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HG Infra Engineering Ltd
Earnings Call Analysis
Q1-2025 Analysis
HG Infra Engineering Ltd
In the first quarter of FY '25, HG Infra Engineering demonstrated robust financial and operational efficiency. Standalone revenue reached INR 1,506 crores, marking an 18.4% increase from INR 1,271 crores in Q1 FY '24. Their EBITDA was INR 243 crores, with a marginal increase in margin to 16.16%, compared to 16.11% the previous year. The consolidated revenue also rose, reaching INR 1,528 crores, an increase of 13.1%, with a slight dip in EBITDA margin to 20.44%. PAT stood at INR 163 crores, translating to a margin of 10.6%. Overall, the company showed consistent growth in revenue and efficiency across its operational domains.
As of Q1 FY '25, the company's gross debt was approximately INR 2,115 crores. In managing this debt, HG Infra has a total liquidity requirement of INR 1,461 crores for ongoing projects, of which INR 728 crores has already been infused. Management expects to inject an additional INR 425 crores in FY '25, with the balance spread across FY '26 and FY '27. This careful approach to liquidity positions HG Infra favorably for upcoming project needs.
HG Infra's order book saw a substantial growth of 34%, now standing at INR 15,642 crores. The diversification into solar energy, alongside traditional highway and railway projects, is a pivotal strategy for the company. The breakdown of the order book includes INR 11,452 crores from roads, INR 2,498 crores from rail and metro, and INR 1,691 crores from solar projects. This diversified approach is crucial for minimizing risks and capturing growth from various sectors.
The Indian government's commitment to infrastructure, highlighted in the recent union budget, includes a significant allocation of INR 111,000 crores to roads and highways. Looking forward, they aim to award road contracts worth INR 300,000 crores within three months. With Vision 2047 targeting the construction of 30,000–35,000 kilometers of new highways and considerable investment in railways, HG Infra is poised to benefit from this momentum in infrastructure development, particularly post-elections.
Entering the solar segment has been a strategic decision for HG Infra, with a current solar project portfolio valued at INR 1,763 crores. They have identified various solar projects under the KUSUM scheme and have projected significant financial growth in this sector. An average EBITDA margin of around 18% is anticipated for solar EPC contracts. The company aims to complete 100% of their solar projects by the first half of FY '26, with roughly INR 900 crores expected to be booked as revenue this year.
Looking ahead, HG Infra maintains its guidance for order inflows between INR 11,000 crores to INR 12,000 crores in FY '25. Revenue growth is anticipated at 17% to 18%, with EBITDA margins expected to stabilize between 15% to 16%. This stable outlook signals confidence in their operational effectiveness while pursuing both existing and expanded project lines across varied sectors. Strategic project selection remains a priority to ensure sustainable profitability.
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Ladies and gentlemen, good day, and welcome to HG Infra Engineering Limited Q1 FY '25 Earnings Conference Call hosted by Go India Advisors. [Operator Instructions]
Please note that this conference is being recorded.
I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am.
Thank you, Shlok. Good morning, everybody, and welcome to HG Infra Engineering Limited Earnings Call to discuss the Q1 FY '25 results. We have on the call Mr. Harendra Singh, Chairman and Managing Director; and Mr. Rajeev Mishra, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces.
May I now request Mr. Harendra Singh to take us through the company's business outlook and performance subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Yes. Thank you, Sana. Good morning, everyone. I'm pleased to welcome you all to the Q1 FY '25 Earnings Call of H.G. Infra Engineering Limited. Our financial results and the investor presentation have been uploaded on the exchange and I hope you have had the chance to review them. I'm delighted to share that HG Infra has demonstrated strong financial and operational performance in the first quarter of FY '25. We have strengthened our position in the highway sector and then tremendous progress in railways and a decent progress in solar sector during quarter 1 of FY '25. Our commitment to operational efficiency and stock execution have resulted in impressive performance across all key metrics including revenue and margins.
Last year, we ventured into the solar segment as a part of our strategy to diversify our order book. Our expertise now spans roads and highways, railways, metro and solar energy. Our focus on expanding and diversifying order book is well on track.
Now I would like to provide some updates on the infrastructure sector. Regarding roads and railways, the recent union budget has made a substantial allocation of INR 111,000 crore to the roads and highways sector, underscoring the government focus into a development. Additionally, the Vision 2047 outlines plans to construct 30,000 to 35,000 of highways and 50,000 kilometers of high-speed corridor, those are the greenfield.
For a year '24-'25, the Ministry of Road Transport has been allocated INR 278,000 crores with INR 168,000 crores earmarked to the National Highway Authority of India to develop national corridors. The government plans to expedite new project awards including revising the build-operate-transfer, that is a BOT model for 54 projects valued at over INR 220,000 crores. Recently, the Ministry of Road Transport announced plan to award road contracts worth INR 300,000 crores within the next 3 months, with a target of reaching INR 500,000 crores by the year-end. We believe that post election, there will be significant positive momentum in the infrastructure projects awarding. As a result, we anticipate abundant opportunities to generalize on the expected order inflows.
Talking of railways and metros, the Union Budget of '24-'25 assigned a record allocation of INR 255,000 crores for multi-tracking corridors, station remodeling, replacement of old track, electrification and signaling system. And other than that construction of flyovers and underpasses highlighting a strong commitment to railway infrastructure and connectivity. Over the next decade, the budget aims to expand railway network by 10,959 kilometers with a total allocation of INR 13.67 trillion for railway projects from FY '20 to FY '25.
