H.G. Infra Engineering Limited (HGINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to H.G. Infra Engineering Limited Q4 FY '24 Earnings Conference Call hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am.

Thank you, Seijul. Good morning, everybody, and welcome to H.G. Infra Engineering Limited Earnings Call to discuss the Q4 and FY '24 results. We have on the call Mr. Harendra Singh, Chairman and Managing Director; and Mr. Rajeev Mishra, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces. May I now request Mr. Harendra Singh to take us through the company's business outlook and performance, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Sana. So welcome, everyone, to Q4 and FY '24 Earnings Conference Call of H.G. Infra Engineering Limited. The financial results and the investor presentation have been made available on the exchange, and I trust you all had the opportunity to review it. Before I proceed with the presenting of the key financial and operational highlights from the previous financial year, I would like to offer a concise overview of the sector and the opportunities it presents for H.G. Infra. I'm pleased to announce that H.G. has delivered exceptional performance in FY '24 across all fronts. We have achieved substantial progress in diversifying our orders by securing 4 non-road projects in this financial year. Additionally, this year marks a significant milestone as we have reinforced our presence in the highway and road sector with 2 successful new projects in Q4 FY '23 -- sorry FY '24. Not only we have expanded our order book, but we have also taken meaningful steps to our diversification in solar power plant projects. Now I would like to provide some updates on the infrastructure sector. Talking of roads, India's infrastructure sector is booming fueled by a significant funding boost of INR 2.78 lakh crores for FY '24, '25, with INR 1.68 lakh crores year mark for NHAI, the focus is on developing national corridor, building upon this momentum, the Vision 2047 aims to construct 30,000 to 35,000 kilometers of highways and 50,000 kilometers of high-speed corridor by 2047. This ambitious plan emphasis the government's commitment to fostering extensive connectivity and facilitating economic progress across the country, concurrently presenting abundant opportunities. In recent decades, H.G. Infra has solidified its position as a formidable force in the infrastructure sector and has proven its mission over the last many years in the EPC and HAM sector. As we seize abundant opportunities and is keen to participate in BOT world with the association of other key players such as highway construction as well as Cube Highways, NIS and other prominent players like Adani and IRB as EPC players where we are already being associated with these companies. Railway and metro, as a part of our long-term strategies of diversifying our order book, we continue to gain considerable ground in the Railways and Metro segment. The budget has earmarked INR 2.55 lakh crores, focusing on multitracking, corridors and station remodeling. A significant portion of this budget is delegated to multitracking 7 speed -- high-speed density corridors, facilitating the expansion of rail networks by 10,959 kilometers over the next decade. Additionally, the Amrit Bharat Station scheme further complements these efforts aiming to remodel 1,309 stations by 2030. Thus, enhancing passenger experience and operational efficiency. The significant momentum observed across various sectors has created ample opportunities. In alignment with our strategic approach, we have prepared to grab these opportunities with 6 railway projects currently in the order book across 5 states and is well positioned to capitalize on the government's initiatives and we are all equipped with the required CapEx, technology and skilled human resource for network expansion and station development, that is a modernization of existing infrastructure, civil work and dedicated high-speed railway corridors. Solar and renewable energy being topped in our race, the renewable energy sector is gaining focus with ambitious targets, aiming for 450 gigawatts of installed capacity by 2030, where solar energy constitutes over 60% and then in the latest budge INR 1,000 crores were allocated for SECI and INR 19,500 for a PLI scheme to enhance solar [indiscernible] manufacturing. H.G. Infra recognizing this lucrative prospects proactively for huge builds and successfully received solar power projects for development under KUSUM-C. That is 543 megawatts VC valued at INR 1,307 crores EPC value that is exclusive of GST. The company is also exploring additional opportunities in solar power development, solar projects, including rooftop installations, these projects win is a testament of -- to H.G. as a leading EPC company in the infrastructure space. In Water sector, the Jal Shakti Ministry budget has increased to INR 98,418 crore for FY '24, '25, up from INR 96,549 crores in the previous year, but highlighting ongoing investment in water infra, and in second phase of Namami Gange Program government has approved INR 22,500 crores, out of this INR 11,275 crores is allocated for new projects. H.G. Infra is keen to participate in projects like Namami Gange to clean the embankment and rejuvenate the Ganga river, pollution abetment, infrastructure development near the river. Projects related to water desalination, way for treatment plants and other water supply projects in rural, urban areas like under JJM schemes. Rainwater harvesting storage under Jal Shakti Abhiyan will be our priority to contribute with the revenue of around INR 50 crores for which we have targeted for this financial year. Furthermore, we are looking forward for partners with strong background with credentials to cover the technical eligibility for strategic partnerships for breakthrough projects in water sector. Let me start the journey of this quarter and give you the glimpse of operational highlights first. As I mentioned earlier, our order book has not only grown, but also diversified as of March 31, 2024. It stands at INR 12,434 crores that is the EPC constitute 28%, while HAM constitute 40%, railway segment contribute 22% and Solar segment contributes 10%. Let me now update on the ongoing EPC projects. The Ganga Expressway project has reached a milestone of about approximately 54.3% adhering to the contractual time lines of the contract. Delhi UER project stands at around 93.1% completion, and it is anticipated to be completed in this quarter only. The Neelmangala-Tumkur project could not reach up to our expectation and it's execution status at around 28% because non-availability of the land for which NHAI is pushing hard and for faster balance and regularization and encroachment free. The progress of various HAM projects is also running as per the planned schedule. The Karnal Ring Road project has achieved 23.9% completion value. So that is progressing well within the established timelines. Raipur-Visakhapatnam OD5 project has progressed to 65.9% completion, and we look forward to complete this by quarter 3 of this year. Raipur-Visakhapatnam OD6 project is currently at about 73.7%. And the same would be completed by quarter 2. The Raipur-Visakhapatnam AP-01 package has achieved a completion status of 69.5%, and the same will be completed by quarter 2. In the Khammam-Devarapalle project Package 1, where we have achieved 50% completion, while Package 2 is at 53.7%. Both the projects would be completed by quarter 3 and quarter 4, respectively. The Varanasi-Ranchi-Kolkata Package 13 and 10 is currently in the initial stages of land acquisition and are anticipated to pick up momentum in second and third quarter, respectively. Turning on to the progress on the railway project. DMRC Metro project has reached completion of about 50%. Bilaspur Himachal Pradesh railway project has progressed to 10.3% completion. Though initially, it was delayed due to heavy rains because of the back water of the dam, it is now progressing well. Kanpur Central Railway Station project has recently commenced with the completion status of 4.12%. Let me now invite Mr. Rajeev Mishra, CFO of the company, to give an overview of the financial highlights of this quarter and overall FY '24.

