Power Mech Projects Ltd

NSE:POWERMECH

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Power Mech Projects Limited Q4 FY '23 Earnings Conference Call hosted by Nirmal Bang Institutional Equities. [Operator Instructions] Please note, this conference call is being recorded.

I now hand the conference over to Mr. Prasheel Gandhi from Nirmal Bang Institutional Equities. Thank you, and over to you, sir.

[Prasheel Gandhi, analyst]

Thanks, Vikram, and good afternoon to all participants. And Nirmal Bang Institutional Equities welcomes you all to 4Q FY '23 Earnings Conference Call for Power Mech Projects.

From the management team, we have S.K. Ramaiah, Director, Business Development; and Mr. Jami Satish, CFO.

I now hand over to the management for the opening remarks, post which we can take questions from the participants. Thank you, and over to sir.

[Jami Satish, executive]

Yes. Thanks, Prasheel. Is it audible?

[Operator]

Yes, you are, sir. Please go ahead.

[Jami Satish, executive]

Dear friends, good afternoon. This is Satish. Also with me Mr. S.K. Ramaiah, Director, Business Development. Once again, welcome you all to the earnings call, quarter 4 and 12 months FY '22-'23. We are happy to share various development of Power Mech during the recent period. Overall, the performance of Power Mech is well within set plan and is in line with our internal targets. Performance for the company continues to be robust and healthy.

Let me first start with quarterly and yearly performance with numbers. The reported total income for quarter 4 FY '23 is around INR 1,183 crores. This is once again all-time performance in the history of 24 years journey of Power Mech in a single quarter. And the reported EBITDA is close to INR 140 crores. And the reported PAT for quarter 4 is around INR 75 crores.

During quarter 4 of last financial year, the total income was INR 905 crores and EBITDA was INR 97 crores (sic) [ INR 98 crores ], and PAT was around INR 48 crores. The total income has gone by almost to [ INR 8 crores ], 32%, whereas EBITDA has gone to almost like 43%, and PAT has solid growth of almost 58%, which is quite robust.

The revenue mix for quarter 4 FY '23 is as follows. Erection business has contributed INR 148 crores, whereas last year, it was INR 521 crores (sic) [ INR 152 crores ]. Civil business, including railways, water and distribution, facility construction, power-related civil work, it has contributed close to INR 760 crores, whereas last year, it was almost like INR 516 crores. Operation and maintenance has contributed INR 247 crores. And last year, it was around INR 217 crores. Electrical business, it has contributed to INR 18 crores, and last year, it was INR 17 crores.

The domestic business has contributed close to INR 1,070 crores, which is close to 91%, and the rest has come from the international business, which is close to 9%. Whereas during quarter 4 of last year, the domestic business has contributed close to 85%, and international business has contributed almost like 16%. Similarly, the power sector, including operational and maintenance okay, power-related growth. During quarter 4, it has contributed 43% and non-power is almost like 57%. Similarly, during last quarter, last year, it was almost like 56% and 44%.

Similarly, the total reported income for 12 months, the entire year FY '23 is close to INR 3,618 crores, whereas years almost like INR 2,728 crores. There's a growth of almost like 33%. And the EBITDA for this year is close to INR 421 crores. But as last year, it was INR 303 crores. There is a growth of almost like 39% with increase in the margin. And PAT for this year is close to INR 209 crores, whereas it was almost like INR 139 crores during the last year.

There's a healthy growth of almost like 50% plus. And in terms of revenue mix, erection business has contributed almost INR 606 crores, whereas last year, it was INR 521 crores. There is a growth of 16% in erection business on a 12-month basis. Civil business has contributed almost like INR 1,995 crores, whereas last year, it was INR 1,290 crores, that's a growth of 55%. And the O&M business has contributed close to INR 930 crores, whereas last year, it was INR 805 crores. There is a growth of almost 16%. And electrical business has contributed INR 69 crores, whereas last year, it was INR 93 crores. There is a fall of almost like INR 24 crores, which is 25%. And on a 12-month basis, domestic business has contributed almost like 88%, and international business has contributed 12%, whereas last year, domestic business contributed close to 84% and international again 16%.

And the revenue mix between power and non-power on a 12-month basis. Power has contributed close to 54% and non-power 46%, whereas last year, the mix was, power 62% and rest has come from non-power, which is almost like 38%. The growth in business is significant. The average growth is on account of strong order book base, in-house execution bandwidth improvement is also seen in overall margin profile and the same is other expected to improve gradually.

