Please note that this conference is being recorded. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am.
Thank you, Manuja. Good morning, everybody, and welcome to H.G. Infra Engineering Ltd. earnings call to discuss the Q3 and nine month FY 2024 results. We have on the call Mr. Harendra Singh, Chairman and Managing Director, and Mr. Rajeev Mishra, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Harendra Singh to take us through the company's business outlook and performance, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Yeah. Thank you, Sana. Good morning, ladies and gentlemen. Welcome to the earnings conference call of HG Infra Engineering Limited, and we are delighted to discuss the key milestones of our quarterly and nine-month financial performance, other accomplishments, and for future vision. We trust you got the chance to examine our investors presentation and the financial results. Let me start with a brief overview of the infrastructure outlook and the latest budget update. The Ministry of Road Transport and Highways has increased, received increase of funding 2.7%, totaling around INR 278,000 crores for 2024-2025, out of which INR 168,000 crores is designated for NHAI for development of national highway corridors.
The government plans to accelerate new project award in the upcoming months and also reviving build-operate-transfer model with 54 projects worth over INR 220,000 crores. Additionally, there is a shift from Bharatmala Pariyojana to Vision 2047 initiative, a more ambitious plan aiming to construct 30,000 km-35,000 km of access control highways and 50,000 km of high-speed corridors before India's 100th independence anniversary in 2047. In the railway sector, the interim budget 2024 has earmarked INR 255,000 crores, sustaining its capital expenditure momentum compared to the INR 240,000 crores, over INR 100,000 crores allocated in 2023-2024. Indian Railways has envisaged a substantial INR 4.2 trillion plan to multitrack seven high-speed density corridors spanning 10,959 km over the next decade.
Under the Amrit Bharat Station Scheme, the government has planned to remodel 1,309 stations by 2030. HG Infra has taken this as an opportunity, considering new bidding in various station projects and already acquired Kanpur Central Railway Station. We aim to secure high-value projects in this sector. Recognizing opportunities in different sectors, we have actively pursued bids to broaden our order books. Let me start the journey of this quarter and give you the glimpse of operational highlights first. As of December 2023, our order book stood at INR 9,626 crores, diversified across 11 states. Out of the total order book, EPC constitutes 51%, HAM constitutes 37%, and railway, O&M, metro contributes the remaining 12%.
Talking of the ongoing projects, the execution progress on various EPC projects is as follows: The Ganga Expressway project is progressing well and has reached a completion milestone of approximately 42.1%. In the Delhi-Vadodara Expressway project, substantial progress has been achieved and standing at around 84.8%. It is anticipated to be completed by March 2024. Nelamangala-Tumkur project is advancing smoothly and has attained an execution status of 19.1%. Karnal Ring Road project has achieved a 10% completion, and progress is well accelerated in the next few months as all initial impediments in the progress has been addressed. The progress of all HAM projects is also running as per the plan schedule. The update is that Raipur-Visakhapatnam OD-5 project has progressed to 54.8%.
Raipur-Visakhapatnam OD-6 project is currently at 62.4% completion. Raipur-Visakhapatnam OD-1 project has achieved a completion status of 61.3%. In the Khammam-Devarapalle project, package one has progressed thirty-three point six percent, while package two is at 38.4%. Let's dive into the progress of our railway projects. The DMRC metro project has achieved a completion of 36.7%, with execution progressing smoothly and in line with the expected timelines. The Bhanupali-Bilaspur-Beri railway project under RVNL, though it delayed a bit initially because of extensive rains in Himachal, is now progressing well. The Kanpur Central railway station project, which North Central Railway has reached a completion of 1.2%, just recently started. Let me now share other significant updates from Quarter three FY 2024.
The appointed date for Kanpur Central Railway Station was received on 16th of October 2023. The PCoD of Maharashtra Package 7 and Rewari Bypass were received with effect from 29th Feb 2020 and 25th May 2023 respectively. PCoD of Rewari-Ateli Mandi was received with the effect from 31st November 2021. Financial closure of Varanasi-Ranchi-Kolkata Package 10 and 13 was declared on 23rd November 2023 and 20th November 2023 respectively. In terms of the financial highlights of this quarter, we are happy to share, considering our financial performance and robust growth story, the outlook on the long-term rating has been revised from stable to positive. The rating committee of ICRA has reaffirmed the long-term rating at AA-, and the short-term rating as A1+. Our financial numbers of last quarter has been satisfactory.
At the standalone level, our total revenue for nine months FY 2024 has reached INR 3,487 crores, marking an 18.3% year-over-year increase from INR 2,949 crores in nine months, FY 2023. EBITDA amounted to INR 557 crores in nine months FY 2021, resulting in an EBITDA margin of 16% compared to INR 473 crores and a 15% margin in nine months of FY 2023. PAT for nine months FY 2024 stood at INR 386 crores, with a profit margin of 11.1%, in contrast to INR 274 crores and a margin of 9.3% of nine months FY 2023.
In quarter three FY 2024, standalone revenue reached INR 1,346 crores, indicating a significant 19% year-on-year growth from INR 1,131 crores in quarter three FY 2023. Standalone EBITDA for quarter three FY 2024 was INR 214 crores, reflecting a year-on-year growth of 13.2%. The PAT and the PAT margin for quarter three FY 2024 stood at INR 205 crores and 15.3% respectively, compared to INR 111 crores in and 9.9%.
