Ahluwalia Contracts (India) Limited ($532811)

Ladies and gentlemen, good day, and welcome to the Ahluwalia Contracts India Limited Q4 FY '26 Earnings Conference Call hosted by Ambit Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sudeep Bora from Ambit Capital. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of Ambit Capital, I thank the management of Ahluwalia Contracts (India) Limited for the opportunity to host the Q4 FY '26 earnings conference call. To discuss the results, I'm pleased to welcome Mr. Shobhit Uppal, Deputy Managing Director; Mr. Vikas Ahluwalia, Director; and Mr. Satbeer Singh, Chief Financial Officer. Now I invite the management to take us through the key highlights of the quarter, post which we'll open up for Q&A. Thank you, and over to you, sir.

Thank you so much. Good afternoon, everybody. Thank you for joining in on this investor call. Ahluwalia Contracts India Limited, has announced its financial results for Q4 FY '26. During Q4 FY '26, the company has achieved a turnover of INR [ 1,322.30 ] crores and a PAT of INR 80.14 crores in comparison to a turnover of INR [indiscernible] and a PAT of INR 83.16 crores during Q4 FY '25. The company has registered a growth of 8.76% in turnover and a degrowth of 3.63% in PAT during Q4 FY '26 in comparison to Q4 FY '25. EPS of the company for Q4 FY '26 is INR 11.96 as compared to EPS of INR 1.41 in Q4 FY '25. During Q4 FY '26, the company's EBITDA margin is 9.35% as compared to 10.17% in Q4 FY '25 and PAT margin is 5.95% as compared to PAT margin of 6.74% in Q4 FY '25. During FY '26, the company has achieved a turnover of INR [indiscernible] crores and a PAT of INR 264.32 crores in comparable to a turnover of INR 4,098.62 crores and a PAT of INR [indiscernible] crores during FY '25. During FY '26, the company has registered a growth of 11.38% in [indiscernible] and 31.17% impact in comparison to FY '25. During FY '26, EPS of the company is INR 39.46 as compared to an EPS of 30.08 in FY '25. During FY '26, the company's EBITDA margin is 9.52% as compared to 8.34% and a PAT margin of 5.70% as compared to 4.85% in FY '25. Net worth of the company has crossed INR 2,000 crores as on 31/3/2026. The net order book of the company as on 31st March 2026, is INR 21,096.31 crores to be executed over the next 24 to 30 months. Total order inflow during FY '26 was INR 10,257.39 crores. At present, we are L1 and 2 projects amounting to INR 1,620.95 crores. Thank you. We are ready to take questions.

[Operator Instructions] Our first question comes from the line of Shravan Shah with Dolat Capital.

Sir, now we are [indiscernible] projects. So if you can specify it would be great. And -- so now how we can look at the full year in terms of the order inflow? And given that we are already at INR 21,000 crores plus and plus INR 1,600 crore, so kind of about INR 2,700-odd crores, so now will the execution will ramp up significantly in FY '27, '28. So what kind of a number 1 can look at in '27 and '28?

So Shravan, yes, the order execution will ramp up now. We have stocked up as far as our order book is concerned. We are giving a guidance of 15% to 20% in this year. And as far as the order inflow is concerned, target is about INR 8,000 crores.

Including the [indiscernible] .

Yes. .

Okay. But sir, for this [indiscernible] 15%, 20% also seems to be lower rather it should be at least 20% kind of number. So FY '28, can we see a much higher in terms of the execution?

Sorry, come again, I've given you guidance for FY '27, right? So you're thinking that further on, you're asking me about FY '28, is it?

Yes. Even FY '27 is 15%, 20% or rather it should be a minimum 20%. That's what I was looking at.

[indiscernible] order book here or because we are well stocked up of [indiscernible] nearly a percentage point of our guidance, but to [indiscernible] primarily due to what [indiscernible] I don't think, I mean [indiscernible]

Okay. So '28 may be similar kind of -- and then the margins are both we are looking at 10% at least, but actually over 9.5% of full year FY '26. So -- and given obviously the commodity runup because of the war -- so how we look at the margin in [indiscernible]

The margin profile, as I said in my last call, a double-digit indication [indiscernible] and we are nearly there. We are at 9.5%, and this is in spite of numerous headwinds that we faced in the last quarter. Elections which were in early April, March was a write-off on account of the fact that due to SIR and elections in Bengal and a lot of labor left the other parts of the country where our projects are, especially NCR nearly 40 to 50 [indiscernible] in February. So March [indiscernible] slowdown or execution made because the state started facing cash runs. So in spite of these headwinds, we have managed to increase this thing by 9.5%, which is more or less in line with the guidance that I've given last time. And we will cross -- we will be into double-digit margins in this year.

Okay. Okay. And lastly, sir, a couple of balance sheet [indiscernible] advance returns on money and unbilled revenue?

[indiscernible] going to run for this test.

[indiscernible] INR 802 crores. And the retention is including [indiscernible]. And unbilled revenue is [indiscernible]

Sir, just 2, 3 bigger projects, particularly the CST registration. So correct me if I'm wrong. So third quarter order book, and now it seems that a INR 470-odd crore execution has been done. So is there any adjustment in that? Because since the execution is much better. And if it is -- so how one can look at the FY '27, '28, similarly, the Indian [indiscernible] and recently when the center is [indiscernible]

So the [indiscernible] execution last year [indiscernible] are now approved, and the project has picked up speed. We will see an increase in the revenue from this project. As far as [indiscernible] is concerned, this project is a design-build project. The project was awarded to us in January -- on 14 January. So our design is getting frozen, we have begun execution on the ground. The building -- 1 of the 2 buildings, [indiscernible] Bhawan, has been fully demolished, and we started execution, execution and concrete. So this year, we'll see substantial revenue of being accrued from this project also. IGPM, at the moment, the designing is happening, where the work on the ground will begin in the last month of this quarter.

Our next question comes from the line of Lakshminarayanan K G with Tunga Investments.

