Good afternoon, gentlemen. Good day, and welcome to Afcons Infrastructure Limited's earnings conference call hosted by Investec Capital Services (India) Private Limited. As a reminder, all participant lines will be in a 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 stars and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinesh Prasad from Investec Capital Services (India) Private Limited. Thank you, and over to you, sir.
Thank you, Ms. Khan. Good afternoon, everyone. A warm welcome on behalf of Investec to Q3 FY25 earnings call of Afcons Infrastructure Limited. Today, we have with us the senior management team represented by Mr. Subramanian Krishnamurthy, Executive Vice Chairman, Mr. Paramasivan Srinivasan, Managing Director, Mr. Ramesh K Jha, Chief Financial Officer, and Mr. Hitesh Singh, Head of Corporate Strategy. Now, I would like to hand over the call to Mr. Subramanian, Sir, Executive Vice Chairman, for his opening remarks. Thank you, and over to you, sir.
Good afternoon, ladies and gentlemen. Please welcome all of you to the Q3 of FY25 earnings conference call of Afcons Infrastructure Limited. Our financial results and investor presentations have been uploaded on the exchanges, and I hope you had a chance to review them. Joining me today is Mr. Paramasivan, Senior Managing Director, Ramesh Jha, Chief Financial Officer, and Hitesh Singh, Head Corporate Strategy. Let me start by giving all of you some business updates. Afcons' total income was 3,332 crores in Q3 of FY25, as compared to 3,182 crores in Q3 of FY24. For nine months of FY25, the corresponding figures were at 9,635 crores, compared to 9,837 crores in nine months of FY24. Let me turn to our profitability metrics. In Q3 of FY25, our EBITDA stood at 448 crores, making a 14.1% year-on-year increase compared to 393 crores in Q3 of FY24.
EBITDA margin strengthened by another 11 basis points to 13.5% during the quarter. For the nine-month period, EBITDA reached INR 1,247 crores, growing 13.3% year-on-year, while maintaining a healthy margin of 12.9%. Moving to PAT, we delivered a 35.7% surge in Q3 of FY25, with profit rising to INR 149 crores, from INR 110 crores in the same period last year. This translates to a PAT margin of 4.5%, up from 3.4% in Q3 of FY24, reflecting improved cost management and higher profitability. Similarly, for nine months of FY25, PAT grew 23.3% to INR 376 crores, reinforcing our ability to sustain momentum even in the competitive environment. I'm happy to share with you that recent ratings have aligned AA- with a stable outlook for long-term, and A1+ with a stable outlook for short-term ratings to the bank loan facilities and commercial paper program of Afcons Infrastructure Limited.
This is an upgrade from the earlier rating of A+ for long-term and A1 for short-term. The rating reflects the strong business profile of Afcons, demonstrated by the established track record and ability to execute complex infrastructure engineering projects in India and overseas. Additionally, Afcons has been included in the MSCI India Domestic Small Cap Index, which will be effective from 28 February 2025. Speaking about infrastructure sector updates and growth prospects, we see strong continued growth in the infrastructure construction space, evident from government's clear vision of becoming a developed nation by 2047. As highlighted in the recent economic survey, India must sustain an annual growth rate of 8% over there for at least a decade to attain developed nation status by 2047.
Also, as aptly mentioned, infrastructure is a key enabler of this goal, with significant scope available for improving multimodal connectivity, public transport, and disaster resilience in urban areas. Infrastructure development, particularly in the segments we operate, is key to achieving this growth. Various policy initiatives by the government will ensure efficiency in the government's infrastructure investments. Strategically, we continue to leverage our expertise in delivering large-scale complex infrastructure projects across India and globally. Our unique ability to execute projects across diverse infrastructure segments be it marine, industrial, metro, underground or elevated, bridges, highways, tunneling, or hydro sets us apart in the industry. Over the decades, Afcons has demonstrated the ability to successfully deliver across all major infrastructure verticals. This makes us a formidable and a differentiated player in the Indian infrastructure space.
We also continue to build on our growth strengths, which we have developed over time, such as knowledge management, risk management, and operational excellence through innovation. Our commitment to these areas has been recognized through multiple prestigious awards, most recently being the Most Innovative Knowledge Enterprise MIKE Award of 2024, recognized for the seventh consecutive year at both global and India level, reinforcing our leadership in knowledge management. IEI Industry Excellence Platinum Award 2024, this is our fourth consecutive year of recognition for innovation and operational excellence in construction. We remain committed to investing in technological advancements, digitization, and cutting-edge engineering capabilities to improve efficiency, execution timelines, and overall project delivery. In conclusion, Afcons Infrastructure remains dedicated to creating value for our stakeholders, customers, and all our shareholders. Thank you for your support and trust. I will now hand over the call to our Managing Director, Mr.
Paramasivan Srinivasan, to offer a deeper understanding on the development and our future path. Thanks a lot. Thank you.
Thank you, Mr. Subramanian. Good afternoon, everybody. It's my pleasure to welcome you all to Afcons' Q3 25 earnings call. We appreciate your continued interest and support in our journey. I'll just give a broader business landscape, business procurement, and important updates. In the recent budget, despite significant measures to boost consumption and associated pressures on fiscal consolidation, which is an excellent step taken on the fiscal consolidation, the government has allocated INR 11.2 lakh crores per capita expenditure, a 10.1% increase over the revised estimate of the last year. This underscores the continued commitment of the government to infrastructure development, which is once again reiterated by Afcons' statement yesterday. It will be a middle-class-focused and an infrastructure-focused approach towards reaching the shift by 2037. The government's alignment with this perspective is evident in the healthy allocation for roads, railways, and metro projects, and special push through state government.
This will be very significant in many states of 1.5 lakh crores to 50-year interest-free loans that I think many states can use to raise resources using this fund, further using the resources that will go a long way in terms of infrastructure development. And National Monetization Pipeline, the phase I has been hugely successful. Hardly 20,000 crores is a shortfall in the phase I. And in the phase II now, whatever is announced, I am pretty sure with the three-year pipeline that is made, the National Monetization Pipeline will go a long way in terms of improving the finances. And there's a revised PPP model being attempted, and there is a three-year, along with a three-year project pipeline involved that I think will be a work in progress as we look at it in this thing.
The PPP in India. PPP has moved to HAM, and again, moving back to PPP, how it is going to work, we need to see. And the government has announced the establishment of an export promotion mission, which is very positive. This is something which I must say government has acted based on feedback by many exporters as to some of the areas of improvement required. And also, government's own push to see that top Indian companies become top global players as well. So from that angle, they've created an export promotion mission to address non-tariff barriers, facilitate credit access, and provide other forms of support to enhance exports. This initiative is also expected to focus on project exports, including those funded by the government. And as I conveyed earlier, the government is developing a strategy to elevate select Indian project exporters to compete with global players.
Afcons, along with other leading project exporters, have engaged with key ministries and also with NITI Aayog to advocate for supportive policies in this regard and the initiatives required in this regard. We've implemented these recommendations to drive a substantial expansion in India's project export footprint. Overall, the government's continued focus on infrastructure development will provide a strong impetus to this sector. This position to large, diversified EPC contractors such as Afcons to capitalize on emerging opportunities and contribute meaningfully to the nation's infrastructure development. Internationally, with the export mission and also our continued focus with some strong private clientele like ArcelorMittal, gives us better revenue visibility. The LOC project by the Government of India has seen a slowdown from its impact.
However, there are select geographies, as we have been mentioning, wherein there is a good visibility in terms of wherein the competition is restricted to some European players, Turkish, Indian players like that, and Eastern Europe, and some of these countries. Also, as we indicated as a part of our strategy, bigger projects in the Middle East with local partners that is also taking shape from the futuristic angle. In terms of business development, Afcons continues to strengthen its position. As of 31 December, we have INR 38,000 crores of pending orders, which excludes about INR 10,662 crores of L1, and INR 14,603 crores is the amount of orders we have booked in the past nine months. In the first month of the current financial year now, before the first, I think, 45 days, we have already received INR 1,283 crores from DP World.
And with that, our order book is almost at INR 16,000 crores as of now. With the INR 10,662 crores further L1, I think we are slated to achieve about 30,000 plus in the current year, with some more tenders expected to be open shortly. With this, we would say we would have reached the highest-ever order book in terms of for the year. And at the end of the year, we will be somewhere between INR 45-50,000 crores order book, giving us more than 3x visibility for the future period. And this will clearly give revenue visibility for the next couple of years. And as we conveyed earlier, while the current year we expect ourselves to be the flat or marginally higher growth, next year we expect 20%-25% growth from that of current year, more towards 25%. That is what we are looking at.
Afcons continues to set the benchmarks in the infrastructure sector with notable achievements and the industry across. As per latest Engineering News-Record 2024 ranking of USA, we are ranked 139th in the top 250 international contractor list, reaffirming our global presence. In terms of marine, we are rated as the 14th largest. In bridges, we are the 12th largest. In transportation, 46th largest. In Aqueducts, 12th largest. In water supply, 38th largest. In marine, we are the highest-ranked Indian contractor. In bridges, we are the only Indian contractor within the top 25. In transportation, we are the only Indian contractor within the top 50. These are very, very happy tidings in our international presence. Our Delhi-Meerut Rapid Rail project is inaugurated by our Honorable CM. Of course, it's not entirely our stretch. It's partly our stretch is also included over there.
We have won several awards: ET Infrastructure Leadership Award for our Kolkata Metro and Maharashtra Samruddhi Package 14 Excellence in Transportation Infrastructure. National Safety Council has awarded five-star rating and the Shield for our Liberian project. Unwavering commitment to innovation, execution excellence, and safety is continued to be given, accredited by various agencies. This reinforces Afcons' position as a leader in delivering world-class infrastructure. In conclusion, Afcons remains strongly positioned to capitalize on emerging opportunities in the infrastructure sector with a robust order book. We are confident with a robust order book, a strategic approach to business development, and a strong track record. We are confident on delivering sustained growth and value for our stakeholders. Thank you all once again. I'll conclude my remarks and hand over to our CFO for providing review of the financial results.
