Ashoka Buildcon Limited (ASHOKA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ashoka Buildcon Limited Q2 FY '24 Earnings Conference Call, hosted by JM Financial. [Operator Instructions] Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Ashish Shah from JM Financial. Thank you, and over to you, sir.

Yes, thank you, Dorwin. A very good afternoon to everyone. On behalf of JM Financial Institutional Securities, I welcome you all to the Q2 FY '24 Earnings Conference call of Ashoka Buildcon Limited. Today, we have from the management, Mr. Satish Parakh, Managing Director; and Mr. Paresh Mehta, the Chief Financial Officer of the company. I hand over the call to Mr. Parakh for his opening remarks, after which we will move on to the Q&A. Thank you, sir. Over to you.

Thank you, Ashish. Good afternoon, everyone. Hope everyone is doing well. On behalf of Ashoka Buildcon Limited, I extend my warm welcome to everyone joining us today to discuss our business and financial results for quarter and half year ended 30th September 2023. On this call, we're joined by Mr. Paresh Mehta, our CFO; and SGA, our Investor Relations adviser. Let me start with the sector update. As per the research reports, following are the key highlights of the sector. The execution orders of Ministry of Road Transport and Highways is expected to increase by 16% to 21%. That is 12,000 to 12,500 kilometers, that is 33 to 34 kilometers a day in FY 2024. This was on the back of healthy [indiscernible] order book and an increased budget outlay of 25% in FY 2024 budget for MoRTH. Execution increased by 9.8% year-on-year. That is 3,196 kilometers in 5 months of FY 2024 compared to 2,912 kilometers in 5 months of FY 2023, and is expected to gain momentum in coming quarters, ahead of general elections in next year. However, MoRTH awards of 2024 up to August 2023 declined by [ 48% ] to 1,756 kilometers from 2,706 kilometers during the similar period of FY 2023. The overall MoRTH awards are expected to fall to 9,000 to 9,500 kilometers in FY '24 from 12,375 kilometers in FY '23, owing to the likely slowdown in bidding activity before the general elections, which have to be held in May 2024. Previously, during 2023, awards by MoRTH declined marginally by 2.8% compared to 12,731 kilometers. So this year, we have seen a decline of 35% in August. Now on the project front, I'll give you an update. In the month of September 2023, company has received a letter of award for power distribution infrastructure development projects for 4 circles in the state of Maharashtra from MSEDCL for accepted contract value of INR 646 crores. In addition to that, for one more circle at Osmanabad has been awarded for INR 125 crores in the month of October 2023. With this current order balance book, for the power T&D stands at INR 6,250 crores. However, we have also been awarded one project in October 2023 for construction of cable-stayed bridge at Khammam, Telangana for total consideration of INR 146 crores, adding to the current order book of road EPC to INR 5,388 crores. Two of our HAM projects with NHAI has received certificate of commercial operation dates in the month of September 2023. CoD was received for section of Tumkur-Shivamogga project, that is Karadi to Banwara; Package TS II in Karnataka; and another CoD was received in October 2023 for a section of Tumkur-Shivamogga project from Banwara to Bettadahalli, Package TS III. One of the company's SPV Abhijeet Ashoka Infrastructure Private Limited, has handed over the Wainganga Bridge project, which was on BOT basis back to the PWD authority on September 28, 2023, after the expiry of concession period as per the terms of the concession agreement and obligation awards. On asset monetization, the company had entered into share purchase agreement with Mahanagar Gas Limited for the sale of 100% stake along Morgan Stanley Fund, held in Unison Enviro Private Limited, a subsidiary of the company. Also, it has entered into a SPA for sale of its stake in Jaora-Nayagaon Toll Road project and Chennai ORR project. The company and its subsidiary, Ashoka Construction Limited, are at the advanced stage in respect of divestment of their entire stake in certain subsidiaries engaged in construction of -- construction and operation of road projects on HAM basis and BOT basis awarded by NHAI. Considering higher probability of sale getting completed in the next 12 months, the assets and liabilities of these subsidiaries are continued to be classified as assets held for sale. Coming to the order book. As of 30th September 2023, our balance order book stands at INR 14,795 crores. The breakup of order book for roads and railway projects comprise of INR 7,842 crores, which is 53% of the total order book. Along the road of the project order book, HAM projects are to the tune of INR 1,299 crores, EPC order are worth INR 5,242 crores and railway is around INR 1,302 crores. Power T&D and others account for INR 6,126 crores, which is approximately 41% of the total order book. The total EPC Building segment of INR 789 crores, which is 5% of the total order book, and CGD comprises of around INR 39 crores. We have brought them all these EPC projects on the order book as financial closure could not happen or could not be achieved by Government of Maldives and Exim Bank. Let me reiterate that our focus remains to build sustainable EPC business in segments of highways, railways, power T&D and buildings. This is all from my side. I will now request Mr. Paresh Mehta to present the financial performance. Thank you.