See, in recent quarters or maybe in the recent years, we have seen a noticeable step-up in CapEx intensity. However, this increased investment hasn't it translated into a corresponding expansion in EBITDA in a significant manner which would expect downward pressure on our structural ROE. If you can help me understand if this lower asset turnover is the new normal of the business? Or because whenever we have been exceptional in terms of return ratios and lower depreciation with disciplined CapEx. Now the higher CapEx is not commensurately increasing the margins. And therefore, it is -- and also depreciation is increasing as you can see. Now is this a new normal for the business that what we used to enjoy maybe a decade back or maybe like 3, 4 years back also, [indiscernible] in terms of return ratios because the CapEx is increasing, and it is not at least a way in which I see in the last 1 year, it is not increasing the margins in general. So I just want to understand, structurally, are we -- is the company is going through a different shift? Are the industry is going through a shift where CapEx is needed to stay in the same place and not excel in the operating margins?

A very interesting question, Mr. [indiscernible] So yes, the last point that you made, both the industry as well as our company is at an inflection point. What we see if you see -- if you track our company also, since we are only in buildings and factories, the size of the orders, individual orders have gone up considerably and the time lines are getting squeezed. What that means is that the buildings that at the scale at which we are operating, the buildings are becoming more complex. So to handle such building is going up, will go up because the required mechanization. That gives further exacerbated or the need for machinery or mechanization is further enhanced because of shortage in labor. What we've been seeing over the last 2, 3 years, that there are various factors which now eventually around the year lead to a shortage of labor. Earlier on, it used to be for a couple of months maybe around the [indiscernible] are towards the end of the year. But now virtually through the year, every month, so the labor supply is disrupted. So hence, we feel or we -- the top management of the company decided a couple of years ago that we would invest in mechanization. The full effect of which, while this is the new norm, right? But the full effect as far as our company is concerned, since we have been at this inflection point, and we've been preparing for it as we have said in our past couple of investor calls, the impact towards the positive side will be seen in the coming couple of years, and our margins will go up. You will see that. They've already gone up in the last year, and you will see them further going up in this year than the following year. More so, when we are -- the higher CapEx also is on account of the fact that we -- not only we are well stopped or we won over the last 2 years, if memory serves me right, we've taken an order into about INR 18,000 crores. And so we are well stocked up and that we are well geared to execute this in the next 3 to 3.5 years, one. Secondly, because of our presence in areas like [indiscernible], of course, being a backyard. Now all these areas have very stable governments and the governments are the same in these states and in the center. So the cash strike or the payment issues that we had faced earlier in estate, we feel they are a thing of the past. So going forward, I think margin -- that's why we are giving you an increased guidance on the margin at the top line.

Got it. Sir, the depreciation would continue to meaningfully increase? Or what would be the increase in depreciation with respect to the -- for the CapEx with respect to the revenue growth because we have an exceptionally strong order book. I just want to understand how do we kind matters of whether effect would grow higher than revenue growth and therefore, higher depreciation. Is that how to think about the next 3 or 5 years?

So as I said, the CapEx in this year, FY '27 will be on the similar lines. We feel -- in fact, a couple of quarters ago, I had given a guidance of CapEx of about INR 500 crores. As we moved along, we've seen, we factored in some headwinds and we factored in how by increasing the efficiency of our machinery, we've been able to reduce the CapEx in this year to about INR 174 crores. And I think moving forward, around INR 300 crores would be the CapEx in FY '27 also. Depreciation would increase, but on similar lines.

No, this is helpful. Just one question. See, if you look at the inflation has actually increased across the board driven by fuel prices. Now since our projects are [indiscernible] and you'll have limited [indiscernible] I think. How do you ensure that the margins are protected or this is something which you have to keep in mind that there is a -- is difficult to negotiate for the price decreases as you execute the projects?

So the answer to this is twofold. One, almost all of our contracts now have a built-in escalation clause to give you -- to cite an example, this INR 3,000 crore contract for [indiscernible], there is an escalation clause [indiscernible], which is based on wholesale price index. So where labor and is also covered and the material increase is also covered. Having said that, what we've seen in the short term, in the last 1, 1.5, 2 months. The WPI has not moved as much or if the movement is not commensurate with the actual increase in prices, especially the metal prices. We have not only us, but the other construction companies have also has represented to the government directly and through industrial bodies, industry bodies that they should take a look at this and the ministry is taking an actual look at how when they principally have agreed to compensate a price increase to the contractors, how they can be more fair. What I can say at this stage is they are also buying their time. They're seeing how long the impact of this war is going to last. So if it is a prolonged impact, I think wherever there is a gap between the WPI uptick and the actual inflation that we will find a way to compensate us. As regards to private client like say, DLF or other large builders or developers like rigged or Maya and so on and Signet Global, all heavy material like cement, steel, raw material, the basic price of procurement is a pass-through, the inflation is a pass-through. So we are adequately covered. Having said that, if the war prolongs for a longer period...

Yes, I'm listening.

Yes, I think somebody was on unmute. So I think I answered your question.

Second question is that, if you look at the last 2 years, there have been challenges, 2 challenges. One is the pollution control thing that actually happened in NCR for 2 consecutive years. And also the labor availability was also a challenge. Now that we are scaling up and I think our order book is much better than it's almost doubled in the last 2 years. How do you -- what are the steps you are taking to mitigate or to notify these 2 big risks which we are actually facing?

So NGT continues to be a risk. But what has happened is that the entire ecosystem is coming together to sort of see how we can mitigate the inefficiency, which is there during this period of 2 to 3 months, one of the things that the developer has started doing clients have started doing is that they pay for labor, which is idle whenever the work is stopped. So that the labor does not run away. And we sort of lose time if the labor leaves the site, then once the ban is listed, we take time for the labor to be brought back. So in effect, if the project stays closed for a month, it takes another month for the labor to come back to ensure that it doesn't leave the site and the impact only is of the day that the project is shut down. The developers or the clients have started compensating the labor through us or either directly or through us. Secondly, projects such as Central Vista, which is now a large part of our order book in NCR is not impacted by NGT. So we foresee a substantial contribution to our top line growth from that project even during the months -- so yes, that is that. Thirdly, as I said, the government is also -- again, the industry bodies, the various clients, contractors they are talking to the government pollution mitigation measures have been taken on site like again, at the Central Vista project. We've got missed [indiscernible] all over the site, along the boundary, along the sensing on the building, so on and so forth. So we are -- all these efforts, I think, will lead to a reduced impact. And hence, the number of days of shutdown, I think, should be lesser this year.

Our next question is from the line of [indiscernible] from Countercyclical PMS.

So if we see our net -- our order book has doubled over the past 2 years, but our revenues have grown at less than 9% CAGR over the past 2 years. So what I'm trying to understand is what has changed in the current year that we will do approximately double the revenue growth that we have been doing in the past 2 years because orders were anyway not a issue?

Yes. So as I said, most of our slow-moving projects, like, say, somebody asked a question about CST, CSM, which was until recently, our largest -- one of our largest order wins that for the [indiscernible] was a slow-moving project amount of the designs getting changed and approval getting delayed. Now that has picked up speed. Secondly, projects in states such as [indiscernible], which were slow moving because of political upheaval. Now all these states have a stable government. So there -- these projects are, again, I think, will move much faster. Thirdly, with a lot of our orders such as large orders such as the 2 airports that we are doing. Again, design is the thing of the past now. We are looking to complete the Varanasi airport actually ahead of [indiscernible] because there are elections next year that [indiscernible] also will be closed out in this year. [indiscernible], which is a new order win for us. Their designing is happening. And 2 months down the line, we'll be breaking ground. As I said earlier, Central Vista, which is our largest order win [indiscernible] there, we've already broken ground, and the time lines of that project due to the nature of the project are extremely -- it's a fast-moving project, where it would be logging a turnover of close to INR 100 crores to INR 150 crores a month. So all this will contribute to the growth projections that I have given at the beginning of my call.

If we -- if I remember correctly, 2 years back, you had said that to the question why our margins had come down from low double digits to low teens to basically single-digit margins. So you had said that once the private sector order book becomes the land share of the business, so margins will again go up. So now that has happened now, I think over 60% of the order book is of private clients. So now at the time of bidding, I mean you must be keeping some margin in mind before bidding. So I mean, on this order book, when we execute it, will we be able to reach that kind of margin?

As I said during my last call also, that we will -- the margin will go up, and we will be near about double digit or we will [indiscernible] we are nearly there. So in the last 1 year also, as our private sector has gone up exposure, we have increased from 8.3% to 9.5%, as far as EBITDA is concerned. And as I'm saying, going forward, the further increase will be well into the double digits now. And I had also said last time, the blurry days of 13% to 14% are the teens, so to say, or -- I don't think there are too many factors which are beyond our control. So I don't think in the short term, we can -- we will be getting there.

Okay. So now that [indiscernible] margins are [indiscernible]. So basically, what has changed fundamentally in the industry that the margins have come down because, I mean, one would have expected the operating leverage to kick in? I mean, when we were doing 1/3 on for the current revenue base, that time, we were doing 12%, 13% EBITDA. And now we triple the revenue we are doing 9.5%, 10%?

So if you were to see, this is an industry-wide phenomenon, even if you were to -- all of you would have done a peer comparison, we have done it. Not only now last few quarters, we're doing, we are consistently in the higher bracket of the kind of results or margins that we are declaring, right? This is an industry-wide phenomenon. Part of the reason is that the industry is growing, the CapEx is growing. The skill levels are actually deteriorating. Labor shortage is increasing that's why I mentioned that this industry is at an inflection point. While we are aspiring or aspiration to make buildings at par with those being made or having been made earlier in the developed part of the globe. But the skill levels don't exist. . So I think the government or the developers all the contractors, they are [indiscernible] now. Hence, more and more mechanization is happening. But it will take time. Even with the mechanization, we need crane operators, trained excavation, activated operators, pump operators, so on and so forth. So there is a skill shortage across the board. And this cannot be upgraded at the press of a button. This takes time. The margins have come down across the board.

Understood, sir. Now sir, what is the net cash that we have?

Net cash [indiscernible] This is cash in [indiscernible] INR 817 crores.

Understood, sir. Sir, so now in way back, like in 2008 hours, 18 years back, our stock price was INR 350 and now it is INR 760 so basically, the shareholders have -- the wealth has grown by 4%, 4.5% CAGR, which is less than the rate of inflation. And there have been no significant dividends also. So -- and now that we are in a very comfortable net cash position, sir, don't you think we should do a big share buyback so that the number of shares can reduce and whatever future growth gets divided on a smaller equity base and the government has reduced taxes on a also -- so because ultimately, we are debt-free, so then why just subsidize banks by giving them low-cost deposits.

Look, our industry has always been at the forefront of cycles. And the cycles at times, it's difficult to predict. 3 months ago, we were thinking that we were riding away and all of a sudden, the war hit and the future is now quite uncertain. So during such time, it's always better to have awarded with you, which -- this is what our past experience will start up. During the last downturn, when a lot of our peers sell by the wayside, we could survive the downturn. And we could continue to grow. So at the moment, the share buyback is not in the [indiscernible]. That's not even across the mine.

But now my last question is, sir, that are we thinking of putting up a precast facility especially in the NCR region, where we have a good business for the same reason of like labor substitution and so on?

We are internally debating on how to use technologies, which are being used in more developed nations, precast, preengineered buildings, precast building these are things and also how to do pre-engineered which is as far as MEP is concerned, all this is being looked at research. But for this to succeed, you need greater standardization. We are in active talks with a lot of our large clients there, we are sort of convincing all constituents of the ecosystem to look at standardization so that more and more things can be done off-site and got to site in knockdown conditions. So this is something which is not something which is a short-term solution. As I said earlier, upskilling would also form a key part of all of this. going forward over the next 2 to 3 years, yes, some of these will be brought to use in a lot of our projects, but it's not something which will be seen in the next year, 1.5 years.

Our next question is from the line of Amit Khetan with Laburnum Capital.

Just wanted to understand on your guidance of 15% to 20% growth and double-digit margins. To what extent are the current macro headwinds sort of factored in your guidance? And what are the potential factors which could sort of lead to under delivery either on execution or in margins?

At micro level, I think we factored in quite a few quite like political instability, as I said, in states, that is something now seems to be a thing of the past. The only thing which can derail this is the impact of the war, if this war is prolonged. And India's fiscal performance or financial performance or India in years gap, it widens the trade gap, right? And that is something which is beyond our role. Otherwise -- and that will add the [indiscernible] also. Otherwise, I don't really see any other reason which can stop us from meeting the guidance that I have given.

Fair enough. Just wanted to understand how does the -- can you just explain a bit in terms of how the impact of the war impacts our business, either directly or indirectly?

So you know what -- began, sorry. The first impact, which was the immediate impact was the prices or the lack of availability of LPG cylinders, which directly impacted labor. The labor ran away to their native places because the UPG to cook their food, so that was an immediate impact, and labor is a key resource today. In fact, as I mentioned in an answer to the earlier question that today, we're facing a huge crunch as far as skilled labor is concerned. So that would direct impact. Now going forward, the price of fuel, this also now has an indirect impact towards inflation. Thirdly, supply chain is badly disrupted. A lot of materials or at least the component, say, to give you an example, electrical panel. Now switcher is not available. So the delivery of, say, a panel from the time like the order was placed if it used to be 2 months. Now it is not less than 4 months. And so there are delays everywhere on this account. That has an impact on our overheads, on our IT fees.

Our next question is from the line of Parvez Qazi with Nuvama Group.

A couple of questions. First, you said we are looking at adding about INR 8,000 crores of orders in FY '27. So I mean, in terms of your target, would these be more towards private sector or government sector. Also in terms of segment, will we continue to kind of stay away from the residential orders and focus more on commercial institution orders? Just wanted to get some color on that.

Yes. So the first question answer to that is, it would be in line with our broader reason overall vision of having an equitable split as far as our client list is concerned, so it will be half and half tentatively. As regards the residential orders in NCR residential is not a focus for us. But in the southern part of the country or the western part of the country, we are not averse to picking up residential orders with clients who are stable. And which was the last question that you ask, sorry? Have I answered your question? .

You answered my question. Second question is -- and I'm sorry if you have given this data, what is the quantum of fixed price orders in our order book currently?

This is 11%.

Sure. And lastly, I mean, in view of the significant amount of volatility, I mean, both external as well as even the domestic operating conditions and which you talked about [indiscernible] shortages and NBP ban and so on and so forth, how is the competitive intensity in this segment now? Has it increased -- or do you think people have gone away from the segment witnessing are there? Just wanted your thoughts on that.

So while last quarter, when we spoke, and I sort of took the last call, the competitive intensity was high, over the past couple of months, there is a bit of a status quo for everybody or each constituent of the ecosystem is trying to evaluate where we are headed, the private developers have also slowed down the launches of fresh launches and the government sector also, as I said, there was a state of elections in various states. So the machinery, as such, over the past couple of months, was slow, was moving very, very slowly. So it would not be prudent for me to sort of predict or project where the competitive intensity is going -- is headed. I think over the next couple of months, people will buy their time.

Our next question comes from the line of Vaibhav Shah with JM Financial.

Sir, just half on margins. So you mentioned that we are expecting a double-digit margin for sure in FY '27. So given the headwinds in terms of the rising raw material cost and the labor availability of big challenge, so what gives the confidence of that 10% plus margin? Is it the mix of the order book right now?

It's the mix of the order book, both in terms of private public sector. It's also how the order book is spread geographically. And thirdly, also because 89% of our order book, the escalation clauses are in build. And so yes, these are the 3 Central. And more of our large orders, the [indiscernible] project, be it the DLF project, the escalation clauses or the majority of the volatile materials are covered. .

Okay. So if we look at the top 3 projects, so what kind of execution are we targeting in FY '27 from [indiscernible] and the Central Vista project?

So CSMT would be around INR 600 crores. The Central Vista would be about INR 1,000 crores. And the third one, which we mentioned earlier.

Our IGPM, as I said, the designing is it would not be prudent for me to comment on that. We've kept our target modest as about INR 100 crores and [indiscernible] You asked about [indiscernible]

[indiscernible]

Yes. [indiscernible] would be to the tune of about INR 200 crores. .

Sir, if I look at the IGPM guidance, so we were targeting a much higher revenue from the project to any particular issue on it or are you seeing a delayed starting execution given that gaming is going on?

Yes. As I said, we will start towards the end of this quarter, but there are certain changes in design, which are happening there. That's why we've kept our target modest conservative in terms of our projection on the top line from this project.

Okay. So secondly, in terms of depreciation, so it was around INR 29-odd crores in Q2. Do you see this trend going forward? .

Yes, that will be on a similar line in partner to that already get to [indiscernible]. And according to INR 250 crore to INR 300 crore, we are planning for the CapEx under last year. And the reason would be according to that perfectly.

And lastly, on the working capital, we have seen some increase this year, especially in the second half. So when looking into other current assets, it has jumped up significantly from [indiscernible]

[indiscernible] unbilled revenue retention money, that this is unbilled will increase to [indiscernible] And our working capital days [indiscernible] This is -- in the last quarter, there's a 103 days and [indiscernible] and last year, you were talking about this was around.

[indiscernible]

But definitely, but this is an airline with our [indiscernible]

Yes. So we see some reduction in '27 or it will be [indiscernible]?

That is -- I think that is standard [indiscernible]

This is similar level in forward?

Yes.

Okay. Okay. Sir, lastly, in terms of -- since the large part of the elections have at the state level have been done during this year will be completed. So labor, do you see it should be better compared to what it was last year?

Look, last 3 months have been particularly bad for labor. I think going forward, things will improve. But labor shortage is here to stay. As I mentioned earlier, these skills, there is a deficit of skills also -- and then the labor is only coming from a handful of say, 3 or 4 states only. And construction pipeline is increasing exponentially. So this is a problem that we will have to grapple -- continue to grapple with. But we are looking at more mechanization. We are looking at upscaling and we're looking at standardization helping more mechanization. So all the constituents of the ecosystem are coming together to see how we can come back to this. But over the next 3 to 4 years, this is a problem that will be there. It's here to stay.