Good afternoon, everyone. Before I get into the numbers, first, I'll just talk about the rating upgrades we have got done. We are very happy to inform you that we have got our credit rating upgraded to AA minus for long term and A1 plus, which is the highest rating for short term from CRISIL. Moving into AA category, we'll open up the money market instruments like CP, NCDs to us, and this will give us a lot of interest-saving arbitrage opportunities. This would also help us bring down the interest rate going forward. Now, on the numbers we have talked about last time also, I would just like to recreate. The company is into the business of construction. The margin in a quarter varies based on the nature, type, and quantum of work we execute.
Quarterly results may vary in different quarters and may not be indicative of annual results or trend. Now, moving to specific numbers, during Q3, we have done a top line of INR 3,332 crores. As compared to Q3 in the previous year, INR 3,182 crores. The previous quarter, Q2 2025, we had done INR 3,090 crores. If you look at the top line number for nine months, we have done INR 9,635 crores as compared to previous year nine months, INR 9,837 crores. Now, during this quarter, we had a growth of around 5% year on year and around 8% quarter on quarter. Because of the acceleration in the turnover during Q3, this has narrowed the YOY gap to 2% in nine months from the previous nine-month period because in Q2, we were 5% down from the previous year number.
Since there is an increased pace of execution now we are seeing in recent months, so as things stand, we should close the year on a similar top line or a nominal growth for this financial year. As far as revenue guidance is concerned, this year we are looking at a flat growth or maybe a nominal growth. This is because of our muted order booking in the last two years, which we had talked about earlier, but since this year, we have already bagged close to 26,000-27,000 crores of orders, including the projects where we are L1, which we are quite hopeful that we should be getting very shortly. All these projects will mature for construction in next financial year, wherein we are looking at a growth of 20%-25%, more towards the upper trajectory.
On a medium to long-term horizon, we would like to sustain our target, which we have achieved over a longer period of time last 10 years. So we should be around those numbers, which is around 15%. Now, moving to EBITDA, during this quarter, we have done INR 448 crores of EBITDA. As against Q3 24, we had done INR 393 crores. So in terms of percentage, this quarter we have done 13.5%, and this is up by 111 basis points from the previous year. In the nine-month period, we have done INR 1,247 crores of total EBITDA, which is 12.9%. And this again is up 175 basis points from the previous year, wherein we had clocked 11.2%. Now, in EBITDA, I would just like to clarify that in our EBITDA calculation, we have considered BG Commission as part of our operating expenditure.
So EBITDA that we are talking about is after removal of BG Commission as an operating expenditure. Whereas we understand that the street considers BG Commission as part of interest or finance cost. Hence, if you consider it that way, then the EBITDA will increase to the extent of INR 125 crores, which we have excluded. Also, in our EBITDA calculation, we have included other income as part of revenue. Here we have explained earlier also that our other income needs to be understood in the perspective of our business: arbitration interest, foreign currency exchange gain, and miscellaneous incomes are recurring and very integral to our business. Hence, this needs to be considered as other operating income. So for the nine-month period, the INR 311 crores of other income we have considered as operating income while calculating the EBITDA.
These EBITDA percentages, what we have achieved for the nine months, 12.9% for this financial year up till the nine months. This year, as things stand, we expect the number to be higher than what we have been given a guidance. We have always talked about that we are going to maintain our EBITDA 11% plus. Reason being we are maintaining this that construction is full of contingencies. Our endeavor will be to save on those contingencies or optimize it. But many a times, we may not be able to save those contingencies. Hence, our guidance will remain at around 11%. Now, moving to profit after tax. But again, reiterate that this financial year we will be having an elevated EBITDA margin since we have already achieved 12.9%.
Moving to profit after tax, we have done for this quarter 149 crores, as against 110 crores we have done Q3 last year. This again is 102 basis points up in terms of percentage point. For the nine-month period, we have done 376 crores of profit after tax. This is 3.9% of the top line of the total income. This again is 80 basis points up than the last year number. In finance cost, we have seen the kind of optimization we were expecting. So there is a saving in interest cost because of the IPO proceeds we used towards debt repayment. But this got negated because of change in mix of interest-free versus interest-bearing advances. Usually, in the total portfolio of advances we were having, 75% used to be interest-free and 20%-25% used to be interest-bearing advances.
But this time around, the projects we have bagged, we are seeing 70%-75% projects are interest-bearing. So that's where we have saved on the bank interest, but interest from client advances have increased. So that's where we are not seeing any benefit on the interest cost front. But the projects have been tendered in such a way that these aspects have been factored in the project, so our margins are going to remain intact. We have also continued to account for accelerated depreciation on our TBMs of the total INR 367 crores of depreciation. Around one-third is on account of accelerated depreciation in that. So the trend continues. Now, moving on, the return ratios for the nine-month period, we have clocked ROCE of around 16.6% and the ROE of around 12%.
So here again, I would like to clarify that the capital infusion has increased the capital base, but operations are yet to elevate. Hence, returns in short term are showing some dips. Right indicator for the return ratios are annual numbers. Even though we have clocked in excess of 15% ROCE and around 12% ROE, if we factor in the accelerated depreciation, our ROE will be at a very high level. Also, these returns need not be looked into isolation. This needs to be looked in the perspective that it is over and above the impact our projects are creating on the society. Moving to the debt, we have closed the nine-month period. Debt has come down to the level of 2,692 crores on gross basis. And on the net basis, it is around 1,788 crores.
