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Ircon International Ltd
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Good afternoon, ladies and gentlemen. I am Steve, the moderator for this conference call. I thank everyone for joining us today for the Ircon International Limited Q4 and FY '24 Analyst Conference Call. Please note that this conference call is being recorded. [Operator Instructions] Today, we have with us the senior management represented by Shrimati Ragini Advani, Finance Director; Shri Alin Roy Choudhury, CGM Finance. I would like to remind you that some of the statements that will be made in today's discussion may be forward-looking in nature. It is subject to several risks and uncertainties, and actual results could materially differ. I would now like to hand the conference over to Shrimati Ragini Advani, Financial Director for the opening remarks, after which we will have the form open for interactive Q&A session. Thank you, and over to you, ma'am.
Thank you, Steve. Good afternoon, everyone. I'm Ragini Advani, Director Finance, Ircon. On behalf of my team, I extend a warm welcome to all of you, and thank you for your presence today in the earnings call for Q4 as well as year ended 31st March 2024. I have along with me, my team members, Mr. Alin Roy Choudhury, CGM Finance; and Mr. Sachin Garg, DGM Finance. As you would all have seen the results this year, FY '24 has been an exceptional year for Ircon. The company has been upgraded to Navratna by DPE, and this is a prestigious status that's been granted to us because of our firm financial performance, efficiency and credibility. Additionally, Ircon has reported once again in FY '23, '24 highest-ever turnover and PAT. This achievement underscores the company's robust growth and the successful execution of the projects. We extend our heartfelt gratitude to all the stakeholders for their continuous and unwavering support. Financial results as well as the investor presentation has already been uploaded. I'm sure all of you have had the opportunity to review these documents. Just to summarize our financial performance, the company has reported a total revenue of INR 12,871 crores in FY '24, almost up by 20% as compared to INR 10,750 crores, for the same period last year. PAT has also increased by about 21.5% at a level of INR 930 crores as compared to INR 765 crores in the last year. Earnings per share have correspondingly gone up to INR 9.88 per equity share in FY '24, vis-a-vis INR 8.14 in FY '23. And this is on a face value of INR 2 per share. The Board of Directors have recommended a final dividend of INR 1.30 per equity share, thereby bringing the overall dividend for this year to INR 3.10 per equity share. This is, of course, subject to approval of shareholders in the ensuing Annual General Meeting. Order book of the company currently stands as at 31st March 2024 at INR 27,208 crores. The mix between competitive bidding and nomination and order is almost 50-50. And between domestic and international is about 91%, 9%. Ircon has 11 subsidiaries, mainly SPV and this is in renewable power road highways. Ircon has 7 joint venture companies, mainly for coal connectivity. Without taking much time, I would like to open the floor for Q&A session.
[Operator Instructions] The first question is from the line of [ Tushar Raghatate ] from [indiscernible] Wealth Management.
Yes. I have a question regarding the high-speed rail. I just wanted to know like what percentage of our order book is high-speed rail link contracts. And how do you see that panning out in the next 2 to 3 years. Hello, maam.
Hello, maam. Can you hear us?
Hello.
Yes, maam. Mr. Tushar, could you please go ahead with your question once again.
yes. Yes. So, maam, just wanted to know like high-speed rail network, what percentage of your order book as of now? And how do you see that panning out in the next 2 to 3 years. [Technical Difficulty]
Mr. Tushar, if you could go ahead with your question again.
Yes. I just wanted to know the high-speed railway network is what percentage of your order book? And how do you see that panning on in the next 2 to 3 years? Because I could see we have experience in ballast less track lane segment. Just wanted to know your views and the order book position going forward.
So it roughly is about INR 5,200 crores, the order value of the bullet train project. So it would be about 19% to 20% of our order book. And in terms of going forward, our honorable Prime Minister has announced a particular stretch to be opened in '25, '26, then another one in '26, '27. And full connectivity will be a year after that. So we are accordingly working for those time lines.
Fair enough, maam. And what sort of order book you are foreseeing maam for FY '25 overall?
I mean, in FY '23, '24, we've had order book increase, which was quite nominal, close to about INR 1,000 crores only from new projects and the balance from some increases that we had in our existing projects. So taking this forward, while we will again target to get order book increase to the extent of revenue that we do in this current year or maybe a little more, but a lot will depend on the number of bids which are coming out, the tenders which are coming out. First quarter, there has been a slowdown because of the election. And I think we'll be in a better position to give you this answer in our results of June quarter.
Fair enough. And then last question. Are we holding your earlier guidance of 15% to 20% CAGR growth for 2 to 3 years?
15% to 20% of what?
CAGR growth for 2 to 3 years, sales growth.
No, no, no. So what I had said was that we will try getting over a period of 4 to 5 years a double of our turnover. And currently, we have done quite well from INR 10,000, we have moved on to INR 12,000-plus crores. In fact, almost close to INR 13,000. So on a year-on-year basis, it may not be every year a growth of about 10% to 20%. We do see next year depending on -- of course, it will depend also on the orders that we procure this year, but we kind of see a flattish growth going forward for the next financial year.
Okay, maam. And my last question, maam, what are initiated in order to increase our margin?
Sorry, initiatives to increase the margins. That is what you're asking?
Yes, maam.
So we've always maintained that our margins are quite good vis-a-vis the industry, and we will continue to maintain the margins. Increased margins will be difficult because competition is immense. And so also, there is a lot of pressure on margins. We've had fabulous margins this year, which have been, in fact, on the higher side of the spectrum that we've always stated to our investors. And going forward, we will maintain the margins. We will not be able to increase them. PAT margins would continue to be in the level of 7% to 7.5%.
The next question is from the line of Shreyans Mehta from Equirus.
Congratulations on a good set of numbers. Maam this quarter, if you see the margins, the -- on a stand-alone basis, we are closer to, say, 7-odd percent. So can we replicate the same going forward? Or are there any one-offs during the quarter?
So in this quarter, we had a one-off income against an arbitration settlement or in fact, a settlement in international court. This was in regards of our South Africa project, and that's being partially offset by certain provisions that we created this year. On the whole, that has given margins which are higher than the other 3 quarters in the fourth quarter. But having said that, overall, as we've been maintaining, we should be able to maintain PAT margins in the level of about 7% to 7.5% going forward.
Got it. Got it. Got it. Sure. Secondly, maam, in the previous calls, you were talking about order inflows large ticket size projects, which are put on hold. So are we seeing there some improvement out there? And if you could name a few projects where you are expecting next year we could bag or where we have bidded for some projects?
Yes. So I may not be able to name them, but -- they are pretty much in the pipeline. It just so happens that domestic -- some of the big projects that we were targeting in domestic market. The decisions are delayed because of the elections that have come in. And we hope to be one of the players to get some part of it at least, but we will only know it later. And yes, our team -- business development team, along with the management is looking for all kind of bids that we can do both in domestic as well as international markets. We've put in a lot of efforts last year also, and we'll continue to do those efforts. Unfortunately, last year, we could not see the results, but we are hopeful that after the June quarter, we should be able to see some good results, and we'll be sharing it with you then.
Got it. Got it. Got it. Sure. Secondly, maam, if you see our order book, we have an order book of closure to say INR 40,000-odd crores. And given the average evolution, will we be able to do it closer to INR 14,000-odd crores. So I mean, just to the previous participant, you said probably will be ending flattish. So are there any slow-moving projects? Or are we being very conservative on the execution front?
So the INR 27,000 crore order book of 9%, these are construction projects. It includes a bullet train project; it includes a tough terrain Myanmar project as well as a tough terrain Sivok project that we have. So all these projects are never ever meant to be completed in 2 years. So these were supposed to be a 4- to 5-year horizon in which these are supposed to be created. And therefore, I have maintained that we will have a flattish number of turnover last -- next year. And this will continue for a period beyond 2 years.
Got it. Because maam my point was that majority of the projects are at advanced stage, it's not -- we just started work, so if you take [indiscernible]?
In our case, Myanmar and bullet train is still at a nascent stage or I would say the first 25% stage.
Okay. Okay. Okay.
Yes. Those will spill over after next 2 years.
Sure. And then last 2 questions on my side. One, in terms of investments which we've done in our SPV till date, and how much needs to be invested? And second is on of solar project what is your status and how much have you invested?
Could you repeat your question, please?
One, till date, how much investments we have done in our road mining SPV. And second question is the status of the solar power projects which we have in PPA. So where -- what's the construction status and how much equity we've infused in that project?
Yes. So first, coming to the solar project. We have already infused equity of about INR 112 crore odd. And we will be infusing funds to the extent of another INR 89 crores in this current year.
Maam, and this is totally our share, right?
Yes, this is totally our share.
Sure.
Okay. And in terms of the project itself, well, there is land acquisition, which is happening. And apart from that, we have already tied up all our contractors in terms of the procurement that we had to do, including for supply of solar modules. The tariff and the PPA is already fixed and the commissioning -- a part of the commissioning would happen in this year and the balance in next year.
Got it. Got it. Got it. Sure, maam, in terms of investments, which you've done till date in all our SPVs and how much we have in within next say 1 or 2 years?
Cumulative investments in the range of INR 2,000 to INR 2,200 crores is what we have done right now in all our SPVs, joint ventures as well as subsidiaries. And we have to do another INR 1,000 crores in the next 2 years.
Next 2 years.
INR 1,000 crores to INR 1,100 crores, yes.
And majority would be towards the coal connectivity projects or that's largely done.
No. No. No. So even in coal connectivity, there is some amount that we could done, but majority would be in the road projects. And we expect that the outflow in this year, FY '24, '25, but all these products should be in the range of INR 500 crores.
INR 500 crores. Sure, sure. Maam, and I have a couple of more questions, I join back in the queue.
Yes.
The next question is from the line of [ Joydeb Debnath ] from Microsec Wealth Management.
Yes. My first question is in the recent quarter, you noticed a loss of around INR 14 crores from the asset suite. So could you please tell me from which associate that was booked? And do you expect this similar loss in upcoming quarters? Or this is a onetime focus.
Which loss are you mentioning about, sorry I couldn't hear you properly.
The share of profit of joint ventures of around INR 30.67 crore?
So in our joint ventures, as I stated last year also, one of our coal connectivity project, CERL, it is running into losses. Last year, the losses were about INR 30 crores. And this year, the loss has been about INR 25 crores. And it will continue losses for another year to 2 years. It is still actually a particular per line has to be still set up, which we are in the process of doing. And also the traffic from this line will pick up over a period of 2 years. And it's only after 2 years that this will breakeven. So another 2 years, we expect this loss to be taken. But on the overall, the project is doing fine. The viability is there. And therefore, as promoters, we will have to continue incurring this loss for another 2 years.
Okay. Okay.
That's the only one. Otherwise, all other projects are rather doing well.
The next question is from the line of [ Anisha Thakkar ] from Arrow Capital. Mr. [ Anisha ] your line has been unmuted. Please go ahead with your questions. Okay. We'll move on to the next question. The next question is from the line of Shubham Shelar from IDBI Capital.
A couple of questions. One, you mentioned that there has been an arbitration claim that has -- that has positively impacted our margins. Can you mention the quantum of this amount that is [indiscernible]?
Overall quantum was INR 97 crores. The impact in my P&L is about INR 66 crores.
And this 97, is it -- anything booked in other income also? Or...
Partly -- out of 6 - yes, about INR 22 crores is booked in other income.
Okay. So INR 22 crores booked in other income. And 97 minus 22, which is roughly INR 75-odd crores is part of your revenue?
66 minus 22. The 97 versus 66 was already sitting as part of retention money in OTI. So what has affected my P&L overall is 66, out of this 66, 22 is in other income and 44 is in my project revenue versus expense, the overall margin, the operational margin.
Got it. And just a bit clarification with high speed, you mentioned the amount is INR 5,300 crores odd, and so this is nothing has started as of now, right? Because this was our big [indiscernible]...
No. No. No. So these had -- we have done about, I think, INR 1,000 crores till now.
Okay. Okay.
Yes.
Sure. And then coming to -- our own cash in the books will be how much?
Our own cash is in the range of INR 800 crores, INR 800 crores to INR 825 crores.
Okay. And -- in terms of our tax rate, can you expect that 25% for '25 and '26 going ahead?
Yes. Yes. We can. In fact, this year also it's been 25%. Last year, it was low because of the -- some taxation benefits that we got last year. Otherwise, it should be in the range of 25% only.
