HG Infra Engineering Ltd (Part IX)

NSE:HGINFRA

Earnings Call Analysis

Company Achieves Strong Growth with Asset Monetization

In the second quarter of FY '24, the company reported a 20% revenue growth to INR 954.5 crores compared to the same quarter last year. There was a 17.3% increase in profit after tax (PAT), showcasing a robust financial performance. Management assured investors of a 20% or more revenue increase, with anticipated new projects adding INR 5,000 to 6,000 crores this fiscal year. Additionally, the company is progressing in monetizing four assets, having signed an agreement with a trust backed by KKR for the sale of four projects, anticipating the closure of the first tranche in November '23.

Robust Financial Performance and Positive Outlook

The company has portrayed robust financial growth, with a notable uptick in revenues and profitability. In the second half of fiscal year '24 (H2 FY '24), EBITDA margins expanded to 21.7%, up from 18.9% in the first half (H1 FY '23). The profit after tax (PAT) similarly showed strength, registering a 17.3% year-on-year increase in Q2 FY '24. The company's executive team expressed confidence in achieving a revenue upside of 20% and anticipates new projects adding between INR 5,000 crores to INR 6,000 crores for the year, propelling forward momentum in order inflow.

Management of Debt and Asset Monetization

Despite the indiscernible gross debt figures, debt management remains a focal point, with continued equity infusion into key projects. Most notably, the successful agreement with Highway Infrastructure trust backed by KKR for the sale of four projects indicates active steps towards asset monetization, aiming to close transactions by November '23.

Strategic Initiatives and Execution

The company is not only looking at financial growth through business expansion but also emphasizes improving operational efficiency and executional capabilities. There are ongoing strategic initiatives, such as preliminary discussions in diversified sectors including the solar and metro sectors. Additionally, a digital transformation drive is underway with automation in plant and machinery, expected to contribute significantly to financial indices with a seamless, transparent, and real-time work environment.

Order Inflow Adjustments and Future Projections

The company shows a conservative projection of INR 5,000 crores to INR 6,000 crores in order inflows for the current year, a downward revision from an initial expectation of around INR 9,000 crores. There is concern over possibly lower confidence leading to further reduction in order inflow projections; however, the shortfall is planned to be rectified in the following year. The management remains optimistic about the future, expecting to compensate for any deficiencies from this year in FY '25, and is still eyeing a target revenue of INR 10,000 crores by FY '27, despite a current year revenue growth projection adjustment to 20% from 25%.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to Q2 FY '24 Earnings Conference Call of H.G. Infra Engineering Limited, 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.

[Sana Kapoor]

Thank you, Yashasvi. Good afternoon, everybody, and welcome to H.G. Infra Engineering Limited Earnings Call to discuss the Q2 and H1 FY '24 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, moved in conjunction with the risks that the company faces. We 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.

[Harendra Singh, executive]

Yes. Thank you, Sana. Good afternoon, ladies and gentlemen. A very warm welcome to the H1 FY '24 and Q2 FY '24 Earnings Conference Call of H.G. Infra Engineering Limited. We welcome you all here to share the highlights of our quarterly and half yearly performance achievements and our vision for the future.

I hope all of you have had the opportunity to review the investor presentation and financial results, which have been made available on the exchange. And we all know that NHI tendering has been in the slow lane until September 23. The major reason behind lagging numbers is because of the prolonged and uncertain monsoon across the country, that is for execution as well. It has now recently picked up due to certain changes in the bidding process and internal conditioning of the department. Next 4, 5 months would be [indiscernible] for the sector due to upcoming central and state elections as known to each 1 of us.

We are working on our strategy or priorities to overcome these challenges, and we are optimistic that bidding will definitely accelerate in coming months.

Let me share some thoughts on the opportunities and other sectors and we wish to diversify our order in all other mentioned sectors. In [indiscernible] sector, PM Narendra Modi Ji on August 6, 2023, launched Amrit Bharat Railway Station scheme to transform and [indiscernible] 1,309 railway stations across the nation. It aims to transform railway stations into modern [indiscernible] hubs. We have already bidded 2 tenders amounting to INR 1,000 crores, and we are working on 3 new tenders about INR 1200 crores in this scheme for the financial year FY '23-'24.

We have also began 14 projects costing INR 6,500 crores on various authorities like Indian Railways, [indiscernible] et cetera, in railway sector. The results of these grid projects are yet awaited. In this financial year, we are planning to bid about 15 more bids of INR 8,000 crores in this sector.

In metal sector, we are eligible to bid for elevated metro and RRTS project. That includes Orbital Railway as well and have started bidding for various metro projects. We are also exploring possibility to build underground metro rail projects in association with other organizations. The sector remains in our focus in upcoming months.

A warning in water sector was quite slow during 6 months because of the state elections in few of the states, we are expecting momentum in this segment in coming months. I would like to assure our shareholders, all the financial partners and other stakeholders, that company [indiscernible] to ramp up the growth story and persistent to grab the upcoming opportunities in the near future.