Thank you, sir. Last year, ICRA has upgraded our ratings from stable to positive for a long-term, short-term successive facilities and entity on account of the financial growth and discipline. Our financial performance in the last quarter and the entire year has been satisfactory. At the stand-alone level, the total revenue of FY '24 has reached INR 5,122 crores, reflecting an impressive 15.9% year-on-year increase from INR 4,419 crores in FY '23. EBITDA accounted to INR 822 crores in the current fiscal year, resulting in an EBITDA margin of 16% compared to INR 710 crores and 16.1% margin in the corresponding FY '23. PAT for FY '24 stood at INR 546 crores with a profit margin of 10.7% compared to INR 421 crores and a margin of 9.5% in FY '23. In Q4 FY '24, stand-alone revenue reached at INR 1,635 crores, representing a significant 11.2% year-on-year growth from INR 1,470 crores Q4 FY '23. Stand-alone EBITDA for Q4 FY '24 was INR 265 crores reflecting our year-on-year growth of 11.3% PAT and PAT margin for FY -- Q4 FY '24 stood at INR 160 crores and 9.8%, respectively, compared to INR 148 crores and 10% in the same period of the previous fiscal year. Regarding the company's debt position on a stand-alone basis, the gross debt amounts to INR 451 crores, including working capital debt of INR 69 crores, term loans current maturity and the trade limits totaling to INR 334 crores and NCD of INR 48 crores. Moving on to the consolidated numbers. For FY '24 revenue reached to INR 5,378 crores, growing at 16.4% year-on-year increase from INR 4,622 crores in FY '23. EBITDA reached INR 1,062 crores with an EBITDA margin of 19.7% compared to INR 895 crores and 19.4% margin in FY '23. PAT for FY '24 stood at INR 539 crores with a profit margin of 10% compared to INR 493 crores and 10.7% margin in FY '23. In Q4 FY '24, the consol revenue reached to INR 1,708 crores, making significant 11.3% year-on-year increase from INR 1,535 crores in FY '23. Consolidated EBITDA for Q4 FY '24 stood at INR 333 crores, reflecting a year-on-year growth of 12%. PAT and PAT margin for Q4 FY '24 amounted to INR 190 crores and 11.1%, respectively, compared to INR 171 crores and 11.1% in the corresponding period of the previous financial year. In the context of the company's debt position at the consol level, the gross debt amounted to INR 1,500 crores approximately. The total equity requirement of 10 HAM projects is estimated to be INR 1,451 crores out of which we have infused INR 694 crores in this financial year and INR 505 crores is estimated to be infused in FY '25. Let me give the glimpse of the status of the monetization of 4 HAM projects. First tranche on the 3 projects which we have sold in the last year, additional 3 SPVs, Gurgaon Sohna, Rewari Ateli, and Ateli Narnaul. They have been completed on 21st of March -- 21st November 2023, with 100% SPV shares transferred from H.G. Infra to Highway Infrastructure Trust. We have received INR 315 crores as of now, and INR 60 crores will be released on the receipt of approval from NHAI for GST change in law claim. It is expected to be received by June 2024. The second tranche, as far as the updates on the monetization of the fourth project, Rewari Bypass part is concerned, we have received NOC from NHAI and lenders for the change in the shareholding in March '24. Compliance on the conditions precedent as per the SPA is in the process and expected to be completed by mid-2024, and the GST change transition is expected to be completed by June 2024. Around INR 130 crores is expected to be received from Rewari Bypass SPV. For other significant updates of FY '24, I would now request MD sir to take over and share the developments with the forum. Thank you, sir.