Thank you, sir. Good afternoon to one and all present on this call. The results, investor presentation and the press release have already been uploaded on the stock exchanges and the company website. I'm sure you must have had the time to go through the same. Now we'll present the financial results for the quarter and half year ended September 30, 2023. The total income for Q2 FY '24 stood at INR 1,590 crores as compared to INR 1,310 crores in the corresponding quarter last year, registering a growth of 21%. EBITDA for the quarter stood at INR 172 crores with an EBITDA margin of 10.8%. The reported PBT stood at INR 95 crores and PAT at INR 71 crores. For H1 FY '24, the total income stood at INR 3,147 crores as compared to INR 2,820 crores in the corresponding period last half year, registering a growth of 12%. EBITDA for the period stood at INR 268 crores and an EBITDA -- with an EBITDA margin of 8.5%. The reported PBT stood at INR 117 crores and PAT is INR 88 crores. Our debt-to-equity ratio stood at 0.38x as on 30 September 2023. Coming to the consolidated results. The total income for Q2 FY '24 grew by 19% year-on-year to INR 2,195 crores as compared to INR 1,845 crores in Q2 FY '23. EBITDA stood at INR 587 crores for Q2 FY '24 with a margin of 26.7%. Reported profit after tax is at INR 119 crores in Q2 FY '24. For half year FY '24, the total income stood at INR 4,169 crores as compared to INR 3,761 crores in the corresponding period last year, registering a growth of 11%. EBITDA for the period stood at INR 1,098 crores with an EBITDA margin of 26.3%. The reported PBT stood at INR 264 crores and PAT at INR 191 crores. Total consolidated debt as on 30th September 2023 stood at INR 7,200 crores, of which project debt is INR 5,932 crores, NCD stood at INR 200 crores at the ACL level -- INR 150 crores at ACL level. The stand-alone debt is at INR 1,118 crores, which comprises of INR 220 crores of equipment loan and INR 898 crores of working capital loan. On HAM projects, as mentioned in opening remarks by Mr. Parakh, we have received CoD declaration for 2 sections of Tumkur-Shivamogga projects in September '23 and October '23. Post that, SPVs are now eligible for receipt of annuity payments from NHAI for the operations period of 15 years at the interval of every 6 months from the date of the achievement of CoD -- PCOD. Towards our BOT division, during Q2 FY '24, it recorded a gross toll collection of INR 307 crores as against INR 273 crores in Q2 FY '22; whereas in H1 FY '24, it recorded a gross toll collection of INR 624 crores as against INR 550 crores in H1 FY '23. With this, we now open the floor for questions and answers. Thank you.

[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a decent quarter. So my first question is on the key asset monetization [indiscernible]. So what stage of approval...

Sir, sorry to interrupt, but the line for you sounds very muffled.

Hello, is it better now? Hello?

Yes, sir.

So my question was on what stage of government approvals have we secured for the Chennai ORR and the Jaora-Nayagaon project? Because it involves the governor -- Tamil Nadu Governor and the Principal Secretary and the Madhya Pradesh Road Development Corporation. So at what stage of progress we have achieved until now on the government side on approving this divestment?

