Ladies and gentlemen, good day, and welcome to the HG Infra Engineering Q2 FY 2023 Earnings Conference Call, hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode. 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 star and then zero on your touchtone phone. 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.
Thank you, Limba. Good morning, everybody, and welcome to HG Infra Engineering Limited Earnings Call to discuss the Q2 and H1 FY23 results. We have on the call Mr. Harendra Singh, Chairman and Managing Director, Mr. Arvind Khandelwal, President, Strategy, and Mr. Rajiv Mishra, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements, and must therefore be 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. Thank you for joining us on Q2 and H1 FY 2023 earnings call today. Hope you all are in high spirits and keeping fine. I trust that you would have looked at the earnings presentation uploaded on the exchanges and company website. As you, you would have seen from our presentation, this has been another good quarter for the company, and that is despite being the weak quarter across this sector due to the prolonged monsoon. As a listed company, over the last five years, we have ensured that all our efforts are in a direction which creates superior shareholder value, and we will continue to focus on building sustainable long-term value on them—for them. Our strong focus is always on growing bottom line, maintaining strong balance sheet, and selection of high quality projects to augment our order book.
Let me give you some update on the infrastructure sectors. Talking about the road, as you can see, coming to the NHAI tendering scenario, NHAI has set full year target of 5,500 km of road projects to be awarded this year, which is a bit slow in the first half of this financial year, which is likely to pick up in the second half of this year, which gives us the opportunity for winning new projects and further strengthening of our order book as a private sector. Railways, as well, there are notable developments in the railways, which are announced in the recent past.
The 1,200, total of 1,253 railway stations that have been identified for development under the Adarsh Station Scheme, that is, the modern railway station, Modernization of Railway Station, as many as 199 stations are likely to be awarded this year. So we have bid for few, and we are, say, likely to bid many in this sector. Apart from this, other track doubling and high-speed network corridors are all there, which are under develop, to be developed and are at DRP stage. Water is again our priority focus, which we again are, are looking at to bid under JJM in Rajasthan, UP and MP States. All these developments will give lot of opportunity to us to enter into these segments and diversify our business beyond roads. Let me first start with quarterly financial performance.
During the quarter, we reported a revenue of INR 752.1 crore . At standalone level, this revenue from the corresponding period last year stood at INR 753.2 crore. The EBITDA stood at INR 120.8 crore in Q2 FY23, and EBITDA margin stood at 16.1% in Q2 FY23. The EBITDA margin stood moreover at the same level we were in last year, despite increase in the cost of material, but our drive with better operational efficiencies, strong execution capabilities, helped in dealing with the cost and margin. Profit before tax for Q2 FY23 stood at INR 66.24 crore , and profit after tax for the same period at INR 54.6 crore .
Now, coming to the half yearly financial performance at standalone level, our total revenues for H1 FY 2023 stood at INR 1,817.74 crore, an increase of 9.05% year-on-year, as compared to INR 1,666.81 crore in H1 FY 2022. EBITDA stood at INR 283.20 crore, as compared to INR 275.80 crore, same period last year. EBITDA margin at H1 FY 2023 stood at 15.6%, and PAT stood at INR 162.3 crore for H1 FY 2023, as compared to INR 158.80 crore during the same period last year, and PAT margin for HY, FY 2023 stood at 8.9%.
Our total gross debt as on 30 September 2022 stood at INR 392.2 crore at standalone level. This includes working capital debt of INR 42.4 crore, and term loans plus current maturity of INR 349.8 crore. That also includes payables and MSME trade receivables, and INR 66.6 crore, and INR 66.6 crore, and NTP of INR 97 crore. Our total gross debt at consolidated level stood at INR 1,425.3 crore, which includes project debt of INR 1,033.1 crore. I will now briefly cover key updates on our operational highlights of prominent projects.
Our total unexecuted order book stood at INR 10,851 crore as on thirtieth September, which, with our presence, in nine states of the country, and it is well diversified with 54% of the EPC projects and 36% HAM projects. We are pleased to inform you that we have recently received the appointed date as third November 2022, for our most prestigious Ganga Expressway project, where almost 94%+ land is available, and we have started the execution in this project. Coming to the progress of other major EPC projects, in Delhi-Vadodara Package 8, we are inching towards the completion of the project, as we have made good progress and have completed around 92%. We expect the project to be completed in this quarter, say quarter three.
In Delhi-Vadodara Package 9, where we have completed around 81%, we expect the project to be completed by February 2023. In the material project of Adani, we have completed around 72% and applied for PCOD, which is likely to be received in November 2022, and the project is expected—entire project is expected to be completed by Q4. In UER Package 1, Karala-Kanjhawala of Delhi, we have completed 27.4% of the work, which is running as per the scheduled timeline. In Nelamangala-Tumkur project, we have mobilized our resources at project site and execution work has been done. Post the appointed date, which has been, which is 25th August 2022. Coming to our HAM projects under execution, which are also progressing well as per the scheduled timeline.