India's solar power sector is a key component of its renewable energy strategy with installed capacity expanding 30-fold over the last -- for 9 years to 82.63 gigawatts as of April '24. This growth is supported by a major government initiative including the target of 500 gigawatt of renewable energy by 2030, with the solar energy playing a major role. The National Solar Mission and the production-linked incentive schemes have been very crucial in this expansion. The Union Budget '24-'25 allocated INR 10,000 crores for the solar power grid. Additionally, the green hydrogen sector is also poised to -- for significant growth. This is with a target of 5 million metric tons annually by 2030 and an investment of INR 8 trillion crores that is approximately $100 million.
Let me start the journey of this quarter and give you the glimpse of operational highlights first. As of June 30, 2024, our order book stands at INR 15,642 crores making -- marking a significant 34% increase from Q1 FY '24. Over the years, our order book has been diversified beyond roads and highways. For the Q1 FY '25, the order book from different segments stands at, roads and highways stood at INR 11,452 crores; railway and metro INR 2,498 crore and solar INR 1,691 crores. Our order book comprises 28% from HAM and 78% from EPC.
Let me now provide an update on our ongoing EPC projects. The Ganga Expressway project is approximately 57.5% complete, adhering to the contract time line. The Delhi UER project is around 98.1% complete and anticipated to complete in this quarter only. The Neelmangala-Tumkur project is at 23.9% completion only due to the land availability issues with NHAI -- we are working with NHAI to work on with faster regulation and encroachment clearances. Simultaneously, we are also in discussion with NHAI for settlement agreement or for the preclosure of the project due to the nonavailability of land.
Let me brief you on the progress on the HAM project. The Karnal Munak project has achieved 38% completion. Raipur-Visakhapatnam project OD5 and OD6 are at about 72% and 79.4% simultaneously -- respectively sorry. The Raipur-Visakhapatnam AP P1 is 74.4% complete. Khammam-Devarapalle project package 1 is 59.7% and package 2 is 56%. So in all these 5 projects of OD5, OD6, AP1 and Khammam-Devarapalle KD1 and 2, we are expecting to complete them within the quarter 3 and quarter 4 of this year.
Now turning to the progress of railway project, the DMRC project is 55.8% complete. The Bilaspur Himachal Pradesh railway project is 29.3% completed and progressing well after initial delays caused by heavy rains. The Kanpur Railway station project is 8.1% complete, as there has been some clearance of land and utility in the initial stage, which are now settling down. The Dhule-Nardana Railway project is progressing well and completion -- we've completed 1.9%, and that too in Karanjaon project 2.5% and Gaya-Son Nagar project 2.1%, where we have received appointed date with effect from 22nd of June 2024.
Now let us focus to the solar projects. In the last quarter, HG Infra capitalizing on the promising opportunity in the solar sector, actively pursued and secured solar power projects under the KUSUM-C scheme. Recently, we have entered into MoU with Ultra Vibrant Solar Energy Private Limited for takeover and development of 116 megawatts DC of KUSUM solar projects.
At present, all the projects are totaling 700-megawatt DC and valued at INR 1,763 crores, that is the EPC value, excluding of GST. They are all progressing as planned. Execution is currently at about 4% 08:40 and progressing smoothly according to the planned time lines. The total liquidity requirement for the full project is estimated at INR 6,092 crores out of this, just INR 1.3 crore has been infused till June 30, '24. INR 350 crores is estimated to be infused in FY '24, '25, and balance will be in '25, '26.
Let me now share other significant updates for Q1 FY '25. I'm pleased to announce that in quarter 4 FY '25, HG Infra has been awarded 2 new projects by MSRDC, that is the first project is construction of Access Control Expressway at NC -- Nagpur-Chandrapur Package 4, this is the EPC value of INR 1,991 crores. The second project is just along by side of this project is construction of Access Control NC-5, that is Nagpur-Chandrapur Package 5, valued at INR 2,151 crores.
In July '24, we secured new 2 line HAM projects worth INR 763.11 crores. That is near to Ayodhya, which is 84 Kosi Parikrama Marg. Now I will provide an overview of the financial highlights of Q1 FY '25. The standalone financials for Q1 FY '25, the remaining operations reached to INR 1,506 crores, 18.4% increase from INR 1,271 crore on Q1 FY '24. EBITDA was INR 243 crores, with a margin of 16.16% in Q1 FY '25 as compared to INR 205 crores and a 16.11% margin in Q1 FY '24. PAT stood at INR 140 crores in Q1 FY '25 with profit margin of 9.27% compared to INR 118 crores and a percentage of 9.3% margin in Q1 FY '24. On a standalone basis, our gross debt totaled INR 622 crores. This includes consolidated accumulated debt of INR 220 crores, term loan and current maturities and credit limits amounting to INR 309 crores, along with an NCD of INR 32 crores.
Moving on to the consolidated financials. For Q1 FY '25, our revenue from operations was INR 1,528 crores, reflecting a 13.1% increase from INR 1,351 crores in Q1 FY '24. EBITDA reached at INR 312 crores with a margin of 20.44% compared to INR 281 crores and a margin of 20.78% in Q1 FY '24. PAT was INR 163 crores in Q1 FY '25 with a margin of 10.6% compared to INR 150 crores and a margin of 11.13% in Q1 FY '24.
On a consolidated basis, our gross debt is approximately INR 2,115 crores. The total liquidity requirement for 10 HAM projects is INR 1,461 crores. As of June '24, INR 728 crores has already been infused with a projected infusion of INR 425 crores in the remaining 9 months of FY '25 and balance will be infused in FY '26 and '27.
Regarding the monetization of 4 HAM projects, the first tranche of 3 projects like Gurgaon Sohna, Rewari Ateli, and Ateli Narnaul was completed on 21st November '23, with 100% SPV shares transferred to Highway Infrastructure Trust. We have received INR 315 crores and INR 60 crores will be relieved on receipt of approval on GST change in law from NHAI, which is expected to be received by September '24.