Okay. And then with revenue contribution of flattish number, this is based on the current orders that we have in terms of delivery schedule. Anything that we get in terms of inflow, so that will positively will add.
Yes. Yes, absolutely. For which we will be sharing numbers with you as soon as we also got to know.
Right. Right. Right. And then you did mention that [indiscernible] team is working on getting orders. And can you just maybe, will it be possible to gain some -- a bit more color in terms of which sectors we are seeing opportunity. Again, the same thing which we asked if any big pipeline or opportunity that we have bidded or that will help us to understand?
So one -- I mean, as you all are aware, we got a INR 600 crore job up to March in railways itself, and we've got another 1 of INR 1,198 crores again in railway segment itself. And apart from these 2, we are expecting some bids to be opened now, both in roads and highways as well as in railways. Obviously, the target number that we bidded is very high, whether in terms of quantum of bids or the value, but because the competition is immense and also there's been some delay in some of these decisions. Therefore, I think it will be better if we are all patient and we go with the numbers that we actually win.
Okay. Okay. But just one has to understand is it the awarding opportunity for the sectors that we cater to that has been lower in FY '24 and that has also impacted our bidding, that inflow or you're seeing the competition is higher. So which way one should I would be look.
[indiscernible] competition on both. Because in Ircon, as I had mentioned that there is a particular size or scale of projects that we would like to do. And also, we would like to do products which have tunnels or some complexity involved because there are a lot of small time players, onetime players who are coming and competing and they are under quoting in the market. And especially for small ticket jobs, we have found that -- I'm talking about a range of INR 50 crores to INR 100 crores or below that. It is becoming extremely tough to even look at that segment. So considering all of these, the opportunities that have come up in our segment or the target that we're looking at has been limited last year. And also within the segment, the competition has been immense. But we are hopeful of getting some of the jobs, and we should be able to share some positive news very soon.
Sure, sure. Maybe one last question. In terms of high speed, though we have one order with us. In terms of opportunity, because I know it is more of a media report that we keep on hearing a number of projects being lined up, but any bids probably like tenders that are getting invited in an advanced stage. Any color that you can share? There's a lot of names keep on coming like [indiscernible] cities and all.
I also believe that after us, there is an opportunity or that came and that's gone to Afcons. But in terms of focus, of course, this Ahmedabad-Mumbai bullet project, once it is commissioned for which I think that should be the target now going forward because it is one of our prestigious projects from a country's point of view. So once it starts giving us results in terms of actually doing it, executing it over a period of time. Then we are fairly confident because as of now, the credentials lie with us in L&T. So we are fairly confident that this should, from a mid- to long-term perspective, there should be more such projects coming up. And given our credentials, we should be able to get some sizable business going forward.
Okay. And INR 5,200-odd crores in high speed that is fully, like 100% is our share, but...
Yes, I'm talking only about our order book.
The next question is from the line of Raj Shah from Wealth PMS.
Can you explain the margin difference between bidding projects and nomination project, what is the margin difference? And what is the benchmark margin in both here?
So I think we've discussed this earlier -- in earlier calls as well, the margin difference tends to be about 0.5% here and there, depending upon the complexity of the job, the size of the job between the nomination versus bidding as a very ballpark number. And in terms of what our margins will be, I have been saying that we'll be continuing to maintain our margins, which will be in the range of 7 to 7.5 PAT margin, and core EBITDA margins in the range of about 7.5% to 8.5%. So that is something which we are doing, knowing very well that going forward, it will all be competition only.
Okay. Okay. And one more question was, can you explain the cash promotion cycle for the company, whenever the project is awarded or when you win the credit for any nomination, how much percent of the award is reflected in our balance sheet and how is it accounted?
So the -- in our case, because it's a construction, heavy construction job that we do. So whether it is nomination or whether it is competition, there are advances which tend to sit in our books. And there's initially a mobilization advance, then there is an advance against material. And typically, we would say that as such, the working capital, which is involved in completing the project has been very limited and now for Ircon. Going forward, we could have some increase in our working capital requirement because in nomination jobs, the advance tends to be substantial. It is almost like a deposit work, but it would be a working capital which we should be able to manage. I don't see funding requirement towards working capital from banks for the next few years.
The next question is from the line of Heren, an Individual Investor.