In Rewari Bypass HAM project, we have completed around 86%, and we are moving ahead for project completion as per the scheduled timeline. In Raipur-Visakhapatnam AP-1 corridor, we have completed 13% of the project. Further, in two HAM projects of Raipur-Visakhapatnam corridor, that are Orissa Packages 5 and 6, we have completed about 8.4% and 12%, respectively. In Khammam-Devarapalle Package 1 and 2, we have received the appointed date on thirtieth September 2022, for KD Package 2, and post our financial closure declared on fifteenth September 2022 for KD Package, the appointed is likely to be declared very soon. We have started the project execution, these projects, post all these developments. Almost 80%+ land is available in these two projects.
For all HAM projects, we have a total equity requirement of INR 1,137 crore. That is projected till FY 2025. Out of this total amount, we have already invested INR 609.54 crore as on 30th September 2022, and we project to invest some INR 200 crore in this beginning part of this financial year. It is important to update the other significant development of projects and at the organization level. We have received the completion certificate for Gurgaon-Sohna HAM project in September, that we are going to be received the PCOD date as 25th February 2022. Also, from the Narnaul Bypass, we received the clear letter from the party, where the completion was, PCOD was with the performance since March 2022.
At this point, I feel immensely proud and blessed to share that we have been awarded as the fastest growing construction company in medium sector in October 2022, at the Construction World Global World Awards 2022, basis our financial indicators of last five, five years, which shows our strong presence and determination in this sector. Well, a guidance on the bidding outlook and the business opportunities, we are very positive on the sector outlook and opportunities in the second half of this financial year, as covered in my opening remarks, that tendering are expected to show a strong pickup, which gives us the opportunity for winning new projects and further strengthening of our order book.
We are all aware that government is taking numerous initiatives in various infrastructure development programs, including the National Infrastructure Pipeline, the Pradhan Mantri program, that will give thrust to this sector and ample opportunities for the players like us. We at HG, are readying ourselves for the next level of growth through various steps. Like in last quarter, we have initiated various in-house initiatives to strengthen our operational capabilities and enrich our system and processes, with new synergy in our top process, with external environmental, like tender needs and operational needs, with the project and top management interaction, and with external stakeholders. This will help us to build a robust business model, having a complete integration in operations, along with a large fleet of in-house equipment and skilled human resource.
Our strong focus is on operational efficiency, cost optimization, and strong project execution skills that give us the confidence to close this financial year, close to our earlier stated guidelines, with 25% growth year-on-year, and EBITDA margin close to 60%+, as compared to last year. Our key focus ahead will be on winning selective projects that complement our order book and ensure efficiency. Our goal is to achieve additional guiding numbers of INR 4,000 crore-INR 5,000 crore new order inflow in this financial year. Now, I would like the moderators to open the floor for question-and- answer. Thank you.
Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may enter 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. Anyone who has a question may enter star and one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you, sir. Sir, first, coming on the guidance front. So, you mentioned in your opening remark, 25% of growth. So, does that mean we are looking at INR 4,500 crore revenue versus one year guidance of INR 5,000 crore? And now are we confident to achieve this INR 4,500 crore, or is there also a possibility to slightly even even further a lower number by the year-end?
See, as it is all evident that this year the monsoon has early arrival to prolonged monsoon in the entire country and experienced good rains. This is the first factor which has affected the progress during quarter two. Again, if you see to the Appointed Date, which likely was supposed to be there of the next between September, sometime in September, which has been delayed by around one and a half months as per our expectations, affecting the progress. This has impacted almost INR 150 crore of projects all together in quarter two. Again, as we are very clear on it, the point of view of almost all the projects are in hand, and execution is in place in all the projects.
So with that, we doesn't see much of a challenge this quarter, two bit, definitely in quarter three, quarter four, whatever is possible, we would be likely to cope up with that. And for 25%+ means around INR 4,600, around INR 4,600 we will be reaching to this year. And with a major execution, which we have looked into, say, would be coming in quarter three and quarter four, will be from Raipur Visakhapatnam, Khammam, all three packages of HAM. And Ganga Expressway, of course, would be the one which will be the major contributor in this quarter three.
Then UER package again, we did INR 183 crore in last quarter, and Delhi package eight and nine, we again did INR 181 crore in last quarter, where around INR 300 crore is left in Delhi packages, and again, INR 900-odd crore is left in UER package. There again, the almost execution is at a very good trend, where INR 200 crore of execution is expected in quarter three and 200 left in quarter four. So this is how gives us a fair outlook that we would be reaching the INR 4,600 crore level.
