Ceigall India Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Ramneek Sehgal (Chairman cum Managing Director), Kapil Aggarwal (Chief Financial Officer), A. Sarvanan (Whole Time Director)

Analysts

5 Chetrika Deshpandi (Individual Investor), Mahesh Patil (ICICI Securities), Parth Thakkar (JM Financial), Vaibhav Shah (JM Financial), Yash Parker (Individual Investor)

Financials & KPIs

Geographic & Segment Commentary

Roads & Highways (EPC + HAM): Core segment with 10 HAM projects and 19 EPC projects ongoing. Signed concession agreement for Ambala-Chandigarh 04 HAM; received NQ for VRP 11/12 Indore-Ajay Greenfield HAM enabling execution commencement. Northern Ayodhya bypass execution dipped to ₹42 crores in Q1 due to milestone-based billing timing, though management confirmed steady progress with all milestones achieved ahead of schedule. Southern Ludhiana execution constrained by land availability (only 62% land in possession), with FY27 execution target of ~15%.

Renewable Energy: Expanding footprint with PPA signed for Solar BESS at Marina; emerged L1 for standalone battery storage project. PM Kusum projects in Maharashtra and Madhya Pradesh progressing well. Marina project pending transmission line availability; management expects start once transmission tender concludes — an "easy project" given single-location construction.

Transmission & Distribution: Included among 9 renewable and T&D projects in order book; diversification into country's evolving energy requirements, leveraging core execution capabilities to enter high-growth energy infrastructure segments.

International (Romania & UAE): Quoted tenders in Romania and Dubai; adopting deliberately conservative approach due to geopolitical uncertainty (war situation) and robust domestic order book. Management emphasized taking "baby steps" internationally with Seagull Global Pte Ltd and UAE entity not expected to contribute meaningful revenue in FY27.

Company-Specific & Strategic Commentary

Capital Recycling Strategy: Successfully monetized first HAM asset (Mallor-above-Sadhuari project divestment) in Q1FY27 — critical validation of the execute-construct-monetize-redeploy model. Management targets 25% IRR at project level; divestment delivered above committed/guided IRR, supporting future asset sales of completed projects.

Portfolio Diversification: Company now spans 11 verticals across highways, expressways, metro rail, renewable energy, transmission & distribution, and industrial infrastructure. Diversification reduces single-segment dependency and broadens participation in government infrastructure spending across transportation, energy transmission, and urban infrastructure.

Asset Monetization & Equity Deployment: IPO-era equity of ₹253 crores grown to ₹692 crores currently; balance commitments of ₹859 crores (FY27) and ₹744 crores (FY28) across HAM and solar projects. VRP 11/12 requires 50% upfront equity infusion per sanction terms — detailed project-wise deployment targets shared, including ₹97 crores and ₹139 crores for VRP 11 and 12 respectively.

Working Capital Efficiency: Management expects working capital intensity to improve in FY27 and further in FY28, aided by government relaxation measures — supporting improved cash conversion alongside execution growth.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Project-wise Execution Outlook

• Question: Northern Ayodhya bypass execution fell to ₹42 crores — any specific issue? What execution can we expect from VRP 11/12 and Southern Ludhiana? (Vaibhav Shah)
• Answer: No issues; milestone-based billing creates timing volatility — payments only upon milestone achievement, and last 1.5 months were laying work. VRP 11/12 targeting 20-25% execution in FY27. Southern Ludhiana constrained by land (62% available), so targeting ~15% this year. (Ramneek Sehgal)
• Follow-up on ADs for two HAM projects: Bihar FC due next month (Q3 AD expected), Punjab FC in November (Q4 AD). Banks already tied up; AD typically 2-3 months post-FC. (Ramneek Sehgal)

HAM & Solar Equity Commitments

• Question: What equity investments assumed for HAM and solar in FY27 and FY28? (Vaibhav Shah)
• Answer: Current invested equity ₹692 crores vs ₹253 crores at IPO. FY27 balance commitment ₹859 crores — ₹550 crores HAM and ₹310 crores solar. FY28: ₹744 crores — ₹444 crores HAM and ₹300 crores solar. Q1FY27 invested ₹23 crores. VRP 11/12 requires 50% upfront equity per sanction; other projects infuse equity as progress is achieved. (Ramneek Sehgal, Kapil Aggarwal)

Margin Performance vs Guidance

• Question: Q1 margins of 13.4% versus full-year guidance of 11-12.5% — what drove improvement, any one-offs, is guidance maintained? (Mahesh Patil)
• Answer: Three new projects started in Q1 (Maharashtra MH1/MH2 solar, Indore HAM road). Three more projects about to start (appointed dates received in July) will support margins. Guidance of 11-12.5% fully maintained — Q1 beat not treated as run-rate. (Kapil Aggarwal)

Order Inflow Trajectory

• Question: Q1 order inflow was modest at ~₹600 crores — timing issue or acceleration expected? (Mahesh Patil, Chetrika Deshpandi)
• Answer: Order inflows are normally weighted to Q3 and Q4; last year 45% of the order book came in Q4. FY27 guidance of ₹6,000 crores remains unchanged and is "achievable during the year." (Ramneek Sehgal)

Capex & Machinery Deployment

• Question: What was Q1 capex and what is the full-year expectation? (Parth Thakkar)
• Answer: Q1 capex of ₹14 crores, primarily for a launcher purchased at Danapur. Over ₹100 crores of machinery already procured from IPO proceeds. Going forward only specialized machinery will be bought — full-year capex guidance of ₹30-35 crores. (Kapil Aggarwal)

Declining Depreciation & Other Income

• Question: Depreciation fell sharply from ~₹30 crores to ₹9.5 crores; other income fell from ₹15 crores to ₹9.5 crores — are these run-rate levels? (Vaibhav Shah)
• Answer: Depreciation decline due to asset sales in previous financial year and WDV method (depreciation reduces each year on same block); will increase if new machinery purchased. Other income decline because IPO proceeds fully utilized in Q4FY26 (no more surplus FD interest) and warranty income no longer being charged. Current Q1 run-rate of other income is sustainable. (Kapil Aggarwal)

Commercial Paper Issuance Rationale

• Question: What is the ₹100 crores commercial paper intended to fund given the long-tenure nature of HAM/EPC cash flows? (Yash Parker)
• Answer: CPs carved out from working capital requirements — CP rate of 6.8-7% versus working capital loan rate of 7.5-7.8%, reducing finance costs. Also establishes market presence and visibility for the company. (Kapil Aggarwal)

ROE Decline & International Expansion

• Question: Consolidated ROE fell to 14% in FY26 while ROCE stayed at 19-20% — is this capital structure or genuine decline? Also, what is the near-term international pipeline? (Yash Parker)
• Answer: ROE decline purely a function of expanded equity base (₹2,098 crores equity share capital post-IPO/QIP), not operational deterioration. International: conservative approach with tenders quoted in Romania and Dubai; war situation has made management more cautious; domestic order book remains robust and international contribution will be gradual. (Kapil Aggarwal, Ramneek Sehgal)

Working Capital Outlook

• Question: Will working capital intensity improve in FY27 or stay elevated due to higher execution? (Chetrika Deshpandi)
• Answer: Definite improvement expected in FY27 on the back of government relaxation measures, with further improvement in FY28. (Kapil Aggarwal)

Key Takeaway

Ceigall India delivered a healthy Q1FY27 despite seasonal monsoon softness — standalone revenue of ₹901 crores (+10.2% YoY), EBITDA margin expansion to 13.4% (up 200 bps YoY), and PAT of ₹75 crores (+33.9% YoY). The quarter's defining strategic milestone was the first HAM asset monetization (Mallor-above-Sadhuari divestment), validating the capital recycling model and supporting management's 25% project-level IRR ambition. Order book stands at ₹18,568 crores across 39 projects spanning EPC, HAM, DBFOT, renewable, and T&D segments, with revenue growth guidance raised to minimum 15% for FY27. Management maintained EBITDA margin guidance of 11-12.5% despite the Q1 beat, citing project mobilization normalization. Key execution watch points include Southern Ludhiana's land constraints (62% availability), ₹859 crores of FY27 equity commitments across HAM and solar projects, and the back-loaded order inflow profile — with management confident of achieving the ₹6,000 crores annual ordering target driven by Q3/Q4 award momentum.