NCC Ltd
NSE:NCC
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NCC Ltd
Earnings Call Analysis
Q2-2024 Analysis
NCC Ltd
The company reported a remarkable 79% growth in net profit to INR 218 crores for the second quarter year-on-year. Stand-alone revenue experienced a 36% increase, while the consolidated turnover rose by 40% for the same period.
Although revenue increased, the company saw a marginal decline in PAT and a contraction in GPM, reflecting the influence of input cost inflation.
Group subsidiaries have displayed positive growth, with revenues in Pachhwara Coal Mining and the broader group increasing notably, contributing to a broader expansion.
The operating cash flow has significantly improved, with a noticeable enhancement in collections from clients.
The company's order book has reached an all-time high, and management is optimistic about exceeding the annual order inflow guidance and top-line growth.
The company has maintained disciplined capital expenditure and inventory management, with a strategy to keep debt levels manageable for the upcoming financial year.
Equity investments are projected for the next two years to support projects, and the order book, including subsidiaries, stands robust, with projects like smart meters to significantly add in the future.
The company is positioned for a sustainable growth trajectory with strategic initiatives to tackle margin pressures and secure value for shareholders.
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Ladies and gentlemen, good day, and welcome to NCC Limited Q2 FY '24 Results Conference Call hosted by JM Financial. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Shah. Thank you, and over to you, Mr. Ashish Shah.
Yes. Thank you, [ Malcolm ]. On behalf of JM Financial, I welcome everybody to the second quarter financial year '24 earnings conference call of NCC Limited. We have from the management today Shri R. S. Raju, Director Projects; Shri Sanjay Pusarla, Executive Vice President, Financial Accounts; and Shri Neerad Sharma, Head of Strategy and Investor Relations.
So I hand over the call to the management now for the opening remarks, after which we can have the Q&A. Thank you.
Thank you, Mr. Ashish Shah. Good morning, ladies and gentlemen. A warm welcome to all of you into the Q2 FY '24 investors conference call of NCC Limited. First of all, we are thankful to JM Financial Services for organizing this con call.
The presentation containing the performance of 6 months and Q2 FY '24 was uploaded on the stock exchange and in our website at around 11 p.m. yesterday.
Now I will take you through the key highlights of the second quarter and 6 months thereafter, we will take you through the question-and-answer session.
Disclaimer. Before my briefing on Q2, the usual disclaimer of the presentation that we have uploaded in the Stock Exchange and our website yesterday, including the discussion that we will have in this call contains or may contain certain forward-looking statements relating [indiscernible] business prospects and profitability, which are subject to several risks and uncertainties and actual results may materially differ from those in such forward-looking statements.
Now about to Indian economy, out infra construction that I don't want to flex on that one because to keep more time for the question and answers. If you have any questions on that one, we'll answer at the appropriate time.
Now before going to the operating performance, I would like to brief on the key matters taking place in second -- which were participated in this second quarter finances. The first one is simple Arbitration Award. In this quarter, this Arbitration Award is received in September '23. All of you know that, this Arbitration Award process took more than 5 years' time. And the award was not in line as expected by NCC. NCC noticed that some of the clients are not properly [indiscernible] the arbitration aspects, no matter referred to [indiscernible] legal form to identify the grounds, if any, available to ascertain further legal proceedings.
However, a matter of [indiscernible] accounting principles and [ CECL ] has given effect for the different amount of INR [indiscernible] crores in books of accounts. After adjusting the existing projects of INR 57 crores, there is an impact on P&L by [ INR 51 crores ]. But cash flow comes down, there would not be any cash outlook. There would be a cash inflow of INR 198 crores.
With that, this award is given as INR 198 crores payable to NPCL by SEMBCORP. So as a result, there would be a -- cash inflow would be there in the coming months.
But at the same time, in the same quarter, we have received a positive settlement agreement with NHAI for one of the road project or INR 152 crores, which is given effect in the results of the Q2. And this transaction has a positive impact in the P&L account. But both the claims together impacted revenue by INR 199 crores and PAT by INR 149 crores. Because of this impact at the back level of [ INR 114 crores ], a significant amount. All the margins, gross lot margin, EBITDA margin and net profit margin, all the margins deviated from the [indiscernible] normal course.
I'm going to read the other big aspects taking place in the second quarter. NCC secured near four major orders. One tunneling project and the [indiscernible] electrical smart metering projects totaling to INR 11,293 crores, which would further fuel the growth of the company going forward.
And SPVs, out of these four projects, we're required to create special purpose vehicles for three projects. But two smart mix projects and one per tunneling projects. So we have incorporated SPVs for the terms of the contract and the further proceedings, including finance closer are in good progress.
NCC Vizag Urban. We now received INR 20 crores out of INR 50 crores, September '23 installment from [ DRPL ] towards sale contribution of increased [indiscernible]. That balance INR 30 crores, they promised to trade before 15 November, '23. The balance reinstallment December '23 and March '24, they issued to pay within due date.