For the fourth HAM project, that is Rewari bypas, NOC was received from NHAI and lenders in March '24, the compliance with SPV condition is in progress and expected to complete by October '24. There is around INR 130-odd crores is expected to be received from Rewari bypass [ SPV ], where we have invested equity of INR 75.7 crores.
Let me touch base on the future guidance before I conclude this speech. This year is a pivotal for us as we continue to drive forward with a key projects. We are nearing completion on several significant projects, including UER, Khammam-Devarapalle projects packages 1 and 2, Raipur-Visakhapatnam of OD5 and 6 and AP1 in Andhra Pradesh and even Ganga project. We are also focusing on optimizing the acquisition of newly awarded projects making sure to adhere to the stipulated time lines.
We are committed for an order inflow of INR 11,000 or to INR 12,000 crores in FY '25 with a revenue growth of 17% to 18% and a margin of about 15% to 16%, out of which, we have already had secured INR 4,142 crores of highway EPC from MSRDC, INR 763 crores of highway HAM, that is from MORTH in the state of UP and INR 409 crores of solar projects. We are also actively pursuing opportunity in new segments and are focused on the operational efficiency, prudent capital allocation and strategic selection of projects that would ensure margins sustainability and enhance shareholder value. As we move into FY '25, HG Infra aims to further increase its order book share from nongrowth projects, while continuing to strengthen it's position in the roads and highways sector, maintaining this year execution of about INR 6,000 crores and EBITDA margin of 15.6%.
That concludes my remarks, and I would like to ask an operator to open the floor for question-and-answers.
[Operator Instructions] The first question is from the line of Sabri Hazarika from Emkay Global.
So I have just one question. So in terms of your solar power -- solar business, so, sir, can you just like runs through on the equity IRR once again, how much you are targeting?
So all such projects do have that -- where we've build our SPV margins at about 15% equity IRR and EPC margin at about 18%.
Okay. So the -- I mean, okay, the SPV level also, you are like separately also around 15% equity IRR you are expecting, right?
Right.
Okay. And -- and this is based on the overall 25 years this year, whatever you have like done like at a project level this year, which you have done and that way you've derived that it, right? So in itself, I think the SPV business will also be -- I mean, it will -- it is not just the EPC business where the main driver would be independently also the SPV business will be like 15% plus equity IRR. Is that right?
Sure. I think this is of both ways in EPC as well as in SPV level, we are having handsome margin. And also, we have not considered yet any [ PFA ], which is around INR 24 lakhs to INR 25 lakhs roughly in all such project [ per megawatt ], which will add a value of 4% to 5% at SPV as well as EPC.
Right sir. And 3.28, I think that is the blended realization we should assume? Or this has gone up given that we have won some new orders?
Sorry?
The realization of the solar power, it is like 3.25 what you've guided in the last call. That's what we should assume? Or it could be like higher than that?
It remains the same. That is the same.
[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.
Yes. Sir, first, I just wanted to understand the changes that we are likely to make in memorandum of association, particularly on the solar and venturing into the international business. So I wanted to understand in the perspective that what right now we are doing in solar? What extra are you planning to do in solar? And also the renewable and also in terms of the entire value chain of hydrogen, what are we planning to venture in doing that? And also in international, where we are looking at only the solar or renewable or even the pure EPC projects also we can -- we are in.
Sure. As far as international market or doing anything out of India, as of now, there's no chance of doing such thing. And in hydrogen, it's a very basic stage. We have just registered our company for any opportunity looking into the hydrogen space of solar renewables or renewables. In solar EPC and solar IPP, we have -- recently what we have received as a KUSUM-C. We are now looking into the, say, larger portfolio, averaging out into the weighted portfolio of solar park, where the infrastructure development would be done by us aggregating the land, and we would be offering such projects to the company where they really want that infrastructure readiness and connectivity is available. So this is one part.
And then KUSUM-C, which we already have secured, say, almost 700-odd megawatt projects. So we are not very aggressive on taking on further projects in this, but then we want to see further into captive or group captive kind of a project, not big 50 to 100 gigawatts, this can be installed wherever we are planning our solar park. So this altogether, we want to see that the bridging our rooftop also is somewhere we want to explore. But then we want to grow into a very gradual manner, not very aggressively...
Okay. Now sir, coming to the couple of data points which I needed. So on the balance sheet front, on the equity, what -- in terms of the yearly wages that we need to put in, in HAM plus solar. So on the balance sheet front, inventory, trade receivable, payable, mobilization advance, returns on money, unbilled revenue as on June?
See the inventory is plus by INR 124 crores. It is now at INR 421 crores. And contract asset that is unbilled and the debtor, now the debtor is around including retention and miscellaneous deposit is INR 1,051 crores, that is plus by INR 134 crores. Because of the SPV, debtors has gone high. We are not taking much of fundings on SPV in that manner. Contract assets a bit higher at around INR 1,130 crores that is unbilled.
And investment of equity and this is marginally increased to INR 748 crores. And there are other assets increase of INR 75 crores because of some advances to the vendors related to solar and others. As far as equity is concerned, we are at equity for HAM. INR 733 crores is balance equity to be infused and for '25, we are expecting to add INR 425 crores, '27 INR 177 crores and INR 131 crores in '27 -- '26, INR 177 crores and INR 131 crores in '27. For solar, it is INR 692 crores, out of that INR 690 crores, whatever is balance, INR 350 crores would be 9 months and INR 340 crores balance would be in subsequent '25-'26.