Regarding the company's debt position on a standalone basis, the gross debt amounting to INR 470 crores, including the working capital debt of INR 64 crores, term loans, current maturity and trade limit totaling 340, totaling to, totaling to 341 crores, along with the NCD of 55 crores. Moving on to the consolidated numbers. In nine months FY 2024, the revenue surged to INR 307,670 crores, indicating an 18.9% year on increase from INR 3,087 crores in nine months FY 2023. EBITDA reached INR 729 crores, resulting in an EBITDA margin of 19.9% compared to 599.90 crores and a 19.4% margin in nine months FY 2023.
PAT for nine months FY 2024 stood at INR 349 crores, with a profit margin of 9.5% as compared to INR 322 crores, a 10.4% margin in nine months FY 2023. Concerning the company's debt position at the consolidated level, the gross debt amounting to INR 1,356 crores. The total equity requirement for nine HAM projects is estimated to be INR 1,331 crores until FY 2026. As of December 2023, INR 604 crores have already been infused, and there is a projected infusion of INR 974 crores in FY 2024. Let me now give update on the key developments on the monetization progress of four assets.
Pursuant to entering the share purchase agreement on 3rd May 2023, we have finally achieved the milestone of completion of first tranche sale of three SPV, including Gurgaon-Sohna, Rewari Bypass, and Ateli-Narnaul. 100% shares of each company has been transferred on 21st November 2023 from H.G. Infra Engineering Limited to Highways Infrastructure Trust, and consideration has been received against the share transfer. As per SPA, total consideration offered was INR 531 crores for all the four SPV. Out of that, agreed consideration for first tranche of the SPV was INR 405 crores, against which the final total consideration has been closed for INR 375.16 crores. Total consideration includes INR 313.076 crores against equity, and INR 62.06 crores against subordinate debt.
Entire consideration has been received except holdback of INR 59.56 crores being transferred in an escrow account, which will be released on receipt of approval of, for GST changing law on input tax payments from the authority, and the same is expected to be received by March 2024. We would further, we further would like to inform the variation in final consideration was majorly due to change in the price escalation amount on account of impact of changing law, a change in CPI guidelines. Because of this change, there was a negative impact of around INR 13.29 crores on the consideration value of these three SPV company. However, the impact is positive in second tranche of fourth SPV with INR 2.87 crores.
Additionally, during the period before closing of transaction within the agreed valuation date, unsecured loan of INR 16.7 crores was refunded back to the promoter company, which was provided to SPV during the construction period as interim arrangement in general course of business. However, in Rewari Bypass, we would like to receive INR 141 crores against consideration of INR 126 crores as per the SPA. Thus, overall consideration remains unaffected. Also, we would like to update that for second tranche of fourth SPV, that is, Rewari Bypass, we are previously declared with effect on 25th of May 2023. Accordingly, we have applied for the issuance of NOC from the authority and lenders for the change in shareholding. Final NOC is anticipated shortly, and we are expecting to complete the second tranche by March 2024.
On completion of first tranche transaction in November 2023, INR 161.674 crores of total capital gain has been recognized, which attracts a tax of INR 16.09 crores as per the income tax provision for the first tranche. Three SPVs, due to which the overall current component has increased for this period. Let me now touch upon the future guidance. After the lukewarm award in this financial year till now, we are expecting aggressive bidding in the next two months, which will give us the opportunity to augment our order book. Today, HG Infra has bid for 52 tenders worth INR 330,572 crores until January 2024.
Among these three, among these, three tenders were awarded, totaling INR 1,199 crores, including projects of NTPC, Central Railway projects of Dhule to Nardana, and South Central Railway projects of Aurangabad to Ankai Package 9 . Both the railway projects have been awarded in the month of 2024. And hopefully, after the addition of two new railway projects in the month of January 2024, we would further add INR 5000 odd crores more projects in the remaining part of this financial year, taking total order addition during the year to around INR 6,000 crores. For future bidding, HG Infra Engineering also plans to bid on about eight more railway projects, that is around INR 6,000 crores this financial year. We are also targeting high-value railway projects as invited by Haryana Orbital Rail Corporation, to further diversify our order.
We have started preparatory work of analyzing cost and doing preliminary discussions with diversification solar sector, also to propel our way forward. Regarding the revenue guidance, in this nine months, we have attained the revenue of INR 3,487 crores, and we would like to assure all our stakeholders that this year we would be achieving, we'll be achieving 17%-20% growth in revenue compared to last year, maintaining a margin of 16.5%, 60% slab. I want to assure our shareholders and the financial partners with the company is exercising prudence and vigilance to enhance our growth narrative, demonstrating persistence in perceiving forthcoming growth opportunities soon. We are meticulously focused on enhancing our operational efficiency and execution capacity to boost both our EBITDA and PAT margins.
Digital transformation holds a primary spot on our agenda when developing automation in our plant and machinery, operation, and various other verticals. The strategic move is poised to contribute significant value to our financial indicators, fostering a seamless and transparent real-time working environment. That concludes my update, and now the floor is open for question and answers.
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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Alok Deora from Motilal Oswal. Please go ahead.
Good morning, sir, and congratulations on pretty decent numbers and execution improvement. Sir, just again on the order flow, because you know, we are already clocking nearly a run rate of INR 5,000 crores annual revenue, and order book is at around 2x now. So, how many projects we have bid now where bids are yet to be opened? And you also mentioned that there is a pretty aggressive bidding, which will happen in the, you know, in the next couple of months. So what is the realistic number we could look at? Because most of the companies are talking or betting on these next couple of months to kind of, you know, get their order flow in place.