As far as guidance is concerned, we have given 20% growth guidance for top line for the year '23, '24. In the first half year, we have exceeded the guidance to what our guide -- target based on the guidance of 20% we internally stipulated for 6 months, exceeded this by 5% and the management is confident to achieve the guidance given for the fiscal year '23, '24.
So then we go to the order book. As far as order book is concern, the company secured a good amount of orders in INR 12,289 crores in Q2, a growth of [ 362% ] of corresponding quarter in previous year. The major orders received in this quarter are given in the presentation upload in the website. Among them, four are big orders, one is [indiscernible] metro project, [indiscernible] project, two from Maharashtra State Electricity Distribution Company Limited and one from Bihar Distribution Company Limited. And another one is -- okay, another tunneling project, as I said.
Now the order book as of 30th September '23 stands at INR 61,796 crores, highest ever order book. This INR 61,700 crores is after eliminating the [indiscernible] part of those four orders about INR 2,600 crores. These three orders contain -- these three orders growth, smart meter projects given for the duration of 10 years. And our top 10 years, first 2 to 3 years, primarily execution, direction of the smart meters and completion of the project order scope that we have been. But down some years, the contractor requires to kind of operate, maintain and hand over the asset to the client.
So what we've done here is in the order book, the first 2, 3 years, whatever revenue comes that, to that extent, we include in the order book and the current 7 years mainly of operational maintenance that we kept aside. Only we take that part when the post year comes into the start of that wind-up period.
Our order book is well diversified and spread across various states. Right now, we got 28% of orders from UP, where both UP and Central Government given priorities for the [indiscernible] projects and with the adequate [indiscernible] location. So, so far, the payments are good as a result of the progress of those projects going well.
Now onto the NCCL Q2 operating performance. First of all, I will brief the numbers relating to the stand-alone Q2. In this quarter, the company performed well in major [indiscernible] performance parameters. On a stand-alone basis, the company reported revenue of INR 4,283 crores taken as INR 2,050 crores year-on-year, a growth of [ 45% ] on a year-on-year basis. The revenue primarily driven by buildings and vertical divisions, which in term good progress ensured in the UP Jal Jeevan recent projects. The gross profit reported as INR 503 crores, against INR 483 crores, a growth of 4%.
The company has posted an EBITDA of INR 279 crores against INR 289 crores. In terms of percentage, the EBITDA reported as 6.5% against 9.61% of the corresponding quarter of previous year. The PAT reported as INR 69 crores against INR 122 crores.
So here, you might have observed about the decline in the profit margins, which primarily, as I said, we have given an impact of two, one positive plan and one negative plan, together, impacted the margins by INR 149 crores.
Now I would like to just inform how the margins, when we exclude these two nonroutine items. So in this quarter, nonroutine items were accounted by the similar Arbitration Award, an adverse impact of INR 51 crores. And a variable claim from road project, [ INR 150 crores. ] The net impact of these two items, [ INR 109 crores ] impact that revenue level and the gross profit margin level, capital level, EBITDA level and a net profit liabilities [indiscernible] from [ INR 149 crores ].
Once we exclude this negative impact of [ INR 114 crores ], the net profit works out to INR 218 crores for the second quarter, having [ INR 200 crores ] reported in the corresponding quarter previous year, showing a growth of 79% to our corresponding quarter.
So this type of adjustments and impacts are also there on the Q2 of consolidated results. And also this impact is on the 6 months results of both stand-alone and consolidation.
So in this quarter, the other income reported at INR 27.7 crores, having [ INR 31 crores ] from the corresponding quarter of the previous year. This is for second quarter.
Now I move to the 6 months stand-alone operating results. On a stand-alone basis, the company reported a revenue of INR 8,121 crores against INR 5,908 crores, a growth of 36% year-on-year. The revenue increased primarily due to more revenue from business division, which is down due to good progress in UP Jal Jeevan [indiscernible] projects. Our gross profit reported as INR 1,900 crores, taking us to INR 9.8 crores, a growth of 15%.
The gross profit margin in 6 months is 13.44%, taken us to 15.90%. The company has posted an EBITDA of INR 659 crores, taking us by INR 570 crores, reaching a growth of 16%. The EBITDA margins reported at 8.12%, taken as 9.56% to the corresponding period of previous year. PAT reported as INR 231 crores taken 's to INR 242 crores.
Now I move to the consolidated financials, Q2. This quarter reported turnout of [ INR 4,720 crores ] as [indiscernible] issuance growth of 40% was corresponding quarter of previous year. The gross profit reported as [ INR 510 crores ], taken as INR 518 crores, a growth of 4.10%. The GPM reported 11.4% taken as 15.02%. The EBITDA reported INR 304 crores taken as INR 310 crores, a growth of a -- negative growth of 2%.
The PAT reported as [indiscernible] [ INR 113 crores ] a decline by about 37% over the corresponding quarter of previous year. The 6 months consolidated results this quarter reported turnout of INR 9,100 crores taking a INR 6,695 crores, executes a growth of 36% of our corresponding period of previous year. The gross profit reported as INR 1,165 crores as against INR 1,019 crores, a growth of 14%. The EBITDA reported INR 713 crores against INR 618 crores, a growth of [ 15% ]. The PAT reported INR 271 crores taken as to INR 275 crores, a decline of [ 1.5% ] on a year-on-year basis.
