Ircon International Limited (IRCON) Q2 2027 Earnings Call Transcript

Good afternoon, ladies and gentlemen. I am Renju Thomas, the moderator of this conference call. I thank everyone for joining us today for IRCON International Limited Q2 and H1 F527 Analyst Conference Call. Please note that this conference call is being recorded. At this moment, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session. At this time, if you have a question, please press star 1 on your telephone keypad. Today, we have with us the senior management represented by Mr. Salim Ahmed, Chairman and Managing Director, Mrs. Ragni Advani, Director of Finance, Mr. Alin Roy Choudhury, CGM Finance and CFO, Mr. Ramkumar Goyal, GM Finance, Mr. Sachin Garg, DGM Finance, Invest Relations. I would like to remind you that some of the statements that will be made in today's discussion may be forward-looking in nature. It is subject to several risks and uncertainties, and the actual results could differ materially. I would now like to hand the conference over to Mr. Salim Ahmed, Chairman and Managing Director, for the opening remarks, after which we will have the forum open for the interactive and Q&A session.

Thank you, and over to you, I am Salim Ahmed, Chairman and Managing Director of IRCON. On behalf of the entire IRCON team, to each of you, and sincerely thank you. Water 2 and H1 period ended 30th, September 2026. Now, I request my Director of Finance to give a brief about the financial performance of the company. Over to you, Advani.

Thank you. Thank you, sir. Good afternoon, everyone. I'm Ragini Advani, Director of Finance. On behalf of my team, I extend a very warm welcome to all of you for your presence today at IRCON's Earning Calls for Q2 and H1 FI27. Thank you. I have with me my team members, Mr. Alan Roy Chaudhuri, CFO, Mr. Ramkumar Goyal, GM Finance and Compilation, and Mr. Sachin Garg, DGM Investor Relations. The operational environment remains challenging with sectoral headwinds and rising competition. The company has procured some orders during the quarter, though nominal, and the order book stands roughly 2x of the annual revenue. We do remain optimistic about the outlook. and are taking measures to reinforce our position. Financial results as well as the presentations have already been uploaded on the stock exchanges. I am sure all of you have had the opportunity to review these. On console basis, the company has reported total revenue of Rs. 2364 crores and operating revenue of Rs. 2272 crore in Q2 FY27. Part of the company stands at Rs. 100 crore, and core EBITDA at Rs. 227 crore in Q2 FY27. Earnings per share stands at Rs. 1.09 per equity share in Q2 FY26. This is not annualized, and this is on a face value of Rs. 2 per share. Order book of the company stood at Rs. 21 to 96 crores at 30 September 2026. Wherein 55% of the orders are on competitive basis and the balance 45% on nomination basis. At present, 91% of our order book is domestic and the balance international. IRCON has 11 subsidiaries. That includes roads, highways, and renewable projects. And IRCON has 7 joint ventures, mainly towards coal connectivity projects. Without taking much time, I would like to open the floor for Q&A session. Thank you.

Shall we open the line for questions?

Yes, please.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Gaurav, who is an individual investor. Please go ahead.

Thank you for giving me the opportunity, sir. I'd like to, I have a few questions that I'd like to ask. First one was, how much is our own fund on the books as of now?

Okay, Gaurav, answering your first question, our own funds are in the range of 800 to 900 crores.

Okay. So, I'd like to know that, you know, we won one big order this quarter, and how would the order book scenario would look like the rest of the year, right, close of the financial year, and going forward, how would it look like, would we be getting more orders on a bigger scale, as in big ticket orders, or would we be restricting to smaller orders?

Till now, we have almost 900 crores order, which we have already secured. Our strategy is, or our aim is, to secure order to the tune of 9,000 to 10,000 in this year, in the financial year.

Okay.

So, accordingly, you know, we are building in railway works, highway works, and our focus is on overseas. Our focus is on overseas works also, and we are hopeful that, you know, in the next quarter we will get definitely some good works.

Thank you, sir. So, sir, my next question is, how much of the total order book is international, and how much is domestic, and do we expect to get more international orders in the tickets, or they will be restricted because of the geopolitical things going on?

The present position is almost 9% of our order book is from international, remaining is domestic. As I just briefed you, we are focusing heavily on overseas work. So we want to take it up to 15% international orders. So accordingly our bidding strategy is in place and accordingly we are moving.

Thank you. Thank you so much, sir. Also, just one last question from my side, if it's okay. The other income has gone down on console and standalone level. So, any particular reason for that, sir?

So, as far as the other income is concerned, primarily there are two reasons for that. One, we've had dividend from one of our earlier PPP projects, ISTPL. The concession period has ended, and so also the dividend from that ISTPL. The corresponding new HAMP projects that we've picked up, there, it is right now, most of them are in construction stage, and they should get completed by the end of this financial year. So it is that period in between where dividend from the previous good PPP projects stopped, and from the new ones, it's still to take off. And therefore, there's been some decline in our other income. Also, as we've been mentioning, we have been ploying back our cash and bank, surplus cash and bank balance into PPP projects, and to that extent, as and when we are ploying them into equity, the temporary interest on these surplus funds, which also comes as a part of another income, is bound to go down. But however, it obviously gets made up. By the IRRs that we'll get on these projects, which will be spread over a period of time. So it's again a timing difference. And third, there have been some exchange rate, you know, I mean, obviously, last year, the exchange gains were much higher than the gains this year. And that's more of a book entry. So these are some of the reasons why we've had dip in our other income. And it is more of a periodic, sporadic kind of a issue that we are dealing with.

Okay, okay. Thank you. Thank you so much. That explains everything. Thank you. That's it.

Thank you. A reminder to all the participants, that is my press star and one to ask a question. Next question comes from the line of Tivesh Deria. An individual investor, please go ahead.

Hello, good afternoon. I'm Ademusia. Actually, I have a couple of questions. So, first question was, in closing light, how operating subsidiaries are performing, and how much amount is invested in subsidiaries and JVs in FI, NDCs, and what is your plan for?

Yes, please. So, you know, in our subsidiaries, we basically have renewable power project, and we have some of our PPP projects towards road assets. Again, the construction ones are in hand. As of now, also, we have certain joint venture companies for coal connectivity. So, if we take all of these companies, we have already invested about 3,100 crores. In all of these projects, and we expect another 800 to 900 crores that we have to still put in, in some of the assets which are under construction. So, that is where our investments are into the SPVs. Does that answer your question, or is there anything else that you wanted to know?

Thank you, ma'am. Actually, I have one more question. We are incurring losses in JV companies, so when we can expect?

So, yes, you are right. Actually, in our coal connectivity projects, some of them are under construction, and the one project which is operational is CERL. We have been having losses there. That is because initially there are some teething issues. We have connected the coal, I mean, we have the infrastructure ready. But the coal transportation from that area or that particular mine are under development or there could be certain other issues relating to it. So we do expect these coal connectivity projects to start break-even from another two years down the line. The losses are reducing. It should reduce next year. But in terms of break-even, it should be probably the year after that. These are long-term PPP projects, so initial teething problems are always there.

Okay, one last question. Last year, we had tied up working capital loan with the bank, and if I can recall correctly, so we have used around 100 crores. Since we have a huge own cash balance, so why are we using capital loans, working capital loans?

So, you know, last year we had used a very nominal amount of 100 crores as a working capital loan balance, and that was more towards... Certain projects where I thought that the working capital requirement is huge, and given our capital commitments that we have out of our own surplus cash and bank balance, so we had kind of tested waters and made sure that we start taking some amount of working capital loan for those kind of projects. But having said that, it was a very small nominal amount of 100 crores, and as of today, we are primarily using our own cash and bank balance to fund these projects and the working capital need of these projects.

Thank you. Thank you very much. All right. All the best.

Thank you. A reminder to all the participants that you may press star and want to ask a question. Next question comes on the line of Vishal Pediwal with PL Capital. Please.

Thanks for the opportunity. Hello, Audible. Yeah, Vishal. Please go ahead. Ma'am, at the end of FY26, we were probably guiding, like, you know, this year it will be more like a flattish sort of revenue. But I think in quarter one also we have done a high single digit and then this year also, this quarter also, we are doing almost like a low-teams sort of growth rate. So how exactly are we saying the full year could pan out for us? And any particular order that is leading to this execution growth that we have seen, which was not there in the last year, but this year we are seeing it. Any things that you can provide?

Vishal, yeah, I mean, there is a general growth from the last year from turnover point of view. It's about 5% to 6% that we are expecting. So the year should close in the range on a standalone basis, operating turnover in the range of 9,000 to 9,500 crores. And as you rightly said, yes, the focus has been execution, faster execution this year. And one of the key projects that's been contributing to it is our SIVOC project. That's the project where multiple tunnels are involved and bridges are involved in the state of West Bengal and Sikkim. The second project where we are focusing very hard and trying to execute fast is our Trackwork T2 package that we are doing for the bullet train project. So that has led to a turnover, which is... Slightly better than what we had mentioned in our previous annual call.

Okay, okay. And can you also share these orders which you mentioned? What is the pending order book in these two orders for us right now?

So, just give me a second. In case of Sivok, I think it's about close to 2,000 to 2,500 crore. And in case of T2, it should be close to about 3,000 to 3,500 crores.

Yeah, thank you. And then second is on, I mean, usually we have a tax rate in the range of 20, 25%, this time it is a bit on the higher side, touching almost like 33%. So, I mean, like, you know, anything that is contributing to this and then will this come down in the coming quarters?

Yeah, yeah. So, you know, we've had a one-off tax expense or a liability that we had to consider in our Sri Lanka project. So, our Sri Lanka project, which has just got completed, there was a previous tax liability, and that is of an amount of close to 12 to 13 crores. And that is the reason why our average tax rate has gone up for this quarter as well as for this half year. Over the year, it should get almost nullified. So it's a one-off exceptional entry.

Got it. So full year basis, it is in the range of 24-25%?

Yeah, it should be in the range of, in fact, 23-24%.

Okay. And then, in terms of order inflow, I think Sir was mentioning we have an inflow of, I think I missed the number, for first half.

It's close to about thousand croons.

Thousand croons. Thousand croons, okay, okay, okay. But when I'm in... If we do an implied basis sort of order inflow, which what I'm trying to say is the closing order book and then execution that we have done, then order inflow is looking almost in the range of 200 odd crores. So are there any order cancellations that we have seen in the order book?

No, no, that's the reason why, you see, when we are saying close to 1000 crores, substantial quantum has come after 30th September. So, you're absolutely right. If you're doing the mathematics, the increase in order secured in the order book is close to 200 crores, which is the number up to 30th September. But if you're talking today, then that number goes up to 1,000 crores.

Okay, okay. Got it. Got it. In terms of new opportunities, can you give some color, like any sector that is looking promising? I know, I mean, earlier we have been saying competition is pretty high in the sectors, particularly in the railways, but I think there have been a few norms changed which railways have seen early. Probably as a sector that can help us in understanding.

You know, a lot of railway works and highway works are in the market, both in domestic and overseas. Like if I tell you about overseas, there are huge works which have come up in Nigeria, in African countries, and some Eastern Europe also. And we are bidding in all those works. So opportunities are there, both in domestic and overseas. Thank you.

I'll come back and book you for the questions, sir, and thank you very much. Thank you, Vishal.

Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Dave, Kate and Sethia, an individual investor. Please go by.

Hello, am I audible? Yes, please. My question is on the margin guidance of the company. Is the company keeping the margin guidance same or we may see a, like, growth in margin guidance from here on?

So, on a standalone basis, we've been giving a margin guidance of PAT levels close to 6 to 7 percent, and we maintain that. And, uh...

Yeah.

Okay. And on a console basis, we are looking at a core EBITDA margin close to 8 to 9%.

Okay. Okay. Thank you.

And that is what we maintain. Yeah. Thank you.

Thank you. Next question comes from the line of Bhavesh Jain, an individual investor. Please come in.

Thank you for giving me the opportunity. I just wanted to ask that order book is coming down consistently. What is the strategy for sustained orders going forward?

Almost only 1,000 crore, right, which is two times our revenue. And our strategy, as I explained earlier also, is to focus heavily on the overseas market where we get the better margins also and there is less competition. So there are a lot of works in the market in Africa and Eastern Europe and like we are considering. Aggressively for works in Algeria, Sri Lanka, and we are hopeful that in next quarter we get some good works. Domestic sector, highways, and railways. These are the two sectors where we are focusing, and we have almost quoted for, how many works we have quoted?

Quoted close to about 25,000 crores.

25,000 crores of work have been already quoted, and we are opening is pending, so we are hopeful that we will definitely get some good works, and as our target is almost... 9,000 to 10,000 orders out of which 1,000 we have already received. So, we are hopeful that definitely in the next two quarters, we will get good works. Thank you.

Got it, sir. So, my second question is, our tax revenue has gone up this quarter as compared to the same quarter last year. If you can explain the reason for this variation, and can you guide the average tax rate for upcoming quarter and the next year?

Yeah, so as I just mentioned, that as far as the tax rate is concerned, there was a one-off case which happened in Sri Lanka. We've just finished a Sri Lanka project, and there was a tax liability, additional tax liability of 12 crores, 12 to 13 crores that came up in this quarter. It's a one-off entry, and from an overall point of view, we maintain that we will have a tax rate of about 23 to 24 percent. Does that answer your question?

Yes, thank you so much for giving me the opportunity.

Thank you, Babish.

A reminder to all the participants that you may press star and want to ask a question. Next question comes from the line of Korov, an individual investor. Please go ahead.

Thank you for taking my question again, sir. I just wanted to know that, you know, a few years back, there have been a lot of talks, a lot of emphasis on the railway sector. And lately, it has, I feel it's a bit gone down. So if you could please, you know, throw some light on how the RFQ order is looking like, you know, government's focus is looking like on the sector. Will it be on the upward trajectory or will it be, you know, flattened out of kind of the good news to guide us?

I just briefed also that almost 25,000 crores of work have already been quoted by us, and we have quoted very competitively, and we are focusing on overseas, especially in Sri Lanka and Algeria. So we see good opportunities, and we are hopeful that our order book, we are going to beat our target of 9,000 to 10,000 crores of the order in the year. Out of which only, right now, we have got only 1,000 crore. But we are hopeful that in future, we will definitely get some good orders. Thank you.

Just to add to this, Gaurav, I think you were asking about railways, the number of orders that have been coming out of railways, is it?

Yes, yes, particularly for the railway sector. There was a lot of emphasis a few years back.

Railway budget still remains, and they are coming up with tenders. So, and with railways, in fact, the budget is very huge. And so, yeah, it's a good market. It's a very, very large-sized market for us. And railway being our first line of preference, we do focus the most on railways. And we do see a good opportunity there going forward.

Thank you. Thank you so much.

Thank you. A reminder to all the participants, starting my best star and one to ask a question. Next question comes from the line of Manoj Shah with LaxCorp Investments. Please go ahead.

Thank you for the opportunity. I just want you to check by the end of current financial year, by March 27, what will be the order book for the company and what kind of revenue do you expect for the February 28th?

As we have been stating, you know, as at 31st March 26, our order book was close to 25,000 crores, and we do think that our revenue will be in the range of 9,500 to 10,000 crores for this year, and therefore we expect to get orders, new orders again in the range of, similar range of 9,000 to 10,000, such that our order book. It continues at a level of about 25,000 crores by the end of this year as well. So that is where our entire plan of action and our goal or focus is. As regards FI 28, It will really depend on the kind of orders that we secure, but with the kind of efforts that we are putting in, with competition easing out slightly and the kind of opportunities that are sitting both in domestic and international market, we do tend to hope to take it slightly on an upward trend and increase revenue marginally.

See, what has happened, like, I've been monitoring your conference for the last few years, like, in FY26 and FY27, there seems to be a slowdown prior to, as compared to years prior to that, like FY23, FY24. So, I just wanted to check. Are you getting the momentum and do you think this will continue in FY28, FY29 kind of? So my concern is coming from you.

As of now, you know, I mean, the good time to probably give you a better feedback on FY28 maybe a few months down the line because it's a very volatile and a very sensitive market, more so to the uncertainties overall all across the world. So, you know, we are also going conservative, and we are saying we will maintain similar turnovers, similar levels of order book in this year, and marginally we will increase in next year. But we should be in a better position to see whether this momentum will go upwards or continue in a similar pattern, maybe a few months down the line, maybe after February.

Okay. Any update on this RDML and Aircon merger?

So, to us, there is no knowledge whatsoever. As and when we get to know, of course, being a listed company and in accordance with the governance, we shall be immediately informing if there is any such thing. As of now, no. Thank you.

Thank you very much.

All right. Take care.

Thank you. A reminder to all the participants that you may best are and want to ask. Once again, a reminder to all the participants, study my best star and one to ask a question. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I now like to hand the conference over to the management for closing conference.

Thank you, Mr. Renju, for moderating the call. I would like to thank all our stakeholders, shareholders, business partners, analysts, investor friends, who have shown continued support and faith on us. We will be happy to connect on one-to-one basis as and when required, and please do get in touch with us for any further clarifications or queries that you may have. Thank you once again for the participation, and happy festivities to all of you. Thank you.

Thank you all for being part of this conference call. If you need any further information or clarification, you may contact Mr. Sachin Kirk or email at sachin.kirk at virate irkon.org. Thank you for joining us, and you may now disconnect your lines.