Yeah, sure. I say almost 16 bids are there, where yet the results are yet to be declared, and this is totaling about INR 14,000 crores. Apart from this, as we have seen that in February and March, prior to the model code of conduct imposed, likely that the awarding at NHAI, Ministry and MSRDC and several railway projects, they are on the card, where we are also betting upon it. Definitely it looks like that during the next two years, quite a good pace of awarding would be done. It's almost INR 70,000 odd crores, or rather INR 60,000 crores-INR 70,000 crores in MSRDC, they're all EPC projects, and it is around INR 60,000 crores plus at NHAI, and almost INR 40,000 odd crores at from the ministry.
These are the highway projects which we are talking, other than the railway projects are also there, which we believe that definitely INR 25,000-odd crores of railway projects is likely to be awarded.
Sure. And I think, in your comments, you mentioned about you bidding a lot of these railway projects. So what is the expected margins there? Because railway margins might would be lower than this 15%-16% margin which you make in the road projects. So what is the margin profile would be there for those projects?
So we are keeping the same thing, like, say, if you are talking of the dual projects, there's almost the similar kind of a project as highway, with nothing of electrification or SMB. So we are keeping the same margins as we are doing in highway. Definitely, it can be one, not more than 1%, because in a highway EPC project, we are keeping ourselves at about, say, 13% range, that we are keeping for them. And definitely we are targeting about 18%-19%, we are done in the past. So this is how we are looking at any future railway project to be bid.
Got it, sir. That's all from my side. Thank you, and all the best, sir.
Thank you.
Thank you very much. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you, and congrats on a decent set of numbers. So just to dwell upon that: so, till now, the railway orders, the EPC value for us is INR 1,200 odd crores that we have received?
The recent order which we have received.
Yes, sir.
Net of GST and duty, around INR 1,100 crores.
Okay, net of GST. So till now, the order inflow for us is INR 1,100 odd crores, and for full-year, so by next two months, we are looking at further INR 5,000 odd crores. So total would be INR 6,000 odd crores that we are looking at.
Yes.
So in this INR 5,000-odd crores, railway would be how much more we are looking at?
We cannot just see that we already have bid for almost INR 12,000 crores-INR 14,000 crores of bid yet to be awarded. In this, INR 10,000 crores are all railway projects, which we expect that definitely one or two projects from railway is likely to be there out of the INR 5,000 crores expected during the first part of the year.
Okay. So this INR 10,000 crores railway projects, so these are closer to a INR 1,000 crores each kind of a project?
No, it's not typically the same. It is for INR 500 crores-INR 700 crores , or even INR 1,200 crores-INR 1,300 crores also.
Okay. Got it. So, for the full-year, you mentioned 17%-20%, so slightly maybe a lower revenue that we are looking at versus previously INR 5,400 crores. So for next year, in terms of INR 6,000 crores-INR 6,200 crores revenue that we were looking at, are we able to maintain the same guidance for FY 2026?
So for the current year, definitely because of the very, say, weather condition and the erratic monsoons. So this is where the shortfall has been at the Jharkhand project, which we were supposed to looking at this Appointed Date of package 13, which is yet not clarified as per the Model Code of Conduct likely to be imposed. So this is why the shortfall of about INR 200 odd crores is likely to be there. But definitely we are keeping the intact for the financial year 2025 with INR 6,000 odd crores rupees.
Okay. Okay, got it. So now these two appointed date, package 13 and package 10, so, when can we expect the appointed dates?
Looking to the current scenario of Jharkhand, the state government, as well as the Model Code of Conduct, we believe that till May, definitely no chance is there. We also would not be taking this risk prior to this. Only one project which we definitely would be looking at, by June, Appointed Date can be there. The second project, as I am expecting that post-monsoon, that will be declared.
Package 13 will be by June?
Yes.
And, package 10 will be of October, November?
Not November, rather, August onwards, say sometime in September.
Okay. Okay, got it. Sir, you mentioned significant opportunities in railway, metro, NHAI, MSRDC, DMRC. So, out of total, how much are we planning to bid? If you can broadly help us, then it would be a great. So INR 30,000 odd crores that we will be bidding?
Roughly, there are INR 60,000 crores of odd bids which we are aiming at to be bid in these three organizations.
Okay. Okay, got it. Sir, couple of data points on the balance sheet side. So first is retention money, the unbilled revenue, mobilization advance.
The mobilization advance is INR 308 crores, to be very specific. And the total debtor is INR 825 crores, including the retention and deposits, other deposits. And that is, if you can, we want the breakup. NHAI is around INR 140 crores . SPVs are at about INR 250 crores . Adani, INR 300 odd crores , as we have done significantly good in the month of December. That is the same for the month of December only. And others are very negligible, at INR 135 crores . Unbilled definitely is around INR 700 crores , and the INR 700 crores is unbilled of INR 250 crores from NHAI, and Adani is very negligible, about INR 100 crores . The SPV again is INR 300 odd crores , and the remaining others.
Okay, sir, the total debtors, out of that, retention money is how much?
Retention money is around INR 140 crores, INR 115 crores .
115. And total inventory and total debtor value is how much?
The inventory has gone high, it's INR 341 crores. What you are talking of?
Our total debtors.
The debtors we have already said, INR 825 crores.
INR 825 crores, and payables, sir?
Creditors.
payables, payables.
Sorry?
Payables, sir. Creditors.
Creditors, no?
Yes, sir.
Creditors are INR 600 crores.
INR 600 crores?
Yeah.
Okay. So, and just for clarification
Sorry, one second.
Okay. Okay. I was taking an extra point off. Okay, no issues.
Thank you. A reminder to all the participants, you may press star and one to ask a question. Thank you. The next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead.
