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

Ladies and gentlemen, good day, and welcome to the H.G. Infra Engineering Q2 FY '25 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 Mr. Saloni Ajmera from Go India Advisors. Thank you, and over to you, ma'am.

Good afternoon, everybody, and welcome to H.G. Infra Engineering Limited earnings call to discuss the quarter 2 and FY '25 operational and financial performance hosted by Go India Advisors. We have on call with us Mr. Harendra Singh, who is Chairman and Management Director; and Mr. Rajeev Mishra, the CFO from H.G. Infra. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore moved in conjunction with the risk that the company faces. We now request Mr. Harendra Singh to take us through the company's business outlook and subsequent performance, which will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Saloni. Good afternoon, everyone, and welcome to the H.G. Infra Engineering Limited earnings call for our quarter 2 and half yearly FY '25 numbers. As we reflect on joyous deliberations of Diwali and welcome the New Year, I would like to extend my warmest greetings to each of you. I hope you have had a chance to review the investors presentation and the financial results, which are now available on the exchange. I'm pleased to share that our company has built a strong legacy with decades of experience in India's infrastructure space. We have firmly established our leadership in the highway sector and successfully expanding our expertise into railway and solar projects. Our focus on operational efficiency and execution has led to impressive performance across key metrics. Let me now provide some updates on the infrastructure sector. Talking regarding roads and highway sector, which has been a key focus for the Indian government, we expect this momentum to continue. Recently, the government approved a highway project worth INR 50,655 crore, covering a length of 936 kilometers. These projects are part of 8 national high-speed corridor initiatives. By December, the cabinet is expected to clear projects worth INR 2 lakh crores. Although project awards slowed has been -- is quite low in FY '24 due to election delays. NHIs financial challenges and cost overruns, a stronger recovery is anticipated in the second half of FY '25. More plans to award around INR 3 trillion in contracts during '24, '25 and has recently approved 215 kilometers of highway projects across multiple states valued at INR 5,000 crores. Despite the slowdown in the bidding pipeline, we remain confident about the roads and highways sector and a strong financial backing and supportive policies are set to drive rapid growth and modernization. In railway, the cabinet has given the green light to 8 major railway projects with a total investment of INR 24,657 crores set to extend India's railway network by 900 additional kilometers across 7 states. This ambitious initiatives supported the PM's Gati Shakti national master plan, