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Ramky Infrastructure Ltd Management Discussions

638.15
(0.06%)
Oct 8, 2025|12:00:00 AM

Ramky Infrastructure Ltd Share Price Management Discussions

INTRODUCTION

It is imperative to note that for any country to progress and step into the future, its Infrastructure is the foundation. Without proper Infrastructure no country would be able to cater to the ever increasing demand for Housing, Transportation, Electricity and Waste Treatment.

With this in mind your company has since inception has been concentrating on Water, Wastewater treatment, Roads, Electricity Transmission and Distribution (T&D) and Building and Urban Solutions.

However, due to global and National factors your company had to face severe mismatch of revenue and liabilities and had to go for restructuring of the debt with the lenders in 2015. From 2015 till 2025 your companys primary focus has been on completion of the projects in hand and prioritize revenue generating works and avoid taking up new works. With this strategy in the fore front the company has

1) Successfully completed the Ramky Elsamex Hyderabad Ring Road Limited project (REHRRL). The company has received all the annuities from the authorities except a few, the matter of which is subjudice.

2) During this period of 10 years, your company off loaded Narketpally, Addanki and Medarmetla (NAM) Road project thereby generating revenue to fund existing legacy projects.

3) During this period of 10 years of restructuring, your company has completed Sehore Kosmi Tollways Limited Project. However, the project was terminated by the authority due to reasons not in the control of the entity.

4) Further during this period of 10 years, your company has successfully commissioned and maintained the Infrastructure Facility and CETP at Visakha Pharmacity Limited (VPCL) to cater to the infrastructure needs of Pharmaceutical Companies Operating in the pharma park and treating their effluents.

5) Also the company has majorly completed the Srinagar Banihal Expressway Limited (SBEL) project and is in receipt of PCOD in 2018 itself. However, due to several reasons in the State of Jammu and Kashmir the project got delayed due to which the Lenders could not support the project. The company with the support from the promoter group entities has done progress in the project and was able to perform O&M activities on the project. Due to this delay the Annuities were not released by the Authorities and the Bankers eventually off loaded their debt to ARCs. However, on 31.03.2023 the company has entered into One time settlement with the ARCs and has cleared off the debt pending to ARCs. Post clearance of debt annuities are being released as per the agreement conditions.

During this journey of 10 years with restructuring in place and the spanning of many event and upon analysis of the condition of other players in the market the company decided that going forward the company would concentrate on Water and Wastewater treatment and urban sanitation and water treatment works and developer works where the respective governments have Budgetary allocations in place. With this strategy in place, the company has with very limited headroom has not only shown progress in the completion of the legacy projects but has also managed to achieve new projects starting from

1) In 2021, received a contract from GHMC for the Treatment of legacy leachate at Malkaram Lake in Jawahar Nagar, a one of kind unique project which involves treatment of the leachate at Malkaram Lake and release of treatment water back into the lake.

2) Further in 2022 the company has received a contract from HMWSSB for the construction and Operation and Maintenance of 5 Sewerage Treatment Plants at 4 locations around Musi River in the city of Hyderabad. Majority of the STPS have been completed and handed over to the authorities.

3) The company has during the year 2024 received supply of plant contract and supply of Installation Services contract from Power Grid Energy Services Limited in the districts of Leh and Kargil.

Keeping this brief performance of your entity into consideration for preceding 10 years and the receipt of the new orders in preceding 3-4 years the following are the scenarios that exists in the infrastructure space.

CURRENT SCENARIO:

Since your company is more towards providing sustainable infrastructure Solutions we are providing our insights as follows.

Current Dimension of Infrastructure in India:

Infrastructure development serves as a catalyst for Indias journey towards a US$ 26 trillion economy, making it critical to prioritise key investments in physical infrastructure with efforts that promote ease of doing business for increased efficiency and cost reduction. Indias infrastructure sector is expanding at a rapid pace to support the countrys transformation into a worldwide economic powerhouse, aided by a US$ 122 billion (Rs. 10 trillion) budget commitment for infrastructure investment in 2023-2024 and a number of other measures. Infrastructure investment is recognised to have a powerful multiplier impact, accelerating economic growth.

More than half of Indias urban infrastructure needs till 2030, including housing, electricity, transportation, water, and waste management, have yet to be developed.

India must invest US$ 4.5 trillion in infrastructure to enhance economic growth and societal well-being. At COP26, India pledged to achieving net zero emissions by 2070. Indias updated nationally determined contribution (NDC) includes reducing the emissions intensity of its gross domestic product (GDP) by 45% by 2030 compared to 2005, achieving 50% cumulative non-fossil fuel-based power capacities by 2030.

