intellectual property, and it is 100% ours.

Right. So, even the propulsion systems are locally sourced and all other things?

Propulsion is locally sourced, sir.

Understood. So, second ballpark probably compared to 180 kmph trains like Van de Bharat, like it will be 1.5x or 2x kind of a costing for this SSR?

It will not be correct on my part to, you know, give you a ballpark figure because it is not that, You know, 160 kmph is X, so 280 kmph will be 289% that much X. It does not work like that. It is exponential, basically. As the speed goes up, it is exponential.

All right. Understood. Second question, sir, on the CAPEX. So, what's the CAPEX outlined? And you have highlighted probably we're increasing capacities on the rail and metro side. So, on the CAPEX segmental-wise, what's the CAPEX expectations this year and next year? And for the rail and metro, I think we were talking about taking the numbers from some 250 units, the capacity was supposed to go to 350, 400. So, any change in that number since we are now also preparing for HSR over the next three, four years? So, yeah, this is the question.

No, there is no change in those numbers. In fact, since Aditya is fully operational now, so first we will focus on HSR, and then we will shift, you know, we will go for the bulk production also of the HSR as and when it comes. But we are also utilizing HSR facilities which are available for our other projects as well. As far as the CAPEX is concerned, so I just mentioned Aditya, we have infused around 250 cores of CAPEX. The overall capex plan, the last year, last year capex spent was around 379 crores, which was the highest. Probably in the last 15 years, 20 years, I don't know, we have to check that data. This year we have planned around 600 crores, plus once Brahma starts, so that will be another around 900 crores or so, but it will not happen this year. The spending will go into the next year, and maybe a year after that, it will be spread over. Plus, you know, the new unit at Chhattisgarh, where land has recently been allocated to us, it's a very good tract of land and very apt for a heavy earth-moving machinery. So there we are working out the capex, and maybe in the next three to four months, we'll work out what kind of capex we would like to infuse there. So, that essentially will be the total capex plan for the next four years or so, four to five years.

So, lastly, if you could share the order book, order balance breakup segment-wise as of today, and full year order inflow expectation this year.

The order availability, 65% is the order from rail, 25% from defense, 4% from mining, 6% from exports. Fusion of 1181 till now, defense has given us 50%, mining has given us around 25%. Here again, my expectation is 65 to 70% will come from rail and metro, and some 20 odd All right.

What's the kind of absolute number for order inflow this year? Expectation?

Order in flow expectation is 20,000 crores, sir. We will try for 20,000 crores. We expect that with around 40% probability, we should have around 20,000 crores of order.

Understood, sir. Thank you so much, sir. All the best.

Thank you.

Thank you. The next question comes from the line of Sachin Maniar, the 3P Investment Managers. Please go ahead.

Hello. Hi. Good afternoon, sir. Can you hear me?

Yeah, yeah. Good afternoon.

Yeah. Hi. Sir, on the recent order run from HL for light combat helicopter for the fuse large, can you help me? This is for how many numbers? Because what we understand that HL is making almost 156 numbers over 4-5 years. So, would you expect the repeat orders from the same?

Repeat order, I don't think so, but let us see. So, it is 60% of the total 156 numbers that we have received. So, it's around 90-92 numbers, and I'm sure you know the fuselage is the complete shell, basically, the helicopter shell.

Correct. So, this would be spread out over 4-5 years, right? This order would be.

Yeah, I think three years. The exact quantity is 48 numbers.

Okay, 48 numbers. Okay, sure. And second question, what will be the R&D expected this year? Last year, you increased your spending to 251 crores. So, how are you looking for this year?

In terms of the percentage of the top line, it should be around 7%, and if we do a 25% growth, then, you know, it should be something more than 300, 300 cores.

Sure. Thank you. That's it for me. Thank you.

Thank you. The next question comes from the line of Basant Kumar with NPG Investments. Please go ahead.

Yeah. Sir, I have two questions. One is from macro perspective, that what are the concerns and challenges that keeps you worried?

You know, how to maximize our shareholder wealth?

From business perspective.

From business perspective is?

No, no, from business perspective.

So business perspective is, number one, to grow consistently with a CAGR of 20%. Number two, to have a healthy EBITDA margin of at least 17 to 18 percent. And number three, to reduce the working capital, to reduce our debtors, to reduce our inventory. So these are the three major challenges. And once we do that, then obviously our operating ratios, our inventory ratios, and efficiency ratios, all this will enhance the shareholder wealth and add more value.

So, second question was about working capital, and as you rightly said, this is part of your concern areas. So, what steps you are taking to improve the working capital cycle?

What can help you to improve it?

You see, working capital has got two components. One is the inventory, the other is the debtor. So, one of the major steps for the debtor has been, you know, if you look at our spread quarter to quarter, it is generally 10% first quarter, 20% second, 30% third quarter, 40% fourth quarter. In fact, last year, the fourth quarter was almost 45%. So, when so much revenue is skewed in the last quarter, then the debtor goes up substantially. Correct? And also, it also keeps piling up till the end we carry inventory so that, you know, then last quarter we can make some sales. So, two things we have targeted, and this year probably it will help us. Healthy, executable order pipeline, which when I say executable, so it is ready for bulk production. So, fortunately, this year we opened like that, and the main idea is to have a sustainable pipeline. So, next year also, we should open like that. So, once we do that, 35% of the total revenue planned, we are taking, increasing our value of production. The value of production enhancement goes a long way in improving our margins. So, these are the steps we are taking.

Okay, okay. Understood. This is very helpful.

Thank you. The next question comes from the line of Rakesh Roy with Boring AMC. Please go ahead.

Ah, sir. My first question regarding, sir, can you write on your, sir, program on marine engine?

Marine engine, we are not doing anything currently. We are exploring, but nothing concrete has happened till now. So, we are focusing on, you know, the land system engines for the defense application. We are working out, we are exploring various partners, what type is needed. Currently, we don't have any concrete marine engine.

Okay, sir, ma'am, next question, sir, as you say, mentioned here, you have looking to 4 to 5,000 orders in a different segment. Does it include, sir, after PINACA or a QR send order will come, this includes this one, sir? Supporting question?

No, no, PINACA, we have not considered. We have, you know, some orders in the pipeline. One is the ARB, WC has cleared 230 numbers, then we have a command post vehicle, then we have, you know, the tank transporters, then height armored multi-vehicle where we fielded the vehicle, it has successfully cleared the winter trials, now it will go for summer trials.

Sir, my question is, sir, after the QR stamp, because BN is expecting this year already for two, they have a 30,000. Sir, please, even for QR stamp, how much order will come to BAML? So, what is it, sir?

Something in the range of 600 crores, 600 to 700 crores.

This is for the regimen or for the full?

No, it is for full.

Okay. Okay. Right, sir. Right, sir. Right, sir. Thank you, sir.

Thank you. Ladies and gentlemen, that was the last question for today. I now have the conference over to Mr. Harshit Kapadia for closing comments.

Thanks, Steve. We would like to thank the management of BEML for giving us this opportunity to host this call. We would also like to thank all investors and analysts for joining this call. Any closing remarks? And Shantanu, sir, you want to share with investors?

No, I think we are very lucky to have, you know, such learned investors who have continued investing in the company, and very, very interesting questions, very interesting queries. So, my only request is that remain invested in the company, and we'll try to create as much value as we can for all our investors, for all our shareholders. Thank you very much.

Thank you. On behalf of BML, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.