Ladies and gentlemen, good day and welcome to the Kalpataru Projects International 's Q2 FY 206 earnings conference call hosted by DAM Capital Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, ma'am.
Yeah, good evening, everyone, and warm welcome to the Q2 FY 2026 earnings call of Kalpataru Projects International Limited. We have today the management being represented by Mr. Manish Mohnot, Managing Director and CEO, Mr. S.K. Tripathi, Deputy Managing Director, Mr. Sanjay Dalmia, Executive Director, Mr. Amit Uplenchwar, Director of Group Strategy, and Mr. Ram Patodia, President, Finance and CFO. At this point, I'll hand over the floor to Mr. Mohnot for his initial remarks. Post it, we'll open up the floor for Q&A. Thank you, and over to you, sir.
Thank you, Bhoomika. Good evening, everyone. Thank you for joining us for the Q2 FY 2026 earnings call of Kalpataru Projects International Limited. Our financial results and investor presentation have been uploaded on the stock exchanges, and I trust you had the opportunity to review them. We are pleased to share that KPIL has reported yet another good quarter with highest-ever second-quarter revenue and profitability. The performance highlights the underlying strength of a diversified business portfolio focused towards on-ground execution, efficient working capital management, and a proactive approach in investing to build capabilities to scale high-growth businesses. I'll first start with some key highlights from quarter two, and then we'll share updates on individual businesses. Our consolidated revenue for the quarter recorded a growth of 32% YoY and standalone revenue grew by 31% YoY.
At profitability level, EBITDA was up by 28% YoY, PBT grew by 71% YoY, and PAT reported a strong growth of 89% YoY for Q2 FY 2026 at consolidated level. Similarly, at standalone level, EBITDA grew by 28%, PBT was up by 48%, and PAT growth was 51% for Q2 2026. Our consolidated EBITDA margin was at 8.6%, and standalone EBITDA margin stands at 8.3%. Likewise, the performance on EBITDA margin front reflects the nature of project mix, lower progressive water projects, and impact of extended monsoon in India. Our finance cost as a percentage of sales is in line with the guidance of 2% for both consolidated and standalone business. Our consolidated PBT margins witnessed a sharp improvement of 110 basis points to 4.9%, and standalone PBT margin was up by 60 basis points to 5% for Q2 2026.
To update on the working capital and debt front, our focus clearly remains on further strengthening of our sheet. We have closed the quarter with standalone net debt at INR 2,189 crore and consolidated net debt at INR 3,169 crore. Even after considering the inflows from QIP last year, our debt levels have moderately increased despite delivering strong revenue in excess of 30% for the first half of the year. This is on top of the fact that we continue to witness delay in collections from water projects, particularly in JJM projects of UP and Jharkhand, where the progress on payments has remained slow compared to our expectations. Furthermore, we have incurred CapEx of around INR 340 crore in the first half of the year, mainly to support execution of large-scale orders in the B&F business.
In the last four and a half years, we have incurred CapEx closer to INR 2,400 crore to improve our project delivery and competitiveness in high-growth T&D and B&F businesses. Our net working capital days have further improved, both on a year-on-year basis and quarter-on-quarter basis. Our consolidated net working capital stands at 90 days, and standalone net working capital has improved to 102 days. Now, on the order book position, our consolidated order book remains strong at INR 64,642 crore as of 30th September 2025. The diversification of our order book across T&D and civil businesses provides stability and ensures a healthy growth trajectory for our coming quarters. During the year, we have secured orders worth INR 14,951 crore, led by major order wins in the B&F and T&D business. Further, we have positively placed in tenders worth INR 5,000 crore, mainly in the international T&D business.
On the business visibility front, our addressable markets in the near and long term remain very strong, spanning across Power Transmission & Distribution, Solar EPC, Residential & Commercial buildings, Oil & Gas pipeline network, underground and tunneling, urban mobility, and select international projects in the civil business. While we anticipate some temporary headwinds due to lower CapEx, geopolitical issues, etc., the long-term opportunity remains very robust and exciting for established EPC companies like us. From a long-term perspective, we remain confident and undeterred in our growth strategy. Our focus remains to bid strategically with a focus on improving profitability, enhancing return ratios, securing projects that have fair working capital terms, and building differentiated capabilities to maintain our competitive edge.
Looking ahead, based on our current order book position and the immense potential of our addressable market, we remain confident in our trajectory to further scale our T&D and civil businesses going forward. Now, coming to the performance of some of the large businesses. First, I shall talk about the performance of our T&D business, which delivered a strong revenue growth of 51% YoY in Q2 2026, supported by robust execution in India, Sweden, and other international markets. We received new orders of INR 6,864 crore in the T&D business till date in 2026. Additionally, we have positively placed in order projects over INR 4,500 crore, mainly in the overseas market. Our T&D order book stands at INR 26,276 crore, reflecting a growth of 18% YoY.
