Plan to hike margins to 16% by FY27: , J Kumar Infra

“And as you said, we are confident of achieving a $1 billion revenue by FY27. Our order book, as on FY27, we are looking for around Rs 25,000 crores. This year has been very good for us. We have secured Rs 3,800 crores of projects in Q4 only and our order inflow for FY23-24 is Rs 11,861 crores,” says Kamal Gupta, MD, J Kumar Infraprojects.

What I was talking about is in terms of the orders that you have recently won. So, in terms of what is the pipeline looking like for your order book and also if you were going to give us an understanding in terms of the revenue for FY25, what is it that one could expect given that you have been receiving so many big orders?

So for FY25, we are looking for a revenue of around Rs 5,500 crore to Rs 5,600 crores and we may further revise our growth revenue post Q1 FY25, looking at the execution pace.

And as you said, we are confident of achieving a $1 billion revenue by FY27. Our order book, as on FY27, we are looking for around Rs 25,000 crores. This year has been very good for us. We have secured Rs 3,800 crores of projects in Q4 only and our order inflow for FY23-24 is Rs 11,861 crores.

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Taking our order book to Rs 21,000 crores as on December 20 as of now, yes. And the order pipeline also looks to be healthy. We are in the process of bidding for around Rs 40,000 crores of projects in coming six to nine months. Though, because of the elections, the order will only start after mid-June. So, we are confident of taking another Rs 6,000 crore to Rs 8,000 crores of projects in coming year of FY25.

Because over the last few years we have seen that the order inflow has been to the tune of around Rs 2,500 to 3,000 or 3,500 crores thereabout. In FY25, you are expecting it to increase? I ask that question because for a large part of at least three-four months there will be that model code of conduct and the election impact also coming in, so on that account what is a realistic order inflow expectation that we should have for FY25?

As I told you, Rs 6,000 to 8,000 crores of additional inflow in FY25.

But secondly, I wanted to understand, recently, we have seen that metro, of course, were forming the largest contributor in terms of the revenue. But going forward, do you plan to further diversify a lot more into, say, roads and water projects, etc, as well or do you anticipate that for the next two to three years the kind of order pipeline that you see, it is going to be largely metro denominated in terms of the revenue profile?

Well, see, J Kumar is always focused on profitable growth. So, we are more focused on bottom line rather than top line. And so, all of our secured orders of, like, this Rs 21,000 crores, we are expecting 14%, 15% operating margin.

So, metro being our forte, will of course be a major part of the total order book though it is right now it is around 40-45%. Railways is metro and like highways, elevated corridors, tunnels, again, will be a big chunk.

Elevated corridors, we have secured like around Rs 4,000 crores in Chennai. Dwarka Expressway, we just opened and we have bidded for around Rs 20,000 crores of projects in elevated. So, I feel whether it is metro or whether it is elevated, we work in a very niche area. So, all the projects where it gives J Kumar a healthy margin, so we focus on that and metro, of course, will be part of us for coming four-five years because there are a lot of projects coming in metro as well. So, I cannot say like whether it will be the major portion, but of course it will be a prominent portion of the total order book.

So, yes, you just touched upon a point that you are expecting that margins at 14-15%, so that is what will be continuing even going forward in the next couple of years is what you want to maintain at?

Yes, so all our projects as of now are with secured 14-15% margin and we are looking forward to increase this target to 15-16 by FY27.

But originally, you were just a Maharashtra based company, then there was some sort of expansion to Tamil Nadu and the nearby regions as well. What is the idea to further diversify, let us say, into northern India, central India or you continue to focus on your forte which you talked about Maharashtra, Tamil Nadu and the adjoining regions?

Right now we are working in six to seven states and as you said like the south was our first time and we entered in a big way. We are doing like four elevated structures of 21 kilometre double decker first time in India and costing Rs 3700 crores, plus we have taken an additional project of Rs 600 crores for the state of Tamil Nadu.

We are also quoted for projects in central India like Bhopal metro, MP. We are doing in UP and we also like quoting for Patna, Agra metro.

So, like there is no constraint as such. Like if it is of our choice of work we will go anywhere pan-India. So, there is absolutely no constraints working anywhere. We have increased geographically also in this one year and vertical wise also. We have entered into water projects, tunnel projects this year as well like similarly we have increased of footprints to south. So, I think whether it is geographically or vertical wise J Kumar does not have any constraints going ahead. It is just like we should get the healthy margins what we look for.

And lastly I just want to know in terms of the debt also for the company, how do you plan on reducing the debt, any strategy that you have there?

If you see our debt is Rs 620 crores which is like a 0.2x which is very-very healthy as compared to the peers and our net debt is almost zero.

So, it is a net debt free company. So, I think we are not heavy on the balance sheets at all and going forward I think we maintain this debt which will be around 0.2 to 0.22.

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Roy Walsh

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