Let me start the journey of this quarter and give you the glimpse of operational highlights first. For quarter ended September [indiscernible], our order books stand at INR [ 10,678 ] crores, which have established our presence across 11 states with the EPC segment comprising 51% of our entire project and hand segment [indiscernible] the remaining 49%. Now the update on the performance related to EPC. The execution progress on various EPC project is as follows: The Ganga Expressway project has achieved approximately 29.3% completion. The project is running well in the time as per the contractual time lines. In Delhi[indiscernible] projects, we are around 78.8%. That is the financial progress and expected to get completed in December '23. The Neelmangala-Tumkur project of NHAI is progressing well and has reached an execution [indiscernible]. The progress on [indiscernible] projects are also running as per the plan schedule. The update is that all 3 Raipur-Vishakhapatnam packages of Orissa, [indiscernible] are progressing well. And we are around 50% completion in these projects, and we would be completing 2 out of these 3 projects before quarter 1 FY [ '23, ] that is by June 24.

In Khammam-Devarapalle project Package 1, we have achieved 29% completion [indiscernible] it has reached up to 28.1% completion. In case of Rewari bypass, we have received [indiscernible] period, 25 May, 2023, that was on [indiscernible]. This project will be monetized in the second tranch.

For our new Karnal Ring Road project, financial closure has been declared on 29th August '23, and we have received a [indiscernible]. Until now, we have executed 53% of the work in this project.

As we know, we have set our footprint in current order book with diversification to railways and metro. I would like to touch upon the progress of these project as well. We have completed 26.6% of GMRC Metro project. Aggregation of this project is going well on track as per the contract time lines. We have received a quantitative [indiscernible] rail project of 24th May 2023. Now both rainy season, the project is progressing well as per the scheduled time lines.

The NOI of Kanpur railway station project has been received on June 2023. And very recently, the accorded date is also declared. The source and machine mobilization in this project is already completed. And the progress is going to be very well in this quarter as well as last quarter of this year.

Let me now share other significant updates for H1 FY '24. The [indiscernible] of material projects received on 25 July, '23, that was with effect from 30th December 2022. For Varanasi-Ranchi-Kolkata Package 10 and 13, final sanction from letters like HDFC and Axis has been received and the document what the financial closure will be submitted to NHI in this month.

Coming to the financial highlights of this quarter. At the general level, our overall revenue in H1 FY '24 was INR [indiscernible] crores. That's an increase of 17.8% year-on-year compared to INR [indiscernible] crores in H2 FY '23. EBITDA at INR 3.2 crores in H1 FY '24, resulting in the EBITDA margin at around 16% as compared to INR 283.2 crores at 15.6% margin in H1 FY '23.

[indiscernible] in H1 FY '24 was at INR 180 crores, with 8.4% profit margin as compared to INR 152.3 crores at [ 3.9% ] margin at H1 FY '23. In Q2 FY '24, the standard [indiscernible] reached at INR 869.5 crores, indicating a notable 15.6% year-on-year growth from INR 752.1 crores recorded in quarter 2 FY '23.

The stand-alone EBITDA for quarter 2 FY '24 was INR 138.4 crores reflecting a year-on-year growth of 14.6%. The PAT margin for quarter 2 FY '24 stood at INR 61.7 crores and 7.1% as compared to INR 64.6 crores, that was 8.6% last year.

Regarding the company's debt position on a stand-alone basis, the gross of debt amounting to INR 597.3 crores, which includes a [indiscernible] debt of INR [indiscernible] crores, term loan and turning maturity along with the trade limit totaling INR 359.4 crores, an NCD of INR [indiscernible].

The increase in debt in this quarter was due to excess utilization of working capital limits on account of less execution of projects due to prolong and erratic monsoon conditions. Earlier, the company has mobilized all the resources as per the planning of the execution at all the budgets, how we are optimistic to reduce the debt in the coming quarters with improved receivables.

Moving on to the consolidated numbers. Revenue of H1 FY '24 surged to INR [indiscernible] crores, an increase of 21.2% year-on-year compared to [indiscernible] crores in H2 FY '23. EBITDA stood at INR [indiscernible] crores, resulting in EBITDA margin of 21.7% growth as compared to INR [indiscernible] and 18.9% margin in H1 FY '23.

[indiscernible] H1 FY '24 was INR 246.5 crores, which 10.7% profit margin as compared to INR 191.4 crores at 10.1% margin in H1 FY '23. During Q2 FY '24, the consolidated revenue surged to INR 954.5 crores, marking a 20% year-on-year growth compared to INR 795.7 crores required in Q2 FY '23.

At the compounded level, the EBITDA for Q2 FY '24 was INR [indiscernible] robust year growth rate of 36.7%. The PAT margin for Q2 FY '24 consolidated stood at 10.1%, resulting in a PAT of INR 96.1 crores compared to INR 81.8 crores in Q2 FY '23. This represents a significant growth of 17.3% impact on a year-on-year basis.

Regarding the company's debt position at the consolidated level, the gross debt amounting to [indiscernible] that was on 30th September 2023. The total equity requirement for the Karnal [indiscernible] was in the next 3 years. As of September 23, INR 777.7 crores has already been infused and there is a projection of infusion for the year at [indiscernible].

Progress update on the monetization of 4 assets. During the last quarter, we have signed a share purchase agreement with Highway Infrastructure trust backed by KKR for sale of 4 hamprojects. This is certainly 1 of the most coveted projection for us. For first tranche of existing 3 SPVs, we have received all NGI and rental approval for change of control. We have completed and submitted all the condition precedents required for the successful closure of this first tranch. We are expecting to close the production during the month of November '23.

Before I end my speech, let me assure you that we will achieve our expected numbers with 20% plus upside in the revenue that will bring momentum in the order inflow with new projects in the tune of INR 5,000 crores to INR 6,000 crores should be added this year, considerably from road and other divestiversified sector. We have started preparation [indiscernible] costing other bidding elements and undergoing preliminary discussions with various clients in solar and metro sector to propel our way forward. We are working manually in our operational efficiency and executional capabilities to add every penny in our EBITDA and PAT margin.