Depreciation cost as a percentage to revenue remained lower side due to planned CapEx spending. And finance cost, again, as a percentage to the revenue remains lower side and continue to be controlled on account of improved working capital cycle and cash flow management. With better deployment of capital and improvement in margins, we have also seen improvements in return on capital employed and return on equity, which is quite healthy, and we keep this improving going forward too.

The overall execution bandwidth is still increasing quarter-on-quarter on account of various initiatives and strong increase in our resources. The company's well set to execute projects now in the range of INR 900 crores to INR 1,500 crores per quarter. Other recent development and update includes; for the project executed and completed at Andhra Pradesh, Andhra Pradesh Medical Tech Park. We have received during last week the entire amount of INR 42 crores plus from AP government. This was held with AP government for a long time in spite of weak being completing the project on a record time. The realization is a major development for Power Mech and will help in a big way to improve the cash flow and also the overall liquidity for our growth.

Also, the returns and money of around INR 40 crores, which is due now is expected to be released next 30 to 40 days. All final leg books already been done, and this is -- we are quite confident of getting that INR 20 crores, next INR 30 crores to INR 40 crores. With that, the amount of AMTZ will be completely recovered.

Generated positive operating cash flow during the year is around INR 180 crores plus and the free cash flow is around INR 120 crores plus, which is quite healthy. And we are also working on the same to improve further. The average monthly collection of the company has been improving month-on-month basis with the growth in the business collection ranging per month. Now it's in the range of INR 320 crores to INR 400 crores, which is significant.

More importantly, the net -- the exact current days excluding cash and cash equivalents has substantially [indiscernible] on account of improved working capital cycle, change in business mix and change in customer concentration. The net current days has come down to 130 days as on 31st March 2023 and the same used to be 150 days as on 31st March 2022 and 205 days as on 31st March 2021. There is significant improvement in the overall working capital cycle.

Now the gross debt and the net debt remained controlled despite growth in the business and order book. FY '23, if we see the gross debt is around INR 470 crores, and the net debt is INR 241 crores, whereas it was INR 527 crores and INR 320 crores during FY '22. The debt-to-equity as on 31st March 2023, is around 0.37 as it is 0.51 as on 31st March 2022. Similarly, the net debt-to-equity has come down from 0.35 to 0.19 on 31st March 2023, and there is direction in debt-to-equity that it is quite healthy.

The company continues taking various steps to strengthen its resources, including strengthening [indiscernible] training programs, focus on safety and quality, strengthening supply management system because of increased material component in our business model and also the risk management. There has been continuous injection of the senior management from different experts from different industry to strengthen our education capability and also to strengthen the senior management level so that we can sustain our growth and cope up with the changes.

Recently, we have invested Mr. Surendra Babu [ Akala ] and he has joined as Head of [ EU ] business. He has lasted experience of more than 30 years in the field of development and augmentation of several coal and iron ore mine blocks in India. He was earlier associated with Western Coalfield, Central Coalfield, Southern Coalfield Limited, in various positions and also with Adani Enterprises Limited as the Senior Vice President in Natural Resources and Mining Business. Apart from that, Mr. [indiscernible], who has joined as Senior Vice President, as business development and operations [indiscernible]. He is in charge of the business development and operations in Saudia and Bahrain.

Following meticulous economic and electrical engineering and global business management as well as trend which is a Bosch excellence of 18 years in interest in business development strategy, business turnaround and global operations. He gained solid knowledge and process optimization and strategic process to building growth [indiscernible]. Earlier, it was associated with the reported organization like ABB, Siemens, Interconnect PTC. So each experience will help in a bigger way in developing the business operation in -- especially in the Saudi market.

Along with him, Mr. [indiscernible], who is the CEO of International Market. He will be concentrating on Nigerian market and [indiscernible] this will continue to [indiscernible] Saudi market. It will help in a big bit to improve the international operations business.

Now coming to the order book. The order backlog as of 31st March 2023, stands at INR 23,000 crores plus for the entire year of FY '23 and '24, the current financial year. The company has set a target for achieving new orders for group is almost INR 10,000 crores. This is including the spillover orders of around INR 200 crores plus the projects which are on L1 started close to INR 1,400 crores and the projects already added during quarter 1 of the current financial year, including around INR 720 crores. And we are quite confident that these INR 10,000 crores numbers can be achieved.

We have identified different projects, domestic international in different segments, close to INR 40,000 crores plus and the conversion of INR 10,000 crores is quite achievable. We are also expecting good amount of order booking and execution cycle at the international market, too. Now the team has been strengthened because of COVID, there was a lag of 2 years, but now the momentum is picking up. We had a major breakthrough at Nigeria, Dangote in O&M., and there are multiple call of discussions are happening. So we are expecting close to INR 500 crores of order book in international market too this year.