On the net basis, the debt equity is working out around 0.35 times of the net worth. Order book we have already talked about. So on behalf of Afcons Infrastructure Limited, I thank everyone for attending this call. Now, I request Moderator to open the floor for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the desktop telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Rohan John from ICICI Securities. Please go ahead.
Thank you for the opportunity. So my first question was, what is the order inflow guidance for FY 2026?
FY 26 order inflow guidance is INR 25,000 crores.
20? Sorry?
5,000.
5,000 crores. Okay. And how are we seeing the order pipeline currently? What is the order pipeline?
What is the order pipeline?
Order pipeline you are saying?
Yeah. So the prospects, as you understand, our projects are long-duration projects. So our order pipeline, we generally monitor on a rolling basis of around two years. So currently, we have a visibility of around INR 3.46 lakh crore of orders, and they are spread across the segments where we are visible. As rightly so, the largest visibility we have in urban infrastructure, which is close to INR 1 lakh crore. Surface transport, which is our road and rail business, there also we expect a good number of orders to come. Around INR 90,000 crore is the visibility in that area. Hydro underground, which includes dams, pump storage schemes, tunnels, that is around INR 80,000 crore. And marine is around INR 60,000 crore. So that is the visibility we have for the next two years.
Okay. And so, what is the project value for which we have bid currently, for the tenders which are to be opened and we have bid for?
On the rolling basis, around 40-45 thousand crores of tenders are being bid by the company across verticals. And that keeps on, I mean, some projects get we won, some projects we lose, but around 40-45 thousand crores is on a continuous basis.
Okay.
Are there any major projects where I can tell you projects coming months in terms of water and infra projects?
Sorry, your voice was not clear. Can you please repeat the question?
Are there any major projects which we are expecting the tenders to be floated in the coming months in which we are planning to bid?
There are quite a number of projects. Two specific projects which we can mention is one is Dubai Municipality, where there is a big sewage tunnel coming up by tunnel boring machine, where we are already pre-qualified. That's investing in consortium with a couple of others. It's about $3.5-$5 billion each. That is coming up by the next 3-4 months. In domestic, in Maharashtra, we have the Bhayandar-Virar connectivity, which is coming up, which is about INR 75,000 crores of jobs split into six packages, JICA funded jobs. So that is something which is again a marine project, a marine bridge. It will be a specialist project. So there also, this is another big project. The third big project which is coming up is the tunnel under Brahmaputra in Northeast, where in Assam, that is also in the pipeline.
These are some of them. There are a number of other projects. Vadhavan Port is coming up with two projects, Breakwater and Desilting Tank . Andaman Port is coming up with projects. There are a number of other bridge projects that are in the pipeline. Okay. I'm just giving the flavor of big projects where we limit the pre-qualification possibilities and others.
Okay. And anything in metro segment?
In metro segment, already we have bid for Indore underground metro. We have bid for Patna underground metro. And it's on a continuous basis. Recently, government has announced the expansion of NCRTC, where we have done one elevated and one underground. So there are going to be a big investment coming up. There are already sanctions long back, but now it is put into action. So that is coming up. And everywhere the expansions are taking place in the metro projects. In Mumbai has announced the expansion of metro. And Delhi has announced. And Chennai has announced expansion in Chennai and also extension to Coimbatore and Madurai. So a number of places metro expansions have been announced.
Okay. So we expect also to end it with.
In terms of urban infrastructure, we expect continued growth. That is something where the government is also pushing quite a lot. In marine, we find a good opportunity currently in the domestic market, which has not been there for the last few years because of Vadhavan Port, Andaman Port, and similar. In terms of surface transport, I think it will be left more to the specific state as NHA projects have been mentioned that it's become very crowded. Therefore, it depends on more state-specific projects which a number of states have come up with proposals. With the government also giving in 50-year interest-free loans, which they can use as equity towards raising funds. That will go a long way for state-level related development. Therefore, in terms of project pipeline, we don't find much issues. That's on the domestic market.
International market, as I told you, Dubai is there. Saudi, we have a focus currently, and Africa is slowly coming back, reviving back after post-COVID. That gives an opportunity to us, and some of the European markets, which you mentioned earlier as well, we have been focusing on. We are submitting our bids, so that will open up opportunities for us. All these are funded projects by multilateral institutions.
Okay. Sir, I wanted to ask a quick follow-up. Capital. The numbers are on inventory, trade receivables, unbilled revenue, trade payables, and mobilization advance.
If you are looking for number for December, so you are looking at any specific number?
As in inventory, trade receivables, unbilled revenue, trade payables, and mobilization advance. This number will help us to analyze the working capital.
Yeah. So trade receivables, see, I'll tell you, as far as the working capital is concerned, working capital is still at an elevated level because we still see delays in certification of the work done and delays of payments in some projects. This has led to the increased uncertified work and receivables, leading to jump in working capital requirements. Generally, this trend remains during the year wherein bill certification and payments are not up to date. So we see the elevated working capital requirements and borrowings in Q2, Q3. And this gets sorted out by Q4, and that's what we are expecting this time around also. Now, to give you the specific numbers, the trade receivables are INR 3,140 crores. The inventories are INR 1,576 crores. Unbilled revenue is INR 6,134 crores. And the advances from customers is INR 2,383 crores.
Trade payables?