Digital transformation remains on our priority cards from automation in our plant and machinery, operations and other verticals, which will add a lot of value in our financial indicators with seamless and transparent real-time working environment. That's now from my side, we can now open the floor for the question and answers.

[Sana Kapoor]

[Operator Instructions]. We have a first question from the line of Shravan Shah from Dolat Capital.

[Shravan Shah, analyst]

Costs on the order inflow. So in your opening remarks, you have talked about INR 5,000 crore, INR 6,000 crores order inflow versus originally when we started in the year, we were looking at INR 9,000-odd crores kind of inflow. So just trying to understand why we are having a low confidence. And also, is there a possibility this INR 5, 000 crores to INR 6, 000 crores may further reduce to INR 3,000 crores to INR 4,000 crores for this year. And at the same time, also, if you can repeat the value of projects that you have bidded, that would be helpful.

[Harendra Singh, executive]

Yes, sure. I think the order inflow, which -- say, almost 7 months completed. So now we are having 5 months during the year. But definitely was a very slow pace, which never has been the historical part at NHI. But because of some consolidation, some kind of a project appraisal, now the things are moving very fast as they have [indiscernible] team is giving very promising [indiscernible] highway and awarding [indiscernible], but at least it's a 40,000-plus kilometers being awarded and about this further 2,000 kilometers to 2,500 kilometers in the last 4 months.

Out of that, we expect that definitely we have lowered numbers by this number, which should be bare minimum for the year. And we are hoping that it can be INR 8,000 crores, but we are keeping at a low level about INR 6, 000 crores, this is 1 part of [indiscernible]. Second is [indiscernible] we expect that we are going to be awarded by January, February earlier it was almost October, November. But then again, they are also almost [indiscernible] crores of project to be awarded. We expect from them as well.

Apart from this domestificator, as we have already started building and valuation in metro, which can be underground, we have bidded for railway project around INR 6,500 crores, we have already done with 2 railway station bids. So we are looking into INR 8,000 crores of railway bids and RVNL, which are upcoming months. So that is how we have a certain pace already done, but this awarding -- the results we have not yet declared. So with that, we are keeping about INR 5,000 crores to INR 6,000 crores, which for the particular year, with only 4, 5 months balance.

[Shravan Shah, analyst]

Okay. Got it. So 2 aspects for us, whatever, let's say, we get the lower order inflow this year. Are you confident to compensate for the next year. So on a broader sense, how much 1 can look at in terms of the order inflow for FY '25?

[Harendra Singh, executive]

For sure, I think whatever is -- will be the shortfall for the year, we will try to compensate for the next year as well. But only because of [indiscernible] I was the scale going into election this year and then looking into this center election up in May. So by that time, we would be in a position that entire thing would be consolidated in the quarter 2 onwards for next year, we expect that we would be adding not less than [indiscernible] crores, which is a deficit of this [indiscernible] particular year being added next year.

[Shravan Shah, analyst]

Okay. Okay. Great. So -- and in terms of the revenue also now, we are looking at 20% growth this year versus 25%. So that is -- in terms of -- that will also will get compensated in the next year because broadly in annual report, we were already have talked about INR 10,000 crores revenue by FY '27. So that is a kind of a 23% CAGR. So on a sustainable basis, can that be achievable?

[Harendra Singh, executive]

So we talked about -- in annual report we talked about that by say, next 5 years, we are looking to change this revenue to [ 10,000 ]. To be very specific, from roughly current about 7% to 18%, [indiscernible] clear on that. One thing is that for this year, we were looking at about, say, INR 5,400 crores, this is roughly 21%, 22%. We are almost on track because we have done about 17% year-on-year down, and we believe that what always later half of the year is very good for our kind of infrastructure [indiscernible] also activities or festival activities doesn't hamper our progress. So with that quarter 3 and quarter 4, we expect that we will be touching upon the same number, some 20% to 21%.

[Shravan Shah, analyst]

Okay. And in terms of the breakup of the revenue segment wise, what last time we had talked about INR 1,800 crores from HAM and INR 850 crores from EPCs, Ganga Expressway to INR 1000 crores and then [indiscernible]. So that more or less remains the same marginal decline across all the 4, 5 segments?

[Harendra Singh, executive]

Yes, almost the same -- like Ganga Expressway, we initially have projected the INR 2,100 crores what is for the year, '21, '22. So again, during the remaining part of 6 months, we are looking at INR 1,450 crores coming from the Ganga Expressway [indiscernible]. So all the projects would be giving about INR 1,250-odd crores. So major change is coming from these Odisha, Andhra, and Khamman-Devarapalle [indiscernible] already is with us.

And then back to another sector like railway, we will be adding this for the [indiscernible] to be done [indiscernible] small project or where it's about INR 150-odd core values. So these are all -- and [indiscernible] be completed and Mancherial Rewari balance small work portion, which is going on will be completed, a few work of Maharashtra, say, more projects were going on, but a small part of that will be completed. We are not looking at the [indiscernible] on package 13, which we expect that by January-February, but we have not founded that progress in the year. So roughly, the total number is coming as the same, which we have projected earlier.

[Shravan Shah, analyst]

And quantitate for Package 13 and Package 10 is now when we are expecting ?

