Bigbloc Construction Ltd

Ladies and gentlemen, good day, and welcome to the Bigbloc Construction Limited Q1FY26 Earnings Confer- ence Call hosted by Ventura Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then 0 on your touch- tone phone.

Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities, I welcome you all to the Bigbloc Construction Limited Q1FY26 earnings conference call. The company is today represented by Mr. Mohit Saboo, Chief financial officer, Mr. Manish Saboo, Promoter. I would now like to hand over the call to Mr.

Mohit Saboo for his opening remarks. Thank you, and over to you, sir.

Good afternoon, everyone. It is my pleasure to welcome you all to Bigbloc Construction earnings conference call for the first quarter FY26. I will take you through our financial and operational performance for the quar- ter along with some key updates on our ongoing initiatives. For Q1 FY26, Big Bloc Construction reported consolidated revenue from operations of Rs. 564 million, an increase of 9.3% compared to the same quarter last year.

The growth was driven by higher sales volumes which rose by 25.3% YoY to 1,67,835 cubic meters. This vol- ume increase was partially offset by lower average realisations during the quarter. Sequentially, volumes were lower by 4.3% reflecting seasonal moderation following the festive period, the onset of monsoons and continuous slowdown in the real estate sector as well as labour availability, which remains a key demand driver for our products. On the profitability front, gross profit was Rs. 304 million at a margin of 53.9%.

EBITDA for the quarter was Rs. 13 million with a margin of 2.3%. The decline in margins compared to the previous year was mainly due to softer pricing, lower capacity utilisation and seasonal demand patterns. Con- solidated capacity utilisation for the quarter was 53% with utilization of Star Bigbloc building material at 62%, Bigbloc building elements at 58% and Siam Cement Bigbloc construction technologies at 36%.

On the operational side, AAC wall panels production continues to scale up and we are in the process of se- curing the remaining product certifications which will further enable adoptions across a wider set of pro- jects. Additionally, we are seeing an uptick in demand in the current period and expect utilization levels to improve from Q2 FY26 as construction activity picks up post-monsoon. In line with our product diversification strategy, we remain on track to commence manufacturing of construction chemicals at our Umargaon facility shortly.

This will expand our product portfolio and allow us to cater to a broader segment of the building materials market. From a sustainability perspective, the contribution of renewable energy to our total power require- ments has increased to 26% from 22% in the previous quarter. This reflects our continued efforts to integrate clean energy into our operations and reduce our carbon footprint. Going ahead, our focus remains on im- proving capacity utilisation, accelerating market penetration for AAC wall panels and bringing new product lines to the market. With the expected recovery in construction activity, we are confident of delivering im-

proved performance in the coming quarters. With that, I conclude my remarks and now we can open the floor for questions and answers.

Question & Answer

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press * and 1 on your telephone keypad and wait for your turn to ask the question.

If you would like to withdraw your request, you may do so by pressing star and one again.

The first question comes from Srijan Kaushik, an individual investor. Please go ahead, sir.

Thank you for the opportunity, Manish. First of all, I must appreciate the fact that our management has the courage to conduct the call every quarter despite not-so-great numbers. So, on that note, my first question would be regarding the current capital structure of our company. In the earlier call, you said that debt to equity ratio in the range of 1:1 to 1.5 is the number we are quite comfortable with.

As our capacity utilization keeps on increasing, our debt levels will keep on going down but the numbers say that neither our capacity utilization is increasing nor the margins, of course, due to macros like monsoon, which are generally issues. But we can see that the financial leverage we hold right now is working against us each passing quarter. So, do you still intend not to make any changes in the current capital structure going forward given the current situation and whether our further CapEx will be financed via taking more taking on more debt?

So, coming down to your question about the Capacity utilization. So if we compare YoY, we have seen a 25% increase in our capacity utilizations and since this quarter, Q1 is generally a little bit slower, and we saw an early onset of monsoon for this financial year. Looking at that, the capacity utilization has been good and in the running quarter Q2 also, the capacity utilization has been better off than what it was in the previous quarter.

So as we mentioned that we are looking at achieving optimum capacity utilization going ahead on a QoQ basis that's what the target is. And once the capacity utilization keeps on improving, the margins will also flow in and whatever losses have been incurred, that should also be settled off. Coming down to your second query about our debt-equity-ratio and our expansions.

So for the expansions, the land is already procured at MP, and we have gotten the necessary conversions or government permissions done whether it comes to the pollution control board or the conversion of land from NA to industrial purpose all that is completed. And, hopefully, soon, we will be starting work at that site as well. And the debt equity ratio should be comfortable going ahead as the performance of the company also improves.

Okay and any update on our expansion in Southern India and the financing instrument for the same?

So in Southern India, we are still contemplating the same. We are looking for the land for the same and any updates on that will be communicated as and when something is finalized. I did not get your second question.

The financing instrument for I mean, the land acquisition and for the CapEx, whether it is via taking on more debt or I mean some FPO or something?

So, once we have the suitable opportunity of land in Southern India, we will communicate the same accordingly.

My next question is regarding our current order book and the revenue outlook for the coming two quarters.

So, order book has started improving from the end of mid-June or end of June, and we are seeing better order inflows on a daily basis. Our order book generally in this industry does not run for a very long period of time. Generally, it's around five to seven days at the max and when there is a slowdown, it goes down to two to three days because it is a bulky product, and the site, the space available at the construction site is also quite limited looking at those constraints. Can you, get on your second question again regarding the order of care?

Yes, revenue outlook for coming two quarters.

So as we saw that this year also in spite, we have seen the increase in turnover with 25% increase in volumes.

In this quarter, again, we will see further increase in volumes and we intend to reach 70% plus capacity utili- zation in the next couple of quarters.

Okay. Thank you. I will wait in the queue for I have a couple of more questions, but I'll ask it later. Thank you.

Thank you, sir. The next question comes from Manish, Individual Investor. Please go ahead, sir.

Hi. Thanks for taking up my question. I have three questions basically. One, although the volumes increased in Q1, why did the realizations fall like are we aware as to what is the reason behind the fall in realization?

That is one. Second is I also wanted to understand as to what is the sales that we generated from the AAC wall panels and construction chemicals. Third is, in one of the previous phone calls, you guys had highlighted that the aim is to double revenues over the next two years. So wanted to understand if that guidance remains intact. So, these are my three questions.

So coming on to your first question of why the realization has gone down because of a little bit of a slowdown in the real estate sector in Q1 as well as an increase in competition, there has been a little bit hit on the realizations and that is the reason that the volumes have gone up, but the realizations have decreased a little bit. Coming now to your second question. Can you repeat the second question once again, please?

Yes, the AAC wall panel revenue and Construction Chemicals revenue because I don't see any mention of that.

So, the revenue from construction chemicals is approximately around 10-12%, and the revenue from AAC wall panels is approximately at around 3-4%. And this has been increasing on a MoM basis as we are taking more and more orders and seeing more penetration of AAC panels across India. We have kicked some projects in various different cities, the likes of Delhi, Jaipur, Surat, Bombay, Ahmedabad, some in Southern India like Chennai, etcetera.

So similar to how you've shown, what is the breakup in the PPT, right, on the AAC block, Can we show it for the AAC wall panels and Construction Chemicals also because that would give us at least a rough idea from a shareholder perspective as to what are the volumes that the other two segments generate?

Surely, we'll start doing that from the next quarter.

My third question was on the guidance. So I think in the Feb 2025 call, you guys had highlighted that the target was to double revenues over the next two years. So, is that guidance intact?

Yes, we are still in the process of doubling our revenues for the next 2-3 years because expansion has been a little bit delayed because of a little bit of slowdown in the industry. But in the next 2-3 years, they are looking at doubling our revenues.

I have a couple of more questions. Maybe I will join with you and then wait for the other participants to raise the question.

Thank you, sir. The next question comes from Navneet, an individual investor. Please go ahead, sir.

So, my question is, the company capacity utilization was reported around 53%. So what are the reasons be- hind that and what steps have been taken to improve it?

So the capacity utilization for Q1 has been around 53% Q1 is generally marred by labor shortages at the factories as well as at the construction site, and that's the reason that the capacity utilization is much lower.

We are seeing better capacity utilization in Q2, which has gone up to almost approximately 60% in July month. And our intention is to make the capacity utilization reach 70-80% over the next couple of quarters.

Thirdly, what other steps are being taken, we are trying to increase our market share and penetrate more in, different markets and the capacity utilization has been majorly lower for the panel division where since it's a new product and adaptation is taking time.

Okay, sir. Thank you.

Thank you, sir. We have a follow-up question from Manish. Please go ahead, sir.

So, my other two questions are now one, when does the company expect to be profitable because I under- stand that the interest charges right are on the higher side because of the high debt in the books. And second is the depreciation is also a high when we compare it with the previous quarter. So, the performance has not been that great if you look at it from the last three quarters, right?

So, when do we expect to start making profits once again so that's my first question. And second is I also wanted to understand as to how does the price difference currently between the traditional bricks vs the AAC blocks are the pricing difference the same vs the previous year or has it changed dramatically, I'm asking this question because you talked about the realization being low, right so if you can give an update on that.

So, coming down to your first question about when will the company get into profit. So, our intention and target are to firstly, let's see reach optimum capital utilization, which will make us reach on a profitability mode faster. The last two quarters have been at least slow for the entire real estate sector as a result of building materials industry and hopefully, in this quarter or by next quarter, we should be again in the main profitability zone. Coming down to your next question about the pricing of AAC block vs Redbrick.

So approximately the pricing of AAC block is in the range of almost Rs. 3,200 to 3,500 rupees a cubic meter right now across the geographies where we operate. And the pricing of Redbrick is in the range of almost Rs. 4,000 to 4,500 rupees a cubic meter. So still, AAC blocks are almost 15-20% cheaper as compared to Redbrick, and they are still seeing increased market share as compared to red bricks on a QoQ basis.

So, can you please give a flavor if the pricing was similar when we compare it to with Q1 last year? The red bricks and the AAC blocks.

So, pricing of the AAC blocks, have gone down almost 8-10% as compared to Q1 of last year. And I think there might have been a similar decrease in the pricing of red bricks as well. Since it's an unorganized market and transportation plays a very big role in the red bricks industry. So, across regions, it's not a fixed pricing model.

All right. Understood. And one final question, if I can squeeze that in. When you talk about your capacity, right, is it fungible as in you have three products, which is AAC blocks, construction chemicals and ACC walls.

So, is it fungible or is it not fungible I wanted to understand that?

So, we have a total of four manufacturing setup, the Wada facility, the Umargaon facility and one facility near Ahmedabad at Kheda. These here are completely for AAC blocks and one facility near Ahmedabad, which is a joint venture with from Siam cement group from Thailand, that is a fungible capacity wherein which we can manufacture AAC blocks as well as panels and installed capacity of that particular facility is around 250,000 thousand cubic meters per annum.

Coming down to the construction chemicals so, far, up till Q1FY26, we have been just doing trading of con- struction chemicals, which includes block jointing mortar and ready-mix plastic. And we are in the process of installing a plant, which is almost in the world of completion. And shortly, we'll be starting commercial pro- duction there and for which will be for manufacturing of three different chemicals mainly for block jointing mortar, ready mix plaster as well as Tile Adhesive. This is one new product which will be introducing.

And at what percentage of capacity utilization do we expect profitability to come back into our accounts?

So approximately around 60-65%, we should be able to come to profits. And the margin realization in the panel division is far better as compared to AAC blocks division. So as in how the acceptability in panel seems to grow, that should also help us, to get to profitability portion much faster.

And sir, again, coming back to one of my previous questions, wherein you talked about doubling revenues over the next 2 to 3 years, which means if we enter FY25 somewhere around Rs. 225 to 230 crores of sales.

So, if I take approximate number of sales Rs. 450 crores to 500 crores, what do we think the contribution of construction chemicals and AAC wall panels will be to the revenues 2 years from now?

So, in doubling the revenues from INR 225 to 250 crores to 500 crores, the share of AAC wall panels and construction chemicals should be 15 to 20% each and almost 60% should be from AAC blocks.

And how would be margin for all these three segments. How will that look like?

So currently, the margins for blocks have squeezed a little bit, but Construction, Chemicals and Panels, the margins have continued to be almost the same. And going ahead, we see material additions in margins for block industry as well. And, hopefully, soon, we should be able to reach that anywhere between 15-18% EBITDA margins in the two quarters more or less.

