Ircon International aims for Rs 12,000 cr orders, focuses on growth

construction

Engineering and construction company IRCON International is aiming to secure orders worth Rs 10,000 - 12,000 crore in the fiscal year 2023-24. The company's director of finance, Ragini Advani, revealed during a post-earnings analyst call that IRCON intends to close the fiscal year with an order book totaling Rs 35,000 crore. New orders are anticipated to fall within the range of Rs 10,000 - 12,000 crore.

Advani indicated that IRCON is in the final stages of securing major contracts, pending the receipt of the letter of award. She expressed confidence in winning these contracts based on the company's technical expertise, historical pricing, and advanced discussions on certain projects.

Despite a sluggish order inflow in the initial quarter of 2023-24, Advani affirmed IRCON's confidence in securing substantial projects. She noted that the company has reinvigorated its marketing and business development endeavors in the current fiscal, following a focus on order execution in the previous fiscal.

For the quarter ending June 2023, IRCON International secured orders amounting to Rs 200 crore - Rs 250 crore. As of June 30, 2023, the company's total order book stood at Rs 32,486 crore, distributed among the railway segment (Rs 23,613 crore), highway projects (Rs 6,906 crore), and other categories (Rs 1,967 crore).

Advani confirmed IRCON's commitment to achieving 10 percent year-on-year revenue growth in 2023-24, despite a notable 35.7 percent year-on-year rise in consolidated revenue from operations during the quarter, reaching Rs 2,712.2 crore.

Looking ahead to the final two quarters of 2023-24, Advani anticipates a slowdown in order execution due to upcoming general elections in 2024, extended monsoon periods, and a decline in government order inflow.

She also mentioned the possibility of revising revenue and bottom-line guidance after the second quarter of 2023-24 if the company continues to report high double-digit growth in its topline.

Advani asserted that IRCON would maintain its Profit After Tax margins within the range of 7-7.5 percent and its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin within the range of 10-11 percent.

IRCON International is planning a capital expenditure of Rs 500 crore in 2023-24 as part of a broader plan to invest around Rs 1,150 - Rs 1,200 crore over the next few years. The company has already invested approximately Rs 2,200 crore in capital expenditure in recent years.

Regarding the Indian Railways Amrit Bharat Stations scheme, Advani stated that IRCON would not bid for numerous stations due to their small scale (Rs 20 crore projects). However, the company expressed interest in select stations with higher values under the scheme.

On August 6, Prime Minister Narendra Modi inaugurated the redevelopment of 508 railway stations across the country through virtual means, with a projected cost exceeding Rs 24,470 crore.

State-owned engineering and construction firm Ircon International reported a 29.6 percent year-on-year increase in consolidated net profit, reaching Rs 187.4 crore for the first quarter ending June 30, 2023. Additionally, the company's EBITDA surged by 31.2 percent to Rs 208.8 crore during the same period.

The EBITDA margin for the reporting quarter was recorded at 7.8 percent, compared to 8 percent in the corresponding period of the previous fiscal.

Ircon highlighted its growing success in securing orders through competitive bidding, which accounted for 55 percent of the total order book as of June 30, 2023.

Ircon, a Miniratna (Category - I) public sector enterprise, is a prominent turnkey construction company specializing in railway and highway projects.