[Harendra Singh, executive]

Package 13, we are expecting by January, they would be giving the appointed date and Package 10 would be delayed by another 2 months by say, April, we are expecting because they are [indiscernible] yet not obtained.

[Shravan Shah, analyst]

Okay. And lastly, a couple of data points on the equity breakup to be invested in '24, '25, '26 and return some money mobilization advance unbilled revenue as on September?

[Harendra Singh, executive]

For the year, we have kept [indiscernible] to be invested. For the next year, it would be INR 270 crores, and only INR 166 crore balance for FY '26 for the projects which we are operating on hand basis. So this is 1 part. You have asked about the [indiscernible] advance. The [indiscernible] advance is including the material advance is INR [indiscernible]. So what else you .

[Shravan Shah, analyst]

Unbilled revenue and return some money?

[Harendra Singh, executive]

Unbilled revenue is about INR 755 crores and debtor, including retention is INR 172 crore and debtor is INR 550 crores .

[Shravan Shah, analyst]

Okay. And the date you mentioned the CapEx, it actually has increased INR 129-odd crore and we were looking at INR 100 crores. So for full year, how much now we can look at the CapEx and the date have mentioned that we will be reducing. So previously, we have talked about INR 425 crores, INR 450 crores. So what's the new number?

[Harendra Singh, executive]

So that, in any case, would be in the same range, about INR 425 crores to INR 450 crores. So whatever repayment is going to be there for the second half of the year is very high. And you can see because we already paid 1 tranche of NCD and the second tranche will be paid by March.

So looking at, say, whatever of CapEx, which was supposed to be done for all these projects have been done. Hardly there is any CapEx which is to be done for the year and the prior portion of the year, so hardly INR 20 crores to INR 25 crores. So it's the major part going into capital working progress is related to [indiscernible] and even for Raipur-Vishakhapatnam where the limited portion was being constructed. So there are, I think, of INR 40-odd crore being invested into shutters and trains launches.

[Sana Kapoor]

[Operator Instructions]. We'll take the next question from the line of Mangesh Bhadang from Centrum Brokings.

[Mangesh Bhadang, analyst]

Sir, my question is regarding the monetization. So I think we are looking to sell or transfer 4 [indiscernible]. Out of that, we have received the approvals for 3. So I just wanted to understand, will we go ahead with the transfer of these 3 assets first or we will wait for the fourth one. And what are the time lines for actual cash flow to come from this?

[Harendra Singh, executive]

These are 4 projects which we have already entered and signed the [indiscernible] and in this particular 3 projects which we already got the [indiscernible], they are the ones who are going to be first transferred first. There [indiscernible] -- everything has been done. We are expecting that the fund is -- would be coming out within this month only. .

And the fourth one, where the [indiscernible], which we got on 25th of May, post 25th of November, we would be [indiscernible] months down. We will be applying to NHI and our lenders for further NOC proposals. And by the end of this year, we expect that amount for that particular fourth project also would be transected in our account.

[Sana Kapoor]

We have a next question from the line of Veenit Pasad from Investec Bank.

[Veenit Pasad, analyst]

A couple of questions. One is, what has been the reason for increase in unbilled [indiscernible] last 2 years or 24-odd months consistently that number has increased. It was closer to [ INR 250 crores to INR 270 crores ]at the end of '21. And gradually, it has shot up to almost [indiscernible]. So what has been the increase [indiscernible] -- and number two, sir, what gives you confidence that [indiscernible] pick up significantly. Is it a case that the pipeline is extremely healthy in statistics. How much worth of products are under the pipeline as of now?

[Harendra Singh, executive]

Your first question was regarding the [indiscernible] bill revenue, which has now gone up very high. Earlier in 2 years back, it was about INR 200 crores. So very significant reason for there is 1 part is in the projects, we were having the milestone payment, which were not actually where what is the [indiscernible] projects and the financial progress. So physical progress in this particular portion, project is always a 2% to 3% gap into that number. It's INR 4,400 crores out of [indiscernible] unbilled. But definitely, it's a matter of only -- every month we complete 1 milestone and then this portion being released. But this is a continuity of that unbilled, which has been significantly gone high. .

But definitely on NHA projects are -- because in the new year, we have gone through all structure-related projects. There, again, some milestone payments are not giving us [indiscernible] have gained some portion has gone very high, because we have started execution in many of the projects. We have started execution. But then again, we are not, say, targeting and certainly getting the certification from [indiscernible]. And this is now -- but it's a very time gap arrangements. This is going to be stable, somewhere around INR 500 crores by quarter 3 because in many of the projects -- old projects, [indiscernible] and more projects where certain receivables are unbilled where the consolation and certain claims were actually being -- unbilled, but they are likely to be reduced in quarter 3 and quarter 4. By quarter 4, we expect it to be in a range of about INR 500 crore not beyond that.

And the second question was [indiscernible] is definitely having a strong bidding pipeline, which is the end of this financial year in March '23. They were having almost INR 60,000-odd crores of project at that point of time to be awarded. And then could not be awarded because of certain reasons. Now those [indiscernible] another INR 40 crores, INR 45 crores, [indiscernible] crores of orders they are expecting to award by the end of this year as they have guided. And we are expecting that definitely around [indiscernible] kilometers, we are already on the bidding pipeline, that would be all awarded .

[Sana Kapoor]

[Operator Instructions]. We have a question from the line of Jiten Rushi from Axis Capital.

[Jiten Rushi, analyst]

Sir, my first question would be on the monetization. So in terms of the proceeds. So what would be in terms of value we are expecting the proceeds from the first 3 projects and the last project in total, sir? .