So we have received NOC for Chennai ORR, but we are yet to receive NOC for Jaora-Nayagaon project. So this NOC for Chennai ORR, we got after almost a delay of 1.5 years. Now this has resulted in renegotiation with our JV partner on the price to be given to HAM, and that is now under process. Jaora-Nayagaon, yet to get, which we feel we'll get only after these elections are over and new government is formed.

Okay. So Chennai ORR, government approvals are in place. Now it's only the partner where we have to renegotiate on the valuation. And what about the government, there's lenders NOCs on this and other approvals?

Lenders NOCs are in place for Chennai ORR and Jaora-Nayagaon.

Okay. So Chennai, when do you expect to close the deal and money coming in and if that's possible both on Chennai and on MGLs, if you can -- for these 2 assets at least you can update us.

So we should be able to see something by Q4 end, we should be able to. The gas definitely will go from our portfolio by this Q4. And Chennai ORR also we are trying to resolve with our partners to see how we can close this asset sale.

Okay. And just on the HAM assets sale and monetization, so we have been hearing every quarter and goalposts are now getting shifted. So if you can update us, what is the stumbling block here? And it is being -- might be reported in media, that is coming, you also highlighted that H1 should have got closed at least in Q3. We should have got funds. So what's the status on approvals there? Where are we in stage of negotiation? And when do we expect to close this deal?

So on this, we are under discussions for the share purchase agreement with the potential investors. And there is a set of 11 projects, it's 11 project deals. So it has taken some time to close out on the SPA here in the process, and we should achieve it at the earliest.

Well, are you looking at the Q3 now or we move into Q4 next year?

We expect that SPA should happen before Q3 -- by Q3 rather, yes.

Okay. Just the last question on margins. I mean, you have now recovered, our margins are now above 9% stand-alone basis. So is the worst of the margin behind us now? And how we look at -- as you had earlier highlighted towards Q4 moving to a double digits, so are we on track to achieve double-digit margin -- early double-digit margins by Q4?

Yes. So as we had indicated in the last call, this couple of quarters, we'll continue with these margins of approximately 8% to 9%. And then Q1 FY '25, we will see recovery of these margins when a substantial portion of lower-margin projects will get over and the higher-margin projects will take over.

So what kind of band you're looking from Q1 FY '25? Is it more like 10% to 11% or it's like 11% to 12%?

10% to 11%.

Okay. And that is the sustainable margin for us then? So for...

And that should be -- that would be our target even for our new projects.

And just lastly, on the BOT asset, sir, so what stage of like have you shortlisted potential investor? Last time, you said that maybe we finalize a nonbinding back up a thing and look at finalizing a couple of investors and proceeding with bidding. So what stage are you now with BOT goal assets? And when do we expect to close it?

On the BOT assets, we are -- as indicated, we have received NPO offers, and the potential investors have started diligence on the project. Some diligence, I mean, just started. We should see some progress by Q3 on closure of the diligence and then Q4 by signing up some SPA.

The next question is from the line of Mohit Kumar from ICICI Securities.

The first question is that, can you help us with the impact of interest cost which you're providing for the SBI Macquarie exit?

So it's approximately INR 24 crores per quarter.

Understood, sir. The second question is on the -- how is the work progress on the RDSS scheme, especially for the Maharashtra? And what is our scope of work? Is it including buying [ Tata Smart ], SCADA laying wires, et cetera? And also, can you help with the repayment -- the payment profile, are we getting paid on time? How are the receivables?

So Maharashtra and UP, MP, Bihar, all these are RDSS projects where these are distribution lines and transformer-related projects, nothing to do with SCADA or metering. These are regular distribution projects, which company had been doing last almost 1.5 decades.

Understood, sir. My last question is, how is the tender -- so on the payment, sir, on the payment, are you receiving payment on time? How is it, your experience with the -- compared to what it is -- compared to what you used to do earlier, is it better payment terms?