Overall, the outlook for our T& D business remains very optimistic in the domestic and overseas market, with a tender pipeline in excess of INR 150,000 crore over the next 12- 18 months. LMG Sweden continues to deliver strong performance with YoY revenue growth of 89% to INR 2,720 crore in Q2 2026. LMG received orders worth approximately INR 1,100 crore till date in FY 2026 and has an order backlog of around INR 3,600 crore as of 30th September 2025. Our B& F business maintained a strong growth momentum, recording a 20% YoY increase in revenue in Q2. Our order inflows are at record level as we have secured orders over INR 8,000 crore till date in FY 2026. Our B&F order book has grown by 43% YoY to an all-time high of INR 18,758 crore.
Our focused business development and robust execution capabilities have helped us to improve our competitive position in large-sized design-build projects, which places us favorably to secure reputed projects from large market developers in India. Our Oil & Gas business delivered strong YoY growth of 21% in Q2. Our progress on the Saudi project remains on track. We are actively working to expand our international presence to drive the next phase of growth for this business. Our Water business saw a decline in revenue by 5% YoY to INR 517 crore. As informed earlier, collections in the Water business improved in a few states, while progress in UP and Jharkhand remained very slow. With an order backlog of over INR 8,379 crore, we remain focused to complete the existing projects. At the same time, we continue to evaluate new opportunities in new areas and international markets.
Our Urban Infrastructure business delivered strong performance this quarter with a 65% YoY growth, driven by progress on metro rail projects. In our Railway business, we recorded revenue of INR 210 crore during the quarter, reflecting a growth of 9% YoY. Lastly, on our Road BOOT assets, post the termination of WEPL in July 2025, we have handed over the asset to NHAI with effect from 30th September 2025. With respect to Vindhyachal Express VEPL, we are progressing well on approval for sale and expect to complete the transaction in the second half of FY 2026. Lastly, as you can see, all key parameters of most of the businesses have done well. The quality of the performance is just getting better over the quarter, and we expect good stability in the performance and earnings going forward.
This recorded performance has clearly set a strong tone for the fiscal year ahead and reinforces our confidence to achieve the revenue and margin guidance set for the full year 2026. On the guidance front, we are on track to achieve targeted revenue growth of 25%+ at both standalone and consolidated level, compared to our earlier guidance of 22%- 25%. On the standalone and consolidated PBT margin, we reaffirm our guidance of FY 2026 of improving PBT by a minimum of 50 basis points. Further, we are positive to achieve a targeted order inflow of INR 25,000+ crore for full year 2026. In conclusion, we are excited about the opportunities ahead, and we remain committed to driving profitable growth and creating long-term value for our stakeholders. Thank you for your continued support. Now, I request the moderator to open the floor for Q&A.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 comes from the line of Ravi Swaminathan from `[Advisors] Park. Please go ahead.
Hi sir, congrats on a good set of numbers. My first question is with respect to the tender pipeline for the power T &D space. Last call you had mentioned that it was around INR 1.2 lakh crore, and now it is INR 1.5 lakh crore. There has been quite a bump up in the tender pipeline quarter to quarter. Which are the sub-categories like Power Grid, ACB, private players, international, where we have seen the biggest delta in terms of tender buildup? Because of the significant growth, are we seeing an improvement, further improvement in margin profile of power T& D orders, margin and working capital of power T& D orders?
Good evening, Ravi. Ravi, we are seeing traction across both domestic and international front. On the domestic front, whether it is the new HVDC lines, which are further expected to come in for tenders, the southern part of the grid, the southern India grid, which is further getting strengthened, all are expected in between November to February. On the domestic front, whatever we had planned looks visible. What has changed in the last two quarters? We are seeing a lot of traction in some of the Latin America markets like Guyana and the neighboring countries around there, and also in the Middle East. We have seen a lot of tenders come in the Middle East in the last two, three months, whether it is in Abu Dhabi, Kuwait, some of the interconnection lines.
Personally, if you ask me what has changed, international order book visibility has improved significantly in the last two, three months, whether it is Middle East, Africa, or Latin . Also, on Solar EPC projects, we are looking at some big opportunities in the Middle East market, and that's also an opportunity which we are looking at. On an overall basis, the market still looks very good. Now, from on your second question. Given that the orders are under tendering now and will get awarded only in Q3, Q4, or later part of that, later than that, I don't see any improvement in revenue because of these tenders coming in the current year. Definitely, they will help us in forecasting for revenue going forward.
In terms of margin profile, sir, because the market itself is expanding, are we seeing improvement in margin and working capital terms further for the power T&D orders, or is it like it is getting maintained at the same level?
If you ask me at an India level, I don't see a significant improvement, although margins are much better than what they were in the past. On the international front, there are a lot of markets where we have a competitive edge of being there early or not having much competition. There, we can see some improvement. On an overall basis, we still continue this business at the same 9%- 10% EBITDA levels.