[Harendra Singh, executive]

The first 1 is INR 405 crores, all 3 hand projects. The remaining portion would be in the Rewari bypass, that is the fourth project. That is [indiscernible] roughly about INR 127 crore.

[Jiten Rushi, analyst]

Sir, what are the equity which we have invested, as mentioned in the presentation, that will not change, right, sir?

[Harendra Singh, executive]

So obviously, INR 343 crores is to be very specific as the original numbers that remains the same.

[Jiten Rushi, analyst]

And sir, on the debtors. So can you give a breakup between the SPV debtors and [indiscernible] .

[Harendra Singh, executive]

Yes, of course, this unbilled, we have already explained [indiscernible] INR 150-odd crore in Adani Ganga Expressway unbilled. NHA is about INR 180 crores. [indiscernible]. Railway and metro, they are INR 58 crores. And that's about what has already done that explained about it that we are having certain Ministry funded projects and certain MHA compilation projects, which are INR 150-odd-crores into that.

So they all would be stable as [indiscernible], altogether is INR 721 crores. So out of major portion is definitely is Ganga Expressway. NHA is INR 145 crores [indiscernible] and others stood at about INR 133 crores. Adani is Ganga Expressway project is INR 220 crores, which we have received. Every month, we are getting the payment. It's not that is being struck for a longer period. Within 45 days, we are getting the payment, but due to higher range of [indiscernible].

[Jiten Rushi, analyst]

And sir, on the [indiscernible] which you mentioned for [indiscernible]

[Harendra Singh, executive]

The first 30th December 2022. But the later we received very recently.

[Jiten Rushi, analyst]

In December 2022. [indiscernible]. And sir, in terms of your revenue guidance, probably this year, almost INR 5,400 is achievable level minus here and there. [indiscernible]. Now what you see is the [indiscernible] guidance is coming down. So we'll have to catch up on the inflow in the first quarter or first half of FY '25. So what kind of revenue growth have we seen in '25 now ?

[Harendra Singh, executive]

[indiscernible], which we are already operating expect [indiscernible] most of the projects are going to be completed next year in FY '25. So the orders were on a backlog was [ INR 10,600 ] [indiscernible] crores during the year, later part of the year. With that almost the balance would be in the range of INR 7,500 crores or even more than that. So probably INR 8,000 crores, so with that INR 7,500 crore and if order we are looking to add INR 5,000 crores to INR 6,000 crores, the number would be coming almost the same as we started this year.

So with that, the orders which we having that execution where Odisha and all SPVs, except for [indiscernible], they all would be completed in FY '25. So that way, I think INR 6,000 crores is going to be executed for INR 5,500 crore plus crores is going to be executed [indiscernible] only.

[Jiten Rushi, analyst]

That is INR 5, 500 crore revenue from the existing order [indiscernible] .

[Harendra Singh, executive]

It's a better only getting new [indiscernible]. That is where we restrict ourself to INR 5,000 crores to INR 6,000 crores this year.

[Jiten Rushi, analyst]

[indiscernible] and okay. So that's it from my side. All the best and wish you Happy Diwali to you and your team sir.

[Sana Kapoor]

We have our next question from the line of Vaibhav Shah from JM Financial.

[Unknown Analyst]

Sir, just to [indiscernible] our revenue guidance would be around INR 50,000 crores for FY '24? .

[Harendra Singh, executive]

Yes.

[Unknown Analyst]

And what could be your margin guidance for the year?

[Harendra Singh, executive]

Margin would be the same. As you have seen that in this month on month also, we could maintain the same margins. That would be roughly the same 15.5% to 16%.

[Unknown Analyst]

And so you mentioned about some claims in the unbilled portion. So what are those claims related to?

[Harendra Singh, executive]

So basically, they are not those kind of a claims. The claims we actually quantify or taken to our accounts only those claims, which are legitimate U.S. variations and somewhere. We do not take those [indiscernible] claims tying overrun, idling costs into our account. We always take those things very separately.

So these are very small things, almost 12 projects may be completed right from 2016 to 2020. So those are the projects we have some kind of a pending say, variations, approval and so those are the [indiscernible] coming from those 10 to 12 projects.

[Unknown Analyst]

And what could be the amount?

[Harendra Singh, executive]

INR 115 crores.

[Unknown Analyst]

Okay. And sir, was there any reduction in scope in any orders during the second quarter .

[Harendra Singh, executive]

No. There's no reduction as such. .

[Unknown Analyst]

Okay. Because then we reduced the -- take the [indiscernible] we can't reach the revenue. There is some cash of [indiscernible]

[Harendra Singh, executive]

Hardly there is a INR 50 crores to INR 60 crores of gap because [indiscernible] have the Maharashtra projects, 3 projects were there, where the supplementary agreement was exhibited for the balance portion of the work where the land was handed over to us in '20 when the completion was given. But then now [indiscernible] element being likely to be [indiscernible]. So they have reduced that number into the [indiscernible] .

[Unknown Analyst]

So the backlog for Maharashtra, [indiscernible] as of September?

[Harendra Singh, executive]

Today, I think if you see from backlog from Maharashtra and Rajasthan is roughly about INR 72 crores.

[Sana Kapoor]

We have a next question from the line of Ash Shah from Elara Capital.

[Ash Shah, analyst]

So I have 2 questions. The first 1 with the recent construction ban in Delhi NCR. And we have got 2 main projects, other 1 in the metros [indiscernible]. So are we going to see any -- are these projects going to be affected in any manner for this quarter or something [indiscernible] .

