RBM Infracon Ltd Q1 FY2025 Concall Summary

Key Takeaways

• Revenue nearly doubled, margins surged: Revenue grew 98% YoY to INR 38.86 crore, while EBITDA margin expanded 507 bps to 12.31%, driven by strong execution and operating leverage.
• Epitome order is the near-term engine: INR 135 crore advance received on the INR 957 crore order; Q2 billing alone is expected at ~INR 60 crore, pushing total Q2 revenue guidance to INR 102 crore.
• Ambitious diversification is now underway: The company is expanding into solar EPC and green hydrogen, with a solar win already secured and a green hydrogen technology partner being evaluated, targeting a 57-65% revenue CAGR through FY26.
• Cash flow turned negative on aggressive procurement: Operating cash flow was negative as the company built inventory for Epitome, Adani, and Chambal projects; management expects this to reverse as material converts to revenue over the next 2-3 months.
• What to watch next quarter: Whether the INR 102 crore Q2 revenue materializes, the Reliance INR 500 crore order notification lands, and any disclosure on the ONGC order after the promised 10-15 day advisory window.

Epitome Project: Progress & Delays

• Billing acceleration: INR 27 crore billed through March; Q2 billing expected at ~INR 60 crore as all material delivery completes by September end and invoicing proceeds properly.
• Rain-driven delay: Phase 1, originally due March, faces a one-month delay due to continuous rain in Gujarat causing waterlogging at the foundation site; Phase 2 is also delayed by roughly one month. Management has discussed with Epitome and expects LD charges will not be levied.
• FY25 completion targeted: Equipment orders are placed; installation of tanks, pipelines, structures, and cooling towers is the main site activity. Phase 1 is expected mostly complete next year, with Phase 2 equipment erection and fabrication winding up by end of 2025.
• No penalty precedent: Management stated no past penalty has been levied on any project, though INR 25-50 lakh has been deducted over the years across various projects for miscellaneous reasons.

Jay Bajrang Mani: "First phase humara March mein complete karna tha, lekin ho sakta hai one month delay hoga due to aur second month second phase bhi humara almost on-time complete nahi hua to one month aage peeche ho, kyunki Gujarat mein do mahine se continue barish humko pareshan kar rahi hai."

New Vertical Expansion

• Three-pronged strategy: The company is expanding into oil and gas exploration and production, solar EPC (by end of 2025), and green hydrogen production covering green and blue ammonia, projecting a 57-65% revenue CAGR from FY24 to FY26.
• Solar win secured: A solar sector deal has been won; management declined to disclose details publicly, stating results will reveal it. A solar team is formed, small work is ongoing, and bids have been submitted for Andhra government and Kusum Yojana projects.
• Deliberate pace in solar: Management spent 3-4 months working with ReNew and Kalpataru to gain experience and identify bottlenecks, deliberately moving slowly to avoid mistakes.
• Green hydrogen groundwork: A small team has been working for two months; discussions are ongoing with a company that has sold plants to Oman and Russia as a technology partner, with Government of India approvals being sought. The first project will be in Gujarat, with a public announcement expected next financial year.
• Oil & gas team build-out: Sanjay Singh and Deepak Saxena (Commercial VP) have been hired; six retired personnel have been working on this vertical for about one year, with one more senior person to be added.

Aditya Jay Bajrang Mani: "This ambitious growth is driven by our strategic expansion into three new verticals, that is oil and gas exploration and their production, solar sector by the end of year 2025 and green hydrogen production, which relates to the green ammonia and blue ammonia also."

Order Book & Pipeline

• Reliance INR 500 crore order: Bidding is complete. The client has not provided a fixed cab value, instead offering an open-ended scope. Management expects to notify within the next week.
• ONGC order: Management declined to provide any update in the public domain, stating information will be shared after advice from advisors in 10-15 days.
• Vision BN project: 70-80% complete with maximum invoicing happening this month; INR 15-20 crore balance remains.
• Solar order notification: Expected within one week, delayed due to Gujarat rains.

Jay Bajrang Mani: "wo bole tum kaam karo INR 500 crore jitna karna hai wo karo, hum aapko ek samundar mein utaar rahe hai jitna paani bhar raha hai bhar lo"

Financials & Cash Flow

• Q1 FY25 performance: Revenue of INR 38.86 crore (up 98% YoY), EBITDA of INR 4.79 crore (up 237% YoY), and PAT of ~INR 3.29 crore (up 249% YoY). PAT margin expanded 355 bps to 8.46%.
• Negative operating cash flow: Driven by high procurement for new projects (Epitome, Adani, Chambal Fertilisers) and advances given to suppliers like Thermax. Management characterized this as temporary, tied to capacity expansion, and expects no negative cash flow for the full year.
• Revenue conversion pipeline: INR 85 crore already invoiced; INR 102 crore in advances will convert to revenue as material arrives at site over the next 2-3 months.
• Working capital days: An analyst flagged working capital days exceeding 200; management gave a general answer about procurement and advances but did not provide a specific plan or target for reduction.
• Funding posture: Management will approach investors after a project is won and cash is in hand; for a INR 200-250 crore project, they will call investors. ICICI Bank is described as very supportive. Total disclosed loans stand at INR 43 crore at 9% interest.

Margins & Profitability

• Margin expansion levers: Management asserts margins on large projects will increase, not decrease, citing the PPP model, fixed machinery costs, and low labor content. Subcontractors and rate cutting are being used to further explore margin improvement.
• FY25 PAT margin target: 10% on INR 400 crore revenue, yielding INR 40 crore PAT.
• Operational margin range: Targeting 13-15% operational margin.
• ONGC project risk: Aditya identified the ONGC project as the biggest business risk, involving INR 13-20 crore investment, production-based returns, and a need for proper O&M.

Jay Bajrang Mani: "बडे projects जो हम ले रहे हैं उसमें आप सही बात एकदम सही बात बोले हमें बडे project जीतने बडे project अभी जो दो project हमने quote किए हैं उसमें मैं कोई ऐसा चीज़ नहीं लिया हूँ की जिसमें हमारे खर्चे बहुत ज्यादा होंगे। उसमें margin बढ़ सकता है, कम नहीं हो सकता।"

Strategy & Ambition

• Market cap target: INR 5,000 crore, stated at the AGM; management is working towards it and expects to show results soon.
• Growth trajectory: Every year revenue is expected to double or triple; management says they are "full court" and seeking support from bankers and investors.
• Gujarat concentration: Management expressed a strong preference for Gujarat, citing a favorable environment with minimal local issues and no union presence, stating they could execute even INR 5,000 crore of work there if needed, but prefer to grow slowly.
• Solar scaling ambition: Management sees potential for INR 50 crore, INR 500 crore, or even INR 1,000 crore per year in revenue from solar over time.
• Own solar unit: RBM is in talks with the government to set up its own solar unit.

Jay Bajrang Mani: "green hydrogen ka toh future aisa hai ki jaise aap Geeta ka paath padhte hain na aapko jitna interest aata hai"

Guidance & Commitments

Key Metrics