The NDCs and reaching Net Zero both depend heavily on the infrastructure sector. Infrastructure will be critical as India strives for sustained and fair growth in Amrit Kaal.

To boost infrastructure development in the country, the government has launched many programmes over the previous decade, including the National Infrastructure Pipeline (NIP), the National Monetisation Pipeline (NMP), the PM Gati Shakti plan, and the National Logistics Policy.

At Water and wastewater treatment sector:

Sustainable infrastructure systems are those that are planned, designed, built, operated, and decommissioned in a way that assures economic, financial, social, environmental (including climatic resilience), and institutional sustainability across the whole infrastructure life cycle. Built infrastructure, natural infrastructure, and hybrid infrastructure that combines features of both are examples of sustainable infrastructure. India requires not only infrastructure but sustainable infrastructure. A well-defined framework concentrating on project finance and incorporating environmental and social factors throughout the project lifecycle is critical to making this change. Sustainable infrastructure is critical to Indias growth, with investments in renewable energy projects critical to lowering the countrys carbon footprint and fostering a more environmentally friendly energy mix.

The capital outlay by 11 key Indian states towards Water Supply, Sanitation, Housing and Urban Development (WSSH&UD) rose at a healthy CAGR of 30% during FY2020-FY2025 budget estimates (BE) and is estimated to remain healthy, as is evident from the 8% budgeted increase in capital outlay for FY2025 (BE) over FY2024 revised estimates.

Central Governments ambitious schemes like Har Ghar Jal under JJM and the sewage treatment under the National Mission for Clean Ganga scheme are a leap towards sustainable water.

The Government of India has, over the last decade, initiated various schemes, missions and major policies in partnership with the state governments viz. Jal Jeevan Mission (JJM), Jal Shakti Abhiyan, National Water Mission (NWM), Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).

The Har Ghar Jal Programme, one of the largest drinking water programmes in the world, implemented by the JJM under the Ministry of Jal Shakti, was launched with the aim to provide rural households with affordable and regular access to adequate supply of safe drinking water through taps. As on February 23, 2024, out of the targeted 19.27 crore households, 74.58% of households, have been provided with functional household tap connections (FHTC).

Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

It is a flagship urban scheme of the Government of India as the first focused national water mission with the aim of making cities ‘water secure and providing functional water tap connections to all households. It is designed to provide universal coverage of water supply through functional taps to all households and sewerage/ septage management in select 500 cities. The AMRUT schemes prominence is reflected in the increasing proportion of AMRUT out of the total allocation to the Ministry of Housing and Urban Affairs at 13% and 17% in FY2024 RE and FY2025 BE, respectively, up from a mere 2% in FY2023. As on December 18, 2023, 1.87 crore new/ serviced tap connections have been provided through AMRUT and in convergence with the state schemes and 70% urban households are reported to have access to piped water supply.

At Industrial Waste to energy program:

Program on Energy from Urban, Industrial, Agricultural Wastes/ Residues has been notified by the Ministry of New and Renewable Energy. The programme provides Central Financial Assistance (CFA) to project developers and service charges to implementing/ inspection agencies in respect of successful commissioning of Waste to Energy plants for generation of Biogas, Bio-CNG/enriched Biogas/ Compressed Biogas, Power/ generation of producer or syngas. By undertaking this project and getting the support as backed by the government the developers can make use of the opportunity to make waste to energy plants in the country and take a forward step towards sustainability.

To achieve this the following have been the financing initiatives taken by the Government.

Green Financing: Green finance refers to financial arrangements that are unique to the usage of projects that are ecologically friendly or initiatives that incorporate components of climate change. Energy-efficient projects like green building, waste management that includes recycling, effective disposal, and energy conversion are all examples of environmentally sustainable projects. They also include the production of energy from renewable sources like solar, wind, biogas, etc.; clean transportation that involves lower greenhouse gas emissions; and more. Furthermore, projects designated as sustainable under the disclosure requirement for Green Debt Securities include climate change adaptation, sustainable waste and water management, sustainable land use, including sustainable forestry and agriculture, and biodiversity conservation. New financial instruments, such as green bonds, carbon market instruments (like a carbon tax), and new financial institutions (like green banks and green funds), are being formed in order to satisfy the funding requirements for these kinds of initiatives. They together comprise green financing.

Government Initiatives for Infrastructure sector as a whole:

1) The government launched the PM Gati Shakti National Master Plan (NMP) in 2021 which plans to allocate US$ 1.3 trillion by cutting logistic costs, increase cargo handling capacity and minimize turnaround time.