Thank you, Rajeev. Let me now share other significant updates for FY '24. So initially, we have projected to get around INR 8,000 crores of new projects during FY '23, '24. However, due to the all-time low awarding by NHAI, we ended this year or addition at INR 4,350 crores, that is exclusive of GST. In Q4 FY '24, the company effectively secured 3 new orders in the railway sector in EPC mode, that is Dhule to Nardana railway project in the state of Maharashtra that is on Central Railway worth INR 716.11 crores. Aurangabad, Karanjgaon railway station project in Maharashtra, that is inclusive of electrification and signaling work from South Central Railway valued at INR 447.11 crores. Gaya- Son Nagar railway station project that is a DFCC project in the State of Bihar awarded by East Central Railway for construction of double-lane track, including earth work, blanketing and electrification work that is valued of INR 709.11 crores. These all projects are inclusive of GST. The 2 new projects of Highway were awarded. Chennai-Tirupati Package 2 in the state of Andhra Pradesh for construction of access-controlled highway of 4 lane [indiscernible] that is having the EPC value of INR 760 crores, and the Kalimandir-Dimma Chowk of EPC mode in the State of Jharkhand near Jamshedpur that is INR 610.11 crores. Universe of solar and renewable energy, we are happy to share for forum the company has entered in the solar segment and has been recently awarded solar power project development work under KUSUM scheme for 543 megawatts DC of INR 1,307 crores EPC value, which is excluding of GST. The company has secured contracts on Jodhpur Vidyut Vitran Nigam Limited on the KUSUM-C Yojana collaborating with Stockwell Solar Services Private Limited in JV consortium, Together, we will work on the solar power plants together -- totaling 522 -- 538-megawatt DC that is worth INR 3,300 crores. Commerce involves procurement, direction, installation commissioning of the plant over -- within a period of 12 months from the date of [indiscernible] and then maintaining them for 25 years. These projects will be executed through project SPVs. In addition to that, H.G. Infra has also won 2 small solar projects of 12 megawatts worth INR 62 crores. The total equity requirement in the solar project is estimated to INR 540 crores, out of which we would infuse INR 270 crores in FY '24, '25 and balance in '25, '26. Let me touch base on the future guidance before I conclude this speech. This year is very vital for us in terms of our physical progress in our running projects as we are for heading for the completion of our -- nearing completions for many of projects like UER, Khammam-Devarapalle Package 1 and 2, Raipur-Visakhapatnam Package OD5 and 6 and AP-01 and [indiscernible] Ganga project. With that certainly we will have to add new projects for which we have work on the order inflow to the tune of INR 11,000 crores, INR 12,000 crores in road, railway, solar or water to sustain and scale our business to create value for the shareholders and ensure healthy order book. So we are geared for the next growth phase of the company, and we believe that we will achieve 15% to 20% growth in the top line in the coming years and maintain steady margin in the range of 15% to 16%. We have all the ingredients to achieve the milestone with all senior leadership in place, skilled manpower, strategies to move on digital transformation with automation CapEx, [indiscernible] team to explore diversity in business. These strategic moves are poised to contribute significant value to our financial indicators, fostering a seamless and transparent real-time working environment and will truly help us to augmenting our operational efficiency and cost optimization factor will positively impact on our bottom line. We can assure to all our internal and external stakeholders that we are committed to solidify our success footprint in the financial year. With that, I conclude the date of FY '24, I'll open the floor for questions and answers. Thank you.