Yes. All these projects have just started. We have received mobilization advance in almost all the projects, except the last few projects which were awarded in the last quarter. And billing also cycle seems to be quite efficient now.

My last question is, how is the tender pipeline from NHAI? Are you expecting some increase in BOT tenders?

See, NHAI for EPC and HAM, though they have a pipeline, but this is continuously getting extended because nowadays, all approvals are coming from Finance Ministry and finance committees. So the ordering is getting delayed. Though we see the pipeline, but continuous extension in the bidding dates is not resulting in any of the awards. It remains at the EPC and HAM level. BOT is what NHAI is exploring, and they may come out with certain bridge very soon. They have identified around 20 projects. I don't know how many of them will really see the light of the day.

The next question is from the line of Bhavya Shah from Sambhavna Securities.

So I just wanted to know, on the 3 asset sales at the Chennai ORR, which is Jaora-Nayagaon and the state of the Mahanagar Gas, so do we have any specific deadlines in place for these transactions?

See, no specific deadlines. These are taking their own time. Mahanagar Gas, now the period was up to 30th September, that lock-in has been over by 30th September. So we are expecting in the next Board meeting, we should clear this. After that, there are some CPs to be completed and transaction will get completed on Mahanagar. So there, we see certainty. As far as Chennai ORR is concerned, we got NOC, but it was delayed by almost 1.5 years. Now since this delay in time-lapse, there has been some difference of opinion with the partners. So we renegotiated their part of the cost, which we have to purchase and then sell to NIF. So if this takes place mutually agreed terms, we should be able to close in Q4. As far as Jaora-Nayagaon was concerned, we have still not received NOC. So only the new government we'll have to proceed with. And maybe Q4 or early Q1, we'll get the NOC and we'll be able to complete the transaction.

Understood. And my second question is on the order book. So when the whole sector is receiving a lot of orders, our order book has been a little lackluster. So are we planning to aggressively bid for more orders in the future? And what kind of order book that is? It will be more on the road [ increased ] fees or we are pivoting towards the power T&D with higher margins?

So looking at order book, our focus definitely will remain on highways. We would pursue our EPC and HAM projects and may also participate in some of the BOT projects of highways. Now these orders, we hope that next month onwards, this should really pick up, and we will be able to bag good number of orders by March end. As far as railways is concerned, they are also aggressive in coming out with a lot of projects. And we have now good foothold in railways where we have completed our Punjab project and other projects are also at advanced stage of completion. So railways would be another focus for the company. Power T&D, we have enough of order books in our hand, so we'll not be aggressive in this sector. But if we get a good margin, definitely we'll -- participation will be there, and we will pick up some good orders. As far as buildings is concerned, it's a new segment. Our FDI project is moving as expected. And we do expect some orders in building segment also in the coming future.

The next question is from the line of Nikhil Abhyankar from ICICI Securities.

Sir, can you tell us something about the bidding pipeline that is there until the March of '24? Because after December, Jan most likely there won't be any orders given out. So how are we looking at it? And how much order inflow are we targeting for this year?

So bidding pipeline-wise, if you see, NHAI and MoRTH is growing up around INR 75,000 crores order book, which is a significant 3,600 kilometers around. And our target, we are expecting around INR 4,000 crores to INR 5,000 crores to bag all across sectors like roads, railways, power together.

Okay. And sir, on the railways, are there any more opportunities remaining in station redevelopment?

Station redevelopment, we're not participating yet. The development projects and connected to real estate projects, so we have not participated in these projects.

Okay. Okay, understood, sir. And sir, any update on the NTPC project?

NTPC is moving well. We have almost procured all the modules and now erection is underway. Payments are also being done by NTPC in time. And they're also paying us reimbursement of custom duty. So NTPC is moving as targeted.

So we should expect to make money in this project?

We have already booked loss on this project in last quarter. And this would -- the number will remain same.

Okay. So no more profits, no more losses from that project?

No more profit, no more losses, yes.

The next question is from the line of Dr. Amit Vora from The Homeopathic Clinic.