Trade payables are INR 4,024 crores.
4,424 crores. Okay. That's my question. Thank you so much for the opportunity and all the best.
Thank you, sir.
Thank you. The next question is from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead.
Hi sir, thank you so much for the opportunity. Sir, I heard that we, I mean, the guidance for next year is around 20%-25% revenue growth. Is it right what I heard?
Yes, that is right.
And sir, some of the, I mean, some of our peers were indicating that there is some kind of payment delays happening from the state governments and many agencies in terms of construction projects. So have we witnessed anything like the similar situation?
See, it again depends from company to company with which counterparty they are working. So as we have in past said that we are very focused when we approach any project and the risk management practices the company has put in place not only helps us in selecting the project, but at times it helps to remove some of the bad projects. So we have not had a similar experience, but to mention, we also had Jal Jeevan Mission project, and there the bill certification and payment issues are there.
Okay. Sure. Thank you so much, sir.
Thank you.
Thank you. The next question is from Rana Bhavin Jha from Enam Holdings. Please go ahead.
Good afternoon, sir. Overall, a good set of numbers and a very strong order intake and a very strong guidance for next year. So just a few questions. I think you mentioned in the first 45 days of this quarter, you have received fresh orders of around 1,100 crores. That's the number you mentioned? I missed that number.
INR 1,283 crores is a marine project from DP World in Gujarat.
And so you mentioned there is INR 10,600 crores L1 plus just trail and rail. And already our order intake for 91 was 14,600. So for the entire fiscal, we would be crossing an order intake of over INR 25,000 crores, right, sir?
Yes. With the L1 already considered, we are already at about 27,000 crores. We do expect another one or two orders to flow into the company. With that, we will be closer to 30,000 crores.
Closer to INR 30,000 crores. And for FY 26, order intake you mentioned is INR 25,000 crores, right? That is as of now you are estimating?
Yes.
Okay. The other question was on the higher interest cost. The reason you mentioned was the client advances now almost 75% of the advances you have to pay interest versus earlier where 75% of the advances were interest-free. So has this happened on a specific segment or specific orders received now, or now this has been the general phenomena across all orders?
No, sir. This is not a general phenomenon across. It actually depends that in which segment we have booked the orders. So if you see the order booking we have done, generally in metro, in high-speed, overseas projects are interest-free. So these projects, recent past, we have not done that, but as MD was explaining and he has also explained that the projects we are targeting or in the pipeline are in the segments where interest-free advances are available. So the percentage I have talked about is for the projects we have backed this financial year. Now, as things stand, on the overall portfolio, the composition may undergo a bit change, which earlier used to be 75% interest-free and 25% interest-bearing.
Maybe that number might be around, say, 50-50 at the moment, but with the fresh influx of orders, we are quite hopeful that we will get back to a similar situation.
Okay. So interest cost may slightly subside going forward as the order book changes.
Yes.
Right. And the last question on the accelerated depreciation. We appreciate your accelerated depreciation policy to write it off versus the other companies in the sector. The number you mentioned was one-third of the depreciation amount is still on the accelerated part on the TBM?
So what I said is in nine-month period, we have 367 crores of total depreciation cost. Of that, around one-third is towards the accelerated depreciation we have accounted.
Okay. Thank you, sir, and best of luck.
Thank you.
Thank you. The next question is from Ayush Saboo from Choice Equity Broking Private Limited. Please go ahead.
Yeah. Can you confirm that you will run us through the debt picture for the next two years? We see the amount of debt coming down there.
Yeah. Ayush, your voice was not very clear, but what I could hear about was you wanted to understand the debt profile moving forward for the two years. Is that correct?
Yes. Yes. Exactly.
So see, what we have talked about, the company is on a year-on-year basis generating a very positive cash flow from the operations, and the orders we have backed are quite good orders, very quality orders, so going forward, we are looking at the business generating sufficient amounts of cash flow. We'll be generating positive cash flow, and that debt on a continuous basis in terms of, say, debt equity, in terms of debt to EBITDA, will keep coming down. In terms of absolute number, maybe it could be in the range what we have indicated for the year-end, say, around INR 2,000 crores, but I think we should look at improvement from there going forward for a future period. Ayush, you are there?
Yes. Yes. Thank you. Thank you.
Thank you.
Thank you. The next question is from the line of Nidhi Shah from ICICI Securities. Please go ahead.
Thank you so much for taking my question. I wanted to ask about the L1s that we have accrued over the year. Last quarter, also, you mentioned the L1s that were in a similar range. I wanted to know how much of the L1s that you have mentioned this quarter are carry forward from the beginning of the year and how much are new. The ones that have carry forward from the beginning of the year, do we expect these to convert into L1s?
At the beginning of the year, we had zero carry forward of L1. Whatever is the carry forward during the year only, and we do expect all these orders to fructify before the end of the financial year. Out of a couple of things could come up earlier. Maybe the Rajasthan Water Project and the Pune Ring Road Project, quite likely it could come in the month of February itself, and the Nagpur-Gondia could come towards March. That's what is our expectation as things stand now.
All right. And my second question would be on, you mentioned that you would be also moving to some developed countries for bidding for projects. I want to understand what the margins of that would be like in those countries. Typically, what we have seen for other EPC companies is that margins are lower abroad, especially in developed countries. With the projects that you are bidding for as well, or is it up to date?