And sir, any payment challenges in particular states?

At the moment, there were challenges in [indiscernible] over the last 4 to 5 months. the state machinery was [indiscernible]. And as we've seen, generally, 3, 12 months do before the elections happen or are rated to happen, everything slows down, but we've seen an uptick for the election there also as far as the [indiscernible] our funds is concerned.

Our next question from the line of Mahesh Patil with ICICI Securities.

My first question is [indiscernible] you highlighted on account of [indiscernible] So is it also impacting our pipeline [indiscernible]?

[indiscernible] is impacted, but we are not that affected because we are well stopped up when the order book. So going forward, we are sort of biding our time. We are waiting and watching and we are only picking up going forward or picking up contracts with either our existing clients or while established clients with deep pockets. So we are not that affected. But yes, the pipeline overall, as I said, in answer to an earlier question, there is -- everybody is sort of waiting and watching and trying to see iterate as far as the word is concerned.

And sir, we have, I think, reported this time our order [indiscernible] were also given to the past year numbers. So can you like -- the order inflow for this quarter if we compare -- if you want to compare it with last quarter or last 3 quarters?

This quarter, we have not received any kind of product during current year, you are talking about?

Q4, I'm talking about Q4.

[indiscernible] let me get back -- so you're asking for the order inflow in Q4. Is that what you're saying? Quarter 4 comparison to [indiscernible]

Yes, that's correct.

Our order flow is [indiscernible] regarding FY '25 quarter call, you [indiscernible] Maybe you can reach out directly to our CFO, Mr. Satbeer Singh [indiscernible]

Our next question is from the line of Salil Desai with Marcellus Investment Managers.

Sir, just to clarify, you said the Q4 order was INR 43 crores.

INR 300 crores.

INR 300 crores. Okay. All right. Sir, second on the question as your execution in the resolution real estate segment. [indiscernible] mentioned until launches has been slowed. And looking at the execution in a couple of projecting global and white line, we haven't seen too much progress in the last 3, 4 quarters. So is there a broader issue here, there project-specific slowdown in execution?

As far as both these products, the work on the ground has picked up in real earnest. Whiteland, they had due to frequent portal changes as some of you would know, first, there was a revised NDMA code, right, which was later discarded and the government ordered to go back to the original core. So a lot of developers went into redesign [indiscernible] to optimize costs. So that is behind us. In white line, we have begun work on the foundations, concrete casting is [indiscernible] also work has started on all the tower. I think we are doing towers there, a total of 5 million square feet of built-up area and work has picked up there.

So broadly, you're not going to see the sector as a whole like some sort of [indiscernible]

As I said, the sector, definitely, the prices at which these developers were selling, the flat of the war, as I said, has impacted each in every constituent of this ecosystem. It's really contractors, but also developers who are biding their time, and they are waiting and watching to see what happens going forward. So everybody is looking to conserve costs and the sentiment is also muted. So that kind of effect is there. But specifically talking about the projects that we are doing, you mentioned to Signature Global as well as pipeline. We see no reason to believe that the client is looking to slow down the project that we are admitting.

Our next question comes from the line of [indiscernible] with countercyclical PMS.

So do we enjoy any advantage in terms of the procurement side over the competition?

What -- [indiscernible], what kind of advantage?

So costing, like I mean, since we have a large size versus most others, so do we have better credit terms versus our suppliers versus the competitors with our suppliers and vendors?

We would like to think so. But to answer your question more directly, yes, I think we feel we are handling supply sales issues to the best of our ability. And I mentioned earlier, if you're looking to cut down the time line of, say, a project like [indiscernible] Airport, where our stipulated date of commission is June '27 but we are looking to complete it before the elections are announced by January '27. So in such challenging times, if we are aspiring to do that, I'm sure we would be handling the supply chain constraints in a fair decent manner. So given the challenging times, I think we're doing an okay job.

And sir, amongst all the competitors, who would you consider your top competitors, some 2 or 3 names?

So L&T , as I said, L&T B&F is competitor, [indiscernible] is a competitor, [indiscernible] competitor, [indiscernible] competitor [indiscernible] also now. They've gotten back into buildings with teams. So these are 4 or 5 people who build on alongside us on a lot of projects.

Sir, now since most of these players have a very good overflowing order books, sir, so do you expect the bidding intensity to pull down and at least for us now that we have a very comfortable order book. So going forward, whatever bids we will put, I mean, will we be selected in those that only the high-margin orders you would bid for? Or like what's the outlook on the bidding intensity?

I said that Keshav earlier also that we are very choosy. We are also biding our time, and we're doing -- not only doing a due diligence. But yes, we are looking to increase our margin profile going forward.

Now, sir, lastly, if, let's say, a customer is delaying the project on his side by not releasing the funds after every milestone is completed by us. So then what is our strategy? Do we stop the project? Or do we put our own capital and complete the project and wait for the plan to release funds in future? Or like how exactly do we go about it? .

So while there are some standard guidelines, there are SOPs on half within the company and how we have to operate. But this starts from the time that we choose on which project to bid. We check the customer profile. We do our due diligence. Having a certain set of factors are there. which lead our people to decide on the go, no-go. And once we bid for a job once you are successful, then our endeavor is that we try because the costs are -- our IDC is are pretty high. Our endeavor is to work at a steady pace as per a targeted schedule. We are in constant dialogue with the client when there is a slowdown or is an expected slowdown. And -- but if we feel that there is increased turmoil as far as the financial position of a client is concerned, then at time we slow down also.

So what is the maximum hit that we have taken in the past on any single project due to the customer either going bankrupt or getting into financial difficulties or...