The existence of strong enough risk management policy team to give you each project progress, identify the associated risk helping us to proactively mitigate a distal the associates in various ongoing as well as the new projects. So we have initiative taken a few years back, helping us now for a sustainable growth across all the verticals in a large way. Now the targeted business segment broadly include international operations, both the O&M and the traditional mechanical business. We are targeting close to INR 400 crores to INR 500 crores.

Operation and maintenance, domestic including the projects which are getting renewed during this year, we're expecting close to INR 1,000 crores plus. Our business as tradition to a lot of projects that are coming up especially the projects which are getting revived. Civil power and the FGD put together, we are targeting close to INR 2,200 crores. Of this, already the projects which are L1 includes close to INR 1,200 crores. On top of the railway metro, we are working aggressively before [indiscernible], we are expecting close to INR 1,200 crores.

Material handling, we're targeting close to INR 500 crores. Water distribution works, we are targeting close to INR 2,600 crores, mostly Madhya Pradesh, Maharashtra and specialty construction is around INR 450 crores and electrical business, INR 450 crores to INR 500 crores. The company has built strong expertise in execution and business development. Now for the government, the opportunities are many to choose. Stand-alone prequalification to bid for any new project for government increased significantly in projects like railway, road, water, O&M, material handling, [indiscernible] construction.

Execution for FY '24, FY '25 and FY '26. Next 3 years is going to be robust and healthy on account of improved order book large targeted projects in pipeline and increased execution run rate per month. Also, the margin profile we have seen improving and expected to improve further gradually. We are working to build business model to have recurring long-term project model income to the tune of INR 3,000 crores, that is including operational vents and the MD operation from FY '26 onwards.

In addition to the business growth, this will help in improving margins. This INR 3,000 crore is expected to improve as 18% CAGR from FY '26 onwards. So this will help in a big way. Whatever -- to a large extent, it will also help improving working capital and cash flow.

Now I request Mr. S.K. Ramaiah to update on various other development before we get into Q&A session. Thank you, all.

[Sudha Kodandaramaiah, executive]

Thanks, Satish, and good afternoon to all our dear participants. Satish has given the overall numbers of the revenue, the order book -- backlog and the order book position and some of the numbers on the financial side.

And what is important to understand is that basically, I would like to emphasize that there is a -- first of all, the market has opened fully for us. That is the first time we are seeing so much of penetration is there. And thanks to this national infrastructure pipeline, which is in under [indiscernible]. And this is in terms of the value of what we have booked in the preceding year. Almost it is 100% more than the previous year, what we have booked about [ INR 4,231 crores ]. The preceding year, it is INR 8,479 crores, almost 100%.

And this has been significantly possible some of the major orders what we have taken in FGD, infrastructure job, railway job significantly Railways Metro jobs and then some of the maintenance jobs. And also on the traditional jobs on the power plant work which has happened in [indiscernible], [indiscernible], et cetera. And [indiscernible] Metro maintenance shop, what we are doing is the very interesting job of core for that open port for the entire metro, a little better opportunity about 2 -- about another 114, 115 cities are coming up. And this is the type of opportunity which has happened.

And if you look at the overall figure, excluding the quarter for the MDO development, the backlog of the order, which was INR 8,885 crores as of last year, March '22. It has gone up to INR 13,733 crores, almost 55%. And the significant contribution has come up in the engineering business on the mechanical side, almost 4 times that has gone up from [ INR 60 crores ], [ INR 50 crores ] to [ INR 68 crores ], [ INR 79 crores ]. [indiscernible] there is a modest increase of INR 5,840 crores to INR 6,136 crores. And O&M, yes, last year, there had been some of the opportunities got postponed, and there is a dip in the overall backlog. And deletions and same, but overall, increase in the order backlog is 65%.

And on the domestic side. Domestic continues to play a leading role because of the opportunities which are available in energy sector, infrastructure sector, railway and various other non-power sector. And that domestic sector almost contributes to a backlog of 91%. And international, as Satish has said, of the post-COVID, there had been a [indiscernible] investment coming up in the Middle East, Gulf region, and now perhaps to open up. Then the power sector business is significant to gear up at 66%, [ INR 9,131 crores ] to the backlog. Non-power sector is INR 4,602 crores. And this also is a good product, which is there. Therefore, the overall, if you look at some of the major jobs what we are executing on today. We had expected a good job, which has [indiscernible] the job we have completed that is in Tamil Nadu. [indiscernible] also into 60-watt bonders for L&T on behalf about 32%.

