IRCON International (NSE:IRCON) Q2 2027 Earnings Call

0:02 Good afternoon, ladies and gentlemen. I am Renjoo Thoms, the moderator of this conference call. I thank everyone for joining us today for IRCON International Limited Q2 and H1 FY 'twenty seven Analyst Conference Call. Please note that this conference call is being recorded. At this moment, all participants are in a listen only mode. Later, we will conduct a question and answer session. Today, we have with us the senior management represented by Mr. Salim Ahmed, Chairman and Managing Director Mrs. Raghini Advani, Director of Finance Mr. Alin Roy Chaudhry, CGM Finance and CFO Mr. Ram Kumar Goel, GM Finance Mr. Sachin Gag, PGM Finance, Investor Relations.

0:53 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 and A session. Thank you and over to you, sir. Thank you. Good afternoon, ladies and gentlemen. I am Salim Ahmad, Chairman and Managing Director of IRCON. On behalf of the entire IRCON team, I extend a warm welcome to each of you and sincerely thank you for joining us today for our earning calls for quarter two and H1 period ended 09/30/2026.

1:52 Now I request my Director of Finance to brief about the financial performance of the company. Over to you, Ircon. 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 earnings calls for Q2 and H1 FY 'twenty seven. I have with me my team members, Mr. Alan Roy Chaudhry, CFO Mr. Ram Kumar Goyal, GM Finance and Compilation and Mr. Sachin Gharv, 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.

2:42 We do remain optimistic about the outlook and are taking measures to reinforce our position. Financial results as well as the presentation have already been uploaded on the stock exchanges. I'm sure all of you have had the opportunity to review these. On a consolidated basis, the company has reported total revenue of 2,364 crores and operating revenue of INR 2,272 crore in Q2 FY 'twenty seven. PAT of the company stands at INR 100 crore and core EBITDAC INR $2.27 crore in Q2 FY 'twenty seven. Earnings per share stands at INR 1.09 per equity share in Q2 FY 'twenty six. This is not annualized, and this is on a face value of INR 2 per share.

3:30 Order book of the company stood at INR 21 crores, $2.96 crores at 09/30/2026, 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 seven joint ventures, mainly towards coal connectivity projects. Without taking much time, I would like to open the floor for Q and A session. Thank you. Shall we open the line for questions?

4:21 Yes, please. Thank you. We will now begin the question and answer session. 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?

5:10 Okay. Gaurav, just answering your first question, our own funds are in the range of INR800 crores to INR900 crores. Okay. Okay. Thank you. 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 in the rest of the year by close of the financial year? And going forward, how would it look like? Will we be getting more orders on bigger scale as in the ticket orders? Would we be restricting to smaller orders? Till now, we have almost INR900 crores order, which we have already secured.

6:01 And our strategy is... Or our aim is to secure order to the tune of 9,000 to 10,000 in 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. Okay. Can you can you hear me? Yes. Yes. Yes. Sorry for the disturbance. There was some noise. Yeah. So our focus is on overseas works also. And we are hopeful that in the next quarter, we'll get definitely some good works.

6:53 You. Okay. Thank you, sir. So now 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. We want to take it up to 15% international orders. So accordingly, our bidding strategy is in place, and accordingly, we are moving.

7:43 Okay. Okay. 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 stand alone level. So any any particular reason for that, sir? So as the other income is concerned, there... Primarily, 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 hand projects that we 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.

8:29 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 clawing back our cash and bank, surplus cash and bank balance into PPP projects. And to that extent, as and when we are blowing them into equity, the temporary interest on these surplus funds, which also comes as a part of under our 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 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.

9:36 Okay. Okay. Thank you. Thank you so much. That explains everything. Thank you. That's it from me. Okay. Thank you. Next question comes from the line of Divesh Teria, an individual investor. Please go ahead. Hello. Good afternoon. Am I audible, Yes, please. Yes. Awesome. Actually, I have a couple of questions. So first question or can you close in light how our operating subsidiaries are performing? And how much amount is invested in subsidiaries and JVs in FY 2026? And what is the plan for the next year?

10:24 Yes, please. So 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 INR 3,100 crores in all of these projects, and we expect another INR 800 crores to INR 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, have one more question.

11:12 We are incurring losses in JV companies. So when we can expect profit contribution from this JV? 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've 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 breakeven from another two years down the line. The losses are reducing. It should reduce next year.

11:59 But in terms of breakeven, it should be probably the year after that. These are long term PPP projects, so initial teething problems are always there. Okay. Okay. One last question. As last year, we had either working capital loan with the bank, and if I can recall correctly, so we have used around INR 100 crore. Since we have used own cash balance also, why are we using capital loan, working capital loan? So 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 INR 100 crores.

12:57 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. Okay, ma'am. Okay. Thank you. Thank you very much. All the best. You. Next question comes from the line of Vishal Pebiwal with PL Capital. Please go ahead. Yes, ma'am. Thanks for the opportunity. Are you audible? Yes, Visham. Please go ahead. Okay. Ma'am, at the end of FY 2026, we were probably guiding like this year, it will be more like a flattish sort of revenue.

13:45 But I think in quarter one also, have done a high single digit and then in this year also this quarter also, we are doing almost like a low teens 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 are seeing, which was not there in the last year, but this year we are seeing it? Any anything that you can provide me? So Vishal, yes, 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 stand alone basis, operating turnover in the range of INR 9,000 crores to INR 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 Civok project.