[Operator Instructions] The first question is from the line of [ Dipen ] Shah, who is an Individual Investor.

And congratulations to the management on a good set of numbers. Sir, I had a couple of questions on the new areas of operations which we are entering. Firstly, on the solar segment, we have got 3 contracts worth about INR 1,300 crores. So just wanted to understand like in terms of our capabilities. Sorry, am I audible?

Yes, yes, please continue.

Yes. So just wanted to understand in terms of capabilities, how are these projects different as compared to what we have been doing? And how have we built up the capacities for installation of these projects? The second thing is that since this is a private party, but it is under the KUSUM scheme, so how confident or how comfortable are we about the receivables from this project? So this is first set and I have one other set for the new business which is Namami Ganges.

Your question remains that this is not a private party contract. This is a price discount, which is the Jodhpur discount, they have awarded. The consortium has received the project, which we have splitted into 2 parts, that they would be doing [indiscernible] would be doing 35% of the total project value. And balance 65% of INR 1,300 crores would be done by H.G.. So this is one confusion into it. The second part is in EPC, the projects do have 85% procurement. That is all related to module and structure and say, electrical works, where the holes and transmission line being laid. So that only 15% of the work which remains civil is the area of needing level even [indiscernible] and the even ramping. So this is what we've done during [ '12, '13 when we worked for a line pole ] earlier days. It's not that difficult. It's a very renewable kind of a project. So it's only procurement part. So we do have a -- already has carved out our initial stage EPC team within the company. So that already is in process and we would be doing within the company itself.

Okay. And sir, since about 85% of the project is procurement, would margins be similar to what we have currently in EPC contracts? Or would there be lower than the existing margins, sir?

No, no. So we have kept both the provisions. So since the projects are having, say, the tariff which -- average INR 3.27, INR 3.27 is the average tariff you'll be getting. So we have maintained the EPC margin guidance at about 15-plus in these as far as EPC cost is concerned as well as equity IRR is around about [ 14.5% ] 15%.

Okay. Sir, and the project of INR 1,300 crores includes the maintenance also. This is only the EPC part, sir?

Purely EPC project.

Purely EPC. Okay. And sir, on the Namami Gange front, there have been talks in the market previously about the project is not getting completed on time and there have been receivable problems. Any take on there, sir, have things smoothened out quite a bit now and you do not see receivable problem.

No, no. It's initial discussion, which we are doing with one of the army where they already have involved into that already. So we have completed 2 of the water projects. So we are looking into this sector. Probably JJM water sector projects are all there, water desalination plants and water treatment plants. So only initial points which I have discussed during the speech.