[indiscernible] an advanced stage of completion, 85% or INR 285 crores. And the bigger job, the [ INR 830 crores ], we are at 70%. [indiscernible], Bangladesh, INR 855 crores, we have done 80%. And the very interesting think what is happening [indiscernible] there for us is drinking water, INR 2,927 crores, [indiscernible] viral it more by 30%, 40%, that we have done almost 15% in the last year and this year it will further improve.

Then some of the road projects in Telangana and also in Karnataka and [indiscernible]. We have done about 40%, 45% of the work. And there are ones we have already taken up. And then the [indiscernible] is an interesting job, the metro maintenance shop that we have already started immediately. And in terms of the man for deployment today, we have a lot of optimization has gone redeployment and still utilization of the skills available in different segments infrastructure, installation, O&Ms, exports, and contract management, business development, I think we have done a significant excise on iron optimize the manpower. It has almost come down by 10% in spite of the out of backlog and the turnover is going up. That is a is also tomatoes for the better margins. At the end of last year, it was 32,000. Now it has come down to 28,500.

Now I would like to bring up certain things on the major segments as we work. Railways jobs, today, we are doing 8 major jobs about INR 1,300 crores to INR 1,400 crores. And most of the jobs are very pretty well railway and metro jobs and drinking water that is happening in the UP for 3 areas, [indiscernible].

The order booking is expected the original order, which was awarded around INR 2,720 crores is expected to go up to INR 4,347 crores, based on the project approval of the India and [indiscernible]. And therefore, about 2,903 villages will come [indiscernible]. And the good thing is that we have provided 100% drinking water for about 102 villages. Therefore, that the company having diversified and working in different villages.

And we are having a distributed mechanism for managing the various villages with the key managers posted in district wise and area wise, that is yielding results for us. And we have completed last year about nearly INR 571 crores of jobs. And these projects are well structured in terms of payment terms and other things without any retention and there is an advance. And we are focusing a lot on this and because there's so much focus on investment the government had also because of its need for the reagents.

Now coming to the what are the opportunities that will come up down the line. I think a broad figure was the share was INR 10,000 crores. It would be possible based on the track record and the market availability of the opportunities. And there are a couple of things users to understand this.

One is that there is a real of some of the star projects about 5,270 megawatts, one at [indiscernible], then [indiscernible] et cetera. And already, we have entered a monitor. We have taken jobs from the JSPL who have taken this job. We are especially following [indiscernible] Group for the 200 to 600 megawatts and about INR 400 crores of offer has been given, and we are well placed to get to the entire jump of that. That is the leftover job.

And now all a depth expertise is an undertaking finishing job that we had demonstrated in [indiscernible] and also on at this port already, we have mobilized the or this is a revival of deposits, and there is also -- because information on the new green and [indiscernible] expected, particularly NTPC is planning 14 sets. And overall, about 28 are expected [ 60 to 80 megawatts ]. We hope these things will take step to balance the energy mix between power and renewables.

And if that happens, another 21,000 megawatts of new greenfield and gold green plant would come up already delivers quality there doing 8-megawatt that has to take shape. And there are many projects from NTPC also in the pipeline. Therefore, this is an opportunity we are putting based on our expertise.

And the recent diversification we have done in the mining side and the material handling and coal handling we are executing quite well at [indiscernible] and then that should give us a lot of expertise in handling a EPC job.

And there are about 70 [indiscernible] with Coal India itself. And Coal India is investing about INR 50,000 crores. And apart from that, there is a huge emphasis on the capacity expansion of the steel plant, from present 140-plus million tonnes to go up to a 250 million tonnes. And the immediate expense on what is expected is on all the deal the steel plants, for example, JSW, Arcelor Mittal, Monnet Ispat and JSPL. Their plan to invest there about INR 300,000 crores to ramp up the capacity to 60 million tonnes. Of course, the overall government target to enhance the steel capacity to 250 million tonnes by end of this decade that is already there with an investment of $156 billion.

Now the expertise, what we are gaining implementing [indiscernible] projects in [indiscernible], [indiscernible], [indiscernible] and then [indiscernible]. There are significant opportunities in this for the project work, they're mainly structural, mechanical, equipment, piping. And we will certainly take a call on this, and this is a good opportunity to pursue.

