KNR Constructions Ltd
NSE:KNRCON
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
238.4
409.6
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
KNR Constructions Ltd
Earnings Call Analysis
Q3-2024 Analysis
KNR Constructions Ltd
In a bold stride toward infrastructural enhancement, the company has garnered attention with an 11.1% year-on-year increase in the capital outlay, reaching a striking INR 11 lakh crores. This surge reflects the company's dedication to burgeoning sectors, earmarking INR 2.78 lakh crores for roads and highways and INR 2.58 lakh crores toward railways. The government's plan to award projects covering 5,200 kilometers further spotlights the intertwining of public and private investments in infrastructure.
Despite a slowdown in awarding activities, largely due to sluggish land acquisitions, there exists an undercurrent of optimism. With 2,815 kilometers of newly awarded contracts from April to November '23, there's an underlying confidence in the government's pursuit of a project award goal totaling 6,000 kilometers. This ambition holds promise for enhanced highway connectivity across multiple states, exemplified by the recent foundation laying for 225 kilometers of National Highway in Madhya Pradesh.
NHAI's asset monetization and toll income strategies have reached new heights, a testament to the strategic undertakings to fuel future projects. There's an anticipated milestone of achieving an unprecedented toll monetization revenue of INR 40,000 crores for the fiscal year '24, marking a historical peak since 2018-19, and Union Minister for road transport Mr. Nitin Gadkari eyes a further ambitious revenue target by 2030, propelled by a projected 15% annual growth rate.
The revenue has shown a commendable increment, with quarterly figures climbing 9% year-on-year to INR 905 crores, and 7% growth observed over the nine months of fiscal year '24 to INR 3,015 crores. Though the EBITDA for Q3 FY '24 saw a 6% decrease due to lower revenue contributions from irrigation projects, the company sustains a tenacious profitability with an impressive order book of INR 4,965 crores, painting a tapestry of sustained execution over the forthcoming years.
The company's strategic operations have not only driven revenue but also bolstered its financial health. They've maintained a strong balance sheet, with a working capital standing firm at 61 days, and a surging consolidated net debt, albeit with a modest net debt to equity ratio of 0.37x, indicative of a judicious management of leverage.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the KNR Constructions Limited Q3 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. S. Vaikuntanathan, VP Finance, KNR Constructions Limited. Thank you, and over to you, sir.
Good afternoon. Thank you for joining us today on the call to discuss the financial results for Q3 financial year '24 and 9 months financial year '24. Mr. K. Jalandhar Reddy, our Executive Director, is in the site and he is likely to join within next 30 to 45 minutes. And along with me Mr. K. Venkatram Rao, General Manager of Finance, Accounts and Strategic Growth Advisers, our Investor Relations Advisers are available.
We have uploaded the results and the investor presentation on the stock exchanges as well as on our company website. I hope everyone got an opportunity to go through it. We would like to touch upon a very few company updates and the industry events, post which we will have a question-and-answer session.
I would like to share our prospectus on significant industry developments. The infrastructure continues to be a focused area for Government of India. This is reaffirmed by the hike in the allocation of budget to the sector. With an increase of 11.1% year-on-year, the capital outlay is of INR 11 lakh crores. The allocation towards roads and highways is INR 2.78 lakh crores and towards railways including the track laying and other things is around INR 2.58 lakh crores.
The government is planning to bid out projects totaling to 5,200 kilometers on BOT toll mode during 2024, '25, which will be based on the revised model concession agreement. With this, the government is trying to bring in greater participation of private sector investment. Government believes that infrastructure plays an important role in enhancing the connectivity and driving economic growth. As per industry sources, MoRTH is set to revolutionize India's infrastructure with 14 new expressways and high speed corridors spanning 2,239 kilometers, backed by INR 1.3 lakh crore investment.
These projects spread across states like Uttar Pradesh, Maharashtra, Gujarat, Kerala, Raipur, Bihar, Rajasthan, Madhya Pradesh, Assam, and Jharkhand. MoRTH is spearheading in transformative initiatives that will unlock opportunities for the infrastructure players in the country such as our company.
The awarding of activities has been slow in this financial year, mainly due to slow land acquisition. For the current financial year so far, the overall length of new contracts awarded between April and November '23, was 2,815 kilometers, down from 5,382 kilometers the year before.
Despite the challenges, there is optimism for robust project awarding activity for the coming months, particularly with MoRTH's ambitious plan to award projects totaling 6,000 kilometers in March, April 2024. Once this project would be upcoming, construction of 9 NH worth 2,357, covering a length of 225 kilometers in Jabalpur district under bridge on Jamni river.
For ease of transportation and to promote tourism in MP's Jabalpur district, Mr. Nitin Gadkari recently laid foundation stone for these highways. The ministry oversaw an 8% increase in National Highway construction with 6,215 kilometers completed between April and December 2023, compared to 5,774 kilometers in the same period of previous year.