Okay. And sir, lastly, just one question. We have given a guidance of about 15% to 20% growth, which should be about around INR 6,000 crores, INR 6,500 crores, of which how much visibility have we have in terms of existing projects which are continuing? And how much are we dependent on new projects starting during the year, sir?

Dependency on the new project for this current fiscal year that we already have considered INR 700 crores to be added for the new projects. That is from railways. Otherwise, all the projects which we are already having -- they're all under execution. They will be contributing significantly in this particular number.

[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.

Yes. And just trying to understand both on order inflow and the revenue part. So when we have revenue part of INR 11,000 crores to INR 12,000 crores kind of order inflow versus last and we have said INR 8,000 to INR 10,000 crores. So first, in terms of the breakup from which we only particularly have EPC, solar, water, railway, how much we are looking at this INR 11,000 crores to INR 12,000 crores. And also, given the kind of competition will be there, particularly infrastructure was muted. So will it not be coming at a lower margin?

For the guidance for the coming year, which is around INR 11,000 crores, which we believe that because of the last year ordering, which is an all-time low for NHAI because this time, they would be definitely post the elections, they would be awarding there having strong bidding pipeline. So that I believe from HAM -- as HAM opportunity or EPC opportunity in highways. Even the MSRDC project, which could not be awarded during the last year, they are all having around INR 90,000 crores plus of orders, they are going to award -- sorry, INR 60,000 crores plus orders. So this is likely one of the opportunity which we would be looking at. Another -- apart from this, we are already having the discussion because NHAI is looking at BOT for around INR 2 lakh crores of orders to be awarded in BOT front. So in this particular already being contacted by [indiscernible] as we have discussed during my opening remarks that we are only in the close connections with these companies that we would be doing it their EPC part. And just how -- for Highway opportunity, we are looking around INR 8,000-odd crores of orders to be added and around INR 3000 crores are balance from water where we already have been discussing that we would start looking into this sector as a prominent sector and say, just a small part of the solar as well as definitely INR 2,000 crores plus from railways.

Okay. So INR 2,000 crores is for railway and solar and water would be INR 1,000 crores combined put together that we are looking at this year?

Correct.

Okay. And second, in terms of the -- I mean back to on the revenue again. So 50% includes INR 6,000 crore plus kind of a number for this year. So similar run rate we're looking at for FY '26 also?

Yes, of course, because the order which is around INR 12,500 if we usually are looking at what we did last year around 16% year-on-year. So we again would -- looking at this number there would have been even better if the appointed date of Jharkhand package 10 and 13 would have been declared. But definitely, it has been delayed because of various reasons. But now we are very clear that we will be touching around, say, around 17% to 18% year-on-year for this year and which will continue for subsequent years as well.

Okay. Okay. Great to hear them. And then this -- what was this INR 10,000 crores plus bookings there. So from that, we are looking at the major revenue and only INR 700 crores revenue we are looking at in FY '25?

Just to clarify, INR 700 crores of the new railway projects, that is where the land is available. And INR 700 crores -- INR 500 crores we have considered from solar for this year and say the projects of Jharkhand package 10 and 13 opportunity where the appointed date would be declared in this year only. And again, we are talking of the Jamshedpur and Tirupati project, where it's only a matter of only financial closure in one of the projects because the land is almost 90% plus available in both of these projects. So this gives us immense confidence that we would be touching around INR 6,000 crores.

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

Harendra ji, congratulations on a good quarter. Sir, my first question is on the solar EPC. So can you help us understand a little bit more on how the supply chain tied up for this? What are the price escalation clauses? Are the prices passed for the modules? And you are investing almost INR 520 crores. So higher equity, so high at 40%. So and how do you exit?

See, first part is we're looking into the supply chain issue but we have already -- we have suggested that about 50% of the project EPCs are modules, which we already have built to prominent supplier that is around at a rock bottom price, which is around -- but as of now, it has never been around INR 13 per megawatt. That is the one move, which we already have taken. The second part is the other electrical ancillary, transformer, inverters and other things. There are a regular pattern. We do not expect any price escalation because we has taken the provision of price escalation just a 3 years trend, 5 years trend, which we have seen, apart from the solar module, these are all the products which are all stable. So the one part and the second part, which is very important is equity and the monetization. So we are looking into this part where the equity definitely is around INR 500-plus crores, which is we can -- we may be able to monetize the project if the equity IRR is this much, and we already has seen that few projects have been monetized once they have been completed. But even if you retain the project for another 2, 3 years once we could have a cluster of the portfolio where it would have monetized at the later stage, we will do that.

But sir, what is the time line for execution and completion of this project and also out of the INR 1,307 crores, what is your share of order book in this about the part you will be positioned.

No, order book this is 65-35 ratio say, 35%, they already stock well has been -- that has been taken out of the total order value. So INR 1,300 crore is the orders, which we would be doing in this particular financial year as well as next financial year. There's a 18-month contract project for LOA, which we received in the month of March. So right from 1st May, where they -- already they have given the clearance for the land and every other thing. So it has been started. 18 months from now, it will be roughly around sometime December '25, likely they will be completed.

Second question is on the railway. So now you've added new orders in the railway segment when all the -- I mean so when the peers are exiting railways have cut down their exposure given the milestone-based payment issues and working capital issues, rights away issues. So how do you read this while taking these orders do you think these will be profitable and they're not pulled down the overall blended margins for the company?

See railway projects earlier whatever railway project was being offered, they are very small projects. And I think within just last 3 years for example EPC project has been started in the railway projects. Now they are also working on the same model as NHAI has worked almost 15 years back. So now they are figuring it out very clearly that the decision has to be given and the land if it is available. So there are 2 major factors. One is the decision, and I have seen that there's a significant change in the -- even the schedule of milestones where the payments shall be made. Even it is better than NHAI. And NHAI are also looking into, say, change in their, say, payment schedule where they already have given last 2, 3 years in Atmanirbhar. Now they are following the same model that cash flow is very important. So it was last many years that there's definitely railways pressure was there. But we have seen a significant change. And I think for INR 2 lakh crores of projects, there are to be, say, executed plus, and it's not only railway electrification or signaling and transmission. They are all civil and it's DFCC or even the highest density corridor where the construction of wireless track, they are even station. They will require this key change, which I believe they already have initiated.

But what will be the difference in the net working capital days here versus the road segment. So I think you are at about 30, 31 or 35 days of [ MWC ]. Do you think that , that will see a deterioration in the mix revenues from there just go up?

No, I think as we have our experience in metro, definitely, if the working capital cycle is definitely skewed very high and no doubt. But in the railway, we have seen like we are working in the railway projects for last [ 4 ] we are getting very timely payment. Every month, we are getting -- in Kanpur also whatever we build we usually are getting the payments. Not much of our contract asset or unbilled has been created over there. But definitely, some portion is there. But again, as we have seen as there is not much of the stock is to be built up in these kind of projects, very highway it is very much required. So there are mix of it. But in any case, we are getting monthly payments where almost Schedule G and Schedule H are very exhaustive.

Okay. Just the last question on the BOT opportunity. So you will play through subcontracting or you'll also directly also bid for some of the BOT toll projects?

As of now, we are not at all interested in BOT toll. We are already just like Adani we're working. This is the second project we are working. We worked for 4 projects. This NHAI approached us -- so we look forward to this opportunity working at the EPC contract supply -- support to these projects.

[Operator Instructions] The next question is from the line of Jiten Rushi from Axis Capital.

Congratulations on good set of numbers. Sir, first request is can the HAM projects pick up between equity and debt, anything in the grant received because if...

Jiten, a bit louder, your voice is not very much, audible.

So you can hear me now? Hello?

Fine.

Yes. Sir, the first request is if you can share the HAM projects breakup, which you usually share in the presentation in terms of equity grant which would be really helpful. I think this is not part of our presentation this time.

You're talking about equity, debt.

Yes. HAM breakup of equity, debt and...