See, our experience in overseas market is quite positive. And in fact, we generate very high margin in overseas markets. So overseas continues to be a good margin-generating segment for us, and we are quite focused working in overseas markets.
Even the developed countries where there are margins tend to be lower, you are positive about those countries as well?
See, in overseas markets, it's difficult to put developed and all, but we are not working in, say, a place like America, Northern America, or Southern America. Those places, we are not working. And the places we are working are neighboring countries. We are working in Africa, and we are targeting markets like Eastern European markets, Saudi Arabia, and some projects in Dubai.
All right. Thank you so much.
Thank you.
Thank you. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi. Good afternoon, everyone, and thanks for taking my question. So the first question is, of our 38,000 crore order book, what is the quantum of projects where we are yet to receive the appointed list?
No, that was good.
38,000 crore is the order book which is already there in the book. Apart from that, we have another INR 1,300 crore, INR 1,283 to be precise. With that, it's about INR 40,000 crore pending order book. Plus INR 10,000 and odd crore, we have L1 status.
Sir, I was asking about the appointed date. I mean, for the INR 38,000 crore order book, have we got the notice to proceed from our client, or are the projects already?
All the cases, including the 1,283, we have received in all the cases notice to proceed.
Sure. The second question is, did I get it right that we expect our debt level to release about INR 2,000 crore by the end of FY 25?
Yes. That's what the target is.
Sure. And lastly, what was the CapEx that we have incurred in nine months?
The CapEx we have incurred in the nine months is around 250 crore.
Of that portion, what would have come in Q3?
Come again? I'm not clear on the question.
Sir, what was the CapEx in Q3?
In Q3, it was around INR 125 crore solid.
Sure. Thanks and all the best.
Thank you. Thanks.
Thank you. The next question is from the line of Pratik Bhandari from Arth Ventures. Please go ahead.
Yeah. Hi sir. Thanks for the opportunity. If you can give a sense of what typically is a bid success ratio and what is the current bid pipeline?
Yeah, so our bid success ratio is currently. I mean, it's typically in the range of 18%-20%. And the pipeline, as I just mentioned, we have a very healthy pipeline. For around two years visibility, we have close to INR 3.4 lakh crores of pipeline spread across segments. So on the availability of projects, we don't see any challenge. And that's why the guidance is given for FY 2026 that we are targeting INR 25,000 crores of fresh order booking.
Okay. And of the total quantum of debtors you mentioned, which are INR 3,140-odd crores, how much of them would be six months older?
So see, last time also I had explained that generally in our data, the number we are giving you, it's distributed in three parts. Roughly one-third, one-third, one-third. One is normal receivables, which will be, say, around 30-40 days kind of normal receivables. One-third is towards retention money, which we receive as per the terms of the contract. And around one-third is towards arbitration data. Those arbitration datas of that around INR 1,200 crores, we have already received around INR 668 crores by giving bank guarantee under the NITI Aayog guideline. But since accounting standards require that the gross amount of arbitration receivable needs to be shown in the books as gross receivable, and the amount we have received as liability. So that's how it gets reported in the books. So to answer you, this arbitration receivable could be more than six months.
More than six months?
Yeah. Older.
That one-third you mentioned about the arbitration data, right?
Yeah. Because it takes time unless those matters are settled in the court. Even though we have received, say, more than 50% amount we have received, but those need to be classified as gross amount as receivable, and unless those are settled, it remains in the books, and those are generally older cases.
Okay. And what would be the quantum of contingent liability on the balance sheet as on December 31, 2024?
Contingent liability as on December 2024 will be around INR 1,400 crores.
1,400?
Yeah.
Okay, and of this, what would be the quantum of claims?
So are you asking about the claims or the variations we have to receive from our customers?
Yes. Hello?
Yeah?
Yeah. I'm talking about the claims. If you can give a split of this INR 1,400 crores?
These INR 1,400 we have talked about is contingent liability, which is in our books. Of this, around INR 480-odd crores, so say close to INR 500 crores is towards one of the royalty claims which has been put on us. This has been set aside by Nagpur High Court. The same matter, the party had gone to Bombay High Court, wherein they have actually put the case against the Government of Maharashtra. That is one item. Ideally, this would have gone up, but since they have again gone into litigation, so the amount is outstanding. Closer to INR 500 crores is various disputes or the claims put by our subcontractors against us. Those are around INR 500 crores. Close to INR 400 crores will be pertaining to some of the tax-related litigations we are fighting.
Okay. So INR 500 crores of the royalty claim and INR 500 crores is for the subcontractor dispute, and the remaining INR 400 in the form of taxes and other?
Yes.
Okay. Okay, sir. Thanks for answering my question.
Thank you.
Thank you. The next question is from the line of Ayush Saboo from Choice Equity Broking. Please go ahead.
Yeah. Thank you. So just I had a couple of questions. The first one being on the oil and gas sector. In the previous conference call, we spoke about us having all the industry having presented to government and ONGC's changing the project terms, etc. So how is it? Any progress on that front which is made?
As of now, no, not much progress in this. Efforts are still on to get the contract methodology, contracting methodology, and the implementation of contract administration improved, and so we have been persisting from quoting to ONGC's till such end we make it.