So put together, this year, requirement would be INR 775 crores. Out of this, in '25-'26, we do expect it is a total of INR 518 crores that we do expect that the solar -- this equity of [ stockwell ] component of our INR 125-odd crores would be coming back in that year only. And then the total of 5 HAM assets, which we are looking that they would be complete -- we will be completing this year only. So there's INR 767 crores of equity, of which INR 536 crores already has been infused.
Okay. So -- and then in terms of the monetizing further HAM and plus also in terms of the solar, is there any plan?
Yes, definitely, all these HAM -- 5 HAM projects, we are at a very decent stage of discussion where the, say, 2, 3 funds or parties, they already has -- expression of interest has been shared. And we are looking at -- by October, November, we will be sharing them the first of data. And then November or December, once we expect any 1 or 2 EPCs. And then by March definitely, all the projects will be completed by that time with few exceptions of 5% to 10% in 1 or 2 projects with very less count. So definitely we are looking into monetization of all these 5 HAM projects.
Okay. Sir, I didn't -- yes, it was continuing to the numbers only just clarifying the number what the sir said, I didn't get the exact number of unbilled revenue, mobilization advance and trade payable.
Mobilization advance is lower by INR 130-odd because we have seen that the mobilization advance rate of interest is quite high, and that's why we are now looking into further higher debt, where the rate of interest is quite low, just 1.5% difference is there. And unbilled also has given that it's -- you are talking about trade receivables or trade payables.
No. The total unbilled revenue in terms of the trade receivable and then the trade payable.
Unbilled and trade receivable is INR 1,051 crores including retention.
INR 1,051 crores, okay.
[Operator Instructions] The next question is from the line of Nidhi Shah from ICICI Securities.
My first question would be last quarter...
A bit louder. Your voice is not audible.
Okay. Am I audible now?
Now it's fine.
My first question would be on the guidance side, last quarter, you have given a guidance of revenue growth for 11% to 12% and order book of INR 11,000 crores. Do we still maintain the guidance or given how our order book has performed this quarter, would you like to revise the guidance, increase it in some way?
So as far as order book is concerned, we are well on track, INR 11,000 crores to INR 12,000 crores, which we are maintaining the same, almost 52 -- INR 300-odd crores already have been added until first quarter -- until July rather. And as far as execution is concerned, we are very much hopeful that we will be doing in the range of 18% to 20% year-on-year.
I meant the order book, would you like to increase the guidance for the order book, given how that has -- the order book has been better than expected this quarter and Q1.
I couldn't get your question very clearly.
So are you looking at order inflow of maybe more than the guided amount? Is the guidance conservative, given how well we've done in order book in this quarter?
Sure. We are hopeful because when NHAI and Ministry, they are looking at, say because in the last 1.5 years plus, nothing much has happened as far as awarding front is concerned. So we are quite hopeful that we would be adding more and more orders from highway front for sure.
Okay. Again on the guidance, one last thing would be what is your CapEx guidance for the whole year? And what have you already spent in Q1?
Even hardly if something has been added, it's only INR 15-odd crores, which have been added in Q1, but not much. During the entire year, we are expecting that INR 75-odd crores would be the total number.
[Operator Instructions] The next is from the line of Deepesh Agarwal from UTI AMC.
Sir, since the recent Vibrant Ultra order, our portfolio in solar will become 644 megawatt. Is that understanding correct?
So again, please repeat your question. Ultra Vibrant, yes, what you want to know about it?
So my question is, with the receipt of the recent order of -- from Ultra Vibrant, our solar portfolio will increase to some 644-megawatt. Is that understanding correct?
We have included this number. We have already have included, now this 700 megawatts, including this 150-megawatt of DC from the Ultra Vibrant.
Okay. And sir, what is the kind of PLF we can expect in this, given this would be closer to that, I guess, to Jodhpur belt. So it should be higher PLF?
PLI basically, it's a CFA where the central financial assistance is there. It is roughly around as I believe INR 24 lakhs per megawatt.
And my question is with respect to PLF. Basically, what is the utilization we can expect? Would it be 27%, 26% or would it be lower?
No, see this [Technical Difficulty] we are -- minimum is 19%. But in any case, we have seen wherever power plants are established like Bikaner and Jodhpur, they're maintaining about 23% to 27%. So whatever we will be doing -- billing extra, we'll be getting more invoicing and revenue from -- at the SPV level.
Understood. And I want to understand, incrementally, would there be similar projects with such margin profile because the kind of margin profile that you're guiding and the IRR, which you are guiding seems to be very rare in solar projects. So would it be similar, such projects for us in the future?
Sure. I think this is an exceptional margin, which we are also seeing, but definitely may or may not as an opportunity is any of the solar is now -- let's say we have seen that the government focus is to look into 2030 this much of megawatt production is to be done. So we believe that the companies like NTPC, Coal India and other PSUs,they are coming for the more and more solar installations. And when they are coming, we would definitely look into any of the EPC players with -- the larger players, which we can do EPC for them, even the land availability of this thing. So but in a later future, we can have more clarity on how the margins would be even at that stage or marginally lower than this. [Technical Difficulty]
Sir, those projects generally come with 6%, 7% kind of a margin there, NTPC kind of project you said. So would we, as a company be open to take a solar project, which would be sub-10% margin?
For the EPC, definitely, as we are doing so in highway or railway. All EPC projects, we are looking at projects with 11% to 12%, and if it is HAM project, a bit higher in 18% range. So that is averaging out about 15% to 16%. And we believe that in solar also, we have recently have seen a few numbers where the margin is around 12% in NTPC and Coal India.
Sure, sir. And lastly, sir, would we also look at module manufacturing?
Sorry?
Would we also look at module manufacturing -- solar module.