Got it, sir. Thanks a lot.
Thank you. The next question comes from the line of Sumit Kishore from Axis Capital. Please go ahead.
Good evening. Thanks for the opportunity. My first question is on the T&D business. When I look at your disclosed orders so far this fiscal year, it appears that a fairly small portion has come domestically and mostly it's overseas. You mentioned that in your mature L1 positions, the pipeline, also international T&D is quite strong. What we are noticing is that a lot of interstate TBCB projects on a year-on-year basis have been much lower so far this fiscal. I just want to understand that in this backdrop, is it possible that the second half also would largely be dominated by international in T&D? What percentage of your T&D order book is international right now?
Sumit, just so that we have clarity, on the domestic front also, we have got orders in excess of INR 2,500+ crore in the first six months, which is around 30% higher than what it was in the previous year. We are L1 also in a few projects. On the international front, obviously including LMG Sweden, we've got orders in excess of INR 4,000 crore in the first six months in Q2. My point is, I do not see orders coming down because a lot of tenders which Power Grid has not taken, but some private sector players have taken, would get into that award stage maybe Q3, Q4. Some of the large TBCBs have not necessarily been taken by Power Grid, and that also would come up for tendering soon. Already the tendering process started, but the award would happen later part of the year.
I personally stay confident from a long-term perspective on getting very good orders coming in. From a timing perspective, maybe Q3, maybe Q4, maybe it could be one quarter here and there. The reality is that both the businesses, whether it is T &D and TLI , are sitting on very good order books right now, right? They are sitting on order book which is closer to two and a half, three years, even if I assume a 20% growth. I'm not desperate in that sense to go and take an order just for the sake of getting an order book because they have good visibility, the opportunity is good, and they're limited players of the size and scale who can deliver this kind of projects. I am very optimistic about it.
I believe the next 6 - 18, 24 months, there will be good orders for domestic and international. One quarter here and there could happen depending upon when the tenders happen.
Okay. The second question is in relation to water. While revenues are down about 5% in the quarter, how has been the movement on the receivable dues for water over the past six months?
Over the past six months in the business, we have invested additionally closer to INR 700 crore. Basically focused on execution of a lot of projects which were at 70%, 80% completion, which we want to complete much sooner than later. We have seen good traction coming in from a few states. We have seen good traction coming in from MP. We have seen good traction from Punjab. We have seen good traction from Bihar. We're not seeing as much good traction coming from UP and Jharkhand when it comes to receivables. We've had meetings at various levels, and we believe this should change soon. In the first six months, we have invested closer to INR 700 crore in that business. Additionally, INR 700 crore.
Okay. Basically, the working capital improvement that we are seeing slightly is not being helped by Water. Water is just still being a drag there. Extra Water, your working capital will be much better.
100% agree.
Okay. Just one last final clarification for WEPL. When is your dues going to come to you after the transfer to NHAI?
It will take some time because as far as the dues are concerned, there's some arbitration and there's some claims also. Even our KEPL dues, which the termination happened three years ago, have not yet come while we have provided for full KEPL in books. Given the lending process at NHAI and given that there are some claims which we have won and which are under arbitration, I do not expect this to happen very, very soon. It could take maybe a few years or could be more than that. We are trying to settle this with them, but it's a lending process. I'm not expecting any dues on WEPL to come in even this year and maybe even next year.
Okay. What is the total quantum of the claim?
No, sir, we might not be able to quantify that today because we have a lot of arbitration claims which we have won, and there are some claims which are under process. The quantification is difficult, but we believe there might not be a large amount or any amount of equity hit which might come on this project.
Okay. Thank you. We'll show you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Rajesh Kumar from HDFC Securities. Please go ahead.
Hello.
Hello.
Yeah, hi.
I should be from HDFC. This is Parikshit Kandpal from HDFC. Sorry.
Yeah, hi, Parikshit.
Yes, my first question is on the domestic. If you can give us the breakup of the T&D order book in domestic and international, and also the breakup of the prospect pipeline in the T&D, both international and domestic.
You want the order book as of September 26th, right? I f you look at the T& D order book as of September 26th, it's closer to INR 10,000 crore excluding L1. If you look at the international order book, that's approximately INR 16,000 crore as of September 30th, 2026. 20 25. My mistake. Yeah.
Sir, also, if you can give us the breakup of the domestic pipeline of INR 1.5 trillion which you highlighted, both domestic and international.
Of the INR 1.5 trillion which we are looking at, more than INR 50,000 crore-INR 55,000 crores of orders, I think, would come under TBCB bidding itself in the next three to four months, which includes two big HVDC orders and two large orders in southern India. That itself would be in the range of INR 50,000 crores plus a few more orders which are already shortlisted for tendering. The balance would be international with a lot of focus on the Middle East, LATAM excluding Brazil, Sweden and neighboring countries, and Africa. Our focus would be primarily on domestic, LATAM, Africa, and Europe, not as much on the neighboring countries.