2) The National Infrastructure Pipeline (NIP) was introduced that looks at over 9,000 projects across 34 sectors with an outlay of US$ 1.2 trillion between 2020-25.

3) According to World Bank, by 2036, 600 million people will be living in urban cities in India, representing 40% of the population. This is likely to put additional pressure on the already stretched urban infrastructure and services of Indian cities – with more demand for clean drinking water, reliable power supply, efficient and safe road transport amongst others.

4) Under the PM Awas Yojana, the government has built around 3 crore houses out of which 75 lakh houses have already been delivered to the beneficiaries. The government plans to launch a loan subsidy scheme offering a subsidy between 3-6.5% for the lower income groups.

5) In January 2024, The government of Maharashtra and NTPC Green Energy Limited (NGEL) have inked a Memorandum of Understanding (MoU) for the development of green hydrogen and its derivatives (green ammonia, green methanol) with a maximum capacity of 1 MT annually. This includes the development of 2 GW of pumped storage projects as well as 5 GW of renewable energy projects in the state, either with or without storage. An investment of Rs. 80,000 crores (US$ 9.64 billion) is possible.

6) FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at Rs.1,32,601 crores (US$ 26.76 billion and Rs.2,50,628 Crore (US$ 35.24 billion), respectively, between April 2000-September 2024. FDI rules have been significantly liberalized in India and can provide foreign investors with options aligned with their business goals.

7) In the Union Budget 2025-26, capital investment outlay for infrastructure has been increased to Rs. 1.21 lakh crore (US$ 128.64 billion), which would be 3.1% of GDP.

8) Infrastructure Finance Secretariat is established to enhance opportunities for private investment in infrastructure that will assist all stakeholders for more private investment in infrastructure.

9) FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at Rs. 1,32,601.17 crore (US$ 26.76 billion) and Rs. 2,50,628.61 crore (US$ 35.24 billion), respectively, between April 2000 September 2024.

10) As a part of the Union Budget 2025-26 is complemented with a continuation of the 50-year interest-free loan states for capital expenditure and incentives for reforms., with a significantly enhanced outlay of Rs. 1.5 lakh crore (US$ 17.30 billion). In line with the PM Gati Shakti National Master Plan, the government has shortlisted eight key infrastructure projects—seven from the Ministry of Railways and one from the Ministry of Road Transport and Highways (MoRTH)—to enhance efficiency and reliability in challenging terrains. As per the Union Budget 2025-26 access to relevant data and maps from the PM Gati Shakti portal will be provided to private sector in project planning. The Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) is a government initiative aimed at developing modern infrastructure and efficient supply chain management to boost the food processing sector in India. The scheme aims to reduce agricultural wastage, increase the processing level, improve farmers returns, and create rural employment opportunities.

COMPANY PERSPECTIVE

The flagship company of the Ramky Group, Ramky Infrastructure Limited is one of the emerging infrastructure companies in India with a wide sectoral and geographical presence. Determined continually to foray into fast-growing infrastructure segments across India, the Company has diverse and extensive execution experience across key sectors of growth. Over the years core competence has been further developed by the engineering, planning and project execution skills. Ramky Infra has diversified its business portfolio which helps us to mitigate risk of slowdown in any one particular segment.

The Company is professionally managed with a well-qualified and experienced personnel in all following areas including but not limited to engineering, procurement, legal, secretarial, finance and administration combined with a full-fledged MIS system.

Ramky Infra operates through the following principal business modes: i. Engineering, Procurement & Construction (EPC) Business, which is operated by the Company, ii. Developer Business, which is operated mainly through the special purpose vehicles.

EPC BUSINESS

The Company operates the EPC business in the following sectors: i. Water and Waste-Water projects such as water treatment plants, water transmission and distribution systems, elevated and ground level service reservoirs, sewage treatment plants, common effluent treatment plants, tertiary treatment plants, underground drainage systems and lake restorations; ii. Building Construction, which includes commercial, residential, public, institutional and corporate buildings, mass housing, High-Rise, Healthcare Infrastructure, Integrated Townships projects and related infrastructure facilities such as hospitals and shopping malls; and iii. Irrigation projects such as cross-drainage works, barrages, lift irrigation projects, canals, feeder channels; iv. Roads and Bridges: This sector includes expressways, highways, bridges, flyovers, rural roads, terminals and dedicated service corridors v. Industrial: This includes parks, Industrial Infrastructure, SEZ etc. vi. Power: This includes electricity transmission networks, sub stations, feeder lines, High and low tension distribution lines.