So broadly, we did INR 1,800- odd crore, so to reach INR 4,600 crore, we need INR 2,800- odd crore. So around INR 1,300 crore-INR 1,400 crore run rate would be required in third and fourth quarter. So that can be doable. And also for the FY 2024, previously we were looking at INR 6,000- odd crore revenue. So what's the new number? And in terms of the margin, when we said 16% +, so that is for entire full year of FY 2023, or in the second half, we are looking at 16%+ margin?
The trend of margin has now been restored, as again, within, say, last, say, almost four, five quarters, we were dealing under this pressure of this commodity price. Now it is all back on track to 16%+ margin, which will all be visible now. As quarter three and quarter four, all together INR 2,800, definitely in quarter three, if we can always see that the quarter four all comes at about, say, 35% to 30%, say, to 35%. So there we are very clear about it, that quarter four would be, say, really a big number. But in quarter three, all the way around quarter three and four, it would be coming at INR 2,800, roughly.
For the next year, FY 2024?
Next year, definitely we will be on same track as we have already seen that about 22%-25% year-on-year. That is it, which we can see the INR 4,600, if we add some 22% to that, it is coming at around INR 4,580 crore-INR 6,000 crore.
Okay, okay. On the order inflow, last time when we said, we will be looking at close to INR 3,000 crore-INR 3,500 crore from HAM and INR 1,000 crore-INR 1,500 crore from the other JJM and NHAI EPC. So that remains the same, or are we now looking at more railway orders than the NHAI EPC orders?
Of course, as we as already as suggested in the opening remarks, as in railway remodeling, there is a new concept coming in on the EPC mode from railway. And where we have already bid few of the stations, though we could not win those projects the earlier one. But now we again believe that EPC of NHAI or EPC of railways or any EPC of water together would come at about, say, $1,500 minus 35 available odd growth will be coming from HAM.
And any of the projects in terms of the value size, apart from railway, where we have bidded, what's the value and where we have bidded and when likely the results are to come?
... No, no, we are already sent some INR 15,000-odd crore of projects bidded, in INR 10,000 crore in NHAI and some INR 4,000 crore in our railway and railway stations and the water. Where I think there are about 8 bids which are yet to be opened.
Okay. On the equity front, just you mentioned INR 200 crore this second half. So in for 2024 and 2025, how much will you be needing? And in terms of the monetization, we were previously looking at 4 HAM projects. So any progress? When can we see the announcement from that front?
So the total liquidity requirement for, say, by 2024 and 2025, after this INR 200 crore, as per already INR 611 crore, INR 1,137 crore. Out of this, INR 610 crore will be already invested, and some INR 200 will be invested in the later half of this year. So the balance would be in 2024 and 2025. Hardly, it's coming at about INR 190 crore in 2024, and balance in 2025.
Mr. Shah, may we request you to return to the queue? There are several participants waiting for their turn.
Okay. Okay, thank you.
Thank you. Before we take the next question, we'd like to remind participants to ask a question, you may enter star and one. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead.
Good afternoon, and congratulations on a very, very good order book, sir. My two, two questions. First is, how is the road bidding pipeline looking like from NHAI side? Till date, I think the bidding has been pretty lukewarm. Is there any-- are you seeing higher portion of HAM in the pipeline?
Well, see, as almost, almost it was expected in, first half of this year, not much of the bidding activity, which always has been experienced in last few years. As we already guided, I think it's 6,000+ km to be awarded by NHAI this year. They were looking at few modifications into the cash support from NHAI from 40% to 20%, which is in at, say, advanced stage of discussion. By that time, I think now we have seen that almost they are, around 60 odd bids, which are to be, say, delayed or to be awarded within this quarter three. This was a clarity that now, in NHAI again, with all majorly in hand, EPC are not many, but definitely a few of the big BOTs.
Okay, I understand. So expect the H2, the order bidding to pick up substantially.
Yeah.
Is that right, sir?
Yes, yes.
Absolutely. And second question, sir, on the railway side, I think you would give a detailed, you know, outlook on the opportunities. Are you looking at railway station redevelopment work? And does it mean that you need to build some capabilities and investment in the resources?
No, I think, as you can see in any of the redevelopment work, like station building, terminal building, it doesn't require much of a campus. It's a nature of the procurement and labor-oriented, labor-intensive work. But definitely, these are good works, which we believe they are the steel frame structure works, which give us the possibility and opportunity that we may go for any of the one or two stations.
Mr. Mohit Kumar may be requested to return to the queue, please. Thank you. We request participants to please limit your questions to two per participant, so everybody gets an equal opportunity during the call. We'll take the next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, Harendra Singh, congratulations on a decent quarter, sir. My first question is, what is the total order in course of financial year 28? And, for the next year, how are you looking to replace this large order of Ganga Expressway? Because that's one bulky order which is coming. So it will be a tough task to exceed this year's order inflows.
