All the rumours are false, we have a strong balance sheet: Rohan Suryavanshi, Dilip Buildcon
Rohan Suryavanshi, Head, strategy & planning, Dilip Buildcon, says the balance sheet is among the top 3 in the industry. The top line revenue has almost doubled between 2016 and 2018 and the revenue guidance for FY19 is Rs 10,000 crore. Hew was talking to ET Now.
How does a 50% fall in stock price go down with you because there are rumours doing the rounds? I do not know how much of it is true and please refute that if they are just rumours that there are some concerns with auditors over the balance sheet. What is going on?
If you ask me about the stock price, honestly that is something that I do not really understand. What I understand is this is a market phenomenon right now and there is a massive carnage in the small and the midcap space. All companies in our sector have cracked 40-45% irrespective of whatever their concerns are or rumours might or might not be. So, sooner or later, there would be sanity in the market and we will wait for that.
As per the rumours that have kind been circulating, all of them are false and we have already clarified them on many occasions. Even our auditors came out with the clarification that these are all false and both of them submitted to the exchange their letter indicating their willingness to continue. The balance sheet has been stronger than ever. These rumours about us having a weak balance sheet are false. If you speak to any analyst who covers all the infrastructure stocks, our balance sheet is actually amongst the top two or three in the industry.
You are saying that you have addressed those concerns and they have been put to rest. That this is a market adjustment and it will take its time. But, have any institutional investors sold out to your knowledge?
No, the big institutional investors have not sold out to our knowledge in that sense. Why all this happened I guess is because the HNI retail and lot of the people who trade on margins, as the carnage started in midcaps and smallcaps due to the change in the SEBI regulations and also us being put under ASM ( Additional Surveillance Measure), have panicked and sold. We have written to the regulator about why we are put under ASM but we have had a standard reply on that. I guess the regulator takes the decisions from time to time and sooner or later, we should come out of it.
You have also got an analyst meet lined up and in the light of all that, you are saying what your line of defence is going to be. I am sure you are going to be questioned about whether or not there is strong revenue visibility for FY19-FY20. What is going to happen to order inflows and of course being questioned on the stock fall?
There is no difference for us. At the analyst meet, we would be explaining to people how the industry has changed over the last few years, what has been happening, where do we foresee it going forward, what has Dilip Buildcon been doing in the same time, how our business models might have been changing, the impact that it has on business, on P&L, on balance sheet etc.
In terms of how our revenues is looking, I do not think revenues has ever been a concern for us as a company. If you look at our track record, even in the last two years, we have almost doubled from FY16. We were at Rs 4000 crore of top line and in FY18 we were at Rs 7700 crore of top line. The guidance that we have given for FY19 is about Rs 10,000 crore which is a growth that we have already demonstrated even this year.
We grew from Rs 5,000 crore to 7,700 crore — almost Rs 2700 crore of growth. This is a growth that has been demonstrated and once our quarterly results also start coming out, all these concerns will be dispelled. The order book currently stands at about Rs 26,000 crore which is about Rs 14,000 for EPC orders, Rs 12,000 crore for the HAM orders. This gives us a order visibility of almost three plus years where from our trailing revenue, even this year we hope to bag another 8000-10000 crore of orders at least.
So we are not worried because there is a very strong order book pipeline coming out from the central government. 99.5% of our orders are from the central government which has been ordering at a record pace in the last few years. We are in a very good place for this industry. All players in the sector have about a three to five years forward looking order book. Orders have been going at a very good rate, there has not been a lot of competitive intensity. So we continue to be very very positive on the order book, on the earnings that we should see in the next couple of years at least three years which we have visibility for.
There are two concerns emerging when you speak to people who track your company rather closely or are investors as well. They are saying there is no denying that there is very strong revenue as well as order visibility in Dilip Buildcon but how is such a large company growing at a such a fast pace being able to deliver orders on time? Are there any execution concerns and what about debt?
Let me first answer the debt question. In the last four years, our debt has only increased by about 25% but in the same time our top line has increased 300%. Our top line went from Rs 2600 crore in FY15 to Rs 7700 crore in the same time but our debt levels went from Rs 2400 crore to Rs 2800-2900 crore in the same time.
We have become far more efficient with our working capital as well as with the debt that we have raised. So these concerns which the market may have, historical data does not support it/ We have not been raising debt at the same pace as earlier because we were in that growth phase at that time. We had made investments and all those investments are paying off right now. So even though we may still invest in equipment, we will still invest in our assets going forward. But we have also become more careful in terms of how we are growing.
Our working capital cycle is less than 100 days — about 95 days or so. This is actually amongst the best in the industry working capital cycle. If if we do a thorough analysis of all the top players in the industry, we will be among the top 10 for sure.
Coming to revenue. again like I said, we do not see any issue. Our top line Q4 revenue was about Rs 2600 crore. This pace will continue throughout the year. We do not foresee any problem. We have time and again proved that whatever we say, we are committed to deliver it. Every year, we have given a guidance and we have gone ahead and beaten that guidance. You have our track record for the last two years as well.