All right. Thank you so much.

Thank you, sir. We have a follow-up question from Srijan Kaushik. Please go ahead, sir.

My next question is regarding the marketing of the AAC Block. So are we putting significant effort educating people regarding AAC blocks vs this red bricks because it requires a complete shift in the mindset to trust something which looks perfect on paper, but people lack confidence from within them committing it to in reality. So, can you put some light on that?

Yes, we are trying to increase the conversion from Redbrick to AAC blocks, So, majorly in the metro cities, Tier 1 or Tier 2 cities, they have majorly shifted to AAC blocks from red bricks. With the Tier 3 or the small towns or villages, their penetration of red bricks is still quite high and we have our sales team appointed in those networks and we are trying to do some campaigns also for conversion of most customers from red bricks to AAC blocks. We have seen a little bit of success there. Actually, we have been doing some white labeling for brands like Ambuja who are getting block manufactured in our name. And because of their retail networks, we are supplying blocks to these small towns and villages through them so that the market avail- ability and acceptability of this product improves.

Okay. Thank you. So, my next question will be on the technical front. I have read somewhere that AAC block face drying shrinkage, right?

Yes.

So, what's our customer feedback on the same?

So, the product is governed by IS norms and these drying shrinkages whatever are being faced, are whatever people are using AAC Blocks today, they are well aware about the characteristics of the product, and there are no challenges with regards to the use of the product. This product is being used in the industry over the last few decades and there have been various buildings which have been installed and are still, constructed and are still running, which have been made using AAC blocks. There are no challenges or issues relating to the usage of the product.

Okay. So, our customers are fully satisfied and no complaints whatsoever till now?

So, we don't have any customer complaints or challenges with regards to the quality.

Thank you and my last question is that are we considering other or do we have other diversification plans on product profile in the future like in other construction materials apart from additive chemicals like putty or paint or something like that?

So currently, we don't have any other product diversification plans on hand for the short term. But yes, over the longer term, the reason is to make Bigbloc Construction Limited a building material company instead of just an AAC block or AAC panel company.

Right. Thank you.

Thank you, Manish.

We have a follow-up question once again from Mr. Manish. Please go ahead, sir.

My question is, why would it be difficult to, say, push sales of AAC blocks vs. red bricks if the prices of AAC blocks are low in comparison and second, did we realize any sales from carbon credits?

So, regarding your first question regarding the conversion from Red Bricks to AAC Blocks, Red Bricks is a product which has been running since and they said maybe since 50 to 100 years. And it says that the end customer who is using red bricks today is content happy using it, and there is just a resistance to change.

That that is the reason that we are doing job work for people like Gujarat Ambuja and also trying to create brochure or pamphlets explaining them about the advantages of AAC blocks compared to the red bricks, whether it comes to cost, whether it comes to the thermal conductivity, or also it comes to the more carpet area that the person gets. This is how we are trying to create that awareness. Slowly and gradually, that is where you have seen return as well.

So the share of the product in the volume material was around 3%, which has gone up to almost 10% over the last decade. And I feel over the next decade, this 10% should go up to almost 30-40%. Coming down to your question about carbon credits. So yes, in the running quarter, there's been no realization of carbon credits.

So when do we expect sales from carbon credits because I know the company has been talking about poten- tial revenue recognition from carbon credits. Do we have any time line for it and like, what could that number look like?

So, we have some carbon credits in stock on our books, but regarding when we'll realize revenue for the same, we are in talks, but carbon markets are currently not performing excellently well because of the global trade scenario, etc. Once these things settle down and we see an uptick in the carbon pricing market, we will try and realize the same as well.

Okay. Thank you.

So, there are no further questions. Now, I hand over the floor to Mr. Mohit Saboo for closing comments.

Thank you all for taking the time to join us today and for your continued interest in Bigbloc Construction Limited. As we continue to navigate opportunities ahead, we remain committed to delivering consistent growth and value in the coming quarters. As always, if you have any further questions, please feel free to reach out to our Investor Relations Advisors, Churchgate Partners, and we will be happy to address your query. Thank you, have a good day bye.

Thank you, sir. Ladies and gentlemen, this concludes the conference call for today. Thank you for your par- ticipation. You may disconnect your lines now. Thank you, and have a good day.