Thank you, sir. Thanks for the opportunity. So my question was broadly regarding, we are seeing that the pace of CapEx increase for NHAI has reduced, as well as for railways. And going forward, maybe, to reduce the fiscal deficit, the CapEx might reduce as well. So do you expect higher share of BOT going forward, say, in the next three to five years? And how will we try to participate in that opportunity?
Sorry, I couldn't understand you. You can repeat it, sir?
Sure. So right now, as compared to HAM and EPC, going forward, there might be higher share of BOT projects.
Okay, okay.
from NHAI.
Understood. So definitely NHAI is having, say, looking to the response of many of the lenders as well as concessionaires, where the TOT they could, monetize. So looking into that, they have actually has figured out some 50+ project of INR 220,000 crores on BOT model. And, we have certain concession, modified, concession agreement has been modified, which is, quite friendly, which we believe is a positive move. And, I don't know how it, will definitely react on, actual bidding being or rather than awarding. But then definitely, looking to this opportunity, and we are working with Adani, we have already worked with IRB. And, Adani and IRB, they are the one who are very, say, always try to, take such type of projects.
Apart from this queue and, say, one or two concessioners, they are also approaching us. So they are also approaching HG, EPC player to them. So with that, I think the opportunity is definitely with the government's strength likely to come. We would not be at a, say, risk. We would be again looking into such opportunity from the perspective as an EPC to the developers.
Okay. So we are not looking to participate directly?
We will be taking trial of one or two, not with very aggression, with very, say, own numbers, keeping our own.
Understood. Sir, what will be the margins on this profile? Usually, what is the margins for BOT projects as compared to HAM and EPC projects?
Oh, the BOT projects and HAM projects, they are all same as for EPC is concerned.
Yeah.
If you talk of the development
Mm-hmm.
So the project being taken by the concessionaire, they do have definitely consideration in toll risk is there or in HAM there's no risk as such. So there, their calculation, the different is different.
Okay, sure. Thank you, sir. That's all from me.
Thank you very much. The next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.
Good morning, sir. Congratulations on good set of numbers. So my first question is on the in, so as you said, what I understand is that-
Please speak a bit louder. Yeah.
Can you hear me now? Okay. Is it loud now? Hello.
Yeah, yeah. Now it's okay. Yeah.
So my question was on the equity investment in the fully HAM project, in which we have completed our monetization. So I'm assuming, we have invested around almost INR 268 crores, against which we were supposed to receive INR 404 crores, INR 405 crores, which you said, 30 over INR 375 crores. So sir, in this INR 375 crores, so almost INR 60 crores is still pending, right, sir?
Yeah.
This INR 60 crores is related to GST, for the change in law, which you will receive by end of month, once NHAI approves it. That is what my understanding is, right?
So, yes.
So far, we have made a capital gain of almost INR 106 point, 106, INR 107 crores, while that is in the standalone. That is, that is correct, right?
Yeah.
Because, overall, you said INR 117 crores, which is including the control number, standalone plus the control number. Hello?
Yeah, yeah. Quite right.
So, sir, you said some negotiation is going on. So what is that negotiation like, which has impacted the valuation? So what is the reason of the impact in the valuation in the first 10 projects?
So see, this is the entire deal has been for all four projects. The individual projects do not have any impact on it. Looking to that, say, I already have addressed, like, because of the CPI, so this is a consumer price index, where so later on, guidelines being issued by NHAI for calculation of the price index.
Mm-hmm.
So there is an impact of over INR 13 crores, which is a net impact of INR 10 crores, taking consideration of Rewari Bypass as well. So net is INR 10 crores. But in Rewari Bypass, looking to the equity which we have invested and the likely proceeds or likely entity we should be getting in next 15 years, with all consideration, that INR 126 crores rupees initially being considered in this overall valuation of 531, where it has now it would be INR 140 crores plus. So this is INR 13 crores plus in that particular project. So overall, the overall INR 531 crores are intact, so we are not going to lose anything out of that. It's a matter of first tranche or second tranche.
Having discussed that, definitely the capital gain, which we have considered in this HG standalone and the consolidation which we have, we have seen that these three projects, where certain discounting is to be done, in that tax in the profit margins, which actually has impacted the consolidated number.
Okay. So that's the main summary that comes about. Okay. Yes, sir, so any CapEx for nine months, and what is the guidance for full-year FY 2024, 2025? And what is the balance equity break up, if you can give us. Like you said, for INR 74 crores in Q4 this year, and what about the balance, INR 604 crores, how is it broken down after the INR 604 which you have invested so far?
Post this, the, say, INR 9 crores out of the INR 13 crores and INR 1,331 crores, INR 1,300, uh, INR 31 crores . INR 601 crores already done till 31 September. INR 730 is the balance, and this, the 74 which we have considered for the quarter for 2024. INR 465 is the number which we are considering for 2025, and INR 196 crores is the balance which from 2025, 2026 or 2027, say, accordingly, when Jharkhand projects are positive declared. This is about equity, and as far as execution is concerned, for sure, we are looking at this, say, current year to be closed at around, say, INR 5,000 crores-INR 5,200 crores. That is a rough number. For 2025, we are keeping our guidance about INR 6,000 crores .
The CapEx so far, and what is your targeted CapEx for FY 2024, 2025?
CapEx would not be a big number for the subsequent years. CapEx hardly would be in the range of INR 75 crores.
This year?
Sorry.
FY 2024.
This year already has been done. Nothing else, more to be added.
Almost like you've done more than INR 100 crores from what I understand.
Yes, yes, yes, yes.
Okay. Sir, I have more question, I will come back in touch. Thank you.
Okay. Thank you.
Thank you very much. A reminder to all the participants, you may press star and one to ask a question. Thank you. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Good morning, sir. Sir, just to confirm, so this year we are expecting INR 6,000 crores order inflow, and what should be the expectation for the next financial year, FY 2025?
Sure. I think for this current year, what we have initially has guided are around INR 8,000 crores to be added. If we are at that stage where nothing, say, big, has been achieved as far as awarding is concerned across infrastructure, especially NHAI and highway projects are concerned. We believe that whatever bidding pipelines they are having, post this election, there will be not many projects, then opportunity would be available to us. With that, we are expecting about, say, INR 8,000 crores-INR 10,000 crores being added next year.
Understood. Just to confirm the number for railways, so you said HAM EPC, 18%-19%, highway EPC, 13%-14%, EPC is 13%-14%. Then railways are at what margin, sir?
They are almost similar, which we are keeping for EPC highway, that is around 13%. We are keeping the same number.
Okay. So with this mix change, do you expect the overall margins to come down because we are getting much more in railways?
No, it's not that big number of railways. It's just around 18%-20%. For highway also, EPC project, which we are doing earlier, was constituting this much. It is a replacement of NHAI EPC projects, or rather highway EPC project by railway project, so the margin definitely would not be impacted much.
Understood, sir. And sir, now, if I look at your overall P&L, so of course, we have maintained broadly maintained the EBITDA margin, if you look at nine months and all. But what is happening is below the EBITDA, you know, we are using maybe much more of our own equipment. So that is, you know, we are paying less to maybe on the lease side, but then, you know, all those costs are hitting us on the depreciation and interest, and those have increased a lot, much more than revenue growth, 50%-60% growth. So because of which the overall PAT margin, PAT is not increasing. Maybe 7%-8%, and this quarter would be flat YOY or 2%-3%. So, you know, despite a very healthy growth, 17%-18% on the top line, it's not impacting our bottom line.
How do you see that, sir?
I think, the PAT is, at the standalone level, you can see the PAT is around, say, 9.5%-10%, say. With that, whatever interest outflow is there, it's now stable. There as a percentage you have been seeing last two, three years, interest not increasing to that extent, and the depletion definitely in the recent quarters has increased. But for sure, I think, it's a part of cash accrual. So we don't believe, we don't see any challenge as far as that is concerned. It would be in the range of about 10%, and it can even go up to 11% in the subsequent quarters.
Going forward, our finance cost, let's say, as a percentage of revenues, et cetera, do you expect these costs to normalize further? Or, I mean, this is the new normal. How do you see it? Because this has increased almost 70% on a YOY basis.
Finance cost is roughly, it's, roughly finance cost is coming at about INR 15 crores, and that's per quarter. If you are talking INR 60-INR 65 crores, we have finance cost, which is likely to be stable and I think won't to be increased. Only depletion, which has gone, earlier it was INR 25 crores per quarter, now it has gone up to INR 36 crores-INR 38 crores. So which is a big number, but definitely the, with the, coming, in the coming years, the CapEx is not going to be at that high level.
Okay. So this is not driven by any change in our model as such, wherein now, you know, we are doing more of these equipments on our own because of which, even while seeing lower margins, we are, you know, maintaining EBITDA, but falling in terms of the PAT margins.
No, no, nothing has been changed. No.
Okay, sir. Okay, sir, all the best for the coming quarters.
Thank you. Thank you.
Thank you very much. A reminder to all the participants, you may press Star and One to ask a question. Thank you. The next question is from the line of Mehul Mehta from Nuvama. Please go ahead.
Good morning, team. Thanks for the opportunity. We have been exploring possibility to bid for underground metro rail projects. So has there been any progress in terms of JV with any organization?
We already have tied up, but as of now, we could not see any project where this could be explored. We already have tied up as for the tunnel projects, for metro tunnel projects, rather. But for sure, we are not very aggressive as far as with the coming opportunities in highways and in railways or in railways, even high-speed density network corridor to be developed where the bridge construction and the DFCC corridor to be constructed. So we are keeping this, but not very aggressively.
I see. As far as you have been focusing on, I mean, maybe like, you know, though on railway and road projects, but in metro, say, like, you know, if we look at, like, you know, out of operational metro network of about 800 km and currently about 650 km under construction, would you be sharing who are the major players, kind of?
Metro, definitely we are seeing the L&T to a very higher level, and J. Kumar is there, then Afcons and then ITD. So they are the one, say five, seven are the big numbers with them. They are having 70% of the entire metro construction.
Okay. Say, like, you know, out of the proposed network of about 1,000 kilometer, like, you know, are there new players entering or like, you know, it would be like, you know, the similar players, like, you know, who have been so far, like, you know, in this, like, you know, segment?
In metro, metro projects, mostly the CapEx is being done for the casting yard and everything. So in these cities where they already are set up, having the CapEx set up, so they will be having at least advantage of taking this opportunity. But for sure, in the upcoming tier two cities like Agra, talking of Nagpur, even Kanpur, and there are many more cities where the metro Bhubaneswar, to be very specific. So there, I think, there's a possibility lies where the players like L&T, the other players will, so the company would be interested.
All right. Sure. Another question is in relation to working capital cycle. If we look at FY 2023, and we had about 23 days working capital cycle, net working capital cycle, and currently it is at about 34 days, and which has been mainly driven by 51 days of inventory cycle. So is it like, you know, that going forward, we can see like, you know, this reducing or like, you know, we should continue with like maybe about 30+ days?