That's a very general question. You would be to reach out to our CFO with a slightly more focused query if I used to say the details on our write-offs are there for the past 2, 3 years on a few of our clients who have gone under the likes of [indiscernible] or the likes of HDIL. You be the part of our concall or investor calls over the last 3, 4 years. And if you follow this industry closely, then you would have the data. We can provide that data to you. But all that I can say is that the way we do our due diligence, I think we've survived the slowdown much better than a lot of -- and whenever we have seen in the past that the client is facing increased turmoil, we've sort of engaged in a matter we've taken real estate inventory of them so that our risks are mitigated.

Our next question comes from the line of [indiscernible]

I just [indiscernible] on gross margin during the quarter was relatively low. How much this is due to inflationary pressure?

So again, a number of factors, the [indiscernible] gross margin being low. This was -- we built up because of the order book, enhanced order book, we've built up our costs, be it on account of increased staff primarily on increased on account of increased staff as well as the salary enhancement the increase. So that -- but there was a slowdown. As I said, the war started in February and then elections also there in April. So the impact started in February for that also. Then in January this year or the last quarter, Q4 January was impacted on account of [indiscernible] all that led to our top line would have been much higher if these impacts would not have been there. So our IDC led to a decreased margin. And then, yes, inflation also played a part, but not as I said, a lot of it was covered by the escalation clauses in most of our contracts.

Okay. So what is the time lag for recovering that higher inflationary cost which you built in the escalation growth?

Generally, it lagged by a quarter. WCI is -- so there are 2 kinds of clauses which are there. On the government sector side, it's the WTI, which once the index is published quarter-to-quarter the billing, which is there is sort of the enhancement has worked out. And on the private sector side, it is the volatile materials like payment steel great sand, it is more or less immediately.

Month-on-month.

And as earlier con calls, you mentioned that we take the employee cost and our increase in the month of Jan or Q4. Does it take this year too? .

Yes, we did, actually.

Okay. Got it. And last one is that the CSM total order value has been decreased. What's the reason for that?

That said, the GST has been factored in that. That's because of earlier, the total amount was [indiscernible]

All the figures that we've given that these results are without GST.

Our next question is from the line of Madhu Rati with Countercyclical Investments.

I just wanted to understand what kind of IRR or [indiscernible] we expect with these mechanization projects because -- on [indiscernible], you mentioned that meaningful benefits to our margin will be 3 to 4 years down the line. So whatever CapEx that we have done in the past 2, 3 years and the [indiscernible] as you're doing this year, how should we look at it from a payback or an IRR perspective?

So the IRR should go up. It will be very difficult to give you an absolute number. But the enhancement should be between 7% to 10% because our hiring costs will go down.

[indiscernible] would put compared to.

Generally, the life of an equipment is taken to be out 4 years. And so the payback would be in about 4 to 5 years.

But you can say [indiscernible] are taking the life cycle is around 4 to 5 years. But for the other assets, we are taking a cycle around 7 to 8 years also, depending upon the life of the assets. .

Sir, so when the IRR enhancement, is it that also for the current projects, if we get a 20% IRR, whatever mechanization projects that we're doing that should increase by additional incremental delta of 7% to 10%? Or so how should I look at it? I'm not very clear on the enhancement part of IRR.

I don't understand your question. So what I am saying is that to increase the CapEx that I'm doing, the rate of return on account of that CapEx will go up by about 7% to 10% savings.

Basically, we work on the EBITDA and other kind of factors. So you can speak about the EBITDA outlook, please?

Just how much EBIT has been [indiscernible] 3% to 4% EBITDA margin improvement than you expect over a 3-year period or [indiscernible]

No, no, no. Not at all. No, not at all.

Yes. So frankly speaking, I'm a little confused about this question. I don't know if you could articulate it in a slightly better form, maybe I'll be able to shed more light on it.

Yes. Sir, so [indiscernible] I think in the past 3, 4 years, we've been close to INR 400 crores, INR 500 crores or more than INR 500 crores [indiscernible] will be doing additional INR 300 crores this year. So -- but there are no meaningful improvement in our EBITDA margin or employee expenses. However, how should this -- whatever investment, how should lease revenue and ask, how should we flow to our margin? I'm trying to understand on that.

So look, I did mention earlier, right, that the industry is at an inflection point due to a huge shortage of labor and due to the complexity of the building, getting increased exponentially, we are -- the industry as such is going towards more and more mechanization. 10 years ago, you would only see a handful of crane or not every project has a train. Now every project has 4 or 5 cranes. If you see the aero city, the projects that we are doing, we have 15 tower cranes there, right? The downtown project that we're doing for DLF, we are having cranes there. So what I'm trying to say is the nature of the building. If every building in NCR or in Gurna, is 40, 50, 60 story. It can -- earlier on, the building used to be 4, 6 or 4 story. So they could be done without tower cranes. Now not only tower cranes, you have [indiscernible] are state-of-the-art passenger oil, which take up not only building materials, but also people each passenger rail cost about INR 50, INR 60 crore, INR 70 lakhs, depending on whether it's [indiscernible] case. So it's very difficult to say if you're putting a tower crane, are mechanizing and putting passenger is that there will be a corresponding increase of projected increase in EBITDA by a percentage point or 0.5 percentage point. All that the industry is changing very rapidly, plus we are forced to change on account of labor shortage. So it will take the true benefit of these things will take time to accrue. Maybe 4, 5 years, the industry will mature up, right? There will be greater standardization. We would use more industrialized techniques. We would do more work upside and get these in a knockdown condition to side, use machinery to erect it like we do in [indiscernible] so I don't think there is any metric which we can use a yardstick, which we can use to say, okay, we've invested INR 20 crores in tower cranes and batching plants and concrete pumps and this will straightaway improve our EBITDA by 1 percentage point.

Got it. Sir, sir, the [indiscernible] what I understood was because of the CapEx intensity for these projects increasing over a medium term, there should be industry consolidation and some amount of margin improvement from that. Is that a fair understanding?

Over the long term, we are any step that we take, say, tomorrow for instance, everybody is talking about the AI. If I start using AI to start analyzing my output, be it a machinery or labor. I can't say I'm doing it and the impact will be visible in my EBITDA immediately. All these steps that I'm taking, be it for mechanization, be it for digital transformation or any other company, which takes these steps, they are with the long-term goal of increasing efficiency, right?