No, no, not at all.
The next question is from the line of Jiten Rushi from Axis Capital.
Sir, you said in the opening remarks that you are looking for solar park which -- where you will procure land either through ownership or leasing and you will develop a park of 50- to 100-megawatt for C&I customers. So have you identified any park to develop this project? And what kind of capital commitment you are looking for such projects in the future?
Solar part, basically, we have seen in the recent past that the land aggregating being done. The government is looking -- when the agreement has been given to many big players, so if we are here and we can just consolidate and aggregate the lands with the connectivity with a good amount of infrastructure. So this gives us a decent amount that whenever we are offering such projects, we have seen that number. But as of now, we have not noted anything, but we are working on it. Our team is working on it. We look forward that for any power of 500-odd megawatts, it can be done at our stage and being offered 400- to 550-odd megawatt to the people, who are looking at this kind of opportunity and working as an EPC for them as well.
But this should be like a merchant plant where you will be selling on a merchant basis, right?
Almost it's a mix kind of an arrangement, doing EPC or even merchant arrangement, then we are investing some amount of, say, INR 40 crores, INR 50 crores and getting -- even within a shorter period while taking out that, given the opportunities then, okay, plus INR 100 crores. So this is how we are looking at it.
So you said that in the existing solar EPC project, we'll be making 12% EBITDA margin because of the CFA, which you will be passing -- 100% will be passing up from the SCB to the EPC contracts, so that is the parameter and so you'll be making 12% EBITDA margin. Is my understanding correct?
For the project which we are right now executing, it is 18%.
18%, EBITDA margin?
I think in the future opportunities where they're awarding maybe from any public sector, like Coal India or NTPC, which we would look for -- we will look forward to get any of such opportunity at about 12%.
This seems to be very high because we haven't seen such higher EPC margin in Solar segment for any other like-to-like players. So what is driving such high EPC margins? I mean what differentiating HG is doing, except for the CFA, which we are obtaining, what other differentiating we are doing versus your peers who are making sub-10% margin?
I believe I think that the projects where the geography is there, where the land availability is quite easy, we are not paying much in land acquisition, means we are looking for the rental agreement, lease and rental of the land, as well as also the connectivity of such where the transmission line is very short in just 1 to 2 kilometers. So these are the few factors, which we are gauging, where they are adding value to the EPC as well as good value to the JV.
If you are able to win such KUSUM scheme project, you should be making 18% EBITDA margin going forward?
Going forward, if we want to see that this is a good number, which we will be doing, and this is the time which we want that during the year and next year, so this is within almost 40 months we need to complete all such projects. So first, we will be focusing on completion of such projects. And later on, we want to see because this is an 8,000-odd megawatt, yet to be ordered in KUSUM-C only, but we don't want to see because post 31st of March, there is some stringent condition, where the DCR, non-DCR exempt is imposed. We don't see that there is much of an opportunity which will be available with the same margins.
What -- you have won the project before March -- yes, this is the last question, I will come back in queue.
These are the projects, which we received before March, so there are -- so the basic development. If you see any margin, we got 7 to -- 6% to 7% is the lower post-March where instead of participation of usage of -- like non-DCR not allowed, it is only DCR now.
[Operator Instructions] The next question is from the line of Vaibhav Shah from JM Financial Limited.
Sir, for the MoRTH land that we have won in UP, what would be the equity requirement for that project?
Roughly would be in the range of INR 95 crore, INR 100 crore.
Okay. And sir, we saw that we have bid for around 15% discount to the MoRTH cost estimate. So are we confident on making those margins? Why was the bidding so aggressive?
No, we have seen the estimate of them -- because of the adjourning project which we lost, we were L2, the default was 32%. It was very high. The 13%, which we are having good margin in the range of 17%, 18%, which we have factored while bidding.
[Operator Instructions] The next question is from the line of Prem Khurana from Anand Rathi Shares and Stock Brokers.
In our presentation, what I see is the 2 MSRDC projects have been taken into account now. So have we received a letter of awards for both these because I think the perception was that, I mean, these bids are being renegotiated while it will take some time. So if you could clarify if the renegotiations have been or the conversation has already taken place and the LOAs are already in place?
See, the negotiation already has been done. And post that negotiation, whatever process the government follows for their approval as well as the minimum land of 70%, which is required for issuance for LOA, this is one reason. And whenever I think 70% land tentatively by August end or September 1st week is likely to be there, and then they will be issuing the LOA.
Sure. And construction work essentially would start after September, right, because I mean by then only you will be able to have LOA plus and the land in place.
Some time after election or in December even.
Sure. And sir, I think in your opening remarks you spoke about the government's intent to kind of give out INR 300,000 crore of orders over the next 3 months and INR 500,000 crores. I mean is this number realistic? I mean historically, we've never seen them give out these many projects in any given year. And I mean, do we have those many tenders in the market today or it is just an aspirational number? And would you be able to comment on the mix? I mean, how is the mix be in between, let's say, EPC, hybrids or BOT toll, sir?
Definitely, you are saying these numbers are quite aggressive as we have seen in the past that nothing much has happened in the ordering front. But that order pipeline where the BPRs or Bharatmala-1 project Phase 1 and Phase 2 projects, they were almost have been prepared. It's only government's approval or appraisal, which is to be done. And as I believe, but not that INR 300,000 crore, but I believe for 100 days target, they have kept a good number to be awarded, a mix of HAM and BOT. But then again, EPC, there are very less number of EPCs, as we have seen last week only some cabinet approval has been given for, say, 7 more projects. We invested 3 -- 4 are BOT and 3 are HAM -- 2 are HAM and 1 is EPC.