Can you just on these two HVDC, which are these HVDCs, sir, if you can help us?
There's one in Gujarat and there's one in southern India. I don't have the exact names of those lines, but there's one more coming up in Gujarat, which is connecting Gujarat, Rajasthan, and one in southern India. I'll be happy to give you those details. Maybe my team can do it, or it's already in the REC, PFC site. If you look at it, you'll get those.
Okay, I understood, sir. My second question is on the Saudi expansion which you mentioned. What are the areas beyond the pipeline project which you currently have and the T&D which you do? What are the other areas you're looking at, and how big the opportunity is that, and what kind of conversions can we see over the next two, three years coming in incrementally from these overseas?
I think our focus as far as the Saudi market is concerned continues to be on three areas. One is Oil & Gas itself. We are doing a large project, and we'll continue to make sure that we are in that leadership position there. Second, T&D , we have a few projects going on right now which are all getting completed in the next six to nine months. We would like to take some more projects. Third is Solar EPC, where we are looking at one large opportunity in Saudi Arabia, which hopefully will have that clarity coming in soon. That's also an opportunity which we are looking at. Right now, as far as Saudi is concerned, we have all three Oil & Gas, Transmission , as well as Solar EPC. We're also exploring some projects in the Water business, but it might take some time.
It might not happen in the next six to nine months, maybe after that.
This one large opportunity, can we quantify how big is it?
It might be difficult for me to quantify it today, but I can tell you it's already included in our L1 opportunity, which we have declared.
Okay, we're waiting for the conversion, allow it to come in.
Yeah.
Just on LMG Sweden and LNG and both fast, can you help us understand on the revenues which you have disclosed? What has been the EBITDA and the PBT margins on these two entities?
On LMG Sweden, we have seen a very healthy growth in this quarter, which we have expected to be very good. If you look at LMG Sweden numbers in terms of revenue, we have touched revenue of closer to INR 1,500 crore in H1, a growth of more than 50%. On EBITDA margin in H1, LMG Sweden has done in excess of 7.5%, and PBT margin closer to 7%. As far as Fasttel is concerned, the Water business saw a revenue of approximately INR 370 crore. It's much lower than what we had projected. On EBITDA and PBT, Fasttel continues to be negative. We have had some hits coming on some projects, and it continues to be negative.
Okay. Just the last question, sir, on JJM receivables. What are the overdue receivables which you have yet to collect? If you can help us quantify, in case they would have been realized, what should have been our debt positions? Just want to get a sense on that.
Sure. I'll ask S.K. to respond.
Yeah. So. Hi Parikshit . There's S.K. So water receivables from the last quarter, they have gone up by about INR 125 crore. As the end of the quarter went, we were roughly at about INR 1,427 crore, and today we stand to almost INR 1,551 crore. Out of that, highest is in UP , which is INR 737 crore, and the next one is Orissa, about INR 330 crore. Jharkhand is about INR 246 crore. Out of the five states, there is no movement, particularly in UP and Jharkhand. Otherwise, in this quarter, we collected about INR 420 crore, and majority of this came from MP and Orissa. In a nutshell, we have gone up by INR 125 crore during the quarter, in spite of collecting INR 420 crore.
Yeah. Is it right to understand that if I collect both UP and Jharkhand, which is about INR 983 crore, so this is the overdue, I mean, beyond the time, I mean, this should have actually come in now. This is, as of now, maybe beyond 180 days receivables?
No, no, they are more than that. Maybe out of this, 50% is more than eight to nine months, right? In case of UP , we have not got our due payment from almost 15- 16 months. In a nutshell, these two states, you can say more than a year, in fact.
If this had come on time, our debt should have been lower by at least INR 700 million, INR 900 million.
If you look at the debt number and the water receivables, they match with each other.
Exactly. Our debt number would have been much lower. Yeah.
Yeah.
What are you doing? I mean, why this? I mean, why UP is not paying or Jharkhand is not paying? What are the challenges? I mean, we must be presenting it, but what are the challenges? Are they not getting funds or center not giving them money? What is the challenge, if you can help us understand that?
Yeah, yeah. UP and Jharkhand, they are two states. And JJM. These are the receivables which are part of the JJM, whereas the major funding has to come from the central government. In UP, about 15 days back, there was a meeting even at a CM level where he assured that they will do some funding from the state. In a nutshell, states which have some money, they are paying from their own coffer. Otherwise, they are waiting for the central government to support the project. Now, central government, maybe at this point of time, they have different priorities. Also, in the JJM, at a nation level, there is a cost overrun, which the cabinet and the PMO is yet to approve. Because of this non-approval process from the central government, the money is not flowing to the states, and then the bills are kept pending.