Asset monetization is an important element for NHAI to fund the upcoming projects. Potentially, the new project launches in upcoming quarters, energy and space for financial year '24 to achieve the highest ever asset monetization in collection, targeting INR 40,000 crores, which will be highest monetization amount per annum since financial year 2018, '19.
This milestone is expected to propel NHAI's total monetization revenue past the INR 1 lakh crore mark. Such robust monetization efforts underscore the NHAI's commitment to unlocking the value of its assets as well as opening up of new and stable revenue to raise funds for future developments.
India's road toll income primarily sourced from National Highways has experienced a notable upstream escalating from INR 17,759 crores in 2015, '16 to INR 48,028 crores in 2022, '23. Union Minister for road transport, Mr. Nitin Gadkari, has outlined on ambitious target aiming for revenues to soar to INR 1.3 trillion by 2030 driven by projected annual growth rate of 15%.
Further to speed up the awarding while ensuring high-quality roads, there is likely to be a change in the bid process for selection of the projects -- project report consultants. As per industry sources, the government would like to reduce the bank guarantees, offered deemed approval and have splitted the eligibility criteria. December 23, 2023 marked a significant milestone for toll collection, toll plaza, FASTag, daily user toll collection reached INR 210.18 crores on this day basking the highest ever electronic toll collection in a single day.
Now coming to the key updates of the company. The percentage of physical progress as of December 31, 2023, for the half project is follows: Magadi to Somwarpet at 80.5%, Oddanchatram to Madathukulam 97%, Ramanattukara to Valanchery is 59.6%. Valanchery to Kappirikkad is 57.5%, Chittoor to Thatchur is 40%. During the quarter, the execution has primarily been driven by HAM projects.
As of December 31, 2023, the company has already invested INR 480 crores out of these INR 990 crores revised equity repayment for all the HAM projects. The additional equity repayment of INR 90 crores to be infused INR 290 crores from INR 55 crores and INR 65 crores for FY 2024, '25, FY '26, and FY '27, respectively. You can refer the Slide 27 of the investor presentation for detail on each HAM project.
The toll collection for Vega project, that is Muzaffarpur to Barauni in Q3 FY '24 is INR 10.6 crores, which grew by 13% as compared to Q2 FY '24. For 9 months FY '24, the toll collection is INR 61.73 crores. As mentioned earlier, we have received the final proportion of KNR Ramatheertham Infra Limited, KNR Sriranganatha Infra Private Limited and KNR Kaveri Infra Limited. We expect appointed date for these by end of March 2024.
Now coming to the order book position. As on December 31, 2023, the company has an outstanding order book position of INR 4,965 crores, which comprises of EPC projects and HAM projects, which is 69% of the total order book, while irrigation projects comprises of the remaining 31%. When broke on down to clients, 58% of the order book is for third party clients and balance 42% is from capital HAM project.
The third-party order book percentage is skewed between state government contracts at 43% and 13% for central government and balance 3% order book is from other product players. Kindly note that this order book does not include the contract aggregating to INR 1,780 crores as we are yet to receive the appointed date for the 3 HAM projects.
If we include these projects, our order book position will increase to INR 6,745 crores. The current order book position provides a clear visibility of execution over a period of next 1 to 2 years, under the Bharatmala project, a robust pipeline -- project pipeline and the completed DPS should expedite the project awarding activity in the future. The company is targeting an order inflow of INR 5,000 crores to INR 6,000 crores during the next 1 year.
We have been actively pursuing diversification in our operations, recognizing its paramount importance in ensuring resilience and sustained growth. Diversification is not merely a strategic choice, it is a commitment to the future. Our company is resolutely engaged in seeking out different EPC opportunities in new geographies and unconventional project types such as railways, mining, energy, pipeline and metro development are among others.
This deliberate effort aims to not only to navigate the personal challenges, but also to push ourselves advantageously for the future. As on date, the pending receivable from Telangana Irrigation is INR 650 crores approximately, including uncertified portions.
Now coming to the liquidity position of the company. The liquidity position of the company is very strong as INR 550 crores of HAM projects receivable is just to be drawn. This is being done to save the IDT amount. The claim amount of INR 250 crores out of Vivad Se Vishwas is received very recently. Irrigation department payment of INR 400 crores is expected by the March as we are -- we have been given assurance by the government.
I will now request Mr. K. Venkatram Rao, our GM to present results for the quarter and 9 months ended December 31, 2023. Over to Venkatram Rao.
Let me take you through the Q3 FY '24 and 9 months FY '23 stand-alone financial performance first, followed by the consolidated financial performance. I will start with quarterly highlights first. The revenue for the quarter grew by 9% year-on-year to INR 905 crores. EBITDA for Q3 FY '24 is lower by 6% on year-end basis to INR 147 crores as compared to INR 156 crores in Q3 FY '23. The EBITDA margin in Q3 FY '24 stood at 16.3% due to lower revenue contribution from the irrigation projects.
Net profit for the quarter was INR 85.5 crores as compared to INR 162 crores in Q3 FY '23 due to an exceptional income of INR 138 crores on account of sale of 3 HAM projects to the Cube Highways in Q3 FY '23.