And if you could share your thoughts on the debt number for us in this quarter? I am assuming this has gone up because we would have extended some support to hybrid.
Every quarter 1, we see -- we have seen in the past also that because of government at quarter 4 almost target to spend and utilize their budget, wherein quarter 1 it's a bit delayed. And again, as we have seen because the working capital has gone a bit high, but it would be all stable and streamlined. And for sure, I think we will see a debt increase for -- as a replacement of mobilization advance where the mobilization advance earlier we were having about INR 350-odd crores. Now it is just INR 200-odd crores or even less than that. So there is almost a shift of mobilization advance with all interest-bearing to debt where all interest at the end they were lower rate.
And by the year-end, where do you see this, ideally, let's say, gross debt of INR 620-odd crores or net debt of INR 500 crores, I mean by FY '25 when -- where should we expect this number? I mean, with all the transition that you spoke about in terms of mobilization advance.
In this particular, it would be a kind of a mobilization advance being replaced through a term loan, where the it is -- the recovery of the term loan would be based on the mobilization advance recovery as we progress our NA project. So typically, it would be around INR 500 crores to INR 600 crores. If you see any -- not more than INR 500 crore. If we are replacing the mobilization advance, it will be even more than the -- to see the mobilization advance in the form of term loans.
Sure. And sir, I think for one of the projects that you said, I mean, there is some land acquisition issues on the EPC side. I think it is the Neelmangala-Tumkur that you spoke about. I missed your comment on it.
See the Neelmangala-Tumkur -- there are 2 phase of the projects were there. First phase was 18 months and second phase is 18 months. So first phase almost has been passed, and we have not seen any significant completion into that. And once that is completed, only then the main carriageway, the phase 2 will be taken up. So in that case, we are struck, and we are working with NHAI how this -- either this project is to be totally scrapped or terminated or in other cases can be some settlement agreement like they will be looking at some execution of settlement agreement.
Sure, sir. I mean NHAI either it will be descoped to the extent they have done? Or I mean, if the land comes to you, you would still be able -- willing to go ahead with the project, right?
Right.
The next question is from the line of Vishal Periwal from Antique Stock Broking. Mr. Vishal? The current participant has disconnected. Mr. Vishal, you are not audible. Please return back to the questions queue forthe questions. [Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities.
Sir, you mentioned for the order inflow of INR 11,000 to INR 12,000 crores in FY '25. So can you, sir, quantify how much will it be from highways, railways and solar and water, sir, in the order book -- order inflow.
We are looking at definitely adding orders from railway as well, but we have seen the significant number being that in highways. Primarily and majorly would be in highways only and that too in HAM only and EPC of course, if we are having good margins. So we would be maintaining at about 60% to 65% order coming in from highways only. And other than highway, it is railway of about 20-odd percent, if we are looking into some EPC projects for railways. Other than that, we are looking into further opportunity of water and a bit of solar.
Okay. And sir, in terms of the bidding pipeline, can you quantify how much is from HAM, EPC, solar and railways?
Roughly, the bidding pipeline is railway definitely all are EPCs. And what -- wherever we have already have bidded, there are 10-odd projects are about around of INR 8,000 crores, where the results are yet to declare. But then again, apart from HAM, we are seeing that 60% of the project coming from any -- MoRTH or NHAI are in HAM model only. EPC are very lower, about 10% to 15%. And remaining we have seen that the BOT are -- they are all available because 3 or 4 projects have recently been approved. And there are few many projects, which are all on the BOT mode only.
So you are also planning to bid for BOT projects on your own or with any partnership?
We are ready to bid for any BOT project, but we are -- as earlier also, we are doing work for the private clients. We would be looking to partner ourselves, associate ourselves for -- as an EPC partner to such companies [Technical Difficulty].
[Operator Instructions] The next question is from the line of Pramod Dangi from Unifi Investment Management.
Just one clarification. Between the standalone number and the consolidated number, the difference is the HAM revenue or anything else is also going into the consolidated?
No, in standalone it's -- and the consol, there, the only difference is whatever SPV margins which are there, at all SPV levels, they are added into the revenue as in the bottom line.
And most of the SPVs are actually for the HAM projects, right, before this also...
Most of them are from the HAM projects only. And recently, we have pursued many SPVs for solar as well.
Got it. So the standalone number is purely the EPC number and the SPV number will come on the consolidation, that's the clarification I wanted. Thanks.
The next question is from the line of Franklin Moraes from Equentis Wealth Advisory.
So we have seen diversification into various segments in the last maybe 3, 4 years. What I wanted to ask is any other segment that we are exploring maybe which may come up in the next 1 year or so?
Yes, we are exploring water too very precise. We are looking into water not only to JJM. We are looking into some treatment plants. We would be looking into some kind of HAM projects, which are likely to come in water as well, like in the [indiscernible] treatments plants with water [Technical Difficulty].
And what could be our equity requirement in case of the HAM projects?
That remains almost the same. It is 15% of the equity, 15% to -- not maximum, if you -- after including GST is 17%, 18%.
The next question is from the line of Niteen Dharmawat from Aurum Capital.
Am I audible?
Yes.
Sir, my first question is regarding this monetization of HAM. You mentioned that both projects is expected by October 2024, wherein we are expecting some INR 1,000-odd crores in which we have equity capital of INR 75.7 crores. So how much is the debt component in this, if you can highlight that as well?
See, what you are saying is for INR 1,000 crores, there's no debt. The fourth HAM project, which is the Rewari bypass in which INR 75.5 crore equity already has been infused, where the all 4 projects -- just SPA to be executed, NOC being obtained from both lenders as well as NHAI. So likely by this September end, we would be getting INR 130-odd crores into that, and INR 60-something crore are for GST payout, which is change in the approval, which is to be obtained from NHAI, which is at the last stage again. So this is one. The project which -- what you are saying is of 5 HAM project, which we'll be completing at a later stage, that would be again offered for monetization.