Just a small bookkeeping question is your tax rate seems to have jumped up during this quarter. If you compare it on a year-on-year basis. Just wanted some clarification. And what would be the tax rate going forward for the whole year?
So going forward, the tax rate would be in the range of 25%. And yes, there has been some shift in our tax rate during the quarter Q4 for that matter, if one was to compare year-on-year from last year. That's been because of some deferred tax entries as well as a onetime tax refund that we had last year. And that's an adjustment entry that we've done. It's a noncash book entry also in deferred tax, which we have done. And going forward, it will be around 25%.
The next question is from the line of Shreyans Mehta from Equirus.
Yes. Maam, first question is that we are seeing a lot of deals as far as HAM projects are concerned at substantial premium. So any thought process to monetize? I know we'll have to go through several rounds through rebound, et cetera. But what's the plan out there? Do we intend to hold those? Or there is a structure we'll be able to monetize those.
As I had stated earlier in my call, we had taken busy steps towards asset monetization. We had hired a consultant who would tell us what would be the best way to take it forward. After which we've had a Board meeting on it as well and an -- and principles decision to monetize the assets which are already operational and road and highway sector has been taken. This is in Ircon Board, but as you rightly pointed out, after that, it has to go through several rounds of approval at government of India level. So currently, that approval we have sought from our parent Ministry, Ministry of Railways. The papers are with them. We are hopeful of getting their approval very soon. And then we will be moving it further on to DIPAM and [indiscernible], depending upon how much time they take, we are quite focused to take this forward.
Got it. So intent is to sell it rather than holding to it?
Yes.
Sure. And similarly for the coal connectivity projects, can we monetize those as well or we'll have to hold on to those.
So coal connectivity projects, we haven't yet thought on that direction because we happen to be a minority partner. The majority partner is a Coal India subsidiary, whichever it is, Southeastern Coal fields or Central coal fields. And if at all, we do plan at some stage, it may not be into the market because I don't think coal companies would like to monetize it. There it could be a interstate promoter sale or something that may happen. But this is not [indiscernible] immediately because as of now, all my products are either in fag end of construction or just about commercial, but with losses. So there is no point looking at monetization at this stage.
Got it. Got it. Got it. Sure.
[indiscernible] coal projects to be stable.
Got it. Sure. And secondly maam in terms of in the previous calls, we've been indicating that a couple of our coal SPVs would be up and running in, say, next 1 or 2 years. So how should one look at the share of profit?
So as I mentioned, one of our coal JVs, which is Chhattisgarh CERL. Unfortunately, they've been running into losses. There are a couple of factors. One, of course, our major core line is still under construction. The losses will get reduced, but we will still have losses from them for next 2 years.
Okay.
Meanwhile our other products, which is NCRL, CERL, CEWRL and one JCRL those should start giving us profit. But again, they are under construction. So the coal -- profit from coal JV should essentially be coming after 2 years.
Okay.
Yes.
Got it. Got it. Got...
Because it takes time to stabilize. Ultimately, my revenue there is coming from the coal traffic. So even when I construct it is not that for the very next day, I get full traffic. So that takes about 2 to 3 years to stabilize.
Got it. Got it. Got it. Sure. And ma'am, one last question. Our competitor is actually entering into the manufacturing field to be precise in Vande Bharat manufacturing. So are we looking at any sort of JV or tie-ups where we can actually enter that segment or any other segment which is the upcoming segment?
So Ircon has had a fair share of diversification into roads, highways and now renewables. And we are fairly confident of the areas we have already diversified, and we are making good profits in our road projects.
Correct.
[indiscernible] also we hope to do that. In terms of construction activities, we are fairly confident. In terms of manufacturing, that's a completely new line for us. And as far as Vande Bharat is concerned, that's an area which we've looked at. It's a very, very long liability that is associated with it, which I don't think as Ircon, we are ready to take it at this stage. So we will continue to aspire to diversify into more areas, but it may not be manufacturing of Vande Bharat trains.
Got it. Got it. Got it. Sure, maam. All the best.
The next question is from the line of Gaurika Nair from Avendus Spark.
First of all, if you could help me with the inflow of your order book for FY '24?