For sure. I think we reach initially, as we expect that INR 9,000+ crore to be added during the year, with INR 4,500 crore orders already there. We now, say, we're at ease, but now again, as usually it happens in years, that, around INR 3,000 crore-INR 4,000 crore of orders of NHAI, whether it be HAM or EPC, usually be added in last two years trend. So these are our prime focus, that, with a good, say, any of the orders, having bearing the good profit, that is the first focus.
Then again, beyond the road, we have highways, which we, in railways, we are already pre-qualified the bids that have a railway new track or doubling of those thing, and, high-speed network, which are—DRP is at an advanced stage, which is likely to come in later half of this year or next year. This again, it would be the likely a positive in railway other than the railway remodeling, the stations. And again, in water, that we have already bidded some three of the projects, so we look forward that in quarter three and quarter four. So altogether, we would be looking into the mixed, balance of all the three, four sectors.
Okay. The second question is on the monetization, sir. Now, we have already got INR 600 crore. We have projects where we have achieved the PCOD, the COD. So, what's the timeline for monetization, and, how much, how many projects, value of the book versus equity you are looking to monetize?
Again, I think it is, say for, almost 2-3 quarters, it was at a standstill, but a very, say, it has been initiated at, again, a very aggressive pace in the quarter two of this year. So we are now having, say, 3 particular proposals going on, side by side, and we are working on it. And most likely by end of this year, the deal would be, concluded, and we are getting, we are getting a, good response from the investors, because we are all waiting, and we also are waiting for the entire completion of which we have completed in two of the projects where the PCOD received. And just one project where, small portion is left out, we have received already in November 2021, we received with Rewari-Ateli .
With that, the entire completion of the project is done, and very soon we will be completing Rewari Bypass. With this all those projects, they are about INR 350 crore of equity, which we are looking that at least we should have a recent setup about, say, 40%, that is about 12% of the founding number.
This is the same, then 40% premium to your INR 350 crore in equating investment is what you are looking at, at 12% discount rate?
Correct.
Okay. Thank you, sir. Thank you very much for my question.
Okay.
Thank you. We'll take our next question from the line of Ashish Shah from Centrum Broking. Please go ahead.
Yeah, good morning, sir. Sir, I know you've given an overall guidance for the execution for the year, but just wanted to understand that a couple of projects like OD-5, OD-6, you know, they—we haven't seen a great lot of progress in the first half. I mean, after the appointed dates had been received sometime in end of May. So what is the reason why the pickup has been a little on the slower side?
See, this monsoon, again, in north and south, it behaves differently. Okay, so you can see in this eastern part, where this corridor, the entire corridor is lying, AP and OD- 5, 6. And if not, much of the progress is visible. It's hardly say all these three projects are hardly about say 150 or so is the progress during this quarter, which in north would have been say much better. But now we are all there. We have mobilized. We have having the entire resources waiting for the monsoon to draw, and that has now been restored up, and we would be coming back to the track. We would be progressing very good the project to these projects to quarter three and quarter four.
Okay. So any number you would like to quote, let's say, by the end of the year in OD-5, OD-6, and AP-1?
All three corridors in Raipur to Raipur-Visakhapatnam, we would be doing INR 325 crore in quarter three, and around, say, INR 450 crore in quarter four.
Sure. And-
We're around INR 2,700 crore in balance life as on thirtieth September.
Okay, sure. Also, on Ganga Expressway, how is the ramp up likely? How much do we expect to execute by this financial year end, and how much you're looking at next financial year?
Earlier, it was expected about INR 1,000 crore of execution during this financial year, but now that we would be looking at INR 700 crore because of almost, almost delay by over one and a half months or two months delay. That is one reason. Again, if you see that in north, this fog and the winter rains, it will affect these type of projects, which, earlier if it would have been started, then I think, and offwork and the related activities, this hampers a lot. In any case, we were INR 300 crore or so, which is likely to be where INR 5,000 crore gone down, this is likely to be going down to INR 4,600 crore. That is the big reason.
INR 700 crore this year, and next year, what would be the numbers, sir?
Next year, definitely, we will be looking at about INR 2,000 crore of execution coming down from the next year.
Thank you. We'll take our next question from the line of Jiten Rushi from Axis Capital. Please go ahead.
Yeah, good morning, sir. Thank you for taking my question. My first question, when I was reconciling the revenue based on your order backlog, opening and closing order backlog. The revenue seems to be INR 656 crores. As against our reported number, it is short by INR 96 crores. Any other revenue other than the execution you have booked in the quarter, sir?
What you are saying that the, say, amount which has been recognized INR 750 or so, because there are-
Again, sir, the reconciliation is-
The number is coming from price variation as well.
Okay, it's price variation. And sir, any and any utility shifting or something like that?
It's a minor number, relatively numbers, INR 15 crore-INR 20 crore is coming from utility shifting and INR 10 crore-INR 12 crore is coming as a revenue. The major number is about 8%-10% is coming from price variation, price variation.
Okay, okay. And balance is from price variation.
Yes, yes.
