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Chavda Infra Ltd

| Q4 FY25 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤30th May 25

Summary : Chavda Infra reported steady FY25 growth despite project delays, plans a ₹100 crore fundraise for expansion, and aims to double business every three years while addressing cash flow and debt.

Management Perspective positive : We are happy to share that we have delivered a steady performance. This capital inclusion will further bolster our financial position and support our expansion plan. Our aim is to double it every cycle. We are very particular about this. Once it has happened it's not going to happen again.

Concall Report Analysis & Insights

Business Overview

  1. Chavda Infra focuses on private sector construction in Ahmedabad, GIFT, and Gandhinagar.
  2. The company emphasizes quality, rapid project delivery, and a robust in-house ecosystem.
  3. Successfully completed BeFree, its first project in GIFT city, and 8 projects in FY25.
  4. Outstanding unexecuted orderbook stands at ₹953 crores as of May 30, 2025.
  5. Orderbook is diversified with 41% residential, 51% commercial, and 8% institutional projects.

Future Growth Prospects

  1. Board approved raising up to ₹100 crores for expansion and working capital needs.
  2. Aims to double business every three years, focusing on sustainable and profitable growth.
  3. Plans to expand geographically to Mumbai, Bangalore, Hyderabad, and Delhi in 4-5 years.
  4. Exploring diversification into the industrial segment within the next 4-6 months.
  5. Targeting 300-350 crores in revenue for FY26, with a minimum order inflow of 300 crores.

Management Insights

  1. FY25 saw steady performance with revenue up 8%, EBITDA up 33%, and net earnings up 12%.
  2. The company's core philosophy is building a sustainable, predictable, and consistently profitable business.
  3. Management aims to double the business every three-year cycle.
  4. Current focus is on strengthening presence in existing markets and developing skyscraper technology.
  5. Anticipates substantial collections in H1 FY26 to ease receivables and reduce short-term borrowings.

Signs of Skepticism

  1. Despite strong order book, FY25 revenue growth was only 8% due to project delays and cancellation.
  2. Cash flow from operations was negative, leading to increased short-term borrowings.
  3. Receivables increased significantly (80-90% YoY), impacting liquidity.
  4. Fundraising is needed to regularize cash flow and reduce debt, despite high EBITDA margins.
  5. Management took on debt to continue projects when fundraising was delayed due to market volatility.

Risk Factors

  1. FY25 performance was muted due to project execution spillover into Q1FY26.
  2. Regulatory and technical reasons, like a broken diaphragm wall, caused project delays.
  3. One project was cancelled in FY25 due to commercial reasons.
  4. Cash flow from operations was negative ₹32.8 crores in FY25 due to elevated trade receivables.
  5. Increased short-term borrowings were needed to support working capital requirements.

Good To Know

  1. The company completed construction of BeFree, its first project in GIFT city.
  2. Slab placement time for Mondel One reduced from 15 to 10 days, improving execution and payment cycles.
  3. In FY25, the company incurred ₹24 crores in capex, with net block at ₹74 crores.
  4. Total borrowings stood at ₹162 crores, with ₹18 crores of sanctioned credit facilities available.
  5. Manali redevelopment project is 100% sold out and completed, with ₹35 crores unbilled revenue.

Key Drivers

  1. ₹100 crore fundraise to bolster finances.
  2. New projects awarded, strong order book.
  3. Geographical expansion into Tier 1 cities.
  4. Diversification into industrial segment.

Key Analyst Discussions

Competitive Environment

  1. Differentiates by focusing solely on the private sector, unlike peers.
  2. Strong geographical advantage in Ahmedabad, GIFT, and Gandhinagar due to high development.
  3. Credibility from quality and speed allows direct project awards with good margins.
  4. Has an entire in-house ecosystem (logistics, lab, QA-QC, PM) for rapid service.
  5. Management believes margins will remain stable despite investment in new technology.

Financial Highlights

  1. FY25 revenue grew 8% YoY to ₹260 crores; H2 FY25 revenue grew 4% YoY to ₹145 crores.
  2. EBITDA grew 33% YoY to ₹56 crores, with margins at 21.6% in FY25.
  3. PAT grew 12% YoY to ₹21 crores, with margins at 8.0% in FY25.
  4. Cash flow from operations was negative ₹32.8 crores due to back-ended revenues and elevated trade receivables.
  5. Total debt is ₹160 crores, with an average interest rate of 9%.

Product Composition

  1. Primarily focused on commercial and residential projects.
  2. Orderbook is 41% residential, 51% commercial, and 8% institutional.
  3. Exploring diversification into the industrial segment in the near future.
  4. Currently focused on developing skyscraper technology and culture.

Strategic Considerations

  1. Typical execution cycle for projects is 2 to 3 years.
  2. Geographical expansion beyond Gujarat planned for top-tier cities in 4-5 years.
  3. Fundraising of up to ₹100 crores is planned to improve cash flow and support new projects.
  4. Management expects to close the fundraise within 2-3 months.
  5. Merger of Chavda Infra with developers and RMC is planned post-fundraising, expected within FY26.