DEVELOPER BUSINESS

Development projects undertaken on a Public-Private partnership basis with the Government and are typically awarded after qualifying through a competitive bidding process. Sectors Includes: i. Transportation & Transportation Terminals ii. Industrial parks and Industrial Solutions iii. Urban water and waste water management and Urban solutions iv. Integrated Townships

Risks:

Ramky Infrastructure Limited since its inception has been actively involving in EPC Contracts. Over the period of time, due to various experiences the management is of the understanding that EPC contracts specifically given by Government authorities are subject to many risks.

As the stakeholders are well aware that due to taking up of many projects simultaneously which required huge fund outflow and delay in release of funds from the government and other legal issues your company had faced financial problems which resulted in implementation of Stress Resolution mechanism notified by RBI. Due to this the company had and still is in the process of demonetizing its road assets thereby generating the requisite liquidity.

Therefore, keeping the past difficulties in mind and the current working scenarios the entity faces the undermentioned risks in general.

Tender Risk: The very first risk faced by the entity is in the nature of contract. Many EPC Contracts being awarded by the government are fixed price contracts with no Cost overrun or Time overrun clause into it. This is making bidding for the contract highly risky. Any deviation or un-foreseen event is having an impact on entitys margin and risk faced.

Financial Risk: Huge Financial Commitment are being required at the time of tendering which includes mobilization advances and Bank guarantees. Since this has significant impact on the working capital requirements which has to be serviced regularly, the risk of cash generation mismatch between the financial obligation becoming due and the corresponding in ability to generate revenue is evident.

Material Risk: The EPC Contracts from the Government are not including Cost escalation due to which the contractee faces great risk of not being able to procure the raw materials required for executing of contract from the market which is highly dynamic.

Manpower Risk: The construction faces a shortage of skilled Labour. Many a times labour from inter-state are brought in for execution of the work.

Compliance Risk: Execution of the Infra projects requires compliances at holistic level. Many a times the release of corresponding funds from the Government is coupled with the status of compliances done. Since, the legislations in our country are numerous there is risk associated with the execution.

Unforeseen Risk: Many a times the company specifically in areas of underground works have faced a risk wherein even after seismological test, the terrain has turned unfavourable and execution of contract has incurred huge cost which were not accommodated by the Government authorities.

Clearances Risk: In majority of the Government contracts the requisite clearances from the Government contracts have to be supported by contractor. But the company has faced many challenges in this many a times due to which there is delay in execution.

Due to these risks the company has faced over the year, the company at this point is selective in bidding process. Unless the Contract has reasonable margin and is having Cost overrun clause in it, the company is sceptical in bidding for the same would have an impact on execution of the project.

A LIST OF THE KEY OPERATING SPVS / SUBSDIARIES ALONG WITH THE DETAILS OF PROJECTS:

Sl.

Name of SPV Nature of business

No

1 Visakha A joint venture with Government of
Pharmacity Andhra Pradesh to build, operate and
Limited maintain Pharma industrial park at
Visakhapatnam, Andhra Pradesh under
Build, operate and own model
2 Pantnagar CETP A Common Effluent treatment plant
Limited set up in Uttarakhand to treat the
industrial effluents generating from
industries in State Infrastructure and
Industrial Development Corporation
of Uttarakhand Limited (SIDCUL) area
under BOT Model
3 Srinagar Banihal A subsidiary company which developed
Expressway the Road project to NHAI in the State of
Limited Jammu & Kashmir under BOT (annuity)
model. The project is currently under
O&M.
4 Hyderabad STPS A subsidiary of the company incorporated
Limited for the construction of STPs of various
capacities and sewer pipe network along
South of Musi River Hyderabad under
Hybrid Annuity Mode (HAM) including
O&M for 15 years. Majority of the STP
have been completed and handed over
to the authorities. The corresponding
annuity amount has also been received.
5 Chennai It is a subsidiary incorporated in
Biomining Limited FY 2024-25 for the "Reclamation of
Kodungaiyur Dumping Ground through
Biomining" awarded by Greater Chennai
Corporation, Chennai, Tamil Nadu.
6 Visakha Energy It is step down subsidiary to Ramky
Limited Infrastructure Limited which is for the
setting up of 7.5 MW COGEN Power
plant in Visakha Pharmacity Limited
for captive consumption and for steam
as a service.
7 RECEPS Limited It is step down subsidiary of Ramky
Infrastructure Limited at Visakha
Pharmacity Limited. It stands for
Research Centre for Pharmaceutical
Sciences to provide Advanced Analytical
and Product Research and development
facility to the Pharma Companies
Operating in Visakha Pharmacity.

FINANCIAL PERFORMANCE:

DISCUSSION ON FINANCIAL PERFORMANCE - STANDALONE Revenues

Ramky Infra recorded the revenue of INR 19,693.63 million during the year as against INR 20,331.90 million in FY 2023-24.

