WPIL - WPIL Ltd Share Price

In the Q1 FY26 earnings conference call, management provided an optimistic outlook for WPIL Limited, highlighting several key figures and strategic initiatives.

For the quarter, consolidated revenues stood at INR 379 crores, reflecting a 4% year-on-year increase. However, EBITDA was INR 49 crores, down 18% from the previous year, resulting in an EBITDA margin of 13%. Profit after tax was reported at INR 26 crores. Standalone revenue declined by 24% year-on-year to INR 181 crores, with net profit at INR 19 crores.

Management emphasized a record order booking of INR 139 crores for the product division, which led to an order backlog of INR 411 crores. The international business saw significant growth, with revenues increasing to INR 197 crores from INR 126 crores in Q1 FY25, despite some margin compression due to transaction costs.

Key forward-looking points mentioned by management included:

1. Expectations for improvement in the water sector payments in the second half, driven by the resolution of issues related to the Jal Jeevan Mission (JJM).
2. Positive forecasts for project execution, contingent on improving cash flows, with ongoing projects expected to stabilize.
3. A strong inquiry pipeline in the power and irrigation sectors and strategic alignment with the Indian Navy's modernization plans.
4. An international focus with Gruppo Aturia and MISA expected to continue gaining momentum, and PCI Africa starting the year with a robust order book projected for growth.
5. Management indicated confidence in achieving a margin recovery, aiming to return to the historical EBITDA range of 15%-20% in the upcoming quarters.

Overall, management expressed optimism about the significant opportunities in both domestic and international markets, setting a positive tone for the upcoming periods.

Major Questions and Answers from the Q&A Section

1. Question: "You mentioned about issues regarding the JJM has been resolved. If you can throw some more light in terms of how we've seen the payment processing at this point of time and whether the receivable cycle has now normalized?"

   Answer: We have seen a review of the JJM projects, and the government set up a committee to assess future financing. Payments have started being released, and we anticipate a clearer direction and improved cash flow starting in the second half of the year.

2. Question: "How should we see this year as a whole for the project division? Would it be better than last year?"

   Answer: We expect this year's performance in the project division to be similar to last year or slightly improved as cash flows better support our ongoing projects and operations towards completion and maintenance.

3. Question: "Can you give a broader sense of the Navy project opportunities in terms of project size and margin expectations?"

   Answer: The Indian Navy's modernization plans indicate substantial opportunities for our pumps, with expectations of business growth in the coming years. The scale of orders will depend on the Navy's evolving requirements.

4. Question: "What is the expected impact of heavy rains on our divisions this year?"

   Answer: While the rains have impacted some construction activities, we still expect a strong performance in our product business and positive signs for recovery in the second half from project implementations.

5. Question: "What are the receivables from the Jal Jeevan as of March 25 and currently?"

   Answer: While we don't have an exact figure for Jal Jeevan receivables, we've seen a 25%-30% reduction in overall outstanding payments by July, and cash flow stabilizing over the next three months should further improve our situation.

6. Question: "What is the executable period for the domestic and international order books?"

   Answer: Our domestic order book, approximately INR 2,260 crores, has a typical execution time of about two years. For international contracts, which total around INR 940 crores, the timeframe varies from 2.5 to 3 years due to their longer durations.

7. Question: "Can you elaborate on the impact of recent acquisitions on revenue and EBITDA margins?"

   Answer: Acquisitions have raised our revenue but have also brought in one-off costs and integration challenges that impacted our EBITDA margins, which we expect to normalize over the remaining quarters.

8. Question: "How do you see your margin expectations for the upcoming quarters?"

   Answer: We anticipate a return to our EBITDA margins of 15%-20% as we work through the integration of acquisitions and manage costs more effectively, particularly in the international segment.

9. Question: "Regarding cash and debt numbers, what is the current net cash position?"

   Answer: As of June, our net cash position is approximately INR 200 crores, which we expect to improve further with ongoing project receivables being collected.

10. Question: "Are there any updates on potential future acquisitions or increasing stakes in existing subsidiaries?"

    Answer: We are looking at further acquisition opportunities while maintaining focus on existing businesses. We are currently evaluating the efficiency of our capital use concerning existing stakes in our subsidiaries.