- 2 years ago
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00:00Speaking now with Rajesh Prasad, Director Operations at RDNL, joining us on the show.
00:06Mr. Prasad, thank you so much for speaking with us here on NDTV Profit.
00:10Let's begin with the numbers and what has worked in Q4 for you.
00:16The order book has bumped up and the previous quarters were a little weak,
00:20but things seem to have turned around in Q4. Is that fair to say?
00:25First of all, good morning, Tamannaji.
00:28I have been told that Mr. Neeraj and Samina would also be joining.
00:33Yes, yes, all of us are here.
00:35If you recall, last time we had interacted in the month of January,
00:39and that time it was chilly winter, and now today it's very hot,
00:45basically outside my chamber, and so is the market.
00:50And just now I was listening to the conversation with the Honorable Prime Minister,
00:54and he said that all the PSU shares are going up, and let us wait for the 4th of June.
01:00And see, during the Q3 numbers, if you see, the cumulative number was all-time high.
01:06So here I would like to highlight a few things about 2023-2024.
01:12We had an all-time high top line, all-time high bottom line.
01:18We had commissioned 250 kilometers in one single month,
01:21though the QT of the railway projects is going down,
01:24100 kilometers in a single day.
01:26Then the projects like the rail-over-rail bridge, then the metros,
01:30and then the Karnaprayag DCKS project.
01:32In that particular project, we had done 60 kilometers of tunneling in one financial year.
01:37So if you see the Q3 and Q4, the Q4 is a more working season, number one.
01:42Number two, the Q3, if you see the performance, the cumulative performance up to Q3,
01:47it was extraordinarily excellent.
01:49See, the company's basic strength has been it is highly flexible.
01:54It is focused.
01:56We have got very less reaction time to mitigate the risk.
01:59We have already transitioned from the role of the contract manager to contractor.
02:03So the focus was same.
02:06Only thing is that the Q3 numbers were slightly weak,
02:10which we have overcome during the Q4 time.
02:12And in time to come, this company will keep on growing.
02:15Okay, so you have a similar outlook for next financial year.
02:19That, of course, is the key question.
02:21And I also want to ask you about, because now we know,
02:24RVNL has seen a robust build-up in its order book.
02:28What next?
02:30We're speaking in a pre-election period, as in during the elections,
02:34waiting for the numbers, etc., to come in, new government.
02:37What next for RVNL in terms of this push?
02:40Is high-speed rail where you're going next?
02:43And can you share anything on this?
02:45Okay, so let me start with the conversation,
02:48which we had in the month of January.
02:50During that time, you asked about the, basically,
02:53roadmap for the top line, bottom line.
02:55And that time I had said the 23, 24, we will land 21,000 plus,
03:00and around 1,400 plus the bottom line.
03:03So if you are asking me the outlook, the future outlook,
03:06so what we see is that the top line will be growing with a slightly lesser
03:10percentage, maybe 23,000 plus.
03:13But the bottom line will grow.
03:15See, this we are eyeing for 1,600, maybe 1,700 plus crores.
03:19The order book last time I had said that we are eyeing for 75,000 crores.
03:23All the time we want to have, basically,
03:25order book three to four times of the top line.
03:28And so by this principle, we should have the order book of 80,000,
03:3385,000 crores, which we are now having.
03:35And as personal, we would like to have 1,00,000 crores of order book.
03:40So as far as the order book inflow is concerned,
03:43we would like to maintain this.
03:45The bottom line, again, I say last time we had around 15% plus.
03:49We would like to maintain the same kind of order book.
03:52See, if you see the company's performance in the last 10 years,
03:55every year it has exceeded the performance of the previous financial year.
04:00It happened during the COVID.
04:01It happened in 23, 24, and this will continue in time to come.
04:04And if you see the CAGR of this company, I have got a few parameters.
04:08The PAT has gone up.
04:09It is having a CAGR of 19%, around 20%.
04:12The turnover is around 16% to 17%.
04:15Net worth is, again, 16%.
04:17And the earning per share is 19% plus.
04:21So the CAGR is continuously growing.
04:23The company is exceeding the performance of the previous financial year.
04:27In time to come, you will see there's so many businesses.
04:29Earlier, we used to have only one business,
04:31that is the railway client business.
04:33Now we are having a large number of businesses.
04:36See, earlier we were basically swimming in a protected swimming pool.
04:41Now it is a very big ocean.
04:44Opportunities are endless and galore.