This is the real situation. Representation as the industry through the SHOCHEM, there is a representation to the ministry. At a CM level, there was a discussion. From FICCI, there is a representation. UP, about 15 days back, when we met CM, he assured that after Deepavali, the state government will fund about INR 3,000 crore. Their outstanding in UP alone is about INR 18,000 crore.
Oh, across all vendors.
Now, the balance, right, for all vendors, they will similarly in case of Jharkhand, the total outstanding to the contractors is about INR 4,000 crore. Now, Jharkhand, they are not at all ready to support, even a single duty from the state government. You can understand why, right? They will wait till the time the money comes from the central government. There is a but some of the states like MP and Orissa, they are paying from the state coffer, and the central government will pay them later. This is where exactly, I think there is enough pressure created by industry in UP and Jharkhand, and we are hopeful something should happen in this quarter. We can believe only when it happens.
Just to add to what S.K. said, Parikshit , our focus continues to be completing whatever civil projects we have a 50% blast because we have taken a call that while we might not supply additional materials, at least the civil portion of all the projects we are completing. We are not worried about the money because the central government funded projects, the money will come sooner than later, but the delays impact the margins in a big way. That's why we have been funding these projects to make sure that we complete as many projects as many we can.
Okay. Manish, just one last question on the margins. Now, trajectory-wise, when do we see that we reach closer across 9%? When do you expect we look at crossing EBITDA margins at 9% and moving more towards high single digit, moving towards double digit? Is there any possibility in the near future, or now it's a thing of the past?
Parikshit , on a lighter note, we have been saying PBT margin 50+ basis points , and which we are nearly on track. We should be doing better than that going forward. If you look at it on a totality basis, we have also in the current quarter provided for around INR 30 crore of warranty guarantee provision. If you give impact of that, we are already at those levels where you want to be. Let me not go ahead and commit anything at the EBITDA level, but on PBT level, I believe that margin should only go up from here. I don't see any reason why it should come down on an annualized basis in any form. We are on track to achieve that 50 basis points plus improvement in the current year also.
Sure, sir. Thank you both for my questions. I'll join the chat.
Thank you .
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Amit Anwani from PL Capital. Please go ahead.
Thank you for the opportunity. My question pertains to, as you highlighted, that the margins will go up from here, and this year also, we are expecting 50%. I just wanted to understand, hence, considering the current order book and the pipeline of INR 150,000 crore in T& D. What sense you're getting in terms of the favorable mix change? Over the next two years, will we be towards double-digit margins, especially in T & D? In the overall improvement, is it only T& D where we are seeing improvement, or the other segments also, since we are facing headwinds in Water and Railway? Just a sense of what will be driving this, based on your understanding of the current pipeline also.
Sure. Amit, first, so that we have clarity, we have targeted for minimum 50 basis points improvement in PBT for the current year as a whole. I'm not saying further 50 from here. It's from what we started is what we have targeted for the year. As far as the business EBITDA is concerned, our B &F and T&D business, both in totality, are at a closer to double-digit level. So Buildings & Factories business, T& D business, and Oil & Gas business, all three are at double-digit level, more in the range of 9%-1 1%. Some of the other businesses, for reasons we discussed earlier in the call, are at lower margins. I think these three businesses will continue to be in this range given our current order book and visibility going forward.
Understood, sir. Sir, with respect to the international pipeline, which you talked about, almost INR 1 lakh crore, how much should be Middle East and like we already won one large order, I think, sometime back, are these lumpier orders in Middle East? Will this be the high-margin orders and some more color on the Middle East pipeline, if you could provide?
Amit, as I said earlier, I think there are a lot of tenders in Middle East, Abu Dhabi, Saudi, and some connectivity projects and Solar EPC projects. Our philosophy on Middle East projects has always been that the projects in terms of margins might not be the best, but are very good from a revenue and delivery rose perspective. As far as, and when I say not very good, they might not compare to, let's say, an Africa or a LATAM project which we have won at Guyana or Chile or any of them. In totality, I think if you look at the international order book also, we are focused on that double-digit margin, and we are targeting that. Middle East, in totality, might be slightly lower than double-digit, but reasonably good rose numbers because the projects get done very quickly.
Understood, sir. Sir, lastly, on the Railway business, and you have been highlighting in the past also that we'll be focusing for a few international Railway orders and also the value-added metro orders in domestic market. Some color, if you could throw, are we progressing there? Anything in pipeline. In terms of domestic international market, which can really change the things in Railways?
While we continue to explore a lot of opportunities in Railway, we've not had any significant developments to say that something is visible in the near future. We have submitted PQs in a few countries, we got qualified also. From a six to nine month perspective, I would say nothing is visible as of now on the Railways international front.
Sure, sir. Thank you and all the best. Thanks for answering my questions.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Deven Shah from JM Financial. Please go ahead.
