In This Article:
Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Dhruv Consultancy Services Ltd (BOM:541302) has secured its first international order in Mozambique, valued at $5 lakh, marking a significant milestone in its global expansion.
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The company has demonstrated a robust year-on-year revenue growth of 42.88% in Q2 FY25, with total revenue reaching 32.92 crore.
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Dhruv Consultancy Services Ltd (BOM:541302) has a strong technical score consistently above 95, providing a competitive edge in securing projects.
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The company is actively pursuing international opportunities, having submitted expressions of interest for 145 projects across Africa and Southeast Asia, and is shortlisted for 21 projects.
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The company plans to submit bids worth EUR1,500, with an anticipated financial order book of around 802,000 EUR, indicating a strong pipeline of potential projects.
Negative Points
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The company's profit after tax margin is relatively low at 5.73%, indicating room for improvement in profitability.
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There are challenges related to mobilization expenses, which have increased due to new project starts and have impacted short-term profitability.
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Dhruv Consultancy Services Ltd (BOM:541302) faces potential delays in project execution due to factors like land acquisition and environmental clearances, which are beyond its control.
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The company has experienced a significant increase in other expenses, rising from 13 crore to 23 crore, which may affect overall financial performance.
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There are risks associated with international projects, including compliance and regulatory challenges, although the company is mitigating currency risks by dealing in USD.
Q & A Highlights
Q: With the diluted EPS aligning with last year, what is your outlook for EPS growth given the expected expansion in the order book? A: The non-executive director mentioned that the current unexecuted order book stands at 300 crore, with bids submitted for 700 crore. They expect the order book to double in the next year, positively impacting EBIT and EPS.
Q: With the new capital raise, how will you ensure that the return on this investment meets or exceeds the cost of capital? A: The company plans to invest in state-of-the-art equipment for testing, repay high-interest debt, and enhance bank guarantee limits to support more bids. This strategy is expected to improve operational efficiency and profitability.
Q: As the only listed company in your sector with a high technical score, how do you maintain this advantage against competitors? A: The technical score is crucial, as it accounts for 80% of the bid evaluation. A higher score allows for higher bid prices and better profit margins. The company is focusing on maintaining high technical scores to secure more projects.