Yes. So for FY '24, I have an inflow of close to INR 1,000 crores from new projects. This included INR 630 crores for Aizwal tunnel project that we have. And then there is about INR 120 crores for a signaling project that we've got in Nepal and the balance is somewhat in smaller projects. So that is what I've got from my new projects. And I have an overall order book of INR 27,200 crores currently. So there has been some increase in my existing projects also, roughly to the tune of about INR 2,000-odd crores.
That's it on my first question. Next is if you could tell me a bit about the EBITDA for this year and the future that you expect to wait in FY '25, '26. The EBITDA margin?
The EBITDA margin on a consolidated basis is about 11.73%. And going forward, it will be in the range of 10% to 11%.
10% to 11%. Okay.
Yes. [indiscernible] exceptional, as I've already mentioned, because of some of our -- yes, one being, of course, the South Africa income that we got.
Okay. So could you tell me the [indiscernible] for your revenue growth and your revenue this year and the future?
Yes. So for revenue for the next year, I said would maintain the -- at flattish level, which means that we'll be in the range, which is similar to this year. And going forward, a lot will depend on the orders that I have procured this year. I hope it's a wishful thinking. We are working towards it. But in our industry, it is difficult to say till we get it. But if I get the orders of another INR 10,000 crores to INR 15,000 crores, then a year after this, we should be seeing about 10% growth in my turnover, but it is something which is dependent on the orders that I get this year. So as of now, it is flattish growth for the next 1-year.
The next question is from the line of Darshil Jhaveri from Crown Capital.
Most of my questions have been answered. Just wanted to ask, will our other income run rate be on the similar levels? Or how much impact would it be? So can we expect around INR 500 crores odd other income coming in every year.
So in this 500 -- I mean it's been a little more than 500 this year, which had a portion, as we mentioned of [indiscernible] crores. Can you hear me?
Yes. Yes. Yes, maam.
Okay. Sorry, I thought I had broken up. So out of this, about INR 20 crores, INR 30 crores has come as one-off income from South Africa and another INR 10 crores, INR 15 crores has come from income tax refunds. So if we -- even if I were to leave that aside, we should be in the range of INR 500 crores going forward, at least for the next year. It will also depend how much of my surplus funds I'm investing or flowing back into new projects? Because essentially, my other income includes a lot of my money that I earn on my FDs and mutual funds. So if I start putting them into projects, which I am expecting over the next 2 years, then there would be a slight drop, but I don't see that for the next year, at least.
Okay. Perfect, maam. And with regards -- with regards to our interest cost, so it would also be in the similar range maam that what we are seeing right now, run rate of INR 40 crores a quarter will be maintained? Or how would we see going ahead? Because projects like we are expecting a flattish revenue. So any guidance on how our interest would occur?
You're talking about our finance costs?
Yes.
Yes. So per se in Ircon, we don't have any active debt from a lending point of view. These are more of the costs that you do because of the accounting entries and also a little bit that we pay as interest on advances.
Okay. Okay, maam.
So this is something which will really depend on my size and the nature of projects that I take up. It is not the loans typically that we take up. So finance cost, in our case, is very marginal on a stand-alone basis. But if you were to look on a consolidated basis, all SPVs have financial closures and they have taken long-term lending. The lending is fixed for the entire loan period, and it is linked to the MCLR rates of the respective banks. So unless interest rates go up in the economy overall, which they are not expected to go up further, we should be pretty much at the same levels.
Perfect, maam. All the best.
The next question is from the line of Parimal Mithani from Credential Investments.
Maam, I just wanted to know recently, India and Iran have signed a Chabahar port agreement. And in the past, your colleagues in the past where [indiscernible] the fact will you fund the prospect of Chabahar port in terms of work coming to us, [indiscernible] international. Is there any further development or you think it's too early to comment on that, maam?
Yes. I mean, I would have -- I'm afraid we'll be a little early. But yes, as of now, there is nothing that we can say we are definitely getting there. No.
Yes. In terms of groundwork, we will be ahead in terms of other people in this, is it safe to assume that maam?
Not for Chabahar.
The next question is from the line of Deep Mehta from Bank of India Mutual Funds.
Congratulations for very stable numbers.
Thank you.
My question is regarding -- is slightly top-down in nature. So in terms of various segments in which we are present, what kind of opportunities in terms of bidding are we seeing for this year? And what kind of market share are we planning to take in terms of bid wins?