Sir, on the bookkeeping side, can you just highlight the outstanding mobilization advance, unbilled revenue, retention money, and if you can give us the breakup of debtors, if it is possible, sir, as on September?
Yeah, sure. I think it has been reduced by INR 337 crore, if you see all together, because the data including retention. Okay, so INR 373 crore at, say, June thirtieth, now it's come down to INR 568 crore. It is a bit of a decrease in the Contract Assets, it is unbilled, because major portion is in Ganga Expressway and BB89, which is approaching completion. This is again, a significant number is there, which is certain CCs or billings are likely to be there in quarter three only in this. A bit of HAM projects and other projects in the half time, while starting the projects. Altogether, this is an increase in INR 100 crore in Contract Assets, which is likely to come down again to the same range as we are always doing....
INR 300 crore-INR 350 crore . Better would not be, say, there is anything major, surprise would be coming in. We are now having INR 354 billion watts better.
Sir, ma'am, the question has been incomplete, so let me get the answer, please.
This is regarding the better.
I just didn't get the number. What is outstanding unbilled number and what is outstanding mobilization advances? And based on outstanding, sir.
For unbilled number is INR 458 crore, where the major I have already given that the-
Yeah, yeah, I know.
Mobilization, which again, it's going to drop down to INR 350 crore, not beyond that. Say, with a few of the projects nearing completion and the HAM projects again, where we have completed, we're certain a few are waiting for the approval, we are completed. I mean, more than once, again, it has been increased by INR 50-odd crore . And again, we again, I'm coming to that, that there is a 50 crore increase in the mobilization which is now coming at INR 347 crore .
Retention, sir?
Retention is also two.
That is what?
INR 170 crore-INR 175 crore.
Okay, sir. That is all on my side. Come back in the future. Thank you.
Thank you.
Thank you. Ladies and gentlemen, we would request participants to please limit their questions to three per party. Time permitting, you may come back in the queue for a follow-up question. Anyone who has a question may enter star and one. The next question is from the line of Romil Jain from Electrum PMS. Please go ahead.
Hello. Yeah, thanks a lot, sir. I hope you can hear me?
Yeah, yeah, sure.
Yeah. Sir, actually, I just missed. I could not hear properly. What is the equity requirement for current year and 2024 and 2025?
Current year balance is INR 200 crore for the balance half of this year, and next year it is coming around INR 194 crore. We also, INR 1 million crore, we have already invested INR 610 crore.
Okay. And 25, 25 number?
Balance is coming in 2025, hardly it is coming at around INR 100 crore.
Okay, okay. Got it. And sir, one question on the competition. So as you mentioned, most of the projects are HAM from NHAI. So how has been the competitive intensity in the last couple of months? And do we see some kind of pressure in the competitive intensity?
No, EPC is not yet improved, but definitely, honestly, a major, major shift has been there. I think now the number of players are getting lesser and lesser, and with that, again, the percentage where the discounts were passed on, now we are seeing a bit of a premium over it.
For the upcoming projects?
For the upcoming projects, in the recent past, we have seen few of the bids, where the margins are looking this time, the aggregation is a bit better. Competitive intensity-
Okay.
-was earlier, now has been improved.
Okay, but, any specific reason why it has been improved? I mean, there are players who are not able to bid or capital issues are there?
Actually, not a big reason, but definitely you can consider that the major initial, say about 20-25 builders were there, which were small, mid-sized companies. They are having enough appetite, the orders in hand. They are not participating much now.
Mr. Jain-
Okay.
Could you please...
Thanks, thanks.
Thank you. We'll take our next question from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Thank you, sir. Thanks for the opportunity. So I'm really sorry, I joined the call late. So have you mentioned your guidance for FY 2023, the revenue, EBITDA margin, and the order inflow?
I only can repeat it. It is about, say, 46 somewhere, and EBITDA of 16%+ , somewhere in that range.
Okay. OY, sir, INR 9,000 crore-INR 10,000 crore?
Order in any case, which we already received, is INR 4,500 crore, or INR 4,500 crore would be likely to be added during the year in roads and other sectors.
Understood. No problem. Sir, and you also mentioned that you are looking at railway station orders. So would like to know that whether the margin profile on these projects will be the same as our current margin?
We are keeping our intent clear that we would be not going the low margins for any of the other sectors, you know.
Okay, sir. Okay, that's all. Thank you.
Thank you.
Thank you. Anyone who has a question may enter star and one. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Good afternoon, sir, and thanks a lot for taking my question. Sir, one question is on these large projects like Ganga Expressway, which you have in your order book. So, do you expect the margins to be in similar range, or do you see any efficiencies, or do you see, because these are very large orders that you have got, you see some sort of a lowering of margins?