I will brief about the group companies -- [indiscernible] companies performance. All of you know that we have only at least three companies that are reporting the revenues. The one is Pachhwara Coal Mining Private Limited, which is doing the mining project. Another was NCC Urban doing the dealership business and the third one is [indiscernible] annuity project.
In the group companies, PCM has reported turnout of INR [ 358 ] crores as against INR 280 crores in the corresponding quarter, previous year. NCC Urban has reported a turnout of INR 95 crores as in INR 82 crores in corresponding quarter previous year. The broader group companies to other reported a turnover in this quarter INR 435 crores against INR 368 crores, a growth of 18% on a year-on-year basis. This increase is mainly driven by mining product being executed by the [indiscernible] [ NPL ].
The group company performance in 6 months. The first 6 months, we have the group companies reported INR 804 crores, gathering a INR 645 crores on a year-on basis. NCC Urban has reported a turnout of INR 169 crores as against strong INR 170 crores. The total group companies reported turnout in the 6 months as INR 975 crores as against INR 730 crores, a growth of 33.56% on a year-on-year basis.
As far as cash flows are concerned. The cash was generated in the operating activities is INR 159.54 crores, taken as INR 53.20 crores. This will serve one of the best quarter reported significant amount of cash inflows from the operating activities, despite the expansion taking place at the projects and despite a 40% increase in the volume of operations and project [indiscernible]. The net cash flows used in the investing activity [ INR 79 crores ] taken as INR 53 crores. Similarly, the net cash flows used in financial activity, INR 135 crores, taken as to a trial of INR 50 crores in the corresponding quarter of the previous year.
So balance sheet. Now moving on to balance sheet, first one is the CapEx. Increase in this quarter by INR 43 crores. The company has not spent any big amount on CapEx in the second quarter. In first 6 months period of the CapEx is [ INR 780 crores]. Inventories increased by INR 19 crores from the previous quarter, which in line with the increased volume of construction activities.
In the first 6 months period, inventories increased by INR 268 crores. As a percentage, there's no big increase in inventories comparing to the kind of progress on the [indiscernible].
Trade receivables. The trade receivables increased only by INR 61 crores, having a 43% growth in the turnover.
So the [indiscernible] and improved collections from the clients. In the 6-month period, the trade was increased only by INR 179 crores as against 36% growth in turnover. The trade receivable days significantly come down to 70 days, almost [indiscernible] in the last 7, 8 years.
Unbilled revenue. The unbilled revenue stands at INR 3,646 crores as of [ INR 3,679 crores ]. There is a slight decline despite increase in construction activities. There is a decline unbilled revenue from the previous quarter. Overall, there is a decline in the billed revenue, but at [indiscernible] level of 24% to 22%.
Now coming to working capital. There is a phenomenal improvement happened in working capital in the current 6 months period of the year. The working capital has increased by about 11% as against 39% growth in the turnover. You know that there is a big order book and the company needs to ramp up their progress. But despite all these things, the working capital increase happened only 11%. The working capital as a percent of the turnover recorded as 26% as against peak of 55% in finance year '21. Earlier It is almost [indiscernible], it has come down to 26%.
In working capital, similarly, working up for days is a lot of improvement. This happened at reported a decline from 194 days in financial year '21, to 89 days this [indiscernible] FY half year '24 -- first half year. This is ever lowest in the last 5 years period.
Coming to the liability side. The debt has increased from INR 1,306 crores from first quarter ending, to INR 1,470 crores by September '23, an increase of INR 164 crores. Generally, in the construction industry, the collections are lower in the first 6 months as a result of debt increases in the 6 months of every year, but the quantum of [indiscernible] is much lower than the normal increase happened in the last couple of years. .
The [indiscernible] advance is a decrease in the second quarter from [ INR 3,800 crores ] to INR 3,224 crores, a decline of INR 90 crores.
Coming to investment. There is no change in the investments in the half year or in the second quarter.
Now I request the JM Financial Services to contribute further from the con call. Here, with my colleagues, Mr. Sanjay Pusarla and Mr. Neerad Sharma and Mr. Srinivasa. And we will answer the questions.
Yes. Thank you. Malcolm, we can open for Q&A. .
Thank you very much. We will now begin the question-answer session. [Operator Instructions]
The first question is from the line of Shravan Shah from Dolat Capital.
First, congratulations on great set of numbers, particularly on the execution and the order inflow front, sir. So I understand we are not giving any guidance or upgrading the guidance on the execution. But roughly trying to, on the directional front, trying to understand that normally, the second half is relatively much better on the execution front versus the first half. So last year also was the case.
So broadly looking at the current run rate 36% kind of a top line growth that we have seen in this first half, is it fair to assume that we should be having at least 30% plus kind of a growth this year? And the way the order inflow is that definitely, you can update how much more, are we expecting the order inflow. So considering that even the next year also, 1 can see a 20% loss kind of a revenue growth. So that directionally is, I am correct?
Yes. Can I answer your question?
Yes, sir.
So as far as the guidance is concerned, what we've given the 20% growth on the top line. In the first 6 months, our achievement is almost close to that one [indiscernible] what our guidance we have given.
And going forward, in the next 6 months, as you observed earlier, the percentage of execution generally, good in the second half than the first half. But here because of certain nature of projects, the execution increased happened in the second quarter of [indiscernible]. So earlier, that type of increase out there in the second quarter.
But in this year, in the second quarter, more turnover because of the various projects, big size of projects, are in the recent good position to [indiscernible]. And in the second half, as we said that there is a good amount of order book and rather value is increased.
But the whatever orders we received in the first half year or in the fourth quarter of the previous year, they are big sales [indiscernible] like in [indiscernible] project. now tunneling project. And these smart meter deposits. But these projects require certain [indiscernible] proceedings including the finance [indiscernible]. So generally takes some time to really turn out the report the -- report.
And in finance '24, '25, good visibility is there to report a good turnout from these projects. And in the second half, generally, basing on the first half year performance, we believe that and definitely some execution could be good.
And thereby, I mentioned in my remarks that management is confident to achieve the 20% guidance. So thereafter, there may be some increase will be there, but we are not going to increase or change any guidance at this moment.
Okay. Got it. And then in terms of the margin level, so if we adjust the claim, so a full 1H is 10.3% kind of EBITDA margin. So that is -- that number is sustainable. And previously, we were talking to -- in terms of the further debt reduction also. So from here on, so SEMBCORP, obviously, if we fight and we will get the cash flow maybe at later stage, but broadly considering whatever we have. So how much more we can see our debt reduction and accordingly, the finance cost reduction?
Yes. Now margins are concerned, the company [indiscernible] since there's a competition in the market. Now we have the gross profit margin level, there's a confirmation is there we are beating the projects. But at the bottom level, from the EBITDA level of -- improvement is looking by the management by reporting by increasing the top line. There is the philosophy. In such a way, we are moving.
So now, in the second half, the whatever normal margins. Now the first half, second quarter got impacted because of this onetime in the malfunctions. But second and third quarter remains as we reported the first quarter.
So in normal course, excluding those transactions for the year as a whole, we expect an EBITDA. And we've given guidance 10%, but it may go 10.1% to 10.2%. So there would be the growth of our previous year in the EBITDA percentage. And similarly, the net profit, also increase would be there. We reported last year 4.2%. And current year, there is a chance of reporting 4.5% plus at net profit level.
Sir, I was asking in terms of the order inflows. So further, how much have we are looking at to get the more orders? So how much we are planning to build by March end to get -- at this time? Yes, sir.
As now, we already secured INR 20,000 crores orders as against INR 26,000 crores mandate of guidance we have given. So now we are confident that we definitely achieve the INR 26,000 crores after book basing any present flow of orders -- and flow of orders. And there is some chance to exceed that one. So it may go another INR 2,000 crores, INR 3,000 crores, INR 4,000 crores plus of the existing, what guidance we have given.
Got it. Got it. And lastly, on the data point, sir, so you have mentioned the mobilization advance. If you can repeat the retention money and unbilled revenue number. And investment is -- I hope for the subsidiary and JV loans and investment, is the amount the same INR 1,230 crores, which was there in the previous quarter?
You're not giving chance for the others important questions, [indiscernible], just you tell me to proceed or other to answer.
[Operator Instructions]
Yes, this was the data points so it can help everybody, too.
[Operator Instructions] The next question is from the line of Mohit Kumar from ICICI Securities.
My question is on the -- sir, in the Slide #22. You are saying that the need to enter into new verticals to grow at 20%. Does it mean that you're expecting a slower growth in the existing verticals in the near term? And hence, there is a need to enter into new segments? And if you can help us with the new segment, which you're trying to enter into?
Mr. Mohit Kumar, this is Neerad. I hope I am audible, right?
Yes, sir. You're audible, sir.
Mr. Mohit, the fact of the matter is it is not that we do not see a lot of visibility in the existing vertical. The infrastructure market in India is evolving at a very fast pace. For example, if you talk about the tunnel projects, it was not an active market about a decade back. So smart meter. I'm just giving you an example to answer your question in totality.
We are always looking at what are the new avenues for growth, what are the new projects which are coming up for bidding. And accordingly, we try to have the competence, the qualification and then decide to bid for the projects. So the pipeline of the project continues to be very healthy in the existing vertical as well as the new ones.
But we are not going whole [indiscernible]. We are a bit selective in these new vertical. As we have already shared with you, we have just started with a big tunnel project in the city of Mumbai. We have taken three smart meter projects. So this is what we intend to do.
So as and when the new opportunities come in the newer verticals, we will try to see what kind of projects are those, what is the competence required to do that, what kind of investment, if any, is required, what kind of competencies required in terms of people scale, then we decide to bid for those projects.
So my second question is smart meter opportunity, right. sir. We haven't done, I think, electrical or smart metering ever in the history. So do you think that -- how will you go up on bringing those competitions -- competencies and building those capabilities so that we include as a reasonable profit margin, especially the orders?
See, Mr. Mohit, I agree with you that this is a new market, but this is an emerging area really. And we have done a lot of distribution projects. This is a kind of project that we are doing in the Jal Jeevan mission. What the Jal Jeevan mission sincerely is all about. It is about giving the retail tap connection to the households.
In these smart meters, we are trying to do the same thing. What is required to be done here is to provide the smart meter connections to all the households. So -- and we have done a lot of distribution projects, and we know the clients. In fact, we have been active in this vertical. We have been working with the state electricity board for about 2 decades now. And all these projects are promoted by them. So we understand the space, and we believe we have what it takes to succeed in this space.
[Operator Instructions] The next question is from the line of Nikhil Abhyankar from ICICI Securities.
My question is regarding, we will be entering into the election season in the next 6 months. So do you see that any order finalization will be hit say, after Jan, Feb? So whatever the orders come in, should happen till December, Jan?
Yes, you have asked a very good question. We are entering into these very exciting festival of elections, the state elections, followed by central elections. But we already had the buffers in place. As my colleague, Mr. Raju has already shared with you, we are already sitting at the highest order book in our history, that is about INR 61,797 crores. So close to INR 62,000 crores.
So even if -- though, I do not agree with this view that after the elections are announced, there won't be any project. But even if theoretically, let us say that the proposition that you are trying to make is correct. In that eventuality also, we have sufficient orders on our books to continue to execute until the new pipeline of projects are announced and awarded.
Right, sir. Understood. And sir, also, what is the status for TAQA arbitration? And what is the total claims for that arbitration?
The TAQA -- certain developments are there. Now already we explained about the legal status earlier. In this quarter, there are some amicable settlement to proceedings are going on. So there are good chances to get results from mutual discussions and other things. The process, almost 70% to 75% is [indiscernible] And we expect some [indiscernible] settlement between the two parties.
So as a result, the pending legal proceedings and other things get slowed. So there won't be any -- we are not expecting any big amount -- or provision we made in the books of accounts to happen.
Okay. So how much of the provisions?
Nikhil, I'm sorry to interrupt you. There are other participants in the queue, please limit your questions. If you have a follow-up question, we would request to rejoin the queue, please. [Operator Instructions] The next question is from the line of Deepak Poddar from Sapphire Capital.
Am I audible?
Yes.
Sir, just a clarification first up. You mentioned PAT margin of 5% plus in this year. Like that's what you mentioned to one of the participants earlier.
No. 4.8%.
Come again.
4.8%.
4.8%. Okay. 4.8% plus.
4.5%, we mentioned in my initial answer...
But what your question here, 4.5% plus..
4.5% plus. Okay. Fair enough. And I think our adjusted EBITDA margin in this quarter was around 10.8% rate. So ideally -- I mean, second half is generally much better than your first half, I think. So ideally, this EBITDA margin of 10.1% to 10.2% isn't that on the conservative side, I mean?
For the year as a whole, you're asking?
Yes. Yes. That's what you mentioned, right, 10.1% to 10.2% EBITDA margin.
It depends upon the mix of several divisions we have, several [indiscernible] supports are there. It depends upon the mix. We have delivered the band of 0 to 0.5% in between, it will vary. So we can into at least before 10.2% level for the year as a whole.
Okay. Okay. Okay. I understood. And my second question is on your debt outlook. I think we have seen increase in debt. And I think we had earlier guided that FY '24 and debt on a Y-o-Y basis from FY '23 base, it would be lower by about INR 100 crores to INR 200 crores. So where do we stand in that front?
And then how do we see the interest cost because our interest cost is -- has always been on the increasing trend. So some understanding on interest and that would be helpful. Yes.
Now as far as interest cost is concerned, there are two parts. So one is the interest on moderation advance and other one is interest on loans. As far as the loans are concerned, there is no any good increase in terms of interest because modernation advance is increasing and operation advance also, the mix of the advances on the interest-bearing advances, other one needs noninterest bearing advances. And that mix moves that is where more interest bearing advances are they then natural the interest cost goes.
But always, we should see with reference to the top line. If you see the business top line, there is a decline in the interest cost from the previous year. And any year, there is a decline -- decline is happening in terms of percentage.
When the company grows about 30%, 40% as well as the debt talks are supposed to positive growth, but somehow the debt is under control. So in this year, since the more orders have come and big orders have come, we have the -- smart meter projects is a different type of type of semi and [indiscernible] hybrid nature of it projects [indiscernible], it requires the initial investment by the company. Payment becomes more record [indiscernible] years from those projects.
As a result, some part of investment or increase of the capital into the three projects required. As a result, going forward, there would be some increase in the debt level increases, but it is in correspondence to the growth in the top line.
In terms of turnover, the interest part, we expect a decline, but not in the absolute terms. So as far as the third quarter or so, in the third quarter, we are not expecting any big increase in debt, but fourth quarter and thereafter in FY '25, the debt increase may be there.
So what is the debt level we are targeting?
Mr. Deepak, Sorry to interrupt you...
So it's a follow-up only. I mean it's just a clarification. So what's the debt level we are targeting FY '24 end?
'24, the debt level around INR 1,500 crores or INR 1,600 crores, another INR 200 crores, INR 300 crores from this period.
INR 1,500 crores to INR 1,600 crores FY '24.
Yes, yes.
The next question is from the line of Deepika Bhandari from Philip Capital.
Just two questions from my end that in the first half, we have taken a significant amount of orders. So do we see our CapEx to increase next year than the usual range?
Yes, CapEx based on the present nature of projects, we are not forcing any significant increase in the CapEx. In the next year, we are required to buy the tunneling machines and how we -- SPVs. In SPVs. The tunneling project required to buy that, again, the special purpose vehicle. So how that company structure, whether the company borrows on it's own and buy equipment. And so when the equipment on consolidation, the part again comes into the balance sheet like it, some naturally digit capital-intensive projects, there were some CapEx would be there.
For smart meter projects, we are not expecting any CapEx -- significant CapEx for those projects. So they may not be speaking resemblance unless we get any road projects or mining projects. When we get mining project, a significant increase would be there in the CapEx. It depends upon the nature of projects. So a long date water projects, we are there are secure, and we are not in any significant increase in the CapEx. It would be the normal level of INR 300 crores as well.
Okay, sir. And my next question is, sir -- I mean, because we have won recently or many orders, which might be on the mobilization state. So as on 31st -- as on this 31st September, what percentage of order book was not contributing into our revenue? If you can just give us a rough percentage.
[indiscernible] If you consider the 20,000 -- 20,000 plus what we secured in the current year, out of which 70% to 80% of others won't participate in the current year order book -- current year turnover, 15% to 20% ought to participate in the second half.
Sir, that means INR 15,000 crores to INR 16,000 crores of the total order book is not contributing and was not contributing as on September into our revenue?
Correct.
But there will be some contribution in the second half.
The next question is from the line of Prem Khurana from Anand Rathi Shares.
Congratulations. Very strong execution during the quarter. So sir, my question was to understand our thought process, the way we are thinking about the business now. So as I see it, when I look at some of these orders that have been able to manage in the recent past, tunneling project, which is very large for us and even the advanced metering systems seems as if you are willing to commit our balance sheet now, right? Because the tunneling project, I mean, would need to kind of go in by -- I understand it could be at SPV level as well. But either you're willing to take more debt? Or you would be quite going to infuse some money you're going to buy a TBM?
And even with the advanced metering system, and there will be some equity infusion from your side. So does that mean that we were open to an come in our balance sheet to kind of get some more orders where you feel -- I mean, this money would be able to generate your -- credits? To what extent would you be willing to win take more such a project? I mean it would be quite a kind of come in your balance sheet?
As far as these projects execution are concerned, there are two parts. One is tunneling project you're asking. The other one is the smart meters project. As far as smart meters projects are concerned, already my colleague, Neerad Sharma explained, though they are big in size, we have the earlier experience in the same segment that is electrical distribution works. This is nothing but again, that type of an exam, but the payment terms, the type of annuity and it is a big size order.
Number of electric meters, smart meters to carry it in various places like water -- Jal Jeewan Water Project, how we are doing retail connection to reach in-house. Like the -- each house, we have to [indiscernible] the new meters. And the additional thing is the software systems -- supporting software system to link each and every one to the central process. So that is there.
So as far as these projects are concerned, management at this moment to not pacing. And the team is now the build up to take up -- to execute these projects. And though it is big project, some problems would be there to the new, but it is a manageable level at this moment, management is there.
As far as surrounding project is concerned, definitely it is a new vertical. And earlier, we don't have experienced -- but we have experience in the road. Only on tunneling operation of the tunneling is the one new item. So we -- thereby, we secure this project, the joint venture off with [indiscernible]. They have the experience of execution of this type of process earlier. So we jointly will execute this project. So thereby, we don't foresee any big problems. Some challenges would be there, but it is manageable with the help of the other partners. Any other?
No. So basically, I mean -- sorry, I think I couldn't convey what I want to understand. So I want to understand in these sort of projects, right, you would need to include some equity in the SPVs. So internally, I mean, is there any change in the thought process wherein you are willing to invest money in some of these asset ownership businesses or let's say, in advanced meeting, you would have to put in money. Tomorrow, you could go decide when to go and bid for road hybrid revenue would be quite an important money. To what extent would you be willing to commit your balance sheet towards such projects wherein you would be required to stay back with the project for some time?
Okay. Now these SPVs, we created separate SPVs. These are based on a SPV level making a finance model, whereby to mobilize the funds partly by project and partly by equity. So when our share of equity is required about -- around the -- at this moment, we expect about INR 400 crores to INR 500 crores equity in -- would be there. That is over a period of 2 years also. In a year, about INR 200 crores, INR 250 crores equity and -- needs to invest to that extent our balance sheet gets adjusted -- gets affected.
And just one bookkeeping, could you please give me the break up from a order backlog in terms of how much is -- out of the INR 61,800-odd crores, how much is for the stand-alone entity and how much would be with the subsidiaries, I mean, the like of MDO and advanced metering system, which would not reflect in the stand-alone operation, possibly going to share a breakup, please?
Now from the SPVs, these two SPVs, we secured the -- for smart meters, out of 3, one is directly received by the NCC, now it has been required for NCC water project, that is INR 2,400 crores or so. And other two projects, which appear in the -- first of all, the SPV books of accounts. Now we are structuring that, that SPV again award the EPC content to the NCC. So whatever EPC contract to be done in the first 2, 3 years to complete the project to that extent to the NCC, this value is about to INR 3,660 crores [indiscernible] NCCL books of accounts. And some part up here in the SPV that SPVs part is about INR 927 crores.
Again, total is our subsidiary companies, the order book as on this date, basing on the structure, stands at INR 7,732 crores. And NCC stands at INR 54,000 crores. Together, INR 61,786 crores. And further, other point to be noted is the [indiscernible] of these three to smart meters project, totaling to INR 2,690 crores is kept aside out of the order book. This, we can spare into the order book only when the O&M bid starts, that keeps roughly in the fourth year of the project starting. Clarified?
The next question is from the line of Parvez Qazi from Nuvama Group.
Congrats for great order intake. So two questions from my side. One, if you could provide us what is the total exposure to subsidiaries, JVs, et cetera, that we have? And second, what is the status of payment on the Andhra project subsidiary if it is also going to go to election soon?
Exposure to the subsidiary of [indiscernible]. As far as Andhra projects exposed is concerned, there are two parts, one is the capital city projects and other one is other than the capital city projects. So in the capital city projects, the exposure in terms of fund based and non-fund based. As far as bank guarantees are concerned, there is a significant decline happened from the level of their sales at INR 200 crores now it comes to nearly INR 120 crores -- INR 120 crores.
And as far as capital city exposure at the beginning of the year, we have INR 157 crores. Now it has come down to INR 147 crores. For the running projects, there may not be any big change in the running projects. Whatever we do the day every month so we put [indiscernible] are getting. What our outstanding is there as of 31st March '23, the same level is there now.
And as far as further exposure is concerned, we are not taking any new orders from [ AP Estate ]. And also the execution of the projects, the projects are there, where our fund allocation is there, only we are doing such projects to bring down or to control the exposure till the fund equation of the government improves. Any further clarification you need?
Just the exposure to subsidiary.
Subsidiaries. Okay. For subsidiaries, there is no change in the first 6-month period. In the first 6 -- months period, the investments in [ INR 875 crores ] at the beginning of the year, the same level also there -- same is also there as of September '23.
The next question is from the line of Ash Shah from Elara Capital.
Can you provide the stand-alone and subsidiary order book for Q2 FY '23 outstanding on?
Now the order book as of September '23, for stand-alone stands at INR 54,000 crores. And subsidiary company INR 7,700 crores, totaling to INR 61,796 crores.
I was asking for Q2 FY '23. That is 30th September 2022.
In comparison?
Yes.
[indiscernible].
You were asking about previous year, right, '22?
Yes, same quarter previous year.
Yes. Give us a moment, please.
Now we have about INR 7,700 crores in subsidiary companies at this movement corresponding to the same September '22, that would be around INR 3,500 crores as well.
Also, second question would be, could you throw some light on the pipeline that we are seeing right now, if you could quantify it sector-wise or the overall pipeline or something like that as portion.
We continue to see a very healthy pipeline of projects coming up for bidding, for example, in our biggest division, building and housing. The transportation, we get to see a lot of elevated corridors, a lot of bridges kind of structure.
The same way the Jal Jeewan mission, the water supply rural as well as bulk water supply projects continues to be very interesting space, and we continue to see a lot of opportunities, a lot of bids coming up.
Same is true for the electrical division when we speak about these smart meter projects or the distribution side, we continue to see a lot of healthy projects. But it is not really helpful to put a number.
Why? Because these projects may not get decided in the next 6 months or 12 months, and infrastructure projects takes a lot of time to develop, to get permission, to get the funding, get all the permissions in one place and then they are bid out. So even if let us say that, that number is x, that number x may not get decided in the next 6 months or 12 months.
So that is the reason. We do not really wish to share that number because that is not something that gives you a meaningful information to estimate our performance in for the next few years.
The next question is from the line of Saket Kapoor from Kapoor Company.
Yes. Yes. Thank you for the opportunity. Yes, you can hear me?
Yes, Yes.
Sir, firstly, sir, due to [indiscernible] of time, we are having only two questions. So Neeradji, what is the best way to get in touch with you post the call you also elaborate under that? And secondly, sir, on the MDO business, I think so mine development -- SPV we have done earlier, that was about to yield results now. So what is the update on the same?
Surely. Firstly, I will answer your first question first. You please note down my number and e-mail. If you are ready, then we will talk about the MDO projects. So that you can reach out.
Yes, please.
Otherwise, in the presentation and on the website, the e-mail ID, the numbers are already given. So you please note down my number, 9000326123.
Thank you, sir.
To connect with you. Now your next question was about this MDO project. This mine development project, right? .
Yes. Yes. That's right.
So this is about MDO project. Over now to the [indiscernible]. Basically, it is given for 30-year time span and we started the project. At the beginning, the client is able to provide the land and other facilities to some extent. As a result, the mine plan approval is taken for a period of 5 years and in place of 30 years.
So in the 5 years, it is almost over. And for the balance year, whatever format is required, that is procuring forest land, procuring Stage II clearing and [indiscernible] rerevise mining plan for 25 years, revised mining lease for -- this core extraction, all these things for the last 1.5 years are there. Now they were completed and the [indiscernible] side, it is the obligation of [indiscernible] to procure all these things.
Now the client complete at the smart [indiscernible] and hand off the forest plan, and we started working in that front with our team and then starting mine other side and the shifting of the [indiscernible] and the settlement of their [indiscernible] issues, all are in progress.
And as a result, the mine is the extraction of our burden and core is continuing. So last year, we achieved the [indiscernible] milestone of issuement [indiscernible] 15 million tonnes per year that we have achieved. So along this bet, whatever obligations are there or milestones are there or the MDO, it is in place within the time or in place.
Similarly, the [ WPD ] also -- they are also putting a lot of efforts, whatever [indiscernible] come, what are basically sequence that they're also cooperating and they're providing. As a result, we are able to report good amount of turnover on quarter-on-quarter.
So for the current year, we give target on target about INR 1,500 crores or so, on that we are confident to a INR 2,500 crores turnover. And for the first half year, the company reported turnout of INR 804 crores.
So about transportation, INR 100 crores is the transportation from my [indiscernible] mine [indiscernible] that is 55 kilometers to distance. And as far as [indiscernible] document, the WBPDCL agreed to provide the railway siding up to the [indiscernible] in a period of 5 years. But there's no good progress as far as [indiscernible] is concerned. Still the transportation is going by the trucks of this distance of 15 kilometers.
Now we and the WBPDCL as an alternative plan until the railway rating comes into the place [indiscernible] and identified another two routes to reach the railway siding, another two railway siding creations are identified. And the second one, already, we started transporting the distance, more than 50% now we are transporting through the second road. And also another road now. And that strengthening of third route is going on.
And once this comes into operation, to some extent to the density in the transportation of the growth comes down, but this is one problem at this moment, transportation of the coal. But of course, this is an obligation of the WBPDCL to provide the facility. But as far as MDO is concerned, it is performing what it refers to do. So at this moment, we can see that project is going well.
And sir, very small point, I joined late. So depending upon the scalability of execution, the last H2 -- last year, H2 and this year H2, what kind of growth are we looking in terms of the execution getting scaled up?
Last year, it's [indiscernible]. There are some -- we accounted certain pending bills in the fourth quarter. The cash building the pleasures there with the WBPDCL. They are not digitally escalation, there is a dispute between the two parties and the dispute is resolved and finally agreed by the client. And they certified the bills in the fourth quarter. As a result, INR 250 crores or so happened in the previous year. The same growth will not come in this year.
So as a result, we stand at [ INR 500 crores ] to [indiscernible]. And in second half also, we INR 800 crores plus about INR 850, INR 900 crores [indiscernible] stand.
No, sir, I was looking at company as a whole. Last year, we clocked -- yes. Sorry, it was my second question only. If you -- if I would just complete it. As a company as a whole, sir. We did top line on consolidated closer to INR 6,700 crores for H1. And ended the year around INR 15,500 crores. How should this edge to look in terms of comparison with last year? That was my question and all the best to the team and should [indiscernible].
As comparing to the last half year. Compared last year concern about INR 7,000 roughly, INR 6,700 crores top line we reported. And on the 20% growth would be there. INR 8,200 crores, INR 8,800 crores.
Okay. So H2 will be lower than H1, sir, in that case?
No.
H1, we have done INR 9,100 crores?
Yes.
So if we are looking for INR 8,200 crores for H2, that means sequentially, it will be lower?
So it is not slow. So it is not -- we expect...
It will be more or less in the same range, maybe it's INR 9,150 crores in the first half, and it may lead to INR 9,300 crores or INR 9,000 crores.
Now last time, INR 7,000 crores or so. We've given the top line for second half on this 20% comes to about [ INR 8,000 crores ] and also own another [ INR 600 crores ] is different there. So we at the same level the -- same level would be the clients on. [indiscernible].
I would try to answer your question a little differently. We have already given a guidance for 20% growth, and we continue to stick to that target. So we will hopefully surpass that number.
As there are no further questions from the participants, I now hand the conference over to Mr. Ashish Shah from JM Financial for the closing comments. Please go ahead, sir.
On behalf of JM Financial, I'd like to thank everybody for participating in this call. Also, we thank you to the management for allowing us to host the call. Sir, any closing remarks from your side that you would not like to make .
No. Thank you very much, the JM Financial Services for organizing the call. And I thank you all the participants. And I also thank for the questions asked by you. And we hope that we clarified all the questions and whatever questions we are not answered and if any further data required, you may please contact our strategic head, Mr. Neerad Sharma. His phone numbers are available in the investors presentation. Thank you all.
Thank you very much. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.