Sir, about the margins, you said the margins would improve from the fourth quarter or the first quarter of next financial year.

Yes, by -- on the first quarter of the next financial year.

Next financial year, okay. Any target for this full year? Where do you see yourself in terms of sales?

So we should be able to grow by around 15%.

15% this year or for next 2, 3 years?

This year, 15%. Next year will, of course, depend on bagging of orders.

Okay. Sir, railways is coming out with lot of big-ticket projects in terms of this Mumbai-Ahmedabad and many others. So any plans of going for railway projects, not this bullet train, but other projects of railways?

Yes, we are focused on railways, and we are working with various verticals of railways. And railway would be a focus area along with highways going ahead.

Sir, one last question about -- there was some complaints regarding some bribery. So can you update us on that, what is the status right now? And how will it affect the company or it will not affect anymore?

See, there is a status quo on this issue. Nothing has really moved in last quarter. And it's really not affecting company in any way.

The next question is from the line of Vishal Periwal from IDBI Capital.

A couple of questions. One clarification. I think previous participant, you mentioned 15% number. So this was regarding what, sir?

15% growth this year is what is the guidance we're giving, revenue top line.

Okay. Sure, sir. And in the Power T&D, can you give some color, like what is the execution time frame for these orders? Are they short-cycle orders or, I mean, like similar to what road sector, like little long-period order? Can you give some color?

These -- most of the orders are 2-years time line.

Okay. And I mean, like since -- I mean, we are getting LOA from that. One should consider a 2-year kind of execution for these orders?

Yes. Yes, these are all from LOA dates.

Okay. Okay. And one color on this awarding for the road sector, I think you did mention like it has been bit weak. But even in terms of execution and then in the construction side, are you seeing any stress or probably increase in the receivables? Because there again, like the rule of finance ministry also comes in. So any delay on that front, are you seeing for us or for the sector?

See, execution-wise, NHAI is doing well. We are also doing very much with their expectations. So execution-wise, there is no challenge. Payment-wise, there is no challenge as far as NHAI is concerned. They are paying very much in time.

We have next question from the line of Vasudev from Nuvama.

Sir, whatever pending equity commitment? How much you are infusion through FY '24, '25 and '26?

I could not hear you. Could you go again?

Sir, I was asking about pending equity commitments and how much have you planned to infuse in H2 of FY '24 and '25 and '26?

So by the end of '23, '24, our equipment commitment pending is INR 147 crore; and for '24, '25, INR 56 crores. These are for the HAM projects. So totally, approximately at INR 200 crores.

Okay. Can you help me with the segmental revenue breakup for Q2?

Yes. So this being a lean quarter because of rains, the EPC road revenue was INR 872 crores; power was INR 405 crores; railways was INR 173 crores; PCD was a small amount, INR 6 crores; and other sector was approximately INR 63 crores. Over and above that, RMC business was around INR 38 crores.

Okay, sir. And sir, just one clarification. So you said that you're targeting to INR 4,000 crores to INR 5,000 crores of order wins. So that is incremental order wins for FY '24 or for the full year?

That is incremental order we are targeting.

Okay. Sure, sir. And just one last question from my side, what is the CapEx that we did in Q2? And how much are you planning for the full year?

The CapEx for up-to-date was around INR 79 crores, and maybe the pending CapEx would be approximately INR 15-odd crores for March '24.

[Operator Instructions] the next question is from the line of Devam Modi from ARDEKO.

Yes, sir, just we have seen a high year-on-year traffic. I mean the collection growth rate in Bhandara, Durg, Jaora-Nayagaon and Sambalpur, if you can just explain the reasons for this sort of double-digit plus toll collection growth rate in the last couple of quarters in these 4 projects.

I mean, actually, this is the impact of economic growth, no specific reason for this growth. Of course, if you see revenue rise in the Jaora-Nayagaon project was 7%, that is toll rate rise. And in Bhandara and Durg, this was almost 9%. So keeping that apart and probably in the -- and also in the NHAI projects, approximately 5.3%. So keeping that aside, these growth rates are more from the industry pattern, which is there. No exceptional impact.

