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Dhruv Consultancy Services Ltd

| Q3 FY26 Results Conference Call

NEUTRAL SENTIMENT

Report Source

⬤6th Mar 26

Summary : Infrastructure consultancy navigating accounting adjustments, focusing on diversification, international expansion, and a strong order book for future growth.

Management Perspective positive : We remain confident in our ability to deliver sustainable and long-term value. The future looks to be bright. The company remains positive in achieving revenues that have been mentioned in the order book.

Concall Report Analysis & Insights

Business Overview

  1. Established in 2003, Dhruv Consultancy Services is a prominent Indian infrastructure consultancy firm.
  2. The company provides comprehensive solutions across design, engineering, procurement, and project management.
  3. Core services include detailed project reports, feasibility studies, supervision, and technical audits.
  4. Successfully executed over 250 projects for esteemed government clients like NHAI and MMRDA.
  5. Team comprises over 350 professionals, with 75% qualified engineers.

Future Growth Prospects

  1. Achieved a significant milestone by entering the aviation sector in October 2025.
  2. Secured several new mandates across multiple states, enhancing geographical diversification.
  3. Strong unexecuted order book of INR 256 crores provides healthy revenue visibility.
  4. Strategically diversifying into new infrastructure segments like railways, metros, and urban infrastructure.
  5. Exploring international opportunities in Southeast Asia and the Middle East.

Management Insights

  1. The INR 30 crore accounting adjustment is non-cash, a book adjustment, not impacting operational cash flows.
  2. The company's underlying business remains robust, supported by diversified mandates and a healthy order pipeline.
  3. Management is confident in delivering sustainable and long-term value to stakeholders.
  4. Strengthened internal control systems to prevent future accounting adjustments.
  5. Adopting a conservative, milestone-driven approach for unbilled revenue recognition.

Signs of Skepticism

  1. Analysts questioned the nature and cash flow impact of the INR 30 crore accounting reversal.
  2. Concerns raised about the company's historically negative operational cash flows.
  3. Analyst sought clarification on the composition and liquidity of 'other assets' on the balance sheet.
  4. Corporate governance concerns were highlighted by an analyst due to past issues and current adjustments.

Risk Factors

  1. Reported a dip in revenue and profitability due to a one-time prospective accounting adjustment of INR 30 crores.
  2. The accounting adjustment led to a credit rating downgrade.
  3. Historically, operational cash flows have been negative, a point of analyst concern.
  4. Geopolitical situations, like war in the Middle East, can slow international project progress.
  5. Dependency on a single client or service type increased past competition.

Good To Know

  1. The company migrated from the SME board to the main board, adopting Ind AS accounting standards.
  2. NHAI policy changes regarding project stages and manpower deployment necessitated accounting revisions.
  3. The accounting adjustment was a refinement of forward-looking assumptions, not misreporting.
  4. Management is continuously traveling and exploring international opportunities, forming local partnerships.
  5. The company aims to be a multinational entity, requiring stronger internal governance.

Key Drivers

  1. Strong INR 256 crore order book.
  2. Diversifying into new infrastructure sectors.
  3. International expansion into Middle East.
  4. Government focus on infrastructure development.

Key Analyst Discussions

Competitive Environment

  1. How the company's 20+ years of track record differentiates it in competitive bidding.
  2. Impact of NHAI's new bidding policy focusing on technical capability over financial numbers.
  3. How the company is positioned to benefit from government focus on infrastructure development.

Market Trends & Consumer Behavior

  1. Impact of continued government focus on infrastructure development.
  2. How the Viksit Bharat 2047 vision aligns with the company's growth strategy.
  3. Market trends in airport development and their potential for the company.

Financial Highlights

  1. Clarification on the INR 30 crore accounting reversal and its cash flow impact.
  2. Explanation of revenue recognition methods (GST-based, unbilled revenue).
  3. Inquiry about the composition and liquidity of 'other assets' on the balance sheet.
  4. Questions regarding the company's consistently negative operational cash flows.
  5. Details on how the company funded expenses despite revenue adjustments.

Product Composition

  1. Contribution of the new aviation consultancy segment to future revenue.
  2. Strategic vision behind diversifying beyond highways and bridges.
  3. Steps taken to diversify geographically and reduce concentration risk.
  4. Proportion of new orders coming from non-road consultancy services.

Strategic Considerations

  1. Progress towards the Vision 2030 target of INR 1,000 crores order book.
  2. Status and prospects of international expansion, particularly in Africa and the Middle East.
  3. Management's actions to address corporate governance concerns.
  4. Expected execution timeline for the INR 256 crores unexecuted order book.