So in our case, we wouldn't talk about market share because market is huge in the infrastructure. So within railways, for example, there is a budget of INR 1,50,000 crores, but within that INR 1,50,000 crores, roughly about INR 70,000 crores to INR 80,000 crores is more to do with Vande Bharat and areas where probably Ircon is not present. And then when we talk of another INR 70,000 crores to INR 80,000 crores, a lot gets done by railway itself. And there are also -- it depends a lot on what kind of project sizes do they have? What are the projects that they're coming up with, whether they're coming up at railway level or at a zonal level, which will mean smaller values. And also on a lot of competition. So on a top down approach, the market is very attractive. We are poised to get more jobs. We have the right credentials. And whatever we have built in the past, we also carry a very high credibility. But having said all then -- all this, it is ultimately an L1 regime. And in L1 regime, as I've mentioned earlier also, the competition is also immense. It also depends on the complexity and the kind of technical qualifications that are put in a particular tender. Given all this, we should be able to get a good sizable share. I'm saying, as I mentioned, in the range of INR 10,000 crores to INR 15,000 crores is what we will target getting this year. But having said that, it will really depend because our last year has not been good enough in terms of getting orders.
Sure maam, just one clarification. Railway budget is INR 2.5 lakh crores, right? So...
Yes, it is about INR 2.5 lakh crores. I've mentioned, I think, INR 1.5 lakh crores instead.
Correct. So our opportunity size should be slightly larger than [indiscernible]...
It is still 60,000, 70,000. I mean if you were to reduce and take out all of those. It's basically about 1,35,000 includes the rolling stock and many other areas. So ultimately, the lines, the areas which we do, which is new lines, we got gauge conversion and doubling some bridges, all that combined is coming to about INR 60,000 crores, INR 70,000 crores.
Okay. And metros, bullet train and all those will give us.
Those are over and above anyway because the Indian railways [Foreign Language]. So those are, again, opportunities that we have to build, and we will continue to build.
Yes. Will it be possible to quantify non-railway opportunity for us? Or those are [indiscernible]...
No. No. It will really tough because metro is fairly segmented in terms of states. And it is a little difficult to quantify all of them. But if you go to talk very broadly at India level, then obviously one looking at an opportunity of infrastructure spend of, I think, almost more than INR 10 lakh crores or something on a yearly basis.
The next question is from the line of Manoj Shah from [ Laxcon ] Investment.
Yes. You were saying that you are targeting doubling of the revenue from INR 10,000 crores to INR 20,000 crores over 4 to 5 years from FY '23 to FY '28. Is that correct?
Yes, that is what I had mentioned last time.
Okay. So you have achieved INR 12,000 crores roundabout in FY '24. FY '26, you're saying it will be flat or muted top line growth. And then next -- so next 2, 3 years, we need to grow at -- because over a 5-year period, the CAGR should have been 14% to 15%, then FY '26 to '28, we need to grow at a much higher than 14% to 15%. So -- and you were also saying for the bullet train and [indiscernible], these -- you will have revenue -- more additional revenue capable post-2 years. So right now, you are in the initial phase of that project. Is that so you are saying revenue will flow from bullet train and Myanmar project from FY '26 onwards. Is that correct?
No. No. No. That is not what I meant. What I meant is this project is yet to be completed, so the period in which it will get completed in 3 to 4 years. So the revenue will be spread over the 3- to 4-year period and not over a 2-year period.
Okay. Okay. As you said, it was INR 1,000 crores you booked the revenue out of that INR 5,000 crores, so INR 4,000 crore is still to be executed?
Yes, and it would be over a 3-year period.
Okay. And you said the margins will remain and PAT margins would be in the range of 7% to 7.5% and what -- there will be additional money will go into working capital this year FY...
No, I didn't say additional money will go, working capital, I said additional money has to go into PPP projects mainly. But should there be a working capital requirement, we are poised to do it internally. We will not need lending for it for next few years. We don't see working capital as a challenge for us.
Okay. You're saying you will manage from internal -- you don't need to borrow in the [indiscernible]...
Yes. And I'm also saying that it is not so much of a concern right now. We are well within our numbers. So -- but what -- in fact, I need the fund is for my PPP projects.
The next question is from the line of Hitesh Raja from HV Raja and Co.