[Harendra Singh, executive]

I believe, I think because we are -- there are the projects where there is very high priority PM offices monitoring these projects, leading projects and other especially [indiscernible]. As of yesterday, as we were discussing that a special permission is going to be given for at least for this [indiscernible]. And metro, of course, they are looking at some waivers because in these projects, hardly there is any position, as they have guided that collision department is going to give us a special realization for these projects. .

[Ash Shah, analyst]

Okay. And second 1 would be, do we have any arbitration claims [indiscernible] or any other government body, if you could provide some color on that?

[Harendra Singh, executive]

No, we don't have any claim. It was a very small claim with the [indiscernible] development authority, just INR 10 crore. Out of that, we have already provided INR 6 crores in out of our own build. And in the consolation, also, we are running with a [indiscernible] is going for 4 projects of [indiscernible] projects in 2018, we completed those projects. But very small amount hardly INR 22 crores all 4 projects.

In the Maharashtra also, it's only a matter of small amount of consolation being done for [indiscernible].

[Ash Shah, analyst]

Also, could you provide the revenue breakup segment-wise, roads, metros and railways for Q2 FY '24, if possible?

[Harendra Singh, executive]

Yes, you're asking for Q2, what we have done. .

[Ash Shah, analyst]

Yes, the revenue breakup?

[Harendra Singh, executive]

Revenue, you see The Ganga Expressway [indiscernible] we did INR 290 crores. In NHI EPC, it was INR 188 crores and at [indiscernible] INR 303 crores on a very broad line. Metro and railway, it is almost INR 52 crores. .

[Sana Kapoor]

[Operator Instructions]. We'll take the next question from the line of Uttam Kumar Srimal from Axis Securities.

[Uttam Srimal, analyst]

Sir, you have [indiscernible] few other projects. So what kind of margin profile would be doing in this project if awarded?

[Harendra Singh, executive]

In railway projects, we are keeping our margin for our -- at the bidding level at about, say, 14%. .

[Uttam Srimal, analyst]

Around 14%. [indiscernible] And sir, how is the competitive intensity currently in [indiscernible] and EPC? If you can elaborate on that? .

[Harendra Singh, executive]

Competition, definitely, as we have seen last year, this year, not many bills have been called and open, but definitely [indiscernible] a bit easier, EPC is very invasive. But then again, I think 25-odd bidders 20- to 25-odd bidders are normally being seen in EPC and [indiscernible] is coming around 7 to 10 bidders.

[Uttam Srimal, analyst]

And sir, in case of water projects, you were also expecting margin [indiscernible] 14% to 15%.

[Harendra Singh, executive]

Sorry?

[Uttam Srimal, analyst]

Water projects [indiscernible] .

[Harendra Singh, executive]

Sure. Sure. We are keeping our margins for these [indiscernible] projects. It can be water [indiscernible] about 12% to 15% range.

[Uttam Srimal, analyst]

And all these diversification projects, how much is constitute in terms of revenue because currently I think it's around 80% is coming from road over 90%. So is this a diversified sector will constitute a [indiscernible] revenue model year ?

[Harendra Singh, executive]

For the year, we are keeping that at least 10% of the total turnover would be coming from these metro and railway projects, which we already have started, 3 projects. We'll buy 3 years, 2 years down the line [indiscernible], we are looking at about 20% of the total order execution would be from this sector. And by that year, '26 we are looking at about 25% order backlog should be from these sectors other than roads.

[Uttam Srimal, analyst]

Okay. Okay. And sir, the acquisition has increased in this quarter. So what is the reason [indiscernible] will continue for the full year? .

[Harendra Singh, executive]

Definitely, this would be continued for the whole year. As you have seen in last year, we added about INR 235-odd crores of CapEx, which is a new and some all shutters last year. This year also 6 months we have added this almost INR 25-odd crores of shuttering being added. So the shutting we usually [indiscernible] and that is the reason because in the entire project within 3 years duration, we usually depreciate all [indiscernible].

[Uttam Srimal, analyst]

That's all from my end. And thank to all of you and happy Diwali.

[Harendra Singh, executive]

Yes. Thank you. But then again, I can just see that [indiscernible] interest cost is going to be almost in the similar line, hardly there will be a change about [indiscernible] see last year to this year at the end of this year, this time they are seen on the higher side.

[Sana Kapoor]

[Operator Instructions]. We'll take the next question from the line of Devank Shah from AC Mehta Investment Intermediate Limited. .

[Unknown Analyst]

Sir, I have 2 questions. First is, sir, what is your execution time line for such kind of road project or the railway project. Because earlier in a con call transcript, I have read that 24 months to 36 months. So whatever the order book you are comprising both of road and railway or metro, just give us the aggregation, sir, what is the execution time line of all 3 ?

[Harendra Singh, executive]

It is roughly the same. I think as you are also saying that 24 months is the minimum time line for highway or even for -- if you are seeing [indiscernible] 36 months, RVNL railway project 30 months, macro usually is 30 months, so water also is having 36 months. So just 2 to 3 years of time. .

[Unknown Analyst]

Okay, sir. And 1 more question, sir, we have seen in a recent quarter in a stand-alone numbers, there is a decline in PAT margin due to rising around interest cost. So moving forward, Sir by considering the fact that you are also using the monetization of HAM projects that you have mentioned. Will it be -- margin is going to further touch the earlier level that we have seen somewhere close to 8.6% or something. I'm talking about the PAT margin stand-alone basis.