Thanks for the opportunity. Sir, firstly, on the international subsidiaries, how do you see the growth and faster in the next couple of years?
On the fossil front, I'm not very bullish in terms of growth. We've had some challenges at fossil and delivery, as well as some delays and some client issues and all of that. As far as fossil is concerned, we are not running for growth in any form. We are focused more on stabilizing that business and coming back to profitable numbers instead of losing money. If you ask me from a KPIL perspective, next couple of years, fossil will regrow and not look at growth in any form.
Any LMG?
Sweden, we continue to stay bullish. The current year itself, we are looking at a growth which is more in the range of 30%- 40% and improved margins. That business, given the visibility in order book, I think a double 20%- 25% growth from a two to three-year perspective should be very easy.
Sir, in terms of margins, what could be the stable margins for the LMG business in the next two to three years, given the strong growth?
I think at a PBT level, that business looks like easily we should be doing anywhere between 6.5%- 7.5% in the LNG montage at a PBT level.
Okay. Sir, secondly, what would be your order inflow guidance on a consolidated standalone business for FY 2026?
I think we stick to our guidance of INR 25,000+ crore on a consolidated basis for FY 2026. Normally, on order inflow, we give guidance on a consolidated basis only. That number of INR 25,000+ crore , I think, given that we have already received around INR 15,000 crore and we are favorable based on INR 5,000 crore, I think we should be surpassing that INR 25,000 crore, but I'll be able to revise that guidance, if at all, in December or January.
Okay. Sir, what has been the funding for the B&F portfolio in the second quarter? For the entire year, what are we expecting?
I think my colleague is just telling me it's less than INR 20 crore what we have funded in the first six months. It's hardly any funding which is required. Now that we are pretty confident, we're working hard to get the approval in November, December. We should be positive as far as road assets are concerned because we're pretty confident before March 2026 our VEPL transaction should be done.
Thank you, sir. Those are my questions.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Balasubramanian A from Arihant Capital. Please go ahead.
Good evening, sir. Thank you so much for the opportunities. Sir, for Shree Shubham Logistics, the plan is to.
I'm sorry to interrupt you, Mr. Balasubramanian, but can you please speak through handset?
Hello, I'm audible.
Yes, you're audible.
Yeah.
Please go ahead.
For Shree Shubham Logistics, the plan is to sell two to three warehouses. What is the expected net debt reduction from these sales? What is the carrying value of these assets on the books?
If I look at it from a debt perspective, Shree Shubham Logistics, the external debt is now reduced to a number closer to INR 90 crore. Our target is to reduce this by at least a further 50%, get it to levels of INR 40 crore-INR 50 crore by the year end. We're working in that direction by selling some warehouses. We will continue to focus on reducing that debt as we go forward. Hopefully, by the end of next year, our external debt should be closer to zero. I'm not exactly aware of the gross book or gross value of assets, but I can ask you to connect to my team who can give you the exact gross book value of the fixed assets in the Shree Shubham balance sheet.
Okay, sir. For the Oil & Gas segments, I think we are qualified with Aramco and ADNOC. Could you please quantify the size of the quantified or picked pipeline and the technical margin profile we are looking at in those Oil & Gas segments?
I'll just ask my colleague Amit to respond to this question.
Yeah, so Bala, we've got several projects where we are now qualified between Saudi and ADNOC and some of the other geographies in the Middle East. Some of these tenders which were planned for middle of this year are getting pushed towards Q4 or probably Q1 of next year because of volatility in prices of rent and the crude prices. Let's see where that goes. The qualifications are in place. Tenders are expected either by Q4 or first half of next year. We'll be able to give a better view then. From a pipeline perspective, there doesn't seem to be any issue with the number of projects that are planned in the next two to three years in the Middle East.
I've got it, sir. Thank you.
Thank you. The next question comes from the line of Bharat Sheth from Quest Investment Advisors Pvt Ltd. Please go ahead.
Congratulations, [Manishji] and the team for good number. Hello.
Thank you, Bharatbhai.
We have already got a clarification on all business verticals except Buildings & Factories. How do we see, I mean, the way in real estate also, I mean, again, reviving as well as a lot of commercial and data center things are coming. What I understand, real estate also requires a lot of CapEx. How do we think about it from a two to three-year perspective?
Bharatbhai, first of all, we continue to stay very bullish on this business on all aspects, right? One is our capability and competency to deliver on large projects. Now we have two or three projects which are like 10 million sq t and above design built. Second, our ability to work with large market clients in the country, right? There are five or six clients who constitute more than 75%- 80% of the order book. Third, we have a very good CapEx base, which we can use again. We built this CapEx over the five years. Incrementally, for the growth, we don't need to put in similar kind of CapEx.