Madam, this is a very small question. As you were just talking about there would be some more additional working capital requirements, especially as regards to the PPP projects, and as you already said that, you don't foresee any requirements to raise any funds for working capital, but on the safe side, Madam, whether there will be any impact on the other income or the revenue that we may be earning from the working capital because if we need more working capital, we don't need to borrow, but then it may impact our revenues in some sense?
So this is someone who asked on working capital, I said, as of now, we are on a very, very comfortable situation. If at all, we need working capital, we will have internal resources. I am not needing working capital. Right now, my cash that I get from clients is good enough for me to manage the liabilities. I normally don't put my own funds other than bits here and there. And that position is expected to continue on a short-term basis. But just in case we need to put, we are poised to keep it. As I again mentioned, my internal resources will essentially go in equity investments of PPP project and not towards working capital immediately.
So Madam, as I understand, on a broad basis, as of now, the working capital, the current affects or the short-term investments are not yielding that much of our sizable income in our part of components of the other income part?
Yes. So other income will decrease once I invest, my surplus cash into PPP projects, which is spread over 2 years. But having said that, I'll also be earning in the next few months [indiscernible]. So it will be a recurring cycle. And therefore, I do not see other income dipping from a INR 500 crore level. It may not be at a level of 540 or 580, but it will be in the range of 500 for the next year. Obviously, if I get more PPP opportunities, then the number will come down. But for next one year, I'm confirming it should be in that range.
The next question is from the line of Raj Shah from Wealth PMS.
Just want to ask one question. Wanted to take a broader view and want to understand what is the risk of your contractors or bidding Ircon for the project that we are handling, currently handling. Because I understand we are currently -- as compared to a lot of projects that we get, right? So what is the risk that going forward, is there any project where more than 50% or 60% of what is being done by one single subcontractor in the [indiscernible] projects? And I just want to understand what is the risk that these subcontractors may outbid Ircon going forward in the bidding projects.
Couple of things. The first thing is that Ircon does a lot of work departmentally. Departmentally as in what we do within Ircon in our company by different sections and the essential work there involves the initial planning, the designing, the procurement, which typically for a contractor becomes tough, because most contractors don't have financial resources and subsequently, it's overseeing the overall quality of the project or the credibility. So these are 3 things that we typically bring to the table, even when we are subcontracting. So it is like saying [Foreign Language]. Now in terms of competition, obviously, hardware pure civil work, they can compete with us, and they are. But where it is an overall package, which involves procurement and designing and a lot of planning, meticulous planning in some of these projects. If you see the kind of project Ircon has done, we've done the USBRL project, and we are currently doing the Sivok project.
So all these involved a lot of tunneling project experts. And you have a lot of design and planning details that we need to go into it. So there, the competition will be letter from any of these subcontractors. In fact, it will be new. And that's the reason we are trying to build a niche for ourselves in which we hope to continue getting more projects. Like it goes its freight way for bullet train projects also. The technology is Japanese. There's a lot of JV arrangements that we have with many of the Japanese vendors, and that is how this project is coming. So pure subcontractor will not be able to take it forward.
Okay. And the second question was, what you see cyclicality in Q4 in the top line? Or is there a cyclicality in Q4 or for revenue recognition?
Technicality. What technicality?
Usually, the Q4 numbers are higher than the first Q1, Q2, Q3. So is there any particular reason why Q4 numbers are higher.
Why Q4 numbers are higher?
Yes.
Yes. But I think typically, in our kind of industry, Q4 always tends to be higher.
Thank you. As there are no further questions, I would like to hand over the call to the management for their closing comments. Thank you all for being a part of the conference call. If you need any further information or clarification, please mail at sachin.garg@ircon.org. Ladies and gentlemen, this concludes your conference for today. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Thank you. Thank you, Steve, for moderating the call. I would also like to thank all our shareholders, stakeholders, business partners, analysts, investor friends, who have continued to show faith in us and have supported in this journey. We assure you we will not disappoint you. We would be happy going forward to connect with you on a one-to-one basis if it is required for any further queries and clarifications. With this, I conclude today's con call, and thank you all for your active participation. Thanks, once again. Thank you.
Thank you, everyone, for joining this call. You may now disconnect your lines. Thank you.