No, I can understand your question. Say, in any case, this 150 km, 150 km of, say, mag- huge magnitude, INR 4,500 crores, like in Visakhapatnam and Chennai package, again, about, say, INR 3,000 crore. So this gives a cluster-based approach, where the margin definitely, additional efficiencies are much better, the margin would be good. No doubt that there was a bit of a shrinkage in the earlier quarters. Now, we are coming back to the track. 15%+ margin would be there.
Understood. Secondly, in railways, you know, while we've been trying to enter these two segments, railways, water, but we haven't yet got any significant sort of orders, which will move them.
No, I think it's a very thing. There is that we need to be very the trust has to be there, but no doubt, we are having the clarity of that, but we should not be compromising between that and the margins, compromises are there. So we are on track. We will be getting the orders when it is, as we are looking for 10%-15% this year from the other sector.
Any railways, specifically, sir? Some of the other EPC players have burnt their hands badly in terms of track laying and many other activities.
There is a big change in the execution pattern as well. You can see in last few years in NHAI also, where earlier the land was not there. The project with this overrun, time overrun was there, four-five years completion. Now, it is coming at two years, 2.5, three years. So again, the big change is coming there in the railway as well. This is continuously monitoring this program. It happens like that, the things are being monitored very closely.
In HAM, we are expecting around INR 350 crore release this year. Is that right? And what is the expectation?
What I'm saying is, the deal is going to be completed this year. The fund may or may not come this year, but definitely as the deal concludes, in this financial year, we, within six months, we will be getting the funds.
Mr. Gupta, maybe-
Just one second. This is the continuation of the same question. So next 18 months, what are we expecting of the overall equity release from the HAM projects?
Equity.
Release, sir. I mean, the HAM monetization, what are we expecting the equity to, amount to be, monetized for this 18 months? Let's say this six months and next 12 months, if the next financial year.
This is INR 350 crore of total equity on the 44 projects, which are in proposal for monetization. So there, exactly, we are looking at about, say, 40% of over the equity deployed. This again, we can expect in the next year, so 18 months, again, from now.
Understood, sir. Thank you, and all the best.
Thank you. Our next question is from the line of Jiten Parmar from Aurum Capital. Please go ahead.
Yeah, good morning. My question is basically on the consolidated margins. We did 19% last year. Are we on track to maintain that or better that for this year? What is the outlook for next year?
Currently, for the first half of the period is 18.9%. You are talking about the consolidated margins.
Right.
It would be in the range of about 19%-20%. That would be the same range.
For next year also, you are guiding the same?
For me, these are this, with the HAM monetization and a few things that are PV level, where the, things, bonus and, few years, costs involved in terms of the revenue is not yet realized.
Okay. My second question is on the order inflow. I think you answered that, but I couldn't get it clearly. For half two, you are saying that you should get order inflow around INR 4,500 crore. Just want to make sure of that. Is that right?
Yeah, definitely, we are looking at it, about this INR 3,200 crore-INR 3,500 crore are coming from HAM projects of NHAI, and other than that, EPC NHAI or, the other sectors.
Thank you. That will be all from my side. Thank you so much for answering my questions.
Thank you. Our next question is from Shravan Shah from Dolat Capital. Please go ahead.
Yeah, thank you. Sir, Khammam-Devarapalle Package One, Appointed Date, will be accepted by?
That is by tenth of November, sorry, the tenth of November, the HMS has been already signed, and within next few days, we will be getting the Appointed Date.
Okay, next, so, before this month ends, we will be having the Appointed Date.
Yeah, for sure.
Yeah. Second is in terms of the CapEx, for this one, which we have done, INR 149- odd crore. Previously, we were looking at, even, sale of the equipment, net, INR 135- odd crore for this year.
I can give a clarity on the breakdown of the CapEx, which has been done and which is likely to be done. So this is 134 total rupees of CapEx, out of that, INR 80 crore. Earlier, this capital work in progress, which is there, it is a camp development, which earlier has put on, was the expense, categorized as the expense. Now, it is capital work in progress to be depreciated within, say, two-three years of the, with the duration of the contract. So that is how the number go looks big. So that is how INR 91 crores of CapEx already done, INR 25 crore of land and building are there, and INR 30 crore of camp is there. So total INR 150-odd crore of CapEx done.
Another, say, some CapEx--INR 45 crore will be done in second half this year, and INR 45 crore is likely to be received for with the disposal of the old assets.
Okay, okay, okay, okay, got it. And in terms of the debt level, which is INR 392-odd crore , so-
Three fifty.
By March end, we will be seeing some reduction from here on?
Yeah, 350-400. That is the likely number which would be there.
Okay, okay. And lastly, on the, we were expected to get the INR 26 crore bonus in the second quarter.
This again is the completed as of October level, and in quarter three, we will be getting.
So we will be getting INR 26 crore in the third quarter? And, is there any other project where we will be getting a bonus in fourth quarter?
No, as of now, there's no possibility.
Okay. Okay, yeah, that's it from my side. Thank you.
Thank you.