[Harendra Singh, executive]

Of course, I think PAT margin would be coming to the same range in the sales because of the -- you see the employee cost has been all-time high for the quarter. Because all the projects being mobilized, but the execution was not that range. So there is 1 reason for that. But then again, finance cost and depreciation put together, we would be by end of this year, finance cost would be in the same range as we are with earlier. It was coming at about 1% to 1.4%. This year, we will be in a range of [indiscernible] The total turnover, which we are [indiscernible].

[Unknown Analyst]

Okay. So moving forward, you feel that it is going to improve from here on and margin. .

[Harendra Singh, executive]

Yes, quite correct.

[Sana Kapoor]

We have a next question from the line of Darshit from Robo Capital.

[Unknown Analyst]

So I just wanted to now that do we see the previous, say, 18%, 19% of margins coming back anytime soon, probably in FY '26.

[Harendra Singh, executive]

Talking about margins or at the company level?

[Unknown Analyst]

Yes, the company level, yes.

[Harendra Singh, executive]

Yes, it would be almost in the similar range, 15.5%, 15% as we are doing in the last 4 quarters, we have delivered that margin and where do we -- almost maintaining that discipline.

[Unknown Analyst]

Okay. So for the medium term, we are going to maintain this . And some view or medium-term view on order book and order inflow [indiscernible] .

[Harendra Singh, executive]

Order inflow definitely, as we have earlier discussed during the call [indiscernible] during the year, we are expecting to add at least INR 5,000 crore to INR 6,000-odd crores of orders, the highways and other sectors we are -- and then the execution, which we believe that we would be almost doing 20% plus from the last year.

[Unknown Analyst]

Okay. But for -- like for the medium term, [indiscernible] .

[Harendra Singh, executive]

Sure. I think for '26 and '27, with the government focus on infrastructure especially highway again, in trust, and we have seen all other sectors their budget allocation has been all-time high in railways and so most of the sectors. So we believe that everything because of the election time, we are in just keeping a caution that we may not have these many orders. But then '25 and '26 year, we believe that we would be adding at least [indiscernible] of order for next year and beyond that in the next year. .

[Sana Kapoor]

[Operator Instructions] We will take the next question from the line of Sarvesh Gupta from Maximal Capital.

[Sarvesh Gupta, analyst]

Sir, 1 question on the Ganga Expressway now. See, that was a very sizable sort of an order which came our way and that helped us grow both the order book as well as the revenue profile. Now going forward, as such a large project gets run off from our revenue profile as well as order book. Do we think that overall revenue growth, et cetera, will taper down because we don't have any such large order either in pipeline or maybe expect to win in the coming years?

[Harendra Singh, executive]

[indiscernible] very valid. So basically, with the recent project we executed in [indiscernible] Delhi, there are about 8 kilometers of elevated portion being [indiscernible] being constructed in Odisha project almost 8, 9 kilometers. So this gives us, say, qualification and capacity to build for the huge size project it like it's being called, if you see high-speed network corridor to be developed for railways, where the [indiscernible]. So in that, the range of projects are [indiscernible], we believe that we would be putting up [indiscernible] to build those projects, as a small entity or as well as from JV.

And that is only I think what you are saying, [indiscernible] cannot be from any say, 1 single project is a very high magnitude. We are looking at to be [indiscernible] . And then in Karnal also, we are looking with some [indiscernible] joint ventures, we are joint venture line. We are also looking into the sector.

[Sarvesh Gupta, analyst]

Understood. And secondly, sir, on the order inflows till date for this year. Of course, the pipe -- I mean, the NHAI ordering has been small. But we have been seeing at least [indiscernible] manage to get something even in the last 7, 8 months, while for us, it has been almost negligible in terms of what we have been able to win in this 7, 8 months. So how do you explain that sort of a market share loss and the orders went till date for this year vis-a-vis your peers.

[Harendra Singh, executive]

Probably -- [indiscernible], but the margins which we are expecting, which should get were not there. So we have lost almost 7-8 projects even for NHAI awarded. But then again, this is not a very -- [indiscernible] , many number of projects being billed and awarded. We are expecting this momentum on the standpoint is going to be tight on November onwards going to be all-time high. And as we have seen last 6 months, almost negligible. That's where our -- we believe that we would be getting the same as we have guided that we can have a INR 5,000 crores to INR 600 crores of order.

And then again, as [indiscernible] delays. That is, again, the potential is there with almost individual order size of about [indiscernible].

[Sarvesh Gupta, analyst]

Understood, sir. And on depreciation and interest. So what I understood was that in absolute amount, it will remain the same now. So as you scale your revenues in H2, your overall PAT margins would increase. But going forward, let's say, in FY '25, how do you see these 2 items moving because on this quarter, in this half year, we have seen that items below EBITDA has sort of hurt our P&L percentages. So for FY '25, then from that [indiscernible] of end of FY '24, how do you see them moving?

[Harendra Singh, executive]

The depreciation we have added almost a really high CapEx last year and this year also [indiscernible], and this is going to end up roughly around [indiscernible], but net of our CapEx other. So what is the reason that was that 5 years, 6 years back when we added [indiscernible] machines and the technology of the machine is being upgraded, taking out the old machines and replenishing and getting new equipment [indiscernible] fuel efficiencies there. This is 1 reason that you can see all-time high depreciation going this time.