With the combination of a great team on delivery, great opportunity in all sectors, whether it is residential, commercial, airports, data centers, and industrial projects, history of working with the large clients very, very well, and a great balance sheet, I think we are very bullish on this opportunity. I do not see this business doing less than double digit on EBITDA, and I do not see us growing at less than 20%, whatever happens, even with those challenges on labor and all of that. In a nutshell, I think, and you can see the last 18- 20 months, our 90% order book has come only in two businesses: Buildings & Factories and Transmission. We're very happy with that because from a resource allocation perspective, we believe this is the best time to give resources to both the businesses where the return ratios look very, very attractive.
Mr. Bharat, you're not audible.
Hello?
Yeah, sorry, we missed you, Bharatbhai. I hope you heard the response.
Hello, am I audible?
Yes, now.
Yes. Sir, on one bookkeeping question, in this quarter, our other expenses have shot up almost double YoY as well as QoQ also, it has gone up. Is there any one-off there in that other expenses?
I'll ask Ram to respond to this question, Bharatbhai.
Good evening, Bharatbhai.
Good evening.
Because of the cost.
I'm sorry to interrupt you, sir, but you're not audible.
Okay, let me just quickly help on this one. First, there isn't any one-off expenses which have come in, Bharatbhai. Previous year, we had some gains coming out of FX MTM, which were there in other expenses. That impact this year, there's no gain. That impact is closer to INR 90 crore, which was more on. Otherwise, there's no one exit. Second, there's rent expenses which have gone up primarily on the Saudi project, which comes in other expenses. That's a big, big impact. Otherwise, there's no one-off.
Okay, thank you. All the best, sir.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Abhijeet Singh from Systematix. Please go ahead.
Yeah, thank you for the opportunity. Sir, I wanted to straight on the order book of Middle East between Oil & Gas, renewable, and other segments.
Right now in the Middle East, Abhijeet, we have only Oil & Gas and Transmission. My Oil & Gas order book approximately should be in the range of $600 million, so let's say around INR 5,000 crores. As far as my Transmission order book is concerned, which includes Saudi, Abu Dhabi, Iran, and Kuwait, it should be in the range of $150 million. Total would be more in the range of INR 6,500 crores. I could be off by a few hundred crores, but should be more in the range of INR 6,500 crores-INR 7,000 crores.
You said 5,000 and 2,000 crore? 5,000 crore for.
Yes, 1,500- 2,000, yeah. 1,500- 2,000.
Right.
Unexecuted order book. I'm sure you're looking at that one.
Yes, sir. And sir, what is the outlook on both of these segments in that particular geography going forward? The reason I ask this question is that the Middle East, especially Saudi and a few of the larger economies there, are looking at a significant expansion in their gas evacuation capabilities and other infrastructure, right? Also, a lot of orders are coming in for the T&D segment. In that context, I'm assuming the growth should be pretty robust in that particular geography. If you can throw some light on this aspect.
Abhijeet, I think my colleague Amit did speak about this just a few minutes ago, but I'll repeat that just for the sake of clarity. While we continue to be bullish on the sector, we still are cautious because some projects have slightly got delayed given that oil prices have come down. From a long-term perspective, we believe that there's huge opportunities coming in the Middle East. Even in the short term, at least in Transmission and a few large projects in ADNOC, we see some opportunities coming through. It's a mixed kind of thing, but today we have around INR 7,000 crore of opportunity already there, which we have to deliver over the next two years. We continue to be focused. We continue to be cautiously optimistic on these opportunities.
Understood, sir. Thank you for all the answers. That's it.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Ms. Bhoomika Nair from DAM Capital Advisors. Please go ahead.
Yeah, hi, sir. Just on LMG , just wanted to understand how is the outlook out there, and we were looking at some fundraising opportunities. If you can just throw some color on ordering activity there, what are the prospects? How are we looking at that business? We've seen a very strong momentum this year, both in terms of revenues, and I think also profitability has picked up quite a bit. If you can just talk on that part of the business a little more in detail.
Bhoomika, I think we continue to stay bullish as far as the opportunities at LMG are concerned, one in Sweden and the neighboring countries also. We are among the top three players today in that business in the T&D space and have a very good team which is delivering across all projects, whether it is transmission, substation, or services. Our growth in the current year has been exceptionally good, and we believe that next two, three, four years, that opportunity is intact, and we will only grow one way. As far as margins are concerned, I think those are matured markets where a PBT of 6%- 7% is very reasonably good because the ROS numbers are very, very high, and they are cash positive always. We believe that margins should stay in that range of 6.5%- 7.5%.
Growth is visible, and good growth is visible, and with very high ROS. As far as the fundraising options are concerned, as we had said earlier, we have appointed advisors to look at fundraising options. We are in continuous dialogue with them. At an appropriate time, once we have decided the path which we are choosing, we will communicate back to all of you. We are continuously exploring opportunities of fundraising there, and I believe that in 2026, 2027, we should see some light in terms of getting some valuation of fundraising in whatever form we can.