...Thank you. Our next question is from Jiten Rushi from Axis Capital. Please go ahead.
Yeah, thank you for taking my question, Aditi. Sir, in the railway bids, you said you'll be bidding for the railway lining projects and also on the station redevelopment projects. So sir, these projects, are we qualified or we shall be bidding in joint venture, sir?
So mostly, we are qualified in metro and these kind of projects, and if in case of any typical requirements, qualifying requirements, we are already we are tied up, and we would be doing for those interesting projects.
So what-
Most of the projects are bid as a single entity.
So what is the size till which we can bid as an independent entity?
It's almost at the level of 1,000 or even 1,500. We are eligible for those projects.
Sir, but INR 1,500 crore?
Yeah, because I think we are not getting many projects which size is over 800 or 1,000, but we are eligible.
What project, obviously, we go into joint venture with?
Yes, partner. Yes.
Yes. Sir, on the escalation part, so these projects are mostly commodity-driven projects, so these projects will include escalation, right, sir?
Every project is having this price escalation clause.
That should not be the challenge for us.
Correct.
Sir, on the margin front, obviously, you've given that H2 should be better in terms of EBITDA margin. But sir, going forward, you said that there are large-large ticket projects that we are executing, like the Raipur project, the stretch and the Adani project. So in that, we are seeing like a 15% margin. So do we see that going forward, margin overall should come down to 15%, 15.5% against 16%, 16.5%, which you said? Or-
I don't see now or what with the commodity prices almost has cooled down, and now it's on at a stagnation stage. So whatever bids we have done, say 1.5 years back, now we are getting the equivalent price installation or ease, so that is another similar number. So we don't expect that 16%+ margin would be a say negotiation in coming months or coming years.
Sir, in the revenue term, you said INR 2,000 crore we expect from the Ganga Expressway in FY 2024. So what kind of revenue are you expecting from the Raipur packages and the AP-1 and 2 in FY 2024, sir?
If you can just, look into the break up of that, whichever project where we are, like, targeted to complete it by June 2024, say May 2024, rather. So then when we see it, the most significant portion would be completed, in, FY 2024.
Question, you said that you are expecting a revenue of INR 5,800 crore-INR 6,000 crore in-
At least, at least there could be coming at about, say, INR 3,000 crore-INR 4,000 crore of revenue in this all three packages or rather, which are upcoming, in FY 2024.
On the KD, KD, Khammam-Devarapalle package one and two, how much do we expect in the UER, how much do we expect in FY 2024?
Sir, so let me get the entire order book, which is at about, say, INR 10,800 crore, which is supposed to be completed by the time of this year, in FY 2024, in November 2024. So with that, you can very well understand because majority of the projects where we would be targeting within the stipulated timeline, where the land is not a challenge and where other challenges are not there. We are, according to the contract and according to we are also prepared to execute them on time.
Got it, sir. So that is my kind of knowledge.
Thank you. We'll take our next question from the line of Prem Khurana from Anand Rathi Shares. Please go ahead.
Yeah, thank you for taking my question, sir. So sir, my question was with respect to hybrid annuities, and we already have two assets which are operational now, and we've started receiving annuities as well. So one was, want to understand if we are receiving our annuities in time, and second is eventually, given the fact that both these are such operational, so have we been able to manage refinancing of these assets? I mean, has the interest rate come down, and what's the spread now that we're able to make with this? And just to continue on this, I mean, you spoke about some 40-odd% premium that you expect once you want to sell these assets, right? So is that the, hurdle rate?
I mean, if, let's say, I mean, there's a buyer who doesn't agree to 40%, would you be willing to settle for a little lower number or not?
In the first part, where you are saying that the entire, this, project which we have completed, COD, we are getting the right annuity on, right on time, number one. The operation cost and maintenance cost, which we are incurring, it's, say, well, below the what we are getting from NHAI. So that is all in control. The number which has been indicated as a premium which we are likely to get on the equity investment, which is coming from because of that only, because of the interest rate, which, you know, most of these, assets which we are having, say, it's around 8%, it's about 7.4%, rather, 7.4%. So with that, I think it is a, an advantage to us, which we are in the cash flow of equity at the PD level.
So a decent one. And then, this number which you are saying that 40%, we, we are looking at, so definitely 30%-40% has been indicated by them, and there's a possible negotiation which is going on.
Sure. The payments will come in two tranches, right? I mean, we'll get to first 49% and then another 51%. The first two assets, and I understand you already spent six months, so which is that you'll be able to have it, but then the third and the fourth, you will have to wait for some time, right?
Obviously, I think the review is regularly. It's a process which, say, it's a one-year process, almost.
Sure. And would you be able to help me with the receivable, receivables from IRB and Adani?