Now coming to 9 months FY'24 highlights. Revenue for 9 months FY '24 grew by 8% year-on-year to INR 2,777 crores. EBITDA for 9 months FY '24 witnessed a degrowth of 4% to INR 487 crores as compared to INR 510 crores in 9 months FY'23. EBITDA margin in 9 months FY '24 stood at 17.5%. Net profit for 9 months FY '24 was INR 269 crores as compared to INR 370 crores in 9 months FY '23, which includes INR 138 crores of the exceptional item during 9 months FY'23 on account of sale of 3 HAM projects to Cube.
Now coming to consolidated financial performance. I will start with quarterly highlights first. The company recorded year-on-year growth of 14% in total revenue from INR 875 crores in Q3 FY'23 to INR 996 crores in Q3 FY '24. EBITDA came in INR 226 crores in Q3 FY '24 to INR 197 crores in Q3 FY '23. EBITDA margin in the current quarter stood at 22.7%. Profit after tax stood at INR 136 crores in Q3 FY '24, vis-a-vis INR 108 crores in Q3 FY '23.
Moving on to 9 months FY '24 highlights. The revenue for 9 months FY '24 grew by 7% year-on-year to INR 3,015 crores. EBITDA for 9 months FY '24 was INR 673 crores as compared to INR 671 crores in 9 months FY '23. EBITDA margin for 9 months FY '24 stood at 22.3%. Net profit for FY '24 was INR 412 crores as compared to INR 298 crores in 9 months FY '23.
Now moving to the stand-alone balance sheet. The company continued to maintain a strong balance sheet. The working capital stood at 61 days compared to 65 days as of 30 September 2023 and 67 as of 31 December 2023. The consolidated days as of 31 December 2023 is INR 1,048 crores as compared to INR 730 crores as of September 30, 2023. Net debt to the equity on consolidated basis as of December 31, 2023, stood at 0.37x as compared to 0.24x as of September 30, 2023.
With this, we can open the floor for question and answers.
[Operator Instructions] The first question is from Shravan Shah from Dolat Capital.
Sir, the first question is on the order inflow front. So we have mentioned in the opening remarks of INR 5,000 cores to INR 6,000 crores that we are looking at in this -- in the next 1 year. So a couple of things related to this. So first, how much -- how many projects and the value have we bidded, where bid is yet to open, that is first.
Second, how do you see by March and how much we can get? Third is don't you think even this INR 5,000 crores to INR 6,000 crores in next 1 year is also too less, given the INR 6,745 crores order that we have, which is a 1.7x kind of revenue visibility and whatever, even if we get on the HAM front, it will take at least 9 months to 12 months to start the revenue.
So to sustain a kind of a 10% revenue growth, we need even at least INR 9,000 crores to INR 10,000 crores kind of order inflow by next 1 year. So -- and which are the segments apart from the road we are looking at? And what are the opportunity size where we are confident that we can achieve this?
Yes. In the last 2 months, we could not -- we could tender only on irrigation projects of -- in Telangana is around INR 550 crores in the Khammam district and that itself is yet to be announced.
And with regard to the HAM projects, most of the projects have been postponed, even in fact, 2 to 3 days back there were 4 projects that all have been postponed where we have made the survey and kept all our things ready, including -- in fact, we have submitted the bank guarantee also. Now these projects have been postponed.
And coming to the BOT side, yes, there are certain developments that we may go in for some tie-ups for doing the BOT project. That is yet to be finalized. It's in the very preliminary stage. And we are also looking at the state road projects for Maharashtra state road projects, where the tender is in the month of March. So that we are yet to get further information on that. Either, even if we don't get it, we will go for as a subcontract also that we have decided.
So we are hopeful that -- and in other areas where we are now opening up the area is that we want to do the EPC projects of railway projects we have tendered, but we could not get it, 2 railway projects we have tendered with the joint venture, but we could not get, because a lot of competitions have also came. And so in the future, we will be continuously tendering for railway projects, number one. Number two, the HAM projects will be tethering. Three is that the BOT projects also, we are on the lookout, we will be doing.
And next is that state road projects also, we are looking for it. And wherever that EPC projects for solar power are mining, so we are on the lookout for those areas also. And -- so once the projects are announced where we are doing some study on that, we will be going for EPC of those tenders also. So this is what's the planning, but we are very hopeful that since the elections are all coming around May, there may not be much projects in roads from NHAI or MoRTH, they are going on postponing it.
But what we feel is only after July, the tender -- real tender from roads may come up. So we may have to wait for it. And as we said earlier, we are all now concentrating on the liquidity portion where we are trying to recover all these irrigation payments, which the government has promised, around INR 400 crores before March, that is one.
Second, we already got INR 250 crores over the Vivad Se Vishwas from NHAI. And further claims also we are negotiating. So first, we are trying to strengthen our liquidity position. So that when BOT or any other projects come, we can really do with -- without any probability of funds concerned. And meanwhile that HAM projects of Palani also, we are in the final discussions with the Cube for closing the project. Once that is over, then we may get the return on equity also to add, so this is what the personal development.