But then again, '25, '26 would be all leased out to a normalcy that in the sale decision and interest put together would be in the range of 3.5% .

[Sarvesh Gupta, analyst]

Understood, sir. Maybe I missed it, but FY '24, you said around [indiscernible]. One last question. So FY '24, you are saying INR 5,400 crore of revenue guidance. In FY '25, sir, what is the guidance? .

[Harendra Singh, executive]

Roughly, we are keeping about [indiscernible].

[Sana Kapoor]

We have our next question from the line of Vishal Periwal from IDBI Capital.

[Vishal Periwal, analyst]

I think in terms of bid. You did mention on the railway where you're eyeing. So apart from that, [indiscernible] where we are bidding or any big that is a matter .

[Harendra Singh, executive]

Road sector, there are [indiscernible] already have done. There's a Chambal Expressway, which we already executed. And 1 project also is what is there. I think that is in the state of Chattisgarh, where the results are yet to be declared.

[Vishal Periwal, analyst]

No, sir, what I'm trying to understand is like growth, definitely, there are submitting [indiscernible]. And railway, again, we have already shared the opportunity of roughly INR 8,000-odd crores. But apart from these 2 sectors, any other sector where we have bidded or we are eyeing order inflow for us?

[Harendra Singh, executive]

We are expecting that we will be bidding for metro where we have already had qualified with the recent completion of the projects. So that is where I think we will be bidding, and we are looking into some turnaround opportunities in a [indiscernible], say, Northeast, there's a state of Himachal and [indiscernible]. So this year, we are looking to them. .

[Vishal Periwal, analyst]

Okay. And then when we say metro, it is over and above this INR 8,000 crore opportunity, which you mentioned in the railway [indiscernible] that's on top of it, right? .

[Harendra Singh, executive]

That probably will be. We are looking for this. .

[Vishal Periwal, analyst]

Okay. Okay. And sir, in the non-road side, when we are bidding -- say a couple of projects that is there in order book also. So these are bidded on our own or they are in JV with any partners?

[Harendra Singh, executive]

Which projects?

[Shravan Shah, analyst]

The non-road order that we have [indiscernible] .

[Harendra Singh, executive]

As on date, all orders are with sole entity, [indiscernible] has already backed those orders without the [indiscernible]. And in the future, I think we are looking some water projects where we are not qualifying -- 100% not qualified into that. Even for tunnels, we are not qualified. So any for these big sized projects of [indiscernible] when we are not qualified. So we would be looking [indiscernible] where the joint venture alliance would be done. .

[Sana Kapoor]

[Operator Instructions] We'll take the next question from the line of Shravan Shah from Dolat Capital.

[Shravan Shah, analyst]

Sir, just to again clarifying on the numbers. So in station redevelopment, you mentioned, we have bided INR 1,000 crore projects and plans to bid 3 more [indiscernible] station redevelopment project worth INR 1,200 crores. .

[Harendra Singh, executive]

Yes, correct.

[Shravan Shah, analyst]

So the INR 1,000 crores we did 2 projects [indiscernible] station? .

[Harendra Singh, executive]

One is [indiscernible] 1 is in South .

[Shravan Shah, analyst]

Okay. And INR 14,600 crores also in initial [indiscernible] we said so that we are planning to bid and the INR 8,000 crores also the number that we are planning to bid [indiscernible] is a road sector that we are planning to bid? And what is this INR 14,600 crores. So that is including everything that we are planning to bI'd?

[Harendra Singh, executive]

No, no, no. It does not included of anything. Highway, we have not touched upon as a number. Highway definitely, as we were discussing a [indiscernible] bidding opportunity at [indiscernible]. This is what we are looking into bidding [indiscernible] the year.

[Shravan Shah, analyst]

Okay. And on road, we are further planning to bid for INR 8,000-odd crores ?

[Harendra Singh, executive]

Right.

[Shravan Shah, analyst]

Okay. Okay. Okay. And then on the working capital, so our core cash [indiscernible] days, we have seen -- actually, it has reduced and 31 days came to the March level. So will it remain the same or it will further inch up?

[Harendra Singh, executive]

No. I think it's a net working capital [indiscernible], it would remain almost 35 days, which, say, in between the intermediate intervals, it always requires the working capital, even you see the bank limit is being used. Now again, it is coming to the same stable at 35 days ideally would be the range of working capital.

[Shravan Shah, analyst]

Okay. And when we will receive this monetization among this November 3 projects -- so in terms of the gain, which will be booking? So 1 is how much is the gain that we will be booking and in terms of the tax statement how that -- will it be a 20% tax capital gain tax kind of a thing? So how it will work out?

[Harendra Singh, executive]

So we are working on it. Definitely, it's not that big number because it's almost your [indiscernible] started investing [indiscernible], there are 2 kind of [indiscernible] 1 is for the liquidity invested by AG. So these are the 2 numbers, but that is not a very big say, number.

[Shravan Shah, analyst]

Okay. So on a stand-alone level, it will not be a major number. .

[Harendra Singh, executive]

Yes, yes.

[Sana Kapoor]

As there are no further questions, I would now like to hand the conference over to management for closing comments. Over to you, sir.

[Harendra Singh, executive]

Thank you, Sana. Thank you, everyone, for bringing their expertise and experience around the table. We appreciate everyone joining us today on the call and hope that we have addressed all your questions. If you have any further inquiries, please do not hesitate to reach out to our IR adviser or Go India advisers. And thank you for your participation. Happy Diwali.

[Sana Kapoor]

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.