Yeah, Adani, there is not a big balance receivable as a matter of hardly INR 60-something crore, which we received very regularly, which you are seeing very regularly. I can update upon it, so basically, at the start of this financial, this quarter, so we were having, just a minute, I can give you the update. So we were having this INR 306 crore. This was billed and retention and unbilled, all three together, the start of this quarter. Now it's coming down, and we have received INR 130 crore in quarter. We have received the INR 40 crore post the quarter, and now it is coming at, roughly it is coming at retention in major portion, INR 90 crore, this is what we are due, in any case, the two-year DLP period.
INR 68 crore out of INR 68 crore, later we have received INR 40 crore and INR 30 crore was unbilled, which is likely to be billed within this, as the balance there is under production. So it's mostly on track.
Sure, sir. Okay. So Ganga, the CapEx is already taken care of, right? Or there is some more which is, what is-
I think the CapEx which we have done, and the CapEx which is likely to be done, which again, is going to be, set out, with the disposal, disposal plan, which we are going to dispose. We are going to dispose, yeah.
Sure. That is my end. All the very best of you.
Thank you.
Thank you. Anyone has a question may enter star and 1. The next question is from the line of Uttam Kumar Srimal from Axis Securities. Please go ahead.
Yeah, thank you, sir, and thanks for the opportunity. Sir, this quarter, our employee costs and other expenses have increased. So can you please give some light on that?
See, the mobilization in all the big sites and all the projects where the project has been bit delayed and which we received very recently. So with that, I think the manpower costs in those of the projects is being reflected as an expense in this quarter two. Number two, as a percentage, it is gone high. If you see the execution is picked up, then it will be again coming back to the same percentage as we have been in most of the years, last three years.
Okay. And sir, you said that competitive intensity has reduced. Earlier, there were 20-25 players. So now, at this juncture, how many players are bidding for a particular HAM project?
No, see, what I'm saying is HAM, there has been reduced, in EPC, it's not that. EPC is always having a similar number of players, which are more or less-
No, I'm asking about HAM only.
Earlier, it was going at about, say, 13-15 numbers. Now, it's come to coming down again to, say, eight-10. So that is a significant reduction.
Okay, okay. Okay, sir. Okay, sir, that's all from my side, and all the best to you.
Thank you.
Thank you. Our next question is from the line of Franklin Moraes from Equentis Wealth Advisory. Please go ahead.
Yeah, sir. Thanks for taking my question. So, so you had alluded to the fact that, you know, you had some monsoon impact for the quarter. So has this impact spilled over for this quarter as well, I think Q3?
As earlier being asked, in any case, if we are looking at about INR 28 billion of execution in the current start of this year, this quarter four would be the highest one, and in quarter two, because you can see in all Odisha, Andhra, Bangalore, nearby those areas, Telangana, the monsoon withdrawal has been sometime, say, 15th to 20th of October. A bit of portion being affected. Now, again, the execution is on the right track. We are doing almost INR 15 crore-INR 16 crore of execution a day now. We would be completing, significantly, it would be coming at a good number, decent number in this quarter three.
Okay.
Where year-on-year growth is concerned.
Okay, okay. And last four-five years, we have seen EBITDA margin improvement also, you know, from 15%- 16%+, which is a steady improvement. So one, is it a function of your internal efficiencies, or is it a function of the product mix? And you know, going forward, maybe for the next three-four years, can we expect you know, margins to you know, improve going forward as well, or are they likely to be stable?
So now I think it will be even stable at the 15%-17% range even. So that we are already, because of mix, even where it can be the big site project magnitude, operational efficiency is being improved, a certain, say, modification to the operational, model is there, execution strategy is there. So this is how, I think, looks like in coming years also we will be, maintaining that number.
Okay. And in the last five years, what was the reason for the improvement? Internal efficiencies?
No, I think it's the commodity price, which was very, damaged, say, say few quarters. They're going down as low as 15%, now coming back to 16%. So that is the major reason now.
Okay. Okay, thanks a lot.
Thank you. Our next question is from the line of Mudit Jain from Hem Securities. Please go ahead. Mr. Mudit Jain, could you please unmute your line and go ahead with your question?
Hello. Good morning, sir.
Good morning.
My question was regarding the, on the margin front. Sir, the standalone margin last year was around 16%, and the consolidated margins were around 19%. But considering that the revenue difference is not very much between standalone consolidated revenue, sir, what's contributing to this additional margins that you need to focus on that one?
I think the consolidation of our books is only immediately because of SPV. In SPV, there is not a much of a difference, only the revenue and the profit. The top line, bottom line is coming almost at a similar range.
Okay, sir. Thank you, sir. That's all from my side.
Thank you.
Thank you. That was the last question. I now hand over the floor back to the management for closing comments.
Yeah, thank you all for your time today for attending this investor call. I hope all your queries were answered satisfactorily. In case you have any follow-up queries, please feel free to reach to our, our advisors, that is, Go India Advisors. I'm wishing you all a very good weekend. Thank you.
Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.