From the start of this last three, four years, we have seen the trend of about, say, 35 odd days, but for not crossing 40 limits. So 30-40 days is the ideal one, where we have seen this inventory going higher. Because if you see, can see this, the current year months, in these months, high construction is at a very high pace. So because of that, the inventory is a bit high. But otherwise, the inventory, more or less, would be around, if you see on the top line, around 8%-10% of the inventory would be there, not more than that.
Okay. But as far as like, you know, the FY 2023 was an aberration in terms of 23 days of working capital cycle?
No, it will be coming back to the same 30 or normal trend for the working capital. Because of some unbilled and because of some debt receivable at SPV. So at the end of December, we have not taken the funds from SPV, from the lenders to SPV and to SPV. So that is where the SPV leverage has gone high.
Gotcha. Thanks, I'm done.
Okay.
Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. Thank you. The next question is from the line of Bharanidhar Vijayakumar from Avendus Spark. Please go ahead.
Yeah, good afternoon, sir. You had mentioned in your opening remarks that you are looking to diversify also into solar projects. Can you highlight what are our target projects and what are our scope of work that we are trying to do here?
In the solar, the renewable energy government focus is very specific in the state of Rajasthan, which is the best state to set up. So we have seen, we have explored some of the projects in Kusum Yojana. There is not big projects are there, very small projects, where the tariff is good, and power purchase agreement with the government is being done. So, not going very aggressively, taking some opportunity in that, and projects where the doing EPC as EPC only, EPC only, rather than getting it done through any other contractor. So this will basically start as well with the learning and doing with the, say, secure model of where the tariff and is good, and power purchase agreement being executed with the government only.
Okay. So as a capacity of the developer level, like we will be building these projects as a developer.
We would be entering, we would be entering not only into EPC, we would be entering as a developer, but not very high value projects, very small. To start with, it would be roughly around, say, INR 100 crores rupee projects, but later on, within six months, it is INR 300 crores can be added. So this is where we are looking into this opportunity.
Okay. My second question is on, in your opening remarks, you mentioned that this Bharat Mala is being converted into Vision 2047. So what is the progress of this? What is the thought process of the ministry behind this? Any more details that you can provide, like you mentioned that the 35,000 kilometers, and then there's another 50,000 kilometers. So if you can elaborate more on this.
See, the government is looking into 2047 as the year, the 100-year mark for this independence. So with that, I think government vision statement, where in every organization, it can be highway to railway, so all has been given the task as consolidation of infrastructure development to be done in this 25-year, 20-year time. So with that, we believe that the coming opportunity would be as early as we were looking at 2028, 2029 or 2030 rather, this highway opportunity would be dried up, likely to be dried up rather.
So now, they are given this indication that area also would be there not carved, and where we are expecting say 60,000 kilometers of the existing national highway to be upgraded and some 35,000 kilometers to be awarded on the access-controlled greenfield highway. So this is a vision document where detail of the projects has already been issued. And I think it will take another six months or one year down the line when the clarity would be, or more clarity would be given, rather available. And then I think bidding in the coming years, say 2024, 2025, would be on in these projects only.
Okay, understood. This is long-term, kind of opportunity. Okay, got it. Thank you for answering my questions and, all the best for the future.
Thank you.
Thank you very much. The next question is from the line of Vaibhav Shah from JM Financial Limited. Please go ahead.
Thanks for the opportunity. Sir, when do we expect to receive the proceeds from, for the fourth asset?
It's likely to be by end of this financial year, by March, because this is already at the advance, in the advanced stage with lenders and NHAI. So within next 10, 15 days, we will be likely to, well, like, we will like, likely to get this, NOC, and then another 10, 30, 30, 35 days for, completing an entire formality.
The receipts we received for the three assets, so where has the money been used? Because our debt has reduced around INR 127 crores on a quarter-on-quarter basis, and cash is bearish.
So cash definitely is for around INR 70 odd crores . We can see, that as the payment likely be, which we like always receive from our SPV through lenders' funding. So which we definitely keeping the cash at the company level, we are again looking into this particular arrangement where we will not be taking the, let's say, loan from the lenders, from SP to SPV and SPV in turn to EPC. So this is one, way we are looking. Again, we are now, looking into some part of, this fund to be used for an advance payment procurement. Advance, procurement to, from the vendors. So we are getting around, say, 1.5%, cost, benefit, where the cash deposit is being there.
So there are few other models which we are exercising, where this cash with the company can be used. And definitely, on OD limits or such, only the current accounts definitely would not be there. We would not be keeping our fund into this current account. But then the OD limits would be all free from utilization of use.
Currently, where it is sitting on the balance sheet?
Sorry.
Currently, where the cash is sitting on the balance sheet, the receipts we got from the monetization?
Majorly, which I have seen, are INR 270 odd crores, which are likely to be, which are kept as a debtor receivable from SPV. So this we have done intentionally, we have not taken in SPV. So we, this would be reducing the interest during the session to the SPV.
Okay, got it. Okay. Thank you, sir.
Thank you very much. The next question is from the line of Vishal Periwal from IDBI Capital. Please go ahead.
Yes, sir. Thanks for the opportunity. On the railway side, sir, the two different sort of work that we are doing. So relatively, where do we find the margins to be better, that is for station redevelopment or the new line that we are constructing for Bilaspur?
No, Bilaspur is totally different project. Bilaspur project is on viaduct construction. See, it's in the backwater of dam, where the station and the viaduct is being developed. These railway projects are on 50-odd km broad gauge new line to be laid of INR 700 odd crores. This is Central Railway project. In South Central Railway projects, INR 447 crores. That is, say, second line or, say, the third line being developed as a broad gauge line. And these are all the new lines or the lines which existing line is to be touched.