Understood. Understood. And if you can share some update on Bangladesh orders, where are we? Has the execution commenced again, or will be dropping those orders? Where are we on that?
On Bangladesh, both the governments are insisting that we do the work, both Indian government and Bangladesh government. One particular project, it is in the process where we have not common statute. We have conveyed earlier also, Package Three of the Road Project, WP3, where they awarded the contract 19 months later than we submitted the bid. And where we said, "Unless rate revision is done, we will not commence the work." That project is probably going towards cancellation. And that is something which will be about INR 600 crore, about INR 600 crore value. So that is likely to go out. The other two projects, we are just waiting for the variations and others to be approved for doing the work. We have put a skeleton team there. We have not started the work. The government of India has started paying the money now. Earlier too, they were not paying.
Now they have started paying the money. The Government of Bangladesh wants us to work. And we are just working around to see that in both the cases, both the railway project and one of the road projects, both the cases, the variations have been approved and recommended by the Government of Bangladesh to the Government of India, which is yet to be approved. We are just waiting for the approval to go full force on that. And in the railway project, there are three parts. Part one has been already handed over. Part two, they have given the land now. Part three, they are yet to give the land. And in Package One of the thing, the road project, the last 600 meters is something which they are yet to hand over to us.
There's a likelihood of discussion and settlement that 600 meters will be removed from the scope because already two years since the project deadline is completed. They give an extension though, but this will prolong. They are not able to acquire that part of the land because it's a more crowded place. We are working with both the governments, both Government of Bangladesh and Government of India, to see if things are settled to the mutual satisfaction.
Understood. And sir, last question from my side. We spoke about maintaining 11% EBITDA margins. Now I understand 11% is after including other income, less of BG expenses. But we have done a lot higher, probably closer to 13% for the three consecutive quarters now in the nine months, this quarter as well. So do you think this 11% EBITDA guidance is slightly conservative, and we can still do much better? Not saying that we may still continue to deliver 13% or so, but is it slightly on the conservative side?
Our construction industry at Afcons always evolving has a lot of contingencies happening continuously. While our guidance will continue to be 11 plus. For the current year, it could be well crossing 12, and for the subsequent years, or otherwise, we would say 11 plus. It could happen higher, but we would not like it to fall below 11.
Understood. Understood. Thank you so much, sir. Thank you.
Thank you. The next question is from the line of Bhumika Nair from DAM Capital. Please go ahead.
Yes, sir. Sir, on the you spoke about the margin profile and the interest-bearing advances, which has actually increased. As we move ahead, given that interest costs have kind of stayed elevated because of these interest-bearing advances, would the margin profile then, what we've seen in the nine months, actually continue to remain on the higher side, with PBT margins being more stable and the correct way to look at things?
So what we have talked about that even going forward, we should see improvement in our PBT margins. So gradually, even our PBT margins should improve.
Okay. Yeah, I mean, that's the thing. The PBT margins have also improved in the nine-month period. And would that be a more correct way to look at it as what we've seen in the nine months to kind of sustain as we go ahead?
Yeah. So see, the EBITDA margin, if you see, year on year has improved. And so is PBT margins. Now, I mean, it's up to the investors or individuals how they want to look at it. But generally, people look at the operating margin, and people also look at, say, PBT margin or a PAT margin.
Sure. So the other thing is in terms of CapEx, if you can just tell what is the status of the TBM machine. And while we've done some INR 200-250 crore of CapEx, what are we looking at for this year? And is that number, how does it look like for the next year as well?
With respect to TBM machine, at the highest level, Railway Ministry had convened a meeting, calling the machine manufacturers as well. We had a very good meeting. Alternatives are being attempted to bring in the machine. While there has been a delay of a few months on account of border-related tensions between India and China, and the things are, I think, more or less getting resolved. Subsequent to the meeting, Foreign Secretary also visited China, all that. I had also met Foreign Secretary in this connection. With that, I think things should find a resolution with respect to TBM. Regarding CapEx funding details, Ramesh should brief. For this financial year, we expect to close the full CapEx somewhere around, say, INR 450-500 crores. This is much lesser than what we had budgeted for the year.
Now, last time also, we had discussed that some of the project awards got shifted, so we have aligned our CapEx procurement in line with the project awards, and also, the tunnel boring machines also got shifted to subsequent periods, so as this has reduced in this financial year, next financial year, we are looking at from the number what we had budgeted, we'll have to revise the number, so for next couple of years, we'll be having a higher number what we had budgeted earlier, but since many projects recently, we have completed a couple of projects, and maybe say next six, eight months, we are also looking at completion of some of the projects, so many equipment are going to get free, so we'll recalibrate the requirement, and as things stand, we are looking at there could be a slight reduction.
If we see three-year period, say 2025, 2026, 2027, the total quantum of CapEx what we had planned, there is a possibility that there could be some reduction in the overall CapEx requirement. So 2026 and 2027 will be elevated number, but if we consider three years, the number will come down, the overall gross number.
Understood, sir. So just one follow-up on the TBM. Given the delay in receiving it, will there be any challenges on execution of any project for which the TBM was planned, and there could be some elongated run-off project which could get impacted?