In the case of banking water, perhaps there is a significant progress and out of 19.5 crores of households. The balance that we're thinking and to be poor [indiscernible] households, and government has allotted funds of INR 70,000 crores per day. And opportunities we are tracking in Maharashtra in Madhya Pradesh, then Orissa, Karnataka. And we are looking for a couple of projects there. Drinking water base on the experience what we are gaining in that. Then the legal side, the ongoing investments are continued to be there in that discounting the competition is pretty [indiscernible], particularly discounts investments and then transmission investment to INR 200,000 crores and [indiscernible] up.

And the most important thing is the railway. I think we have gained the current budget roads and private, have we given the bulk of the budget out of INR 1,000,000 crores. And we are doing pretty well in both the sectors, railway and roads also. And we have no significant compensation that opiate all these things.

So as far as [indiscernible] is concerned, some of the projects which were not taken up, it would take up in this year. Both in the domestic market and international market. And domestic market, we are pursuing opportunities of more than INR 2,000 crores. And it is possible in the year, we should be able to be on INR 1,000 crores. About INR 200 crores of renewables are there. And then we are already L1 in [indiscernible], almost INR 130 crores . And also in Vedanta, we have taken some 40 crore jobs. So that should give us a reasonable visibility for the ventures improving. And the other important thing is metro projects, for example, what we have taken a [indiscernible] the total government plan the expansion of [indiscernible]. [indiscernible] from 100 kilometers on geometries to 27 stations, that should bring a lot of opportunities in terms of maintenance shops these are our interest now because we've already taken up, and we will be looking at whether the mail work also, we can take up with some tips that we are looking forward.

And these are all very good investments coming up with a good implementation plan and all. And with our expertise, what we gained in [indiscernible] in the last we can yet, perhaps it is doable also. Then balance FGD, around 50,000 megawatts are to be outed. That will be pursuing it. And taking what I told you railway and metro, the roads are also there. Many roads are going on an aggressive basis. And about 14 projects we are looking at it in [indiscernible], Karnataka and we'll see how to take it forward.

Therefore, on an overall basis, we have identified about INR 40,000 crores of opportunities in the domestic market and also international markets. Nigeria, we got a bid they are set up there with O&M.

And Nigeria is a growing country. [indiscernible] will start there. Then Ghana is there. Then Africa, things should open up in a big way. And the Middle East, water [indiscernible] is that plus 400 gigawatt now because of the COVID there was a lone investment, both on the power sector as well as in oil and gas sector. That should take shape now because their plan is to original plan in [indiscernible] region is to ramp up the capacity [indiscernible] gigawatts. And we have got a sound presence in the residing office in Dubai, and we over dozens of plants and complete 100 terawatts of bunch we are commissioned to. And that experience and background obviously should help us in [indiscernible]. That is what I would take to say. Thanks for your time.

[Jami Satish, executive]

Yes. Can we move to Q&A?

[Operator]

[Operator Instructions] Our first question from the line of Dixit Doshi from Whitestone Financial Advisors.

[Dixit Doshi, analyst]

My first question is, obviously, you mentioned -- last year, our order inflow was INR 8,500 crores approx, of which only 1 order was almost INR 6,000 crores. So other than that the order inflow was slightly lower what gives you confidence in terms of competitive intensity also is quite high. So what gives you confidence of almost INR 10,000 crores order win for the next year?

[Sudha Kodandaramaiah, executive]

I think that comes obviously by the improved investment the infrastructure and also the private investment is catching up now because only a lot of investments are the grow sector, now the private investment is also catching up. And really look at the investments are coming in serious success, whether it is a set road, railways, the low-term sideway visibility is very clear. The energy sector also some deposits are getting revised in the summer for once a new core base ponds are also expected about 21,000 megawatts. Then on the industrial side and then oil and gas A lot of the investments are being planned. And the other thing, what I said about the drinking water, still a lot of opportunities there. and then we balance opportunities on there. Last year also, we had a significant time but some of the intake ships , we would have got more also. But now in this current year, the opportunity is what is available and with the experience gained and qualification also gained.

INR 40,00 crores to INR 50,000 crores of opportunities is a good way for us to [indiscernible].

[Jami Satish, executive]

See, more importantly, we set a target of close to INR 10,000 crores last year. So that's taking various projects, including the FGD part, okay. So we did close to INR 8,500 crores, around INR 400 crores got below to this year. So we got INR 720 crores and L1 started INR 1,400 crores. Maybe next few days, we'll add that. So excluding the INR 1,500 crores that [indiscernible]. Of that, the orders like on the projects which are going to be renewed, okay, that is close to a larger number, close to INR 550 crores, INR 600 crores. And international, we've kept because we didn't have much -- at which time we are targeting almost close to INR 500 crores.