Okay. No, but then, if I look at order book, so the Kanpur work that is there, station redevelopment, and then there's a Bilaspur work that is there. So relatively, where do you find the margins to be better? Like, on,
Kanpur, definitely, as we have done, we are, we are doing our all pre-bid, post pre-bid to post-bid, comparison design, post-design. So we are seeing that good margins are there in Kanpur Railway Station if we compare with railway project of Bilaspur.
Okay, okay, okay. And then, will it be possible to give some number, like, relatively, how much better it is, any ballpark range that you'd like to share?
Right now, I'm not having handy with me.
Okay. Okay. Sure, sir. Yeah, that's all from my side. Thank you.
Thank you.
Thank you very much. The next question is from the line of Pratik Bhandari from AART Ventures. Please go ahead.
Hi. Good morning, sir. Hello?
Yeah, good morning. Yeah.
So I wanted to know as to the exact number of order flow, inflow in the Q3 FY 2024, the recent quarter. What was the exact amount of order inflow?
In Q3, hardly there was any orders being t here are only NTPC, INR 37 crores of new order. Then there's some variations, some change of scope, variation being awarded by the authority. Like in Ganga, we have received variation of INR 100 crores. In some of the projects of financial year also, we have variation, which, that's why the price escalation also has contributed to the top line. INR 130 odd crores of price escalation also has been there.
Okay. So if I, if I talk about nine month FY 2024, I mean, like, this current year up till December, what was the order inflow in the nine months?
In the nine months, hardly we have an order of about INR 75 crores or both NTPC small projects. But the variation orders of about INR 300 crores being passed by various authorities, so that is one. So you can see or compare 12,700 at the start of the year, and say, having say, 6,000, 9,600 at the end of this year. So the difference is almost INR 500 crores. This is because of price escalation
What was the major reason for no order inflows in the, you know, nine months, FY 2024?
As it is all, aware, I think, say, NHAI awarding and, say, highway awarding and other sectors, because of the state election also, not much awarding was done.
Okay, so there's no awarding from, the organization, right?
Yes, yes.
Okay, okay. Thank you.
Thank you very much. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Hi, thank you for the opportunity again. Sir, which two new railway project when we will be getting the Appointed Date?
One of the railway projects, LOI has been received two days back only, 700, one of Dhule, Dhule project. So which, we are checked upon with the, with the organization authority, said that within, I think, three months, likely that the Appointed Date would be declared because the land is available with them. And the second project, approximately it's, third line to be developed along with the existing line. The ROW is available, so within very soon we would also be getting the Appointed Date. So probably by April, both the projects, Appointed Date, likely to be declared.
Oh, okay. So by April, both appointed. And sir, if you can again repeat the equity infusion. So INR 74 crores we will be infusing in fourth quarter. And in the FY 2025, we said INR 465 crores.
Yeah, that we have kept INR 465 crores, looking into the both Jharkhand projects requirement and all five projects which are, rather six projects, where the balance equity requirement would be there. So that, 70% from 55%, 60% already invested, taking to 75%.
Okay, so total balance requirement is INR 730 odd crores till today. INR 604 crores we have invested, INR 730 crores is to be invested.
Correct. Correct.
Okay. And then the fourth quarter, when we'll receive the entire monetization, the fourth project, the second tranche, so how much gain post-tax we will be
Shravan?
I think, what you are saying, that was INR 140 odd crores rupees which we will be getting, and INR 59 crores-INR 60 crores rupees which is lying in the escrow, already being, say, effect has already been considered in the balance sheet. So this is once both, project transaction to happen, and for sure, I think whatever tax is there, as far as the EPC is there, so, you know, this is a calculation to be done once the transaction being done.
Okay. And debt level will further reduce from here on?
Yeah, definitely. We are keeping that about the debt level would be roughly around, say, INR 400 crores from now, and debtors, but the majorly effect would be in the debtors.
Okay, okay. So by, as you mentioned, sir, you have kept the money, but whatever we have received to fund the SPV, so that the interest during construction is on the lower side. So SPV debtors are on the higher side. So that's the major reason. But broadly, in terms of the working capital days, it will be back to the normal 30-35 days, we'll come back to the normal level?
That's right. Yeah.
Okay. Okay. Thank you, and all the best.
Thank you.
Thank you very much. The next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.
Yeah, thank you for taking my question. So my first question is on the, as you said, during nine months, you had bidded for almost INR 30 crores,INR 507 crores project, of which you are able to win INR 1,200 crores roughly. So our win ratio is almost 3.5%-4%. And, now, we are targeting, there is a INR 14,000 crores, open pipeline which the bids are yet to open, and another INR 60,000 crores which are going to bid in roads, and INR 6,000 crores in, railways further. So almost INR 80,000 crores is kind of a bids, which we will be- which we have bidded, like INR 14,000 plus the new bids. So with this 4%, win ratio, the influence can be anything between INR 3,000-INR 3,500 crores.
As you said, like, we are targeting around INR 5,000 crores of more inputs. Do you believe that we will be going aggressive to win the project?
I understand your question. I understand your question. The bid-strike ratio normally depends, say, sector to sector. In railway, we are bidded, we are bidding many projects rather than only selected projects. In the highway, we usually are taking few selected projects to be bidded, and that's why the bid-strike ratio is better in highway projects.
So how much, So basically, out of 60, so you will say you are asking-
In the past year, we have seen that it is roughly at about 6%-8%.
So 6%-8% is the ratio in, let's see, highway.