Sir, just a final question as a shareholder, [indiscernible] a share buyback.

Our next question comes from the line of Lakshminarayanan KG with Tunga Investments.

See, we are in a very good vantage position in terms of our order book. We're almost 2x from where we actually started some the visibility has actually meaningfully increased. Now how this is changing our bidding filters? So specifically, are we actively walking away from lower-margin contracts? And what specific margin threshold you are actually applying when you actually walk into a new order? And also, how are you sensitizing the -- your entire sales [indiscernible], which has actually done fantastically last 2 years. How are you asking them to kind of pick and choose and not just push for bidding or even winning the proposals to the management. I mean how are you using this advantageous position to your advantage that incrementally the ratios and the margins only would get better?

That's a very good question, side of questions with elections. So as I mentioned earlier, we have a series of metrics which are regional tenting departments and tenanting department on the central head office. There is a common set of metrics, which our potential clients when they call us to bid, we put them through those metrics. And then a decision to go or no go first is taken by a regional hedge. Recommendation is given by them. And then they are passed on to the top management, namely Mr. [indiscernible] or myself. And then we decide to whether to go ahead or not. So as far as margins are concerned, we are actually walking away from a lot of projects, even with existing clients. where we've told clients that we don't want to overexpose ourselves if we feel that they are impacted or potentially going to be impacted by the slowdown. As far as the margins are concerned, we've actively -- as I answered earlier, we are bidding when we are bidding -- most of the items are standard, right? When we're bidding now, we have increased our costing profile, be it for labor or be it on account of staffing or other IDC costs. So we are factoring in the enhanced cost that we are facing on a day-to-day basis. And that -- and also our profit margins by a couple of percentage points, if not more, depending on the project profile and the competition intensity that we foresee.

Got it. And a couple of years back, you are smaller than what in terms of complexity as well as revenues and order book, right? Now in the last couple of years, the complexity has increased with multiple type of projects, large projects, and you admitted that the projects are even more complex. And so the way in which you are providing guidance also has to take into account all these complexities. And for the last 2 years, there are a lot of things which are outside your control, which actually center in the deviation between the -- what you -- or the guidance you gave and actually the numbers as reported, of course, they're all external to you. Now in this context, right, how are you tempering the expectations and how are you improving your guidance sharpness so that there is less amount of perceived difference between what you say and what you deliver, therefore, how the market and investors should react?

Again, a good question, but I'd like to sort of start by giving my own opinion on what you've said. By and large, we've always been very conservative in guidance, and we sort of tried to -- we more or less been able to achieve what we've guided in spite of headwind. Secondly, if you were to do, you already must have done a peer comparison below our results of the last financial year or before that, we've constantly outperformed a lot of our peers. Having said that, to answer your question in a more direct manner, as far as a lot of factors other than the other than the impact of war, while some impact is already factored in, in the guidance that I've given. But most of the other factors that impacted our performance or the headwinds that we faced in the last couple of years, we seem to -- they seem to have been covered. A lot of headwinds were created by elections now and different government being there in the states that we are working in and the one at the center. That seems to have been taken care of now. Secondly, our order profile or order mix maker is more equitable now. Thirdly, we have a lot of fast-moving projects in our order book now, Central Vista being one. totally, our slow-moving projects are lower or they've started moving CSMP being a case in point. So all this has led to the guidance that we have given during the course of this call.

Yes. I mean I'm just wondering whether providing guidance itself is a good thing because of the sheer complexity and a lot of things have moved away from your control, right? So given that, is it even [indiscernible] that giving guidance itself is like. .

Excellent observation. I wish more of your [indiscernible] and I've always sort of struggled to people put words in our mouth and say, why are you being conservative? I think the nature of our industry is such that we are always at the forefront of a cycle. As I mentioned earlier, 3 months ago, we were extremely [indiscernible] and we would have -- if we would have gone back in time and this call was held 3 months ago, I would have -- without batting [indiscernible], I would have given a 20% growth guidance. But all of a sudden, the scenario has changed. And what people don't factor in our buildings are -- or even BNS has become very complex. A lot of our projects are EPC projects, supply chain is badly, badly disrupted. It's not only about getting concrete or cement or steel, it's about panels, it's about other MEP products, chillers or transformers so on and so forth. And a lot of components of these finished goods coming from overseas. So yes, you are very right that we are more prone to disruption or headwinds now.

The next question comes from the line of Shravan Shah from Dolat Capital.

Sir, these 2 L1 projects, if you can specify, which are these 2 projects and when the [indiscernible] .

So Shravan [indiscernible] order. And so it will not be possible for me to comment on when that be likely covered -- likely to be award.

But is there also a possibility that it can be rebidded or can sell?

So that possibility is always there because it totally depends on the market conditions being what they are, escalation being what it is, though there are escalation clauses in build, but once they reach an award stage, if they reach an award stage, we would also like to, I would say, on whether we would accept these orders or not depending on how escalation has worked out. So yes, that possibility is there from both sides.

Okay. And broadly right now in terms of for us, the big pipeline would be cross INR 700 crores, INR 1,000 crores or even much higher?

It's about INR 8,000 crores.

Sorry, INR 8,000 crores, you say.

Yes.

Okay, okay. And just -- so I was trying to understand why so much questions on the margin -- so just to give you one more perspective that because ultimately, all the investors, whatever their expectation, they want to build in whatever the numbers the volatility or the sensitivity is differently high for us in terms of the margin. So let's say, the 1% margin, if it is higher or lower 12% to 18% kind of variation is that at the part level and that's why the more questions. So everybody is it trying to understand visa this 10% EBITDA margin that we are looking at, whether it can go to 11%, 10.5% or on the lower side and 9%. So that's the main thing. So in that sense, everybody is just trying to understand. So -- and whatever you have explained given the -- we are much better comfortable in terms of order growth a couple of projects around now out moving broadly, let's say, even FY '28 also, we would definitely would be doing kind of a 15%, 20% kind of our revenue growth. So in that sense, the possibility of 50 bps kind of improvement would be higher versus going lower? That's the way one can look at.