04:46But at the same time, there are some risks.
04:49We are trying to mitigate the risk.
04:50We are allocating the risk factors.
04:52So we have got a large number of opportunities in time to come.
04:58And if you can ask any other questions related to the project,
05:00then I can also amend that.
05:02I can basically supplement that.
05:04Mr. Prasad, hi.
05:05It's also Samina joining in.
05:06Firstly, congratulations.
05:07You are doing a phenomenal job.
05:09And it's so good to see your earnings, your order wins.
05:13The street is excited.
05:14Investors are excited.
05:15There's so much happening.
05:17But let's talk about a recent order win as well.
05:19And I want to quickly get a sense of what we can expect going into FY25.
05:23We've seen a marginal improvement in your margin,
05:25which is about 6.8% for the quarter.
05:28Is there a possibility of margins improving further into FY25
05:32as you consolidate your business?
05:34And these significant order wins that take place every couple of weeks now,
05:38we've heard that you've won another order of about 148 crores this morning.
05:43Give us a sense of the timeline, execution,
05:46any sort of challenges that you foresee,
05:48because you said there will be some challenges.
05:50Are those execution-related?
05:52Yeah, so let me begin with the margins.
05:54So, see, we started this business,
05:57basically projects through the business development.
05:59It is not even three years.
06:01October 21, we got the first bid in the Indore Metro.
06:04And then January 23, the first overseas project.
06:07And in the 23-24, we had a turnover of 1,000 crores in these two projects.
06:13And I'm happy to inform to the investors through the STEAM TV channel,
06:16your STEAM TV channel,
06:18that we had a margin of 10.66% in the first Indian project
06:22and 11% in the first overseas project.
06:25So it is very good in a sense that the first two projects have given good results.
06:31All the projects will not have the similar kind of results,
06:34but we are confident that the kind of value addition which we do,
06:37we will have this kind of numbers.
06:39And the margins earlier were fixed,
06:42that we used to have the only nomination projects.
06:44Now we'll have the nomination, plus the bidding,
06:47plus the projects through MOUs.
06:49This 23-24, we have signed three MOUs,
06:52costing around 4,000 crores, 3,500 plus.
06:56So we have got that complete basket.
06:58Then we will keep on getting the basically dividends from the SPVs.
07:02All five SPVs have been commissioned.
07:04Now it is time to give the results from those SPVs.
07:07So what I can tell you is that we have already diversified
07:11from local rail infra to global or infra.
07:13The margins will certainly change
07:16because we will have the mix of the various kinds of segments.
07:20We are entering into the solar.
07:23We are entering into the irrigation.
07:25We are entering into the road sector.
07:27And plenty of scope is there.
07:29See, 2047, the logistic policy and then Vixit Bharat concept,
07:35we need to have a large number of logistic projects,
07:39projects related to the logistics.
07:41So if you want to discuss on this,
07:44I have got plenty of time on this logistics part.
07:47Otherwise, you can ask the other questions.
07:49Yeah, but we have slight paucity of time.
07:52So we want to discuss this, Mr. Prasad, about the logistics piece.
07:55Can you quickly just explain what happens on the logistics end
08:00and how do the numbers look like in two, three years' time
08:03when logistics becomes center stage?
08:05Okay, so let me explain.
08:07The government of India launched this logistic policy in October 2021.
08:11This is a very important policy.
08:13The logistic market in the country is $200 billion.
08:16And in very simple terms, I would like to explain
08:20that if you are transporting any cargo through the road,
08:23the cost of the transportation is rupees 4 per ton per kilometer.
08:27Really, it is 1.5 to 1.6.
08:29Here it becomes 18, and the water, it becomes 2.
08:32And the other factor, like carbon emission,
08:34the CO2 emission per gram per net ton kilometer,
08:38it is 100 if you transport through the road.
08:40The present logistic cost is around 16%.
08:43The international market and norms is less than 10%.
08:46So there is a reason that by 2047,
08:49we should have the world-class logistic infra, number one.
08:53Then we should have the less logistic cost.
08:56Presently, it is 16% of the total economy.
08:58It should be around 8%.
09:00Then the carbon emission, I have already said.
09:02So the model share becomes very important.
09:04See, in 1951, the model share for the railways was 88%.
09:09Today, it is around 26%.
09:12We want to go up to 45%.
09:14If you want to achieve 45%,
09:16you need to have a lot of infrastructures projects in time to come.