The next question is from the line of Yash Dedhia from Maximal Capital.
Sir, we understood that part of the reason of why mobile -- debt has gone up is because of mobilization advance. But at the same time, I think there is a significant commitment, which is lined up for HAM. So given that your -- what is the impact on the net finance cost for the full year?
See, net finance cost is not going to -- as a percentage would be the same as we have seen in the last past year. Last year, it was INR 72 crores with a top line of INR 5,000 crores. So this is including interest cost, the bank charges and the BG commission, all put to together. So it will -- the same if we are looking at INR 6,000 crores, roughly 1.5% of INR 6,090 crores. It should not go beyond that number. INR 90 crores is a very high number. It is tentatively, ideally would be worked.
Okay. So you're saying it should not go beyond INR 90 crores from that INR 81-odd crores that was there in the stand-alone last year.
Yes.
Okay. And secondly, sir, now in terms of our margins, so we will also be focusing on solar, which is at a lower margin. But then you are also saying that, that would just be 15%, 20%. So net-net, these margins in the coming years, do we expect them to be at similar level of 16-odd percent or do we expect a downturn there?
No, we would be all looking at the solar project, which at a decent margin only, at an EPC level. It's not less than about 12%. Our prime focus would remain on the highway only where in HAM projects we already have seen that we are making good margins in HAM. So we would be focusing more on that only, and a bit of a railway and such diversified of water when the mix of margin -- not the range of margin, which we believe would be making with, what, 15% to 16%. That is ideally which is our own prime focus.
Understood. And sir, if you can give some color on your Nagpur-Chandrapur NC-04 and 5. So there are various media reports about there are some uncertainties. And also, there are some -- I think, the elections are coming in Maharashtra very soon. So how should we look at these? Are these like confirmed in your order book and work is certainly going to start? Or how should these things play out for you?
For any action -- whenever they start bidding and they usually award, there is a process. That, we have been declared and there is a negotiation being conducted. Once the negotiation is done and that is if they are matching, if at all our any project, there is matching their cost, and whenever they are approved, getting the approval as their internal process. So whatever is being done is their process and what we believe that definitely for letter of acceptance, it is a minimum 70% of the land availability that make me to ensure which definitely is taking time.
No. Are these like confirmed orders? Or are we contingent upon the acquisition of land, which is basically puts a question mark on the...
We already have deployed our team at the project and the significant improvement is there, land disbursement is at a fast pace. And we are expecting that by August end or maximum by first week or 10 days of September, they would be issuing the letter of acceptance.
So these will become like confirmed from all the steps by September end?
Yes.
And sir, in water, sir, like...
May you return to the question queue for your follow-up questions. [Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.
Sir, the remaining appointed date for, I think, 4 HAM projects, if you can tell us when we are going to receive Varanasi package 10, 13, then Kalamandir-Jamshedpur and the Chennai-Tirupati Package-II?
See, in the project of Jharkhand, which are earlier being awarded last year, Jharkhand-13 that we would be -- we are expecting the appointed date or it's any time within August or maximum by September end. The second project Jharkhand package 10 will take a bit more time, at almost plus 3 months, expecting by January '25. And Jamshedpur within a month, we would be taking on as already 94% that is available, JMF, everything has been filed. We are impacting within a month, we would be taking -- they would be issuing us the appointed date. Tirupati project, already landed more than 97%. Obligations of authority is completed. We are in the process of submission of financial closure documents. Within this month, we would be getting it. And probably as soon as we complete the formality, we would be taking upon the appointed date.
So all three projects, we would be getting the appointed date and railway, 2, have already been issued. And third one would Dhule-Nardana, that project maximum within a month plus, 1.5 months we will be getting that. So more or less, only Jharkhand package 10 and just recently, this Ayodhya package, they would be the only one where the appointed date would be still declared or even Nagpur-Chandrapur packages were ensigned at a later stage.
And then sir, this both Maharashtra project, MSRDC, when we say negotiation has been done, so if you can share in terms of the broader percentage terms, what kind of reduction the government is looking at? So two angles, will it be a change in scope, reduction in the scope or it is just that the bidders has to reduce their margins and the bid price?
The scope definitely cannot be reduced. It's only a matter of their estimation, what they are expecting. And any bidder what they are estimating at. So there is -- any absolute number of percentage cannot be decided on the project specific, it is different, different.
Okay. And this Neelmangala project where we are saying that it can be a descope can happen. So just to -- if I'm looking at the order book, so right now, it is close to INR 650-odd crore...
For any reason, if the project is stalled and it's not going to have a, say, clarity within the next 6 months or so, so for any good reason from authority as well as company, it is better to just take a back foot. So it's very at a scratch stage, preliminary stage, nothing much has, say, being forwarded and given us. But definitely within a month or so, we would be having a better clarity.
Okay. And lastly, sir, how many projects and the value we have already bidded and where the outcome is yet to come? And second is, in next 3 months, how much value of projects are we planning to bid?
We already have bidded for almost INR 8,000-plus crores of project in the railway and yet results are awaited. And for highway, almost similar number at INR 9,000-odd crores. And for -- if you are talking about the projects which we are likely to bid, definitely, it's all now piling up. We believe that within the next 2 months, we will be bidding of INR 25,000-odd crores.
Okay. And then this road INR 8,000 crores, INR 9,000 crores -- okay, thank you.
May we request you to return to the question queue. The next question is from the line of Jiten Rushi from Axis Capital.