There is INR 1,451 crores, which is the total requirement -- equity requirement, INR 694 crores already has been infused. Balance equity, ROE, is INR 767 crores. Out of which, we are assuming that the year '25, we would be doing that INR 505 crores, '26 INR 131 crores and INR 131 crores in '27.

What you said? Sir, you said INR 504 crores in '25?

'25 is INR 505 crores.

INR 505 crores. '26, how much sir?

This is INR 131 crores and balance INR 131 crores in '27.

In '24, we will give INR 694 crores.

In '24, we have already done INR 694 crores.

INR 694 crores. But if you can give the breakup in Excel because you used to give in presentation that is fine.

Long list of around 10 projects, we definitely would be providing that.

And sir, coming back to the question on solar, I'm just harping on it. So if I understand correctly, this is a 65-35 JV. And sir, the project is for 543 megawatts, which is also will be done in 65-35 JV, right, sir?

Yes.

And sir, on the tariff, you said [ 3.72 ]. And sir, what will be the total project cost? I'm not talking about the EPC cost. What would be the total project cost on which you are calculating equity IRR of 14%?

It's not 15%. It's equity were the GST has also been considered it's around INR 2,300 crores.

Exclude so when you are doing -- concluding the IRR, you are including the GST, right, sir?

Yes, of course.

So this INR 2,300 crore is your share or it's a total project?

The total project, INR 2,300-odd crores, which we have considered...

Sorry sir, can you please repeat, I couldn't get you, sir.

If the total project value is INR 2,340 crores, they are talking about the total project value. So put together. For us...

This is including GST?

Yes.

So this -- your share will be 65% and you will be investing INR 540 crores, including -- you should be including GST, right, sir?

Yes.

Okay. Okay. Okay. And sir, what would be the PLF, it is mentioned 19%. So you are targeting anything higher or you will maintain the same PLF?

PLI...

PLF.

It's not PLI. So basically, we are getting average around INR 27 lakh per megawatt in these projects as assistance. So there's a subsidy being provided to us while we are commissioning these projects during the commissioning.

This subsidy will come to the parent, sir?

Yes, of course. Of course, as a developer, we need to arrangement that. One is the tariff which you'd be getting from the discom a monthly basis. And the second is this is -- while we are doing this project and being commissioned, we will be getting this particular -- roughly this varies from project to project, but it is roughly around INR 27 lakhs per megawatt.

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

Yes. So just continuing on the solar project. So here, you said you have tied up the procurement, but what are the clauses? Is the escalation and whatever happens is it to your account or are you able to pass it on to the...

No, no, not at all. See in these projects, the escalation is to our account only. We have earlier considered, but definitely -- fortunately, we are getting this project being estimated from -- whatever estimate which we have done and the procurement prices are much lower. It's an all-time low.

Okay. Okay. I understand. And in terms of -- so you said there is an O&M of 15 years. So once constructed, then you will be...

25 years.

Okay. Okay. So -- and the overall project life is also 25 years, so the 3.27 per unit, which you said you will get it for 25 years.

Correct.

Okay. And the subsidy, sir, which you mentioned INR 27 lakh per megawatt, is it coming to the SPV or is it coming to H.G. Infra during construction?

No, it is coming to SPV, but definitely, we have considered certain portion to be passed on to EPC.

Okay. Okay. Understood. Okay. And the second question is on the margins front. So you have obviously diversified into railways, solar and you're talking about going into water also. So far, the contribution has been very small in terms of revenues. But incrementally, as you go to FY '25, '26, obviously, the share will go up. So what sort of margin trajectory should one expect? Should we go down, let's say, slightly to close at about 15%, 14%? Or you'll be able to maintain these levels?

As of now, which we have seen as far as past experience of the project which we already have having had and furthermore, we would likely get these for the year and all. We don't see much of a dip from this, say 15% is the lower side which we have considered.

Okay. Okay. I understand. And you said in terms of monetization, just coming back to solar again, just in terms of monetization, you plan to monetize this? Or what is the -- how do you look at it once the project is completed?