And apart from that, the large buyer of FGD that to be awarded. So we are already in advanced stage for discussions to find it. So on that plus the traditional sorry, our and the mechanical put together is close to INR 2,500 crores that's adding up. And water, we didn't add much last year because our city was full now multiple opportunities are coming up, Maharashtra and MP there is still -- we're targeting INR 2,500 crores plus because 2021 almost 4 months back, we added close to INR 3,000 because we wanted to focus on the execution.

So 2022, we didn't add much thing backlog. Now the city was full. Now we intended to add -- the education cycle is growing well on an average monthly we're being close to INR 100 crores to INR 150 crores run rate so now there is an opportunity to add further. So we are trying to add INR 2,500 crore itself. And metal ending, it's a quite large [indiscernible] okay, rightly, we have kept a target of INR 500 crores to INR 700 crores. All we think the number too to be quite achievable.

[Dixit Doshi, analyst]

Okay. And the second question on the Jal Jeevan Mission side. So we have order from UP. I think recently in the last 4, 5 months, many orders were given in the rates as well. Are we building in the MP and any other states?

[Sudha Kodandaramaiah, executive]

Yes. We are aggressively focusing to projects in Madhya Pradesh. Then UP also. UP also, we are pursuing it because we already establish a base. And perhaps Karnataka. Karnataka 50%, Jal Jeevan Mission projects have to be implemented in [indiscernible] lot of backlog there. And the new government has come for us that will get the initiative. And Karnataka, we have a good base.

And because we are bringing Bangalore and then we are doing [indiscernible] on other sates therefore, that should help us to pens, This is a focus area for us just on the experience, what has been gained, and it is a good project to be implemented with strong investment. The government has got keen to invest the money in that. We can give benefits to the overall household. That is why we are on that.

[Dixit Doshi, analyst]

And just Last question on just Jal Jeevan Mission. So how is the competitive intensity over there? And margins in these projects will be similar to what our company level margins are?

[Sudha Kodandaramaiah, executive]

I think we are comfortable with 15% to 18% EBITDA margins, and the PAT will be around on the rationale factor.

[Jami Satish, executive]

Size is quite large actually. It gives the opportunity to -- okay, of course, various fare because the quantum is too large. And the rate at which it's working is quite good because if you see the PVC or the price escalation, not much okay, increase in prices. And it's a short-term contract only 24 months, so we can easily work for 14% to 16% plus, okay. But conservatively, it should at least beat our existing margins, that's what we're working on.

[Operator]

We take our next question from the line of Deepak Poddar. [Operator Instructions] Mr. Poddar, please go ahead and ask your questions.

[Deepak Poddar, analyst]

Sir, I just missed the you mentioned about the execution cycle. So what's the capability we have right now? And what's the rate -- and what is the rate that we are doing right now?

[Jami Satish, executive]

See, now the execution is the bandwidth is well set in terms of the resources at manpower, the equipment base, okay, the infrastructure the manpower base in terms of skill and everything put together. Now it's almost like around INR 900 crores to INR 1,500 crores per quarter we can execute. Because you see like we have demonstrated almost like INR 200 crores -- almost INR 200 close to INR 1,200 crores in a single quarter. Now ramping up INR 250 crores to INR 1,500 crores is well set now, okay? Gradually, we have to see over a period to 24 months, okay. Then the MDO stabilizes, okay, [indiscernible] maybe after, 2026, '27, will consolidate, which are digest to grow and let to restrict.

[Deepak Poddar, analyst]

So INR 1,200 crores to INR 1,500 crores per quarter is our execution capability, right?

[Jami Satish, executive]

Capabilities, it's well set now.

[Deepak Poddar, analyst]

And what's the rate we are doing right now? You mentioned something about that?

[Jami Satish, executive]

It's ranging between INR 900 crores to INR 1,200 crores because to quarter 4 itself, we have demonstrated for close to INR 200 crores. Now the resources in terms of the asset base and all, okay, the range is INR 900 crores to INR 1,500 crores per quarter, we can execute.

[Deepak Poddar, analyst]

Okay. Understood. Understood. And in terms of revenue, I think earlier we were of the view of INR 5,500 crores kind of a revenue visibility this year, right? So that includes the FGD that the order that got transferred from the execution to transfer from fourth quarter to first quarter or it excludes that?

[Jami Satish, executive]

See, quarter -- FY '20 -- FY '23, we are on track. We did what we planned, okay? FY '24, okay, the order book is quite healthy, okay which should be able to convert 37% to 40% plus, okay. So we see this quarterly progress improving each quarter we what we did FY '23. So the order book is quite healthy. So there is high possibility and scope to improve quarter-on-quarter.

[Deepak Poddar, analyst]

I mean quarter-on-quarter, we should see improvement. That's what we are saying, right?

[Jami Satish, executive]

Yes.

[Deepak Poddar, analyst]

Yes. Because I mean 37% of -- 37% to 40% of order book we are looking to execute. So that excludes the MDO order, right, excluding the MDO order?

[Jami Satish, executive]

MDO orders, we are not including yes, you are right because FY '24, maybe a small amount to INR 40 crores plus we should convert. And it should reflect in a bigger way from FY '25, '26 onwards.

[Deepak Poddar, analyst]

FY '25 is INR 40 crores, INR 50 crores, right? That...

[Jami Satish, executive]

No, '24, if all goes well, FY '24 quarter 4, we are expecting close to INR 40 crores plus.

[Deepak Poddar, analyst]

Okay. Understood. Understood. Fair enough, I understood. And a 37% to 40% is in the range of maybe about INR 5,000 crores to INR 5,500 crores, I mean that may be the range when may be working for FY '24? Hello?

[Jami Satish, executive]

Hello?

[Deepak Poddar, analyst]

Yes, yes. Sir, I missed your point.

[Jami Satish, executive]

No. Yes, you're right. That is taking the backlog order book, excluding the MDO.

[Deepak Poddar, analyst]

So that amount about INR 5,000 crores to INR 5,500 crores, right, I mean, in terms of 37% to 40%?

[Jami Satish, executive]

The number [indiscernible] that's the range because I can't be very specific, but there's a range that we should be able to achieve.

[Deepak Poddar, analyst]

Understood. Fair enough. And in 2 years, I think we were targeting about 13% EBITDA margin, right? So are we kind of targeting the same thing as we speak now?

[Jami Satish, executive]

See, in terms of margin profile, you would have seen like last 4 quarters, so there has been improvement in FY '23. And FY '24, of course, there will be some improvement account of various regions like for the quarter mix where we had JV qualification but royalty, we used to say that is coming down, number one.

Number two is like the new mix at the new orders, we are not targeting anything 12.5% to 13%. So this will also help in terms of improving the margins. Having said that, once this MDO stabilized, okay, which we are expecting FY '25, '26, okay, there you'll see that the margin contribution will be in a large larger extent from do. So that will help to push the blended margin. So gradually we will keep numbers improving.

[Deepak Poddar, analyst]

I understood. So once the MDO operation stabilizes, was the steady state margin we can see in MDO operation?

[Jami Satish, executive]

See, MDO, we are expecting anything in the range of 18% plus. Yes. So that definitely should help us to improve the branded margins.

[Operator]

We'll take our next question from the line of Pratiksha Daftari from Aequitas Investments.

[Pratiksha Daftari, analyst]

Just wanted to know what would be the soft orders that will be executed during FY '24?

[Jami Satish, executive]

Yes. So the top orders will include, of course, the FGD, the water, UP, then Yadadri in Telangana, [indiscernible], Maharashtra. Then BMRCL is the Bangalore Metro, then [indiscernible] the second railway. [indiscernible], Udangudi. These are the top orders, which will contribute substantial amount. Of course [indiscernible], Bangladesh, yes.

[Pratiksha Daftari, analyst]

Okay. And so how do we look at margin profile for FY '24? Do we expect to see any improvement?

[Jami Satish, executive]

There is a small marginal improvement, yes, okay? We are seeing the pie increasing, okay, quarter-on-quarter, okay, on account of various regions. Now we can expect some improvement in FY '24 too.

[Pratiksha Daftari, analyst]

Okay. And how about the working capital requirement since we are talking about execution of about INR 5,000 crores, how can we look at the working capital and short-term borrowings for FY '24?

[Jami Satish, executive]

If you see FY '23, in spite of large order book and improvement in execution plus 32% growth, okay? We have kept the control or the region being the net current base, okay, mainly the retention money [indiscernible] other lines is to be kept control payables almost at 75 bps plus. And keeping the cash flow input also on a project level, okay? So we would be able to bring on net current debt to 130 bps, which is a great achievement. We kept a target of 135 honestly.

So we brought this down to 130, which is a best achievement. It used to be 200 bps plus in FY '21 and 54 bps FY '22 that helped us to improve the operating cash flow and the free cash flow. So we were able to control the finance cost and we could able to retain the debt level more or less intact, okay? Of course, it has come down to INR 30 crores to INR 40 crores. So the [indiscernible] is now the amount what we have got from [indiscernible] Andhra Pradesh, INR 42 crores plus we are going to get another INR 20 crores. So it will throw INR 60 crores of additional surplus cash flow to the system. So that should help us to support to the working capital going forward for 12 months, okay? So I don't see much -- I don't see any increase in the depth maybe the finance costs may remain more or less flat or maybe a small increase of INR 5 crores to INR 6 crores. So as an absolute number, it may be in the range of INR 90 crores to INR 95 crores. But as a percentage, you see a drastic percentage coming down. The finance cost will cost related to some significantly.

[Pratiksha Daftari, analyst]

Okay. And one last question. This is I think for contribution of O&M, but overall revenue was upwards of 25%. Do we think we can sustain this number going ahead as well?

[Jami Satish, executive]

Like see, the O&M now, it's -- the education range is close to INR 930 crores to INR 940 crores. This may go up to INR 1,100 crores, okay? So there will be improvement in terms of absolute number, okay? But as a percentage of revenue, it may likely come down because the mechanical pie will contribute this year significantly, and civil pie will also contribute in a significant way because water railway is going up. If you see like the water business is 4% or 5% this said is 8% to 9%. But you'll see FY '24, it will contribute a significant base, almost like 25% plus. And railways will contribute close to 8% to us. So with the mix, okay, undergoing changes, I see the percentage, there might be a slight to fall. But in terms of absolute number, it will go up, madam.

[Pratiksha Daftari, analyst]

Okay. And just one last question. I think what I have understood is that our total water orders from UP were about INR 4,000 crores. Is that amount correct?

[Sudha Kodandaramaiah, executive]

Yes, it was originally, it was around INR 2,720 crores. What happened they give the project report, we are as it based on the excess commotion. That is indicative tenders on which it has been finalized, then the further order will be aimed to be said based on the -- we can stop the work and that has gone up to more than INR 4,000 crores.

[Pratiksha Daftari, analyst]

Was this is already executed?

[Sudha Kodandaramaiah, executive]

No, of the INR 4,000 crores about INR 572 crores was executed.

[Pratiksha Daftari, analyst]

Out of INR 4,000 crores, how much have we executed?

[Sudha Kodandaramaiah, executive]

INR 571 crores.

[Jami Satish, executive]

Close to INR 600 crores, madam.

[Pratiksha Daftari, analyst]

Okay. Okay. Close to INR 600 crores, INR 572 crores, okay. Got it.

[Jami Satish, executive]

Yes, you're right.

[Operator]

[Operator Instructions] We take next question from the line of Prasheel Gandhi from Nirmal Bang.

[Prasheel Gandhi, analyst]

Sir, a question from my end. So for FY '25, what type of ordering to are we targeting even that we are targeting [ INR 100 billion ] for FY '24?

[Jami Satish, executive]

FY '25, we kept the target of close to INR 11,000 crores. The incremental amount, what we're targeting, the pie of going -- sorry, international market slightly will go up because the team has got content and the reduced scope to increase the quantum we could see that some significant amount coming from interest okay? That is number one. And the FGD ordering will continue to be in FY '22 that will be following orders, okay?

But the complete award will take [indiscernible] here. So there will be some opportunity coming in FY '24, '25 too. On top of that, the metal handling and railway metro, we see a huge amount of opportunities. So we have kept an incremental target of another INR 1,000 crores plus. So took a INR 11,000 crores, that's the target.

[Prasheel Gandhi, analyst]

And what is our execution base for FY '25?

[Jami Satish, executive]

So that range is 37% to 40% plus, okay that is something we can take to the opening order growth, okay? Of course, this percentage may not work 25%, 26% because the MDO will kick stock there, okay? So this is excluding the MDO plus the MDO may be another INR 180 crores, so INR 200 crores. And it will be ramp-up slowly over a period of 3 to 4 years, the amount of MDO will go up to INR 600 crores to INR 700 crores per annum.

[Operator]

Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd now like to hand the conference over to the management for closing comments. Over to you, sir.

[Jami Satish, executive]

We have some more developments to come. I could not share the reason being like there are some restrictions from the customer side. Maybe next month, we'll come with some more developments and updates. Okay. So in terms of the order book and the targets that we have kept is on track. The development, we'll update you in next month before the end of our first quarter call, let's catch up on figure. Thank you all.

[Operator]

Thank you very much, members of the management. Ladies and gentlemen, on behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining with us. You may now disconnect your lines.