Okay. Got it. Got it. In terms of working capital, despite the strong execution in the first half, we have not really seen working capital kind of rising, and that has also been in control. Now, as we continue to see further momentum into the second half and perhaps some uptake from more of the Water or Railways, etc., how do you see the working capital for the rest of the year and the year-end debt looking like per se?
On working capital, Bhoomika, I think we continue to stay on a target of less than 100 days for standalone and less than 90 days on console or less than 85 days on console. Obviously, these numbers could look very different if we get majority of our collections coming in from water, but I don't want to be over-optimistic at this date. As S.K. said earlier, as and when the money comes, it would have a direct impact on working capital. I think we will stick to our given numbers at the year-end of less than 100 days, and debt numbers shouldn't deteriorate from here because typically Q3, Q4, debt only improves. Given the growth, it might slightly be in a similar range, not significantly up, not significantly down.
Got it. I know this was discussed to a certain extent earlier in the call in terms of the margin profile. As we're seeing more T&D-led execution, should we see margins further improving? Obviously, at the PBT level, we are looking at an improvement, but more at the operating level, can we see margins going back to that 9%? Crossing a 9% level over the next one to two years? Do you think right now the mix is quite diverse, which will not allow us to kind of cross that level?
I think the margins would definitely improve, right? I have no two views about it because the order book which has been built over the last two years is much better than the order book which we had built earlier. Would it go up from here? It's definitely yes. Can it go to 9%+ levels getting into next year? It sounds feasible, but let's just come back to you at the end of the year with exact numbers. It should be going up only, and I don't see any reasons on this current order book for margins to be lower.
Sure. This is helpful, sir. I'll come back in the question queue. Thanks so much.
Thank you, Bhoomika.
Thank you. The next question comes from the line of Vaibhav Shah from JM Financial. Please go ahead.
Sir, a couple of clarifications. You mentioned that last year there was a one-off in the margins, some FX gain. What was the amount?
No, I did not mention an asset sale last year. I mentioned about.
FX gain.
FX gain, not in margin. It was in other expenses. There was some FX gain, which was closer to. Just to give you a perspective, the Forex loss in HY 2026 is around INR 29.75 crore, and Forex loss in Q2 of 2026 is INR 35.52 crore. Forex gain in HY 2026 was INR 66.6 crore. The delta between INR 66.8 crore and INR 26.6 crore is around INR 90 crore. There was a gain of INR 66 crore previous year in the first half. There's a loss of INR 26.6 crore in the half of this year. The delta is around INR 90 crore in other expenses. Just so that you're very clear, this gain and loss directly does not hit P&L. It goes through hedge reserve. It's only in other expenses, but does not directly hit P&L in a larger perspective.
Sure. Sir, were there any provisions in Q2?
Provisions in terms of what? Warranty guarantee, I've already said that we have created a provision of closer to INR 30 crore in Q2. In half month, our warranty guarantee has increased by INR 60 odd crore, right? INR 70 crore. Sorry. Thanks.
Sir, INR 30 crore sits in the other expense?
The INR 30 crore would normally not be in other expenses. It's in election expenses.
Okay. Thank you, sir.
Thank you. The next question comes from the line of Deepak Purswani from Svan Investment. Please go ahead.
Yeah, hi. Good evening, sir. Sir, just wanted to check it out.
Good evening.
Yeah. Sir, just wanted to check it out. Recently, there has been a spike in some of the commodity prices, especially copper and aluminum. In this context, if you can also give us a sense in terms of the margin profile. What is the fixed price contract, firstly, in the current order book? Is there any margin impact we are expecting because of this? On the incremental basis, how should we see the margin profile because of the rising commodity price?
I think in totality, if you look at the order book, it's as of now, 50% fixed and 50% variable when I look at the consolidated order book. As far as specifically on commodities are concerned, today on aluminum, we are hedged at 90%+ of whatever orders we have, including some L1 orders, which we are definitely sure to get. We are hedged at 90%+. I believe the impact of any increase in aluminum at any levels would be very, very minimal, if not closer to zero, because this aluminum needs to be delivered over the next two to two and a half years. Also, on the copper front, our exposure is very, very minimal because on copper front, our Railway order book is minimal, and there's not much exposure, and we are nearly hedged on that also.
If you ask me personally, from an aluminum, zinc, and copper perspective, the impact on margins might be very, very minimal. As far as steel is concerned, we have not seen much volatility in the last 12- 15 months in terms of increase in price. I don't think that should also have an impact on our profitability in any form.
Okay. Got it. Thank you. Thanks a lot for the clarification.
Thank you. As there are no further questions, I would now like to hand the conference over to Ms. Bhoomika Nair for closing comments. Please go ahead.
Yes, I would like to thank all the participants for being on the call, and thanks a lot to the management for giving us an opportunity to host the call. Thank you very much, sir, and wish you all the very best.
Thank you very much, everyone.
On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.