09:20So in next few years, if you want to know,
09:22we have got plenty of scope for the railway infrastructures,
09:25airport infrastructures, hydro-irrigation infrastructures,
09:29and there are endless projects.
09:33The only thing is that you will have to get the work,
09:36you will have to execute it,
09:37and you will have to satisfy the various clients and the customers.
09:40So Mr. Prasad, would it be fair to say,
09:42looking at all that's happening on the railway side,
09:45plus the logistics piece, and if the share, etc., moves up,
09:49that the next five years for RVNL in terms of numbers,
09:53see, I'm not asking for one, two years.
09:55It's too difficult to predict,
09:56but I'm asking a five-year vision.
09:58The next five years would be materially different
10:00than what the last five years have been.
10:02You haven't done badly by then, by the way.
10:04From March 2019 of 10,000 crores, you had 21,000 crores.
10:08But it's not been blockbuster in terms of revenues.
10:11Do you think this kind of run rate can change over the next five years, Mr. Prasad?
10:17See, if you see the five years,
10:19we had been, basically, we got the Navratna status last year, May 2023,
10:27and we are eyeing for Maharatna.
10:29See, in the next five years, if you're down the line,
10:32if you want to ask me where this company is heading towards,
10:35we have got plenty of infrastructure projects.
10:37Here is a company which has got a proven track record.
10:40It has delivered in the past.
10:42It has got a very good CAGR,
10:44and we solve the technical issues technically,
10:46and down the line, after five years, we have got a very strong vision.
10:50See, in terms of numbers, if you want to ask,
10:52the top line may not grow with that particular rate,
10:55but the bottom line, we are very much keen, number one.
10:58Number two, we are eyeing for foreign projects,
11:01and we are diversifying.
11:03See, if you permit me, then I'll cite two examples.
11:06So, let me explain about the solar projects.
11:09We had got no exposure.
11:11We had got no exposure, but we are working on this.
11:13We are diversifying it.
11:15We have already opened so many offices in the region.
11:18We have opened so many offices in the region.
11:20We have already opened so many offices in the region.
11:22We have already opened so many offices in the region.
11:24We have already opened so many offices in the region.
11:26We have already opened so many offices in the region.
11:28We have already opened so many offices in the region.
11:30We have already opened so many offices in the region.
11:32We have already opened so many offices in the region.
11:34We have already opened so many offices in the region.
11:36We have already opened so many offices in the region.
11:38We have already opened so many offices in the region.
11:41And we are hiring so many projects.
11:43And we are hiring so many projects.
11:45See, the irrigation departments, we had got no exposure.
11:48We have got a work of 2500 crores.
11:50The hydro projects, we are hiring two big projects.
11:53The airport projects, the next 5 years,
11:58the next 5 years government of India is having 1 lakh crores of investments.
12:00So, see so what is the strategy?
12:02So, see so what is the strategy?
12:04So let me explain what are the strategies for this company.
12:07So, focus is EPC, Haam and the Bio KiBase models.
12:09then we want to expand the basically domestic footprints, then internationally also, then
12:16leverage the strategic partnership. We are signing MOUs with the different domestic and
12:22international countries. We want to use and leverage the government initiatives. We are
12:28eyeing to secure high value contracts. So in time to come, what I can foresee is that this company
12:34has got a very, very bright future. You just simply see the past performance and I'm 100%
12:40sure that in time to come, it will continue to like this. Right. So we completely agree. The
12:44street likes it. The stock is at the day's high point as we have this conversation. One last
12:49question, sir. When do you plan to hit that 1 lakh crore order book? Can we expect that in F525?
12:57This is in F525. We should get this. Okay. I just forgot to mention one small statistics. See,
13:06we have got an employee total strength of 400, contract engineers another 800, so 1200. So the
13:12turnover per employee is 18 crores and the profit after tax per employee is 1.22 crores. Can you
13:18imagine that a government company will have this kind of numbers? We have got the efficiency of a
13:23private sector and the authority and the trustworthiness of the government sector.
13:28So one quick, very short question. We're completely out of time. But what is the
13:31quantum of order book that you have visibility on for this quarter?
13:36See, presently, we have not reconciled, but it is around 85,000 crores. And
13:44we have got a strike rate of around 24%. So whatever bids we are submitting, so there is a
13:50likelihood of getting this many numbers. We are running so many projects in overseas,
13:55the foreign projects. So let us see. I'm 100% sure that time will tell,
14:00but we are going to have good numbers.