In general, the government had taken things seriously and had talked to the people. All the projects where TBMs are involved have had some delays. There is also a fresh initiative from the Government of India, jointly with the Government of Germany, to have a manufacturing base set up in India. The existing Chennai facility of Herrenknecht is being expanded. The first such TBM assembly entirely had happened in India very last week only. Therefore, there are more attempts towards indigenization of the overall scheme of things. Temporarily, whatever projects which have been awarded in the last about one year plus, wherever TBMs are to come in, there have been some amount of delays. The delays could impact the project to an extent. But once the TBMs start arriving and the project commences, there will be no issues. Future projects, I think people will plan accordingly.
They would not like to get even some parts from China or anything to avoid such kind of delay. They will accordingly price it. That is what our belief is.
Understood, sir. Understood. Thank you very much, sir.
Thank you.
Thank you. The next question is from the line of Garvit Goyal from Nvest Analytic s. Please go ahead.
Hi. Am I audible?
Yeah, you're audible. Go ahead.
Good afternoon, sir. Congrats for decent execution in this quarter. While most of my questions are answered, I just want to get your view on we all know everywhere there are talks regarding the slowdown happening in the economy level in terms of execution. But your numbers are saying a different story, right? So how are you seeing right now in Q4, basically, the execution, the kind of execution of the kind of government demand that you are seeing in the projects of the government initiatives towards the execution of these projects?
Towards, as you would have seen, highest-ever order book in the history of Afcons is being achieved in the current financial year. So while everyone has talked about slowdown. And so our own requirement being on a comparative scale, much less, we don't find any problem.
In terms of government itself, government is very focused on infrastructure development. The priorities could shift, as we told earlier also, that while probably for some time, roads had been in focus for nearly 25 years, and now the focus gets shifted to railways, to hydro segment, and some of these areas, and road kind of activity is being shifted to state-level development. Instead of centrally developing the roads, we are probably looking at developing the roads through the state by the state-level initiatives, by special funding mechanisms to the state for the equity portion or whatever, and similarly, border-related connectivity, there have been a lot of focus, and some underdeveloped states, it does appear that there is going to be a lot of focus, and also, it appears there is a significant focus on agriculture, irrigation-related infrastructure.
So that would be a very, very significant river linking project or the various levels of irrigation projects. Those are taking a proper shape. And the very fact that even with all these, the government has found a way with the tight fiscal controls also, a 10.1% increase over the revised estimate of the previous year should convey government's continuous focus on infrastructure. And for us, it is not only India. We are looking at overseas market as well. Therefore, that gives an opportunity in some of the markets which is opening up. And that gives an additional opportunity. Therefore, we don't believe any even perpetual slowdown is not going to impact us in the near future. And in terms of slowdown also, there is no real slowdown.
There has been a shift in segments, which in the process, which are one segment, two segment focused contractors may get impacted, but not a diversified contractor, I would put it.
Got it, sir. That is it from my side, sir. All the best for the future. Thank you.
Thank you.
Thank you. The next question is from the line of Desha Shah from RR Investments Advisors. Please go ahead.
Hello?
Yes, ma'am?
Hello?
Yes, ma'am. Go with the question.
Yeah. Thank you for this opportunity. Yeah. So I have two questions. One is you are saying that bidding pipeline we have of 3.5 lakh crores. So could you please highlight that: will it be just domestic or it will include domestic and international both? And if so, could we have a split of it in terms of percentage?
Yeah. It includes both domestic and overseas. Close to 30% of this is overseas and 70% is domestic out of the 3.46 lakh crore I have mentioned.
Okay. Thank you. So my second question would be, out of the current order book of around 38,000 CR, how much % is under completion stage which we can recognize as revenue in the near future, say, for next two, three, fiscal years?
So see, as far as revenue recognition is concerned, the revenue recognition happens on a percentage completion basis. And as per the accounting standard prescribed, under Ind AS 116, we recognize the revenue. So of this 38,000, if you're looking at what percentage should get completed over a period of time, so our average execution period is anywhere around, say, two and a half years. So that should give you an idea of what we are talking about.
Okay. Yeah. Thank you so much, sir. That's it from my side.
Thank you.
Thank you. Very well, gentlemen. That was the last question for the day. I now hand the contents over to Mr. Vinesh Prasad for closing comments. Over to you, sir.
Yes, sir.
Thank you. Thank you, Muskan . I would like to thank the management team of Afcons for giving us a chance to host the call. Thank you so much. Thank you, everyone, for joining us. Sir, would you have any closing remarks?
We would only like to say that Afcons continues to hold its value. We continue to do a strong, technologically complex, and innovation-led project. And it would not be out of place to say that in terms of construction technology, we could well be the leaders. And Afcons will continue to focus the way in which we are focusing on the risk management framework and knowledge management, which helps the company to grow significantly. And we believe that we are by far the continued growth for the next few years, as advised earlier, 15%-16% CAGR over the next few years, as we had achieved a similar number over the last 10 years. And in terms of EBITDA, you would have seen we have been consistently improving. While our general guidance is 11% plus, we look forward to continued improvement in the areas to come.
And we would continue to operate as a transnational operator. And we look forward to investors staying invested with us over a longer period of time to gain full value. Thank you.
Thank you. On behalf of Investec Capital Services (India) Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.