14:42 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 track work 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, ma'am. Okay. And then can you also share, like, these orders which you mentioned? What is the pending order book in these two orders for us right now? So I... Just give me a second. In case of Tivok, I think it's about close to INR 2,000 to INR 2,500 crores.

15:31 And in case of t two, it should be close to about INR 3,000 to INR 3,500 crores. Okay, fine, fine, fine. 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 odd percent. So like anything that is contributing to this? And then will this come down in the coming quarters tax rate? Yes, yes. So we've had a one off tax expense or a liability that we had to consider in our Sri Lanka project.

16:17 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 INR 12 crores to 13 crores. And that has that is the reason why our average tax rate has gone up for this quarter as well as for this half year, right? Over the year, it should get almost nullified. So it's a one off exceptional entry. Got it. Got it. So full year basis, it is in the range of 2425% that we... Yes, yes. It should be in the range of, in fact, 23%, 24%. Okay. Okay. Okay. Sure. And then in terms of order inflow, I think, was mentioning we have an inflow of I think I missed the number for first half.

17:06 It's close to about 1,000 crores. INR 1,000 crores. Okay. Okay. Okay. But ma'am, I mean, so 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 cancellation that we have seen in the order book? No. No. That's the reason why... See, when we are saying close to 1,000 crores, substantial quantum has come after September 30. Okay. Okay. Got 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 September 30.

17:55 But if you're talking today, then that number goes up to thousand crores. Okay, okay. Got it. Got it. Got it. It. And in terms of new opportunities, can you give some color like any sector that is looking promising? Any I know, I mean, earlier, we have been saying competition is pretty high in the sector, in particular, in the railways. But I think there has been a few norms change, which railways have seen early quarter one of this year. So anything that has changed materially for us or probably other sector that can you help us in understanding? A lot of Railway Works and Highway Works are in the market, both in domestic and overseas.

18:44 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. Okay. Okay. Sure, sir. I'll come back in the queue for the questions, And thank you very much. Thank you, Vishal. Thank you. Next question comes from the line of Dev Ketan Sethia, an individual investor. Please go ahead.

19:34 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 like growth in margin guidance from here on? So on a stand alone basis, we've been giving a margin guidance of PAT levels close to 6% to 7%, and we maintain that. Yes. Okay? On a consolidated basis, we are looking at a core EBITDA margins close to 8% to 9%. Okay. Thank you. And that is what we maintain. Yes. Thank you. Thank you. Next question comes from the line of Bhavesh Jain, an individual investor. Please go ahead.

20:28 Thank you for giving me the opportunity. I just wanted to ask our order book is coming down consistently. What is the strategy for sustained orders going forward? Currently, we have an order book of almost INR 21,000 crores, right, which is 2x our revenue. And our strategy, as explained earlier also, is to focus heavily on the overseas market where we get the better margins also, and there's 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.

21:22 And in 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? We... Quoted close to about INR 25,000 crores. 25,000 of work have been already quoted. And their 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.

22:13 If you can extend the reason for this variation? And can you guide the average tax rate for upcoming quarter and the next year? Yes. 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 our Sri Lanka project, and there was a tax liability additional tax liability of 12 INR 12 crores to 13 crores that came up in this quarter. It's a one off entry. And from an overall year point of view, we maintain that we will have a tax rate of about 23% to 24%. Does that answer your question? Ma'am. It does. You so much for giving me the opportunity. Thank you, Babish. Thank you.

23:07 Next question comes from the line of Gaurav, an individual investor. Please go ahead. Thank you for taking my question again, sir, ma'am. Sir, I just wanted to know that, you know, few years back, there have been lot of talks, lot of emphasis on the railway sector. And lately, it has... I feel it's a bit gone, you know, 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, if it could please guide us? You know, I just brief also that almost 25,000 crores of work have already been quoted by us, And we are quoted very competitively.

24:06 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 meet our target of INR 9,000 crores to INR 10,000 crores of the order in the year, out of which only right now, we have got only INR 1,000 crores. But we are hopeful that in future, we will definitely get some good orders. Thank you. 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. Still is, but you could quantify it. Railway budget still remains, and they are coming up with tenders.

24:55 So and with railways, in fact, the budget is very huge. And so yes, 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. Next question comes from the line of Manoj Shah with Lax Corp. Investments. Please go ahead. Yes. Thank you for the opportunity. I just wanted to check by the end of current financial year by March 27, what will be the order book for the company?

25:50 And what kind of revenue do you expect for the FY 2028? So as we have been stating, as at 03/31/2026, our order book was close to INR 25,000 crores. And we do think that our revenue will be in the range of INR 9,500 to INR 10,000 crores for this year. And therefore, we expect to get orders new orders again in the range of similar range of INR 9,000 to 10,000, such that our order book continues at a level of about INR 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.

26:38 As regards FY 'twenty eight, 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 confidence for the last few years, in FY 2026 and FY '27, there seems to be a slowdown prior to as compared to years prior to that, like FY 2023, '24. So I just wanted to check, you getting the momentum? And do you think this will continue in FY 2028, 2029 kind of? So my concern is commission. As of now, I mean, the good time to probably give you a better feedback on FY 'twenty, it may be 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.

27:45 So we are also going conservative, and we are saying we will maintain similar turnover, 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 few months down the line. Maybe after February. Okay. And any update on the this RBNL and IRCON merger? To us yes, yes. 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, which we we shall be immediately informing if there is any such thing. As of now, no.

28:42 No. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I'd now like to hand the conference over to the management for closing comments. Thank you. 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.

29:32 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 Garg or e mail at sachin. Gargircon dot org. Thank you for joining us, and you may now disconnect your lines.