And would it be fair to say that the environment for toll roads in terms of economic environment, in terms of the way of traffic growth and all those things have been there in the last 1 to 1.5 years, plus the kind of multiple these assets are fetching in the private markets or on the -- I think the first InvIT for toll roads -- one of the other private InvIT for toll roads is also out with Cube's InvIT. So would it be better to say that the valuation environment as well as the economic environment both have improved much more after the cancellation of the deal with KKR?

Technically, there is a lot of interest for looking at BOT projects, toll-based projects. And traffic for the last 2 years typically also indicate high growth in the traffic revenue. So interest is there, and I -- and also government also is intending to take out projects, a few on BOT projects, which we don't know when it will see the light of the day, but there is interest in people to buy BOT assets.

And we understand that in Belgaum, Dankuni, Jaora and Sambalpur, I mean what you have shown in the presentation that we have premiums which are payable. So what would be the current year premium -- because it's a 5% escalation from appointed dates in each of the projects. So what would be the current year cumulative premium that you have to pay in all these 4 projects?

One second. Approximately INR 200 crores in Dankuni and around INR 45 crores -- INR 65 crores in Belgaum.

And the other 2 will be much smaller, right?

That is very nominal. It was INR 1.8 crores.

Okay, sure. And would there be any major threat on the Jaora-Nayagaon traffic, how many alternate road or stretch would be coming up because that used to be a big thing, NHAI to NHAI transfer? So now how should one look at it? And I mean, what kind of sort of longevity should that road have? Any thoughts or flavor you can provide on that front?

See, over the years, we have seen that the traffic, though, there are alternative routes coming in, but traffic has generally been increasing. So we don't see a significant stretch. There will be some shift in traffic off and on, but I think so we should expect typical growth of 6% to 7% traffic growth, 5% to 6%.

Sure. And I understand you gave updates on the sale of Chennai ORR and Jaora-Nayagaon in terms of the status of the NOCs and the probably renegotiation with the partner. Any update on Unison Enviro with regards to the -- where the sale is ongoing right now?

Yes, so we have -- the lenders have already cleared NOCs from their side. We are waiting for PNGRB, their lock-in period has already expired on 30th September. And the NOC is already lined up with PNGRB board. So we should get that by the -- before the month end. And then we should try to conclude the transaction in the next month or latest by Jan.

All right. Sure, sir. And just an input that we have seen multiple other similar peers to you who have announced transactions of similar kinds of assets, probably higher or lower in complexity. But somehow those transactions are consummated much faster. So any learnings or any particular things that you would like to highlight by somehow what transactions are taking much longer or anything you feel is affecting our consummation of transactions?

No, I would not be able to compare time lines with any other peer because everybody starts at a particular angle and closes. So I don't know how many actual SPAs have closed at this moment. People are in discussions on diligence as well as SPA. We believe that our SPA discussions are going on. In view of 11 transitions, definitely it takes more time because each project has its nuances and closing takes some time. So it has overshot our estimate, but I think we conclude in this manner.

The next question is from the line of Anupam Gupta from IIFL Securities.

Sir, just a couple of questions. Firstly, on the stand-alone debt, if we -- so during the first half, we have seen a sharp increase in the stand-alone net debt per se. How do you look at it by the end of this year, assuming that, let's say, the MGL transaction is done, but -- and other -- and possibly Chennai ORR transaction is done, what should the debt you should end at with for this year at the stand-alone level?

So we, at the stand-alone level, are approximately at around INR 1,100 crores by the transition on Unison, which we consider, I think so we should end up with a working capital debt in the range of INR 750 crores, INR 800 crores around.

Okay. Okay. And then so this doesn't include any closure of the Chennai ORR project for this year, right?

Yes, I mean -- that comes in approximately another INR 200 crores will definitely go down.

Okay. Okay, understand. And sir, secondly, on your execution side of 15% growth, is there a risk to that 15% growth? Are any projects running slow? Or how do you look at it for this year?

