DBL - Dilip Buildcon Limited Share Price

The management of Dilip Buildcon Limited has provided an optimistic outlook, anticipating significant growth opportunities fueled by government initiatives. The key forward-looking points include:

1. Ordering Activity: Management projects new order inflow between INR 12,000 crores and INR 15,000 crores for the financial year 2026. They expect a revenue range of INR 8,000 crores to INR 8,500 crores and an EBITDA margin targeting around 11%.

2. Infrastructure Investment: The National Highways Authority of India (NHAI) plans to bid out 124 road projects worth INR 3.4 lakh crores in FY '26. Additionally, the government has allocated INR 2 lakh crores for infrastructure in Jharkhand, indicating a commitment to enhancing capital expenditure.

3. Metro Rail and Water Sectors: In the Metro Rail sector, Andhra Pradesh has approved an investment of over INR 20,000 crores for developing metro corridors. For water distribution, progress is expected under the Jal Jeevan Mission, with extended timelines to 2028 for execution due to previous delays.

4. HAM Projects: The execution of HAM projects is on track, with a partial divestment of three projects completed for INR 125 crores. The anticipation is to divest four additional projects within FY '26, with the remainder following in FY '27.

5. Coal Operations: The company aims to achieve a production target of 32 million metric tons in FY '26, with specific quarterly targets, including 25 million metric tons from Siarmal and 7 million metric tons from Pachhwara.

6. Operational Strategy: DBL is focusing on enhancing operational efficiency while pausing capital expenditures to align with the current market conditions. They believe that these strategic refinements will prepare them for better opportunities when the market stabilizes.

In addition, the management highlights their resilience and commitment to maintaining quality over quantity, focusing on sustainable growth despite challenges in securing new orders.

Question 1: Could you restate the guidance on stand-alone revenue, EBITDA margin, order inflow, and capex for FY '26?

Answer: We expect new order inflow to be between INR12,000 crores to INR15,000 crores. For the full year, we anticipate revenue in the range of INR8,000 crores to INR8,500 crores, with an EBITDA margin around 11%. Capex will be very negligible, primarily for replacement, possibly between INR40 to INR50 crores.

Question 2: What is the status of your debt reduction plan?

Answer: Our target remains to reduce debt by INR500 crores by March 31, 2026. This quarter saw an increase of INR85 crores, which we plan to address over the next nine months. Our net debt-free goal by FY '27 is still intact.

Question 3: How is the Jal Jeevan Mission faring?

Answer: We've received most payments related to the Jal Jeevan Mission, barring a regular outstanding amount. Payments from the project are expected to continue regularly going forward.

Question 4: Can you clarify the changes in qualification norms for EPC and HAM projects?

Answer: The net worth criteria have been adjusted; previously, companies needed to have 20% of the project size in net worth. This changed to a scaled assessment based on project size, which should limit participation from smaller firms in larger bids, notably tightening competition.

Question 5: What are the expectations for order inflow moving forward?

Answer: We expect significant order flows between Q2 and Q4, with around INR12,000 crores to INR15,000 crores anticipated. The recent adjustments in qualification criteria should ease competition from unrecognized players.

Question 6: What are the new orders you plan to pursue, and are you diversifying into other sectors?

Answer: Yes, we're looking at sectors such as water, metros, tunnels, and mining. Our strategy is focused on sustainable revenues and better ROE while exploring these sectors.

Question 7: What does the InvIT formation timeline look like?

Answer: We received in-principle approval from BSE, NSE, and SEBI. We expect to launch the InvIT by September 2025, transferring completed assets for this purpose.

Question 8: Will the upcoming change in government ordering affect your strategy?

Answer: Yes, the government aims to award INR3 lakh crores in contracts this fiscal year, which will significantly impact our order pipeline and strategy as we position ourselves for these opportunities.

Question 9: What is the breakdown of your debt post-InvIT formation?

Answer: Currently, our net debt stands at INR8,266 crores. After transferring assets to the InvIT, approximately INR3,850 crores will be released, but around INR2,418 crores will be added as new construction debt, leading to a net reduction of about INR3,000 crores altogether.

Question 10: What is your current status with the coal segment?

Answer: We anticipate producing 25 million metric tons from Siarmal and 7 million metric tons from Pachhwara in FY '26, totaling 32 million metric tons. The MDO operations are proceeding on schedule, contributing to our revenue stability.