Yeah.
Railways is low because of our qualification criteria sometimes doesn't add. And you are not targeting any project in the water segment, like you were talking about in the AGMs?
No. Right now, these are the two state governments which already now in place. It's state of Rajasthan, where almost INR 15,000 crores of order, which could not be awarded earlier by the earlier government, where now they are looking at this opportunity. But definitely, we are looking into these two state government, MP and Rajasthan, and third, UP, where we would be adding these water sector projects, looking for them. But definitely for now, this year, we are not keeping anything, because hardly two months are there. We are not-
Yeah, how much that you'll be into this?
Yeah. Sorry?
Next year, how much you are expecting from MP and UP in terms of bids for [KGN projects]?
Total? At HG level, highway and all other projects?
No, no, sir. You said that water segment, Delhi, Rajasthan can come up.
We would be looking to add at least INR 500 crores-INR 1,000 crores of a single or two project.
Renewable, you're going to, You will be, you'll be setting up a solar small park, and you'll be supplying it to the under the scheme to the farmers, solar farm. Am I understanding that?
No, no, no, no, no, no, no. It's not that. KUSUM Yojana is where the power purchase agreement, the government is taking back the power, and it's, they are being installed near to the grid substation, already in operation, say, with all, Delhi Board. So nothing of that where you're supplying to the... But definitely, government subsidy scheme is there in that. Central government scheme is there, and the power purchase agreement, which normally it's about INR 2.5 or INR 2.6 per unit. Here it is INR 3.5, or around INR 3.5. So there's a, say, good gap in that particular. Margins are good.
Yeah, INR 3.5 is a very good number actually. And the last question on the BOT front, as you said
Sorry to interrupt, Jiten. I request you to rejoin the queue.
Yeah, thanks.
Thank you. Ladies and gentlemen, I request all the participants to limit your questions to two per participant. Thank you. The next question is from the line of Abhishek Dixit from Hem Securities. Please go ahead.
Yeah. Hi, sir. Thanks for taking my question. Sir, my question is that on the consolidated level, what is the reason for dip in the margins in this quarter?
What margin?
The dip in the margins for this quarter, in quarter three of FY 2024.
Consolidated margin.
Dip in the margin, in the consolidated
Yes, sir.
I already explained. So this is the effect because of these three projects, where, say, it's, to be very specific, in Gurgaon-Sohna, there is a negative, revised margin being there majorly. Because the, the entire, say, four HAM projects, where it's affecting 1.55 x of the investment which we have done. In SPV, whatever margins we have built up in the, last two, three years, we are majorly affected in Gurgaon-Sohna, but, say, otherwise, we are all same.
Okay. For full FY 2024, how much EBITDA margins are we seeing?
On this current year?
Yes, sir, for current year.
You are talking about absolute number or a percentage?
No, sir, percentage.
15.9% would be roughly around, yeah, we are doing it 15.9%, roughly it would be in that range only.
Okay, 15%.
Yeah.
Okay, sir. Sir, our major order book is in the road segment, so are we targeting to diversify in more segments?
Which sector?
Sir, our majorly order book is in the road segment, so are we, are we diversifying in more like water and metro projects?
Already we have given the guidance that this year we are having 18% of the orders, balance orders of railway. So other than roads only, and keeping that in mind, in 2025, 2026, we would be roughly targeting at about 25%-30% orders from the other sectors other than highway.
Okay. Okay, that's all from my end. Thank you.
Thank you.
Thank you very much. The last question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Sir, just one question. So going forward, what, So out of your interest cost, let's say, INR 20 crores this quarter, what would be the overall split that we should assume between, you know, financial charges which are levied by the banks and the interest cost? So what would be the split that we should assume, in general? And secondly, going forward, given that you have, let's say, around INR 400 crores net, net debt on the balance sheet post the receipt of, sale proceeds, then, what should be the interest cost, on a yearly basis?
The interest cost definitely for this particular quarter, as we have seen, there are a few quarters where the bank charges and commissions are a bit high. In this quarter three and quarter four, normally, in the past also we have seen this trend. But, overall, if you see the interest portion in, twenty-two crores rupees of, this quarter, is around interest on OD, and it's around INR 10 crore-INR 11 crores, interest by the clients on the client advance. BG commission and these, bank charges are a bit high, so this is, very high, about INR 6 crores. So now looking into that, the entire trend, once we receive this, roughly around INR 65 crores on year-on-year basis, would be the trend of interest on including charges, bank charges, processing fee, BG commission, et cetera.
Of which around 60% should be the financial cost and the remaining would be the charges?
Roughly, you can consider that.
Understood, sir. And on depreciation, should we are at INR 37 crores on a standalone basis per quarter. So what should be sort of the going forward rate we should assume?
This number is coming around INR 140 crores, likely to reduce because the CapEx, what we have done in last year and this current nine months, so the very high CapEx being done. So this CapEx, the coming years, this CapEx is good enough to take the, 15%-20% year-on-year growth, just the 15 to, say, INR 70 crores-75 crores of net, say, CapEx to be done in the, next subsequent two, three years. So this is going likely to come down, significantly, not in these, two, three quarters, but definitely later on.
Understood, sir. Thank you, and all the best.
Thank you very much. As there are no further questions, I will now like to hand the conference over to management for closing comments.
I extend my gratitude to everyone who contribute in contributing their experience and expertise to the discussion. We value your presence on today's call, and trust that we have addressed all your queries. Should you have any additional questions, please feel free to contact our investor relation advisor, Go India Advisors. Thank you for your active participation once again. Thank you.
On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.