No. See, there are many other projects which they already have been done because this is solar do not have a long story, which we had seen that there are a number of projects available in the market, we have been monetized. But definitely, yes, now onwards, there are not many parts the cost to these projects being commissioned. So -- and it's the total interest of the funds where the equity IRR being maintained, and this is a very less O&M cost, say, just we have seen the INR 4 lakh to INR 5 lakh per annum per megawatt is the O&M cost. It's not like -- totally not like roads, where in roads or are other projects, which the O&M is a big risk. Here, it's not a risk. So we would be able to do that.

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

Congratulations on a very good set of numbers. My first question again on the solar, sir. In this particular set we are taking DISCOM risk. Isn't this unrated sector, are you thinking of scaling this business up? Or is this is a one-off?

Definitely, the entry into this sector is just not on better way. It's a strategic kind of decision being taken where looking into the HAM -- shrinkage of HAM projects in NHAI, where the margins are not that big now. And even the NHAI is coming into many projects on a BOT mode, so with that we have taken -- and we would be looking into this diversity where it's not only for restricting whether solar power, rooftop solutions, industrial where definitely the margins at both the level, EPC as well as equity IRR should be maintained that we already have guided that initially also. So we're looking into the back end into the any module manufacturing also cannot be ruled out in that case.

Understood. You're looking at a larger play in the solar. Is that right understanding?

Yes.

Understood, sir. My second question is on the pipeline for the NHAI. How confident you are that this year the NHAI will bid on more HAM and more BOT asset? You did mention $2 trillion -- INR 2 lakh crore but I think with pipeline this stands out today, it's around INR 30,000 crores, which is still not getting finalized.

You're sure that initially think they are talking for BOT pipeline of around INR 2 lakh crores, but initially -- I believe that they are prepared with only INR 50,000-odd crores of project on BOT. But for sure, there are many HAM projects in the bidding pipeline. EPC definitely are not a big number in our projects. But as the cabinet approved this Bharatmala which has been now scrapped almost it's a new document, which is going to be approved. The entire 2047 and 2035, I think, there are 2 milestones which there 20,000-odd kilometers as a greenfield projects also to be developed. So I think it's not that they are all dried up but it take some more months, few more months this year. But they are -- we are also very much hopeful that we have to be awarding around 6,000-odd kilometers during the year and beyond whichever more.

This includes an HAM and BOT, right? 6,000 kilometers. Is that right?

Yes. So roughly, it comes to the INR 1.5 lakh crores.

Okay. And how do you think about [indiscernible] Maharashtra tender? Do you think this will get finalized in the next couple of months? Or it will take its own time?

No, I think it got delayed because of the election only. And now very much cleaner. That's already RFQ done, rights fee has been received 1 tranche they already have received, second tranche also that has been received. With that, I think I believe within a month or so, it would be all opened and the opportunity for all. it is all available, I think.

The next question is from the line of Ketan Jain from Avendus Spark.

I have 2 questions. The first question is on the interest level, sir, what type of -- what interest rates are you seeing at the project level for a HAM project and for a solar project?

It's almost similar for solar, HAM or highway HAMs. So we are having around 8.6%. This is the recent -- 8.7% which we recently have concluded from Package 10 and 13.

Okay. Sir, my next question is on solar EPC margins. Like what kind of EBITDA margins are you looking at solar EPC because peers like Tata Power and SW report only around 5% to 7% of EBITDA margins.

So we have already have calculated there are 2 things. One is that we have discussed is some financial assistance being passed on per megawatt, but that is around 5% to 6%. Loan is around 5% to 6%. So if INR 4 crores per megawatt is the development cost, EPC cost, which we are assuming. So out of that is INR 20 lakh is over 5%. That is one part. And about 5%, we are also expecting around 8% to 10% in the execution, wherever the supply chain and everything, procurement in the margin which we have seen that this is a different one, which we will be doing that.

Okay. And also, are you going to take turnkey like with modules contracts or without modules?

With module only. These are the contracts, which is to be done as a turnkey basis. Their entire commissioning is being done and I think we need to sell the powers to DISCOM. So this is the ultimate aim for development of the -- this is a capital project.