I just want to understand on the RLDA tender, which you have won, so can you throw us some light, what kind of project is going to be -- you are going to develop some land area and what kind of revenue sharing with RLDA, how much equity required and this is a lease project, so some light sir. Sir, the RLDA project, sir, Rail Land Development Authority, RLDA, sir.
Almost 8,000 square meter land which is to be developed and within the commercial land where multiple, say, all we can use a mall, as hotels that we would be bidding, and we are looking into this opportunity as a better opportunity where the return on equity would be in a range of more than 25%, 30%.
And sir, how much investment you'll be making here in terms of a total project cost and equity?
INR 14 crores of investment to be done in 4 years, first is INR 3.5 crores probably, then INR 3.5 crores, then INR 3.5 crores, INR 3.5 crores. So this is basic INR 14 crores of split. And then whatever we would be doing, there's a debt or equity again. But then again, it will take another 2, 3 years to complete the entire project.
Okay. So we have 6-year project, which will take to complete?
Sorry?
Sir, what you will share with RLDA post completion?
Post completion, yes, 2, 3 years, we will be taking for it to all completion, whatever we are planning for that.
Because this payment of INR 14.4 crores, we will be paying to RLDA in the next 4 years and then probably RLDA will be doing the development. And once in the next 5 to 6...
No, no. It is all parallel. Whatever to be developed, we will be taking -- say, the land would be handed over to us within 2 months from now once we pay the first installment. And whenever -- say, once within 6 months, we can just submit our plans, whatever we are going to develop to the municipal corporations and body. And then we would be doing -- likely, it will take another 1.5 years or 2 years to complete the project and parallelly, we believe that the return on equity, which I'm looking at would be in this range.
Sir, my question was how much you will invest, total for the project, how much we -- expect for the RLDA reserve, cost of 14.65...
It is very at a basic level. We are working on it. It would be not less than INR 40 crores to INR 50 crores put together.
And sir, any money you'll give it to RLDA per month kind of a revenue sharing or something like that?
Nothing more to be paid.
Nothing. And sir, last thing, this Tumkur project is nonmoving right now?
Sorry?
Tumkur project is nonmoving now? As you have said, there is a land issue. So it is not moving. So we are struck at INR 61 crores...
Something is moving. But it's not to that level which the demand and the kind of mobilization which we have done and the project should pace, so the project is not to that mark.
The next question is from the line of Vaibhav Shah from JM Financial Limited. Please restrict your question to one.
Sir, what kind of revenue are we factoring from Neelmangala-Tumkur for '25 and '26?
So this year, we are looking at the target of INR 150 crores out of which almost INR 16 crores already has been done.
The next question is from the line of Vishal Periwal from Antique Stock Broking.
Just one quick question. So you mentioned 8 projects where the cabinet has given approval in the road sector. So is it like tenders are already there in the market and then the approval has been sought? Or what is the status, if you can just give some clarification?
We have seen that the tenders like Guwahati Ring Road and then Agra-Gwalior and Ayodhya, they were all there as -- in their bidding pipeline. Now that this is -- the government approval has already is in place now, so it would be moving very fast now for the awarding.
Okay. And then going ahead also, I think maybe with your communication with ministry, so there -- whatever the tenders are there in the market, so they will take maybe like 6, 7 projects approval from cabinet and then probably things will fasten up and awarding can happen. Is that what...
That is -- the process is very clear that less than INR 1,000 crores is at the ministry level and more than that is at the cabinet level. Not cabinet, even PM office.
The next question is from the line of Yash Dedhia from Maximal Capital.
Sir, in the water projects, what kind of opportunities are you finding and what are the expected margin levels in the EPC segment?
See, water definitely JJM, they are all distribution projects. There are many projects, which are in the state of Rajasthan, UP or MP. But then we are looking into -- beyond this number is water treatment plants, it can be water desalination, it can be what, sewage treatment plants. There are projects not specific only for the EPC. EPCs or HAMs again, typically, these projects are for operations as well. And for any certain period of operation being given and the water being treated, so it's a similar kind of like HAM projects, which we are doing or solar projects which we are doing.
So here also margin opportunity is similar to let's say hybrid...
If we are taking on any EPC project, likely it's around 12%. And if we are taking any HAM project, definitely a bit better margin in any of the sense what we have experienced and what -- there are only few HAMs being awarded in Adani-Ganga and one or two municipal corporations. But then again, some kind of authorities, they are coming with HAM projects and where this operation is also aggregate.
And BOT, sir, are you not looking at that?
No, no. We are not looking into BOT projects.
So only EPC, HAM and 12% sort of margin for EPC and 18...
For BOT project also, if we are -- just like we are working it with in Adani and Ganga project, that's all BOT projects only. But for all BOT projects, having taken by such players, we can partner with them as an EPC associate.
The last question is from the line of Shravan Shah from Dolat Capital.
Sir, this solar INR 1,691 crores order book, which is right now there, INR 1,700 crores. So out of that, how much will be executed in FY '25? And I think you previously mentioned 14 months or 16 months. So by 1H of FY '26, will this entire will we book as a revenue?
Yes, definitely. By '26, 100% would be done, likely to be done and within this year, almost INR 900 crores will be done.
Okay. And sir, what you mentioned that INR 8,000 crores to INR 9,000 crores that you have bidded for road projects, so are all these will be HAM projects?
There are 2 EPC and 5 HAM, yes.
As there are no further questions, I would now like to hand the conference over to the management for closing comments.
I appreciate you all for taking the time for attending today's investor call. I hope all of your answers were answered adequately. In case there is still any follow-up query, please feel free to reach out to us or our IR adviser, Go India Advisors. Thank you. Good day.
Thank you, sir. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.