I think you've articulated it very well to [indiscernible] But we've seen [indiscernible] risks here, headwinds, [indiscernible]. A lot of those headwinds seem to be a theme of the past. And I'm quite confident [indiscernible] have achieved [indiscernible] that sense on the fact, [indiscernible] and a lot of these orders are fast-moving orders for [indiscernible] geographically present at Waha stability has [indiscernible]

Our next question comes from the line of [ Ankit Jambusar ] who is an investor.

I want to ask a couple of questions. The first question is that there have been news in regarding to the poor monsoon this year. will that impact our business in any way?

Well, I don't think so [indiscernible] until it has -- look, people -- the reports are that it will be a poor monsoon, and it may lead to an impact on the economy first. So by the time that it trickles down to the projects that we have on hand, and I don't think there will be much of an impact.

Sir, second question is regarding Central Vista project. So is there anything in terms of -- you have already discussed that, I think the first level of execution has started. Is this comparatively, I mean the scale would be much higher, but is that comparatively a smoother project from an execution standpoint, looking at once we are sort of started to work on it because we have projected a higher number for the entire year, and it has that NGT clearance also. Do you see any unexpected sort of variables coming into this project execution like we had of the past projects that were of a different nature, and this is a particular nature?

No. I think this project, as you yourself said, that, a, it was not impacted by NGT. Central Vista all projects, the government is extremely aggressive on the time line because they need these buildings. This particular building that we are doing or 2 buildings that we are doing -- this will house the Ministry of Finance as well as the Ministry of Defense. So the government wants these buildings as of yesterday. Money, obviously, is not a problem for the Central Vista project. So I don't see any challenges other than the fact that, yes, these are extremely complex buildings. But the advantage that we have is that end-to-end, it's an EPC contract and a lot of activities on most of the items that go into executing this are going to be done by our in-house other than highly specialized items. So we have greater control on the output on a month-to-month basis.

Sir, last one question I have. In the last con call when we were discussing about the residential projects, you discussed about CapEx, which we are doing, especially for purpose of the long and in the tall buildings. So now you just mentioned that outside NCR were still open to have the residential buildings. And in the context of the margin and the other discussions which we had in the call until now, I just wanted to check if we have those CapEx or those machineries with us and with the capabilities which we already have. Does that give us the advantage in terms of the competitive advantage, either at the margin level or at the clients preferring while they are -- they want to execute this tall residential premium billing.

It definitely does because as it is the entry threshold of barriers, the bar has been raised as far as building construction goes the very fact that it requires any mechanization for which CapEx is required, we require a stronger balance sheet one. Secondly, the pedigree in terms of the past -- the criteria -- meeting the criteria for qualification is also higher. Not everybody has the criteria or everybody meets the criteria. So yes, that definitely gives us an advantage. So sector, there are only 4 or 5 companies who sort of -- because the private sector large developers, they have their own criteria. Government has a set of defined criteria. But in the private sector, it's more to do with the person even franchise. I won't say [indiscernible], but is a choice of the developer or the top management and the purely go by the delivery of the potential bidders. Successful delivery. Let me put it back.

Next question is from the line of Vaibhav Shah with JM Financial.

A couple of data points. You mentioned that balance was around INR 802 crores. So what will be the intending portion of that?

Let's say, 37%. .

And you see this number with any points or you can increase further in the next couple of years?

I think so that the government project is interest bearing. And more or less, because of 38% is the government order book, that the [indiscernible] also there. So we [indiscernible] It will not go up, it will stay at the same level.

Okay. Sir, lastly, what will be the margin money as of March '26?

Just margin money you are talking about?

Yes.

This would be around -- it's around INR 200 crores.

Our next question comes from the line of [indiscernible] an Individual Investor.

Yes. I just wanted to ask one question on the -- in the relation to India Jewelry Park. Sir, what I've realized over the last 1 year with various observations. This project has been going in terms of the time line due to various reasons. And I just wanted to know, is it related to a design of the project? Or is it related to the decision-making part of the client? Because there were India, U.S. trade deal challenges where India Jewelry is one of definitely a factor which got impacted. I mean last con call also, we discussed that maybe by April will start with execution and what I have understood or what I've heard in the call, correct me if I'm wrong, is that we will be able to do that, we'll be able to start this by this quarter -- last month of the quarter? So do you see any other uncertainties at the client side? Or is it more related to just a matter of time in execution of this project?

So [indiscernible], the project has been derived for some administrative business [indiscernible] of a change in the [indiscernible]. This now has been built in property the excavation work has started at sight. We normally applied all the licenses and out. We are expecting to start growth or soon after the mobile nonsense. [indiscernible] And we are still awaiting a formal go-ahead from the client growth. But [indiscernible] the client has said that [indiscernible] process because it's a [indiscernible] commerce or e-commerce. So whatever permissions we are waiting because the [indiscernible] by the government of Maharashtra to some administrative alliance aligning is happening which you have [indiscernible]

Sure, sure, sure. And just one point, we have guided for 15%, 20% revenue growth this year. So last year, after quarter 2 where we had definitely much stronger view and then maybe because of NGT and the other disruptions which we have faced in the last 3 months. So this 15%, 20% is what we are seeing for the coming year the quarter-on-quarter also, do we see this level of growth over the last year? Or we see the H2 will be much higher in FY '27 looking at the disruptions which we had in H2 in FY '26 or do we see this more uniformly across quarters by treated their margins?

You're right. H2 is always substantially higher than H1 and more so in the case of H1, as it is Q1 is always slow moving. But this time, it will be exceptionally slow moving because we have due to a conference of various factors: a, I talked about elections. labor went away. And then there was -- there is a festival of yield nearly 70% of our skilled workforce is movement, especially carpenters and bar binders. So they went away. And once they went away for elections, they didn't come back over for a prolonged period, they were at home. So Q1 is also impacted. But starting Q2, the numbers will ramp up significantly and H2 will be significantly higher than H1.

We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you, everybody, for joining in and look forward to seeing you on the next investor call. Thank you once again.

Thank you. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.