Currently, projects are on steam. The power projects, because they started off late, I think so they will take more steam. So we are -- probably at this moment time, we are comfortable in estimating a 15% growth.

The next question is from the line of Vaibhav Shah from JM Financial.

Sir, what is the update on MCGM water treatment process? How has been the execution so far?

So execution on this project in monsoon was held up. Now it has restarted in Q3, and we should be able to complete in targeted time lines. It's moving well.

Okay. And sir, for the Maldives order, so we have canceled the order or still we hope for any status update on the [indiscernible], any progress on the same?

We have dropped from the order book, but we do not know how the relations between India and Maldives will play out and this order can get revived. We have no -- there is no cancellation or termination of this order. But the FC between Exim Bank and government of Maldives has not taken place. So now the chances have gone a little weak of getting this FC done. But if it gets done and the order is, definitely, we already have our corner in place. But for the FC, it's not moving. So if it happens between Exim Bank and government of Maldives, then definitely, we'll have the order. Otherwise, it will get terminated. As of now, it's still live.

Okay. Sir, and lastly, on the Guyana order, we saw a strong execution in the second quarter. So we expect the run rate to be maintained in coming quarters?

Yes, this -- last quarter, they did not have monsoon. Now this quarter, when we have monsoon, so though progress will be there, but the run rate may little vary.

Okay. And we already received the 10% mobilization order?

Yes, yes, we have received it. Yes, we've received it on time. There's no issue.

The next question is from the line of [ Akhilesh B ], an Individual Investor.

Congratulations on a strong set of numbers. I had a few questions, sir. First question was, what is the kind of margins that we will get on the T&D part of our order book?

10% to 11% is the EBITDA margins which we expect in the T&D order book.

Okay. And how is the competitive intensity in this segment? Or is it better than the intensity within the road business? Or...

No, we do have competitive intensity. There are 8 to 10 players in every bid. So there is a competition in this segment.

Okay. And sir, second question is, as you also alluded that the performance of the BOT assets has been improving. And so we will expect a better valuation this time around when we close the deal. So ballpark, what kind of valuations are you expecting for the BOT assets, given the HAM asset?

No, it's very difficult to specify a number to all this because negotiations are underway.

Okay. And any thoughts on entering the water EPC space also? That seems to be a segment which has higher margins in our traditional segments. As in you have some thoughts to that?

We have not explored this yet.

[Operator Instructions] The next question is from the line of Faisal Zubair Hawa from H.G. Hawa & Company.

Sir, I mean in the road segment, why do you feel your overall order inflow or the tendering has been so slow? Is the NHAI facing some kind of a problem in land acquisition or in funds? Or is there something more to it than meets the eye? And what is the kind of the HAM projects? Do you feel that we are -- we can bag at least INR 4,000 crores to INR 5,000 crores more orders? Does our balance sheet allow that kind of a leeway?

So as far as NHAI is concerned, of course, land acquisition has been challenging throughout. And it's -- the challenge remains as it is. In addition to that, the approvals have now moved from earlier, INR 1,000 crores and below were approved at NHAI level; now they have moved to standing financial committee. So this does get delayed looking at the priority of project and status of land acquisition. As far as bagging order is concerned, yes, we are expecting good amount of orders to be released by NHAI, which have been continuously extended, but now they'll see the bidding process. And definitely, we'll have our share of cake in this.

And sir, regarding the opportunity in the water segment, do we have any plans to really enter it or kind of...

We are already doing one project for Bombay Municipal Corporation. So on completion, we'll have our own qualification and then we can move ahead in this segment as we are moving in other EPC segments.

And sir, since the new generation of the families also taking over the company, is there any plan to really improve our ROE, ROCE metrics so that finally, we get the market cap that a company which has been in business for almost more than, I would say, 3 decades, deserves and kind of mission-critical work also that we have done, but the market doesn't recognize that because we talk of our low return on equity metrics? So is there any work that the new generation is integrating into the company to get that sorted out?