Other Incomes

The Other income during the year is INR 1,244.80 million as against INR 1,039.25 million for FY 2023-24.

Expenditure

The total expenditure has been INR 17,316.71 million during the year as against INR 16,515.82 million for the FY 2023-24.

Finance Costs

The finance cost has reduced from INR 682.87 million in F.Y. 2023-24 to INR 621.81 million in FY 2024-25.

Profit before Tax

The Profit before Tax has reduced from INR 4,855.34 million of FY 2023-24 to INR 3,621.71 million for F.Y. 2024-25.

Profits after Tax

Profit after Tax has been reduced to INR 2,651.78 million in F.Y. 2024-25 as against INR 3,602.20 million of FY 2023-24.

Earnings per Share

The EPS for FY 2024-25 is INR 38.32 as against INR 52.06 for FY 2023-24.

DISCUSSION ON FINANCIAL PERFORMANCE – CONSOLIDATED

The consolidated financial statements have been prepared and presented in accordance with Indian Accounting Standards (IND AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under section 133 of the Companies Act, 2013 and other relevant provisions of the Act. The Current year results include the results of 21 Companies including 20 subsidiaries and step-down subsidiaries. These companies broadly operate in Roads, Bus Terminal, Industrial Parks and others sectors.

Revenue

The consolidated turnover of the company for the FY 2024-25 has been INR 20,445.38 million as against INR 21,605.21 million for FY 2023-24.

Profit / Loss after Tax

The consolidated Profit after Tax for FY 2024-25 has been INR 2,104.90 million as against INR 3,210.73 million of preceding year.

Earnings per Share

The consolidated EPS for FY 2024-25 has been 28.54 as against INR 44.48 for FY 2023-24.

OPPORTUNITIES & THREATS

Strengths & Opportunities

Ramky Infrastructure Limited is an Integrated Infrastructure company with inherent strengths of experienced management team with broad geographic and operational base. It has an execution expertise over diversified array of projects and being considered as one stop shop for end-to-end project execution.

Growing Competition of Indian industry due to focus on efficiency and quality.

Vast export marked to explore.

Growing recognition of "Made in India" brand in global market

Major growth through outscoring opportunities

Support from the Government and better financial support from players of the Financial Eco System.

Awareness among the society at large for a better sustainable growth of the economy and pressure from world institutions to enable the economy move towards clean and green energy.

RISKS AND CONCERNS:

Risk is the concept of actual outcome deviating from the expected outcome. As an Infrastructure company following are the risks faced by the entity.

Construction Risk

Design Risk

Environmental Risk

Procurement Risk

Sub-Contractors Risk

Technology Risk

Design Risk

Disputes between labours

Changing sequences in construction activity

Non availability of resources

Change in quantities of work

In Time work permissions for executing work Safety of workers

Stoppage of work due to Medical outbreak

Delay in Land acquisitions and hand over

Legal battles for disputes

Environmental Risk:

Impact of weather condition on completion of project

Pollution by construction waste

Procedure to facilitate construction waste clean-up or disposal

Financial Risk:

Delay from clients to release funds

Unprecedented delay in executing of project

Interest service costs.

Change in Legislation leading to considerable financial outflow.

Delay in procurement of funds for taking up the project

Political Risk:

Political uncertainty.

The construction companies need to include risk as an integral part of their project management. Decision making such as risk assessment in construction projects is very important in the construction management. T he identification and assessment of project risk are the critical procedures for projecting success.

INTERNAL FINANCIAL CONTROL AND THEIR ADVOCACY

The Company has adequate Internal Financial Controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statutes, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.

Material developments in Human Resources / Industrial Relations front, including number of people employed

Ramky Infrastructure Limited believes in creating an environment, wherein human resources derive a sense of purpose, passion and personal growth at work, leading to better organizational performance. Towards realizing this, the company relies on the four pillars, namely, talent engagement, performance management, Capability development and maintaining cordial industrial relations. It also believes in review of its HR processes and systems on an ongoing basis to optimize costs, time and labour.

FORWARD LOOKING STATEMENTS

Substantial efforts are being made to close down all the old projects and move towards water & wastewater and sustainable projects. With the various measures taken up by the Governments for reviving the economy and various sectoral financial assistance from the Banking and financial sectors your company is hoping that a head way will be made in operations of the entity.

For and on behalf of the Board of

Ramky Infrastructure Limited

Sd/- Sd/-

Y R Nagaraja

Eshwar Reddy Purmandla
Managing Director Director
DIN: 00009810 DIN: 01892327

Place: Hyderabad

Date : 08.08.2025

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