Got it, sir. Just on things. So now in terms of any number of projects or value that we have bidded and where bid is yet to open.
Only that one of the irrigation projects that we have bidded, that further bid has to be opened in the state of Telangana. For other projects, we have -- actually in the last 2 weeks, actually, 2 bids were there for the HAM, but it all got postponed. But a lot of bids are there, but really as our [indiscernible] told, really we are not sure whether they will come up for participation or not.
Okay. Got it. So given this constraint, so for this year, just to -- in terms of confirming the guidance, so we were looking at more than INR 4,000 crores revenue for this year and also the margin, now irrigation is on the lower side. So if you can help us in terms of the -- how one can look at fourth quarter in terms of revenue and the margin and also for the FY '25. So how much order inflow is to come and that too, let's say, on the EPC front, then only it will start contributing revenue in FY '25.
On what assumption are we taking for FY '25 in terms of the revenue and the margin. So whatever the INR 1,500 crore plus irrigation is left in terms of order book, how much we can execute in the fourth quarter, how much in the FY '25. So broadly trying to understand how the revenue will come in fourth quarter and in FY '25 and how the margin one can look at?
Actually, for Q4, actually, FY '24, we are targeting somewhere around -- we are targeting the entire turnover will be around INR 4,000 crores, so around INR 12,000 crores -- INR 1200 crores. Definitely, we are trying for Q4 FY '24 and guidelines will be somewhere -- because as you know that lower contribution of irrigation, it will be in the same range, around 16%, 16.5%.
So therefore, as far as next year, actually FY'25, we are definitely -- we are getting some EPC project, so we can start contribution on that. So next year, our target is some -- definitely something INR 4,000 and some 10% increase because we are expecting some projects to come [indiscernible] and MSRDC and some -- like Telangana irrigation project some we are expecting.
So definitely, next year, we are targeting with some INR 4,000 crores plus around 10%. And margin will be -- because we have to see if the irrigation project we are getting, then contribution will -- something will increase. Otherwise, 16% and 16.5% is the sustainable EBITDA for the company for existing HAM and EPC project. If irrigation is contributing more, then definitely, it will slightly increase. But as of now, we are thinking that we're around 16% is the sustainable EBITDA.
Okay. And if you can repeat the equity requirement for fourth quarter and '25, '26, '27 and console cash?
The equity requirements are actually what are the existing, actually 8 HAM projects is actually around INR 990 crores. Out of that, around INR 90 crores, we are expecting in this Q4 FY '24 and '25 will be around INR 290 crores and '26, around INR 65 crores and '27, around INR 65 crores. So that includes our 3 new HAM projects for the appointed dates yet to come.
And the console cash is how much, sir?
Console cash is around -- stand-alone debt is INR 30 crores and a stand-alone cash is INR 44 crores. Okay, that we will let you know, console cash flow.
Okay. And how much CapEx we have done in 9 months and for full year and maybe the next year, how much CapEx we can look at?
For 9 months, we did CapEx of INR 70 crores. For full year, we expect somewhere around INR 90 crores to INR 100 crores for this year. And next year is definitely based on a lot of the projects we are expecting. But at least INR 100 crores to INR 120 crores, definitely will be there. If we are getting good projects actually -- EPC projects basically, then definitely CapEx may slightly go up.
The next question is from the line of Niteen Dharmawat from Aurum Capital.
On Slide 9, you mentioned a strong EPC order book of around INR 5,000 crores. Do you really think it is a strong order book for a company with revenue more than INR 4,000 crores. And our order book has been reducing continuously for the last 5 quarters from INR 8,100 crores in Q3 financial year '23 to now less than INR 5,000 crore in Q3 financial year '24. We have been talking about new project wins for the last several quarters now, but nothing much has happened. So where are we going wrong in acquiring new projects? This is my first question.
Our ED sir had joined actually.
I am Jalandhar Reddy joining this side. Yes. Actually, from March onwards, from NHAI, there is a very less number of bids, which have been sorted out. And there were -- in fact, there were many bids in the sequence, but there's a lot of postponement and the several number of postponement happened in this. So in order to address, then we have also started to go with micro irrigation projects -- we have placed in bids in micro irrigation projects as well.
We are also participating in HAM projects and some of NHAI projects, but very small. This time, we had very less inflow of tenders because of some issues with NHAI. So rather, we heard, again, they are even going to DBFOT mode for further bidding process. So to sort out that we are even discussing with major BOT players like Cube Highways and a few other contract -- concessionairs to bid along with us, they're going to bid for EPCs. So if the rally is started, definitely, we are going to pick up in the highway section also.
And irrigation, there are likely -- they are in pipeline and the pipeline in the sense we have given some bids and those results is not yet out. So those 2 to 3 bids are under pipeline kind of thing. Apart from that, we have tried our bids in railway tunneling bridges -- railway tunneling projects also we have done.
And we are also trying to participate in some of the solar EPC mode projects, we're also trying those. And -- of course, mining, we are thinking, but we haven't placed any bids, but in future, we would like to go for mining operation bids also. In order to improve the situation, we have been taking new engineering contracts in our hand, so that our order book is improved and all the efforts that whatever the best we can do, we are doing, sir. This is the situation.
Yes sir, I got it. But the pace at which we are acquiring projects is not very healthy. That is what -- for the last couple of quarters when we were talking about acquiring new projects, that has also not happened. So I thought that I'll bring this to your attention.
We really understand the situation, and we really -- we also have come in a bit awkward situation this time, I agree. And we are trying our best to push the case.
I understand. Now my next question is, what is the status of cash flows from Telangana payment recovery and the award of projects with new government in charge. Are new projects halted or is there any change in the status of the earlier awarded projects. Does this INR 5,000 crores order book involve any projects from Telangana [indiscernible].
Yes, sir. I think about INR 900 crores is there in this order book available from irrigation. That is from that inflow canal and then the pump house project. Rest are almost have completed. So there only we have been having outstanding payments about, say, INR 650 crores plus, which need to be paid by the state government.
We were discussing in the various forums -- department. Even the government, they say we will pay. As the new government is formed, you may have to wait for 1 to 2 months' time to get these payments. So even the department is assuring to pay. And however, they need to resolve this -- for pump house project, they need to resolve the loan issues with the banks. So once that is done, I think all these will be streamlined. We expect another 1 to 2 months delay on this.
And for new tenders, if they are budgeted, then only we are thinking of bidding. Otherwise, maybe we will decide, but however, we gave some bids already.
Next question is from the line of Bharani from Avendus Spark.
So just wanted to check according to you, what would be the major changes in the model consent agreement in the DBFOT mode that we are expecting, which will be conducive for the concessionairs to bid?
Draft concession agreement, is still under discussion in the NHAI, but what we got the information that, now actually in respect of this with the traffic, because alternate issues are basically traffic. Because, as you know, there's now a lot of greenfield expressways coming. So if you are extending the existing road and new greenfield expressways coming there now, it will be the compensated.
So that is the concern from the developer side, and we are already telling in a different forum to toll -- this in respect of toll collection actually, that is not in our control. So what we expected there -- definitely, there is some mitigation plan actually that NHAI is going to put in the concession agreement might be a target date actually, they may reduce rather than 10 years, it may reduce to 5 years. So that's way, this discussion is going on.
It's still this first cut of DCA has not come, but we are expecting that with these all addition DCA will come and then we can submit our comments on that.
Okay. So when do you expect this to be finalized? And when do you expect the BOT projects to come into the final tendering and bidding space.
That's what -- the NHAI is rigorously working because a lot of BOT toll project, they already floated actually. Anyway, they are postponing, because until that DCA is not come, it cannot be tendered. We expect that maybe in next 1 month, actually, they should be able to close it.
Okay. My second question is on our 3 hybrid projects where we are yet to get appointed date. So this has been there without appointed date for more than 3 or 4 quarters. So when do we expect? And what is the reason why it is getting delayed?
Actually, the AP project that is Ongole project, Vijayawada to Bengaluru highway. That is -- we have signed the memorandum, I think, 3 days ago. And it is likely to get another 1 week, we would get the [indiscernible] for that Ongole project. And we are expecting the other one -- other Mysuru projects, there are 2 other projects are there. from Mysuru to Kushalnagara.
Those 2 projects, the second stage environmental clearance is not yet done. I think voting could take place by March end. And once that is done -- before that, I think the land availability, we have -- as per our site study, it says it is only 50% done in both the projects. So that would take -- if this the result -- if they do hedge for 80%, by March end it will happen, or otherwise, 1 more month is likely to take for those appointed dates.
So in summary, the Vijayawada-Bangalore section, probably next 1 to 2 months and the 2 Mysuru projects may be 1 quarter?
Yes, 1 week -- within a week, I think the appointed date may come sir, because we have signed the memorandum for that AP project. The Karnataka 2 projects, I think it will take April also -- sorry, not April, I would say, March -- after March, April somewhere in this time it should happen.
Next question is from Pratik Bhandari from Art Ventures.
You stated the number of order inflow that we have received up until 9 months FY '24?
No, we have not received any order in FY'24.
Next question is from Faisal Hawa from H.G. Hawa and Company.
Sir, what kind of message are we sending with the kind of new directors, which have come in. I mean they have -- they are very good names. And -- does it mean that we want to broad base our thinking within the Board and encourage more to and fro discussions and more diverse opinions. That's one.
Second is that do you feel that we are a little late on our strategy in diversifying to solar EPC and into railways? Or is it because the previous experiences with railways, not releasing orders on time and gestation period being so high, had [indiscernible] us from going in for these kind of orders?
And -- is there any quick fix to this where we could get orders, which can be executed quickly and -- so that the next financial year there could be at least some growth in these numbers because we have been almost flat in sales from the last 2 to 3 years. And third is, sir, we have always been protecting our EBITDA margins even at the cost of losing orders. So we will still continue with that strategy?
Yes, sir. Actually, the first order book concern, yes there are some challenges in new upcoming things like the railways and all. It's a real good situation now. It's there. But the quantum of orders which are coming in large scale from railways also, which if we focus on it, I think we may not be focusing that as a core of our business. But we would take 1 or 2 projects to our order books and which may comprise about 15% to 20% of our business.
And even if I talk about the solar EPC also, it may be comprising about 5% to 10% of our whole business. So wherever -- this risk would be there, but -- if the risk is there and all then we may not be able to go forward, as such there is a lot of ambiquity that is there in the NHAI because of the -- they want to only bid the DBFOT model. Rather, they want to discontinue the kind of EPCs and -- maybe partial HAM projects also could come, but takers for HAM projects have been -- number of takers have been increased and competitive intensity is going up.
So where we have to a little bit -- strategy-wise, we should change ourselves to take quite a good business in hand. And moreover, we are also focusing on state highways, like Maharashtra, we were thinking of taking some projects from Pune Highway or something -- with someone subcontracts and all which we are also in line with that.
So maybe future things will go better, sir. Definitely is all because of the problems that we are facing through NHAI slow bidding process, so for which only we have to -- we are trying other ways. But otherwise, we were much comfortable in those areas actually.
Sir, regarding directors also, sir, the question was there, new directors.
Yes, new directors. I think we have sorted and the director names and everything will be placed before you.
The directors names are already there. I want to know whether we want to now change -- I mean, the -- I want to know the message that we are sending out by -- because these are very illustrious names known almost all over the country. So what is the message that we are trying to send out? Because so far, we have been having family-related directors, more directors, which are in and around Hyderabad based, so...
Nothing like that. We have taken from -- expertise from finance and like that, which is fixed up. And probably, do you mean to say, is there anything wrong which you are thinking in it? I really didn't get the question because I was traveling, I couldn't hear properly.
It's like the clarification is like this. This present 2 directors, their terms are getting expired in the month of September. And already their term will be over or they can -- and further extension may not be possible under the -- so when they are there, then with their help and new directors have been interviewed and then they have been taken as additional directors. So that when they will continue for another 3, 4 meetings, they will be also knowing the entire operations of the company. So with that intention, they have been taken in advance, that's all.
The next question is from Vaibhav Shah from JM Financial Limited.
Sir, over what timeframe do you expect to execute the irrigation backlog?
[indiscernible] and all that, it is completely depending on the payment how we get and what sort of strategy we should go going forward. But seems to be positive this time that we have spoken to various departments and even we happen to meet -- on an official meeting, we have met concerned irrigation minister also. He was so positive. But there are some failure projects on which there is some inquiry or some vigilance is going on. But the projects which are regularized, and they have no issues, those will be treated as a regular ones.
So that is a strategy that they're going to take, which I heard from them So there should not be any hassle, but within 2 months, if they don't sort out this payment problems and all, then it is going to be further burden to us. So that we would like to slightly mitigate in future.
So the irrigation -- what was the revenue in third quarter for irrigation?
It is around 14%, INR 127 crores.
So it should be a similar value in fourth quarter as well?
We expect maybe similar because we are not -- until this -- our ED sir told, until [indiscernible], but it will be the same we can consider.
Sir, actually, if we don't do the projects also, then the overheads will go up. And then as usual, we're likely to get some losses because of the -- overheads are [indiscernible] but there is no turnover or equating is not -- it is not equating to the proper guideline. Even department also don't like to stop the work. They assure that you do, we will try to pay, like that only they are speaking. But maybe we may slow down if at all we get any payment issues and all.
And sir, you mentioned that you have submitted bids in one of the irrigation projects. So what would be the size of the project?
So I think INR 1,100 crores -- 3 projects, INR 1,100 crores, INR 1,150 crores, 3 projects we have placed in some micro irrigation projects in Telangana. And around INR 600 crores, INR 650 crores, there are from regular irrigation projects around 3 or 4 we have placed. And bids are not open so we don't know the result. Just I said, that as we were lagging with the order book, I just mentioned that the efforts -- what certain efforts we are doing.
Sir, these are the same which we had mentioned in last quarter, those were the same projects?
I think -- yes, yes, I think because of the election code, which has come up, so they stopped it during that state election, they've stopped it. That's why things were not in order. Otherwise, those would have -- bids would have been opened and then results would have been out by now.
[Operator Instructions] Next question is from the line of Jiten Rushi from Axis Capital.
Sir, my first question is on the, obviously inflow with the concern I understand, but the guidance at the start of the...
Jiten, we can barely hear you. If you could, maybe speak a little louder.
Can you hear me now?
Now it is okay.
So, my question was on the, sir, inflow guidance which we have -- which you gave in the start of the call, which is INR 5,000 crores to INR 6,000 crores. But now what I understand is the current outstanding bids, yet to open this almost INR 1,700 crores to INR 1,800 crores from the irrigation segment, which is like INR 1,100 crore micro irrigation project and INR 650 crores in normal irrigation project.
So these bids are likely to open by March end. But if you don't win the project, our guidance seems to be very low for the next year because now we are targeting BOT toll projects in back-to-back subcontracting with Cube and other solar EPCs and railway projects, and again, road projects will continue. So don't you think we should look for a higher guidance in terms of influence recouping and focus towards the execution or we just will focus on a low inflow and then probably -- just a bit detail if you can answer on it.
Actually, I was just on this thing, I was on travel, I couldn't hear the question. Can you just reframe me that question.
Just reframing -- sir, we have given a guidance of INR 5,000 crores to INR 6,000 crores. And this year, the bids of Telangana project, yet to open irrigation around INR 1,700 crores to INR 1,800 crores. So even if we win or if we don't win, the bids get delayed, so the infra guidance seems to be very low for future growth. I think you can try and recoup the inflows next year for better visibility.
Because as you said, you are targeting subcontracting, back-to-back subcontracting to BOT toll projects and state highway projects and solar EPC and railway projects. So the pipeline seems to be humongous, but the guidance seems to be very low. So any thought that you can rework on your future inflow guidance and try to rebuild the order backlog?
Actually, let's make us -- let's have some successful projects in flow. Once we have projects coming in, definitely, we'll [indiscernible] because right now, the situation is not seems to be very encouraging situation. Market is very heated up. Last time I have seen a bid, which -- where 23 people -- 24 people have come on in 1 EPC project, wherein it has gone 42% less.
Such unhealthy situation we are now heading. So there -- I'm a little bit scared enough to give you the higher guidance. But once I have confidence of winning the projects or even I get the inflow projects have started, then definitely I would rather go for it, raising my [indiscernible]. We want to go, and we are very passionate to go with the company.
Sir, on the solar EPC, railways and other sectors, are you qualified to bid or you will be bidding in joint venture.
Now a days, the qualifications are framed in such a way that our highway projects are directly getting eligible for that.
Sorry, I didn't understand.
They are framing us -- they are framing the eligibility criteria in such a way that we also benefited to it. Because they really know that entire equipment of many players have been becoming idle. And wherever there is possibility, they are trying to accommodate. Ministries are trying to attract more competition out of the situation. So they are making everybody eligible in that.
But sir, execution will become a challenge because our experience, we are inexperienced in the sector, then we can end up...
Actually solar concerned, sir. If you have the panels, panels got fixed, so everything is same as what we are doing. And for anything, for any work, there have been lots of PRWs, lot of subcontractors which are available, who are expertise in such fields. There are -- we have done ample -- while bidding on to it, we have done an extensive homework by which what all to be done and what methodology we are going to adapt and what are we -- who are the parties we are taking, who are my suppliers, everything is sorted sir. Then only we have gone for bid.
You mean to say, you have a team -- professional team members or Solar EPC railways, which is sorted and...
Right now, I don't have -- right now professional team is not there with me, but we have taken consultants on board, who has guided us. And we have gone to various suppliers. And -- the major thing is buying panels itself is only the bigger exercise that, in fact. Once that is done, the rest all it is easy job for us.
And for railways, we already have in-house team, right sir?
Railways, in a similar way, tunneling, we are trying to recoup some goods engineers for our staff. So once that is done, I think -- and we have one of our subcontractor earlier who worked in one of our highway projects, he is tunneling expert now. So he is joining us hands with us. So we are trying such tie ups also.
Basically, if we see competitive intensity in the route, what kind of inflows you would -- obviously roads will be the important area for us. But are you looking to move out of South India for -- as you have been saying consistently. So are you looking out for more projects out of South India, especially in the roads and solar and other segments? Or we will be focusing only in our expert area, like South India.
No, no. We are focusing on all other parts of India also, only that UP, Bihar I am unable to go because of the queries issue for me. And there is a little mafia that is there. And if you don't have your own captive party, then the problem is with the mafia people. You never know -- every month, there is a change like cement, steel whatever they are changing the rates, it is in the similar way for the aggregates also there in those areas.
So there, I'm not -- unable to become L1 because you had the captive query, they are able to give a lesser price than me. Otherwise, I was really bidding every time. Only UP, Bihar I am out, but rest of the part of India is free for me.
And I would also joining hands with some of the joint venture partners, I am in the discussion. It is in the discussion phase, so I'm unable to give you complete detail, for that who has a captive query and I will join as a joint venture partner, you give me some fixed price which we are doing a deal within and try to breakeven those areas also. I'm trying. It's not a complete confirmed thing as on. But we are taking a strategy.
Last question only. The HAM projects which are in discussion are only 1 project, but last quarter, we were talking about 2 projects to HAMs. Any reason why we are not talking for only 1 HAM project, Palani only.
Yes, you are talking about other 3 projects were also under discussion, but MOE is yet to conclude actually...
But concession is there, because Palani we got already PCOD, that is why we are put in advanced stage, but other 3 projects, discussion is going on, but we have time to -- because this construction is going to complete it in this year-end only December. So after that only we can look into. But meanwhile, we are discussing that project also. It is not like that we are not discussing.
The next question is from Ashish Shah from HDFC Asset Management.
Sir first question is that in the MSRDC projects that you mentioned that you are bidding or you're going to bid. Have you qualified for those bids in the MSRDC.
There I mentioned about subcontracting only. I was not -- that express highway I couldn't have with me. So I could not get the qualification. So we were -- this time we were thinking to go for a subcontract for 1 or 2 projects -- then later, I also get qualification, so that future is going to be more for express highways. So I really want to go have a label so that in future it is easy for me to bid.
Right. So it's because we have -- we are not qualified for express highways, that's the reason we've not qualified for bids.
Yes, I'm not qualified, I don't have the express highway this thing.
The second thing we spoke about some tie-up for BOT. So just to clarify, this is -- we're looking for a joint investment kind of a tie-up or we're looking for -- somebody bids and wins and we do the EPC. What's the kind of arrangement that we are using?
Yes, sir. Initial model, what we worked out with the Cube is about -- we give them EPC bid and they bid for the BOT and later on the commitment, we will do their EPC and the price which I have given. So it's a pretender tie-up, and if they win, we will be the EPC player for that.
Right. Sir, third question is that just to clarify, we were L1 in some irrigation projects of INR 1,500 crores or thereabouts. So now those L1s are not there in the pipeline? I mean, have they been canceled? Or we are still there in the frame for those L1s.
Sir, there is no L1 status. L1 status is not there with -- in official news is not there, only it is the settlement between the contractor who applies the bid, that's it. So L1 is yet to announce and then it sums out. So then we have spoken to the minister last time, he assured that those bids we will not disturb and we will continue with the bidding process. That means, they may be allocating some parts and then they would open up the bid, that's what their this thing is.
Okay. So basically, we have bid for them, we don't -- they've not officially declared L1.
Yes. Yes. And the other projects, among the contractors we have spoken and then decided I'm L1, but it's really not there. Such things, no guarantees as it's kind of that. I don't know who have given you information, it is kind of that instance.
And sir, the other -- what you mentioned about micro irrigation and the other projects, that's different from the INR 1,500 crores that you have mentioned earlier -- the INR 1,100 crores, INR 1,150 crores?
That's a different one. We have different 3 projects, which may have bidded, micro irrigation, they are different ones.
And that you have bid for? You have bid for these projects?
Recently, I think 3, 4 days.
And lastly, what is the unbilled portion of the irrigation, which is outstanding?
[indiscernible] total outstanding including unbilled. We'll have to add this month, right? [indiscernible] is the receivables and balance is certified and unbilled portion, actually, around INR 570 crores.
Next question is from the line of Lokesh Manik from Vallum Capital.
Firstly, apologies. I've joined the call late. So if you've already covered this part. One is with the new announcement that has come in from the minister that they are now proceeding towards BOT project.
So would it be fair to understand that you will now shift now towards the EPC side of work or you would want to take these projects on your balance sheet. And are you exploring partnerships other than Cube, with other private equity firms. And the question is any progress on projects which are non-road related, which you have planned, metros, the highways of the late.
Basically, this actually, as already told on con call by the ED sir and VP sir. So definitely, we are looking for other sectors other than road also. So basically in that metros are there, railways are there, minings are there. So definitely, we are looking in that sector, and we are trying to bid also in that sector.
So basically is that we are taking on EPC basis. So our -- whatever our thought process is that, definitely, we don't want to do that. You can say that BOT type concept. We want to do actually basically EPC for that project. Even for BOT toll also, we are looking as an EPC contractor more rather than as a developer.
So -- we know we are basically the EPC company, and our focus is always in the EPC. So we will continue to be focused on that. That's why we are discussing with different investors in the BOT toll tie-up and to work as EPC contractor. So that is -- and that's why we cannot take entire thing in our balance sheet. So that is our object and we are perching towards that only.
Will this impact your profitability versus where you are doing, taking it on your books versus [indiscernible]. Will that have any impact on your...
It is basically the EPC contract only. So like our existing EPC contractor is there, rather than directly from the NHAI, it will be some of [indiscernible] of the EPC contract. So it is nothing -- our balance sheet will be the same only because we have to bid, we have to give the EPC price actually for that bid and according to that, bidder will quote actually. And when awarded to us, we will get the EPC work and we will do.
Any credit risk on this?
EPC work is whatever the working capital requirement you have to do, for that definitely, we will go with our existing consortium, and we will get it. So credit risk is towards the EPC work only.
That was the last question. I would now like to hand the conference back to the management team for closing comments.
Thank you all for joining us on this call. Please reach out to our Investor Relations consultant and Strategic Growth Adviser or us directly, should you have any further queries.
On behalf of KNR Constructions Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.