Yes, new generation is there now in business last 1.5 decades almost. And they are taking care of the entire international business as well as part of the India business. As gas was one of the new generation initiative, which they very successfully completed, and we are getting a successful exit also. So there are new areas which are being explored and definitely will come to you when...

How will we really improve our ROCE and ROE metrics?

So on the return expectations and the business of EPC will continue the way it is. Of course, looking at newer sectors, we'll definitely bring in better margins and which would improve the return on capital. Also in view of the monetization of assets and opportunity available for return of capital to the investors, again, ROCE could get a bump up because EPC business would continue the way it is continuing and will grow over a period of time.

[Operator Instructions] The next question is from the line of Bharani Vijayakumar from Spark Capital.

So in your opening remarks, you mentioned that the MoRTH awarding for the full year FY '24 will be around 9,000 to 9,500 kilometers, down from earlier year number of 12,375. So essentially, we are expecting a different total awarding by NHAI compared to last year. And that would be related to the delays and extensions we are seeing. Is that a fair assumption?

Could you just repeat your question?

Yes. So in your initial remarks, you mentioned the...

Yes. Around 9,000 is what we're expecting, yes.

Yes, down from last year's full year number of about 12,000. So essentially, there will be a different awarding activity compared to last year.

This is what we feel from the existing numbers and the delay which is happening in the award. This is our estimate.

That's what -- so your estimate, okay. Okay. So would that mean that maybe the spillover would have a positive impact on FY '25 number?

It should have because government is focused on building good infrastructure. They have capital allocation. But awarding is a bit slow, which should improve in the next year.

Okay. So specifically...

It is there to put up a good amount of infrastructure.

Okay. Specifically from NHAI, how much do you expect? Of this 9,000 to 9,500, NHAI component would be...

This is a combination of NHAI and MoRTH together.

So NHAI alone, would you have an estimate?

No specific estimate, but they have around 6,000 kilometers of pipeline already declared, which is in the award stage.

The next question is from the line of Ashish Shah from JM Financial.

Sir, I have a question on the operating cash flows and working capital. So while we have been growing over the last couple of years a little rapidly, but we've also seen the working capital and otherwise the debt levels also go up. So we think, sir, at some point of time, this working capital starts unwinding because then at some point of time, this can put a break on the growth, right? Because if the debt keeps on increasing with every growth, then at some point, there'll have to be a break on the growth. So do you think there can be a sizable unwinding on the working capital and improvement in the operating cash flows?

Yes. So there will be unwinding which will be happening over a period of time coming to quarter 2, 3 quarters. Also, in the new businesses, which we have started where payments are back-ended, that unwinding also will happen. So we should typically come down at -- from these levels to a lower level of working capital requirement for a particular tenor.

Yes. And sir, currently, I mean, if you look at your mix of working capital today, which pockets have the maximum working capital and where you are relatively better off? So which segments are relatively higher and which are relatively lower?

So definitely, the exposure on the road is the higher from a working capital requirement because execution is higher, and the next comes at power and railway.

Right. And that would be true in terms of like number of days as well? Is the number of days of working capital more for your road segment versus the power T&D business?

So I think the road cycle would be slightly lower than the power.

Okay. In terms of days of working capital?

Yes.

Okay. Sir, also, you mentioned the equity investments we need to make in HAM. Are the 5 BOT assets on their own completely? Or they also need some additional support in the form of loans?

Nothing very significant because Sambalpur was a project which we used to require funding. But today, it's already refinanced and that is taken cared of.

Okay. Sure. Yes. So sir, I think there are no more questions in the queue, so we can end the call. So on behalf of JM Financial, I'd like to thank everyone for participating in this call. Also, thank you to the management for allowing us to host the call. And sir, over to you for any closing remarks.

We thank all the investors who have been joined on this call. We are open for question-and-answers and one-to-one interactions for any queries you have on the financials and the company's operations through us or through our investor advisers, SGA Advisors. Thank you.

And we wish you all the very happy and prosperous Diwali. Thank you.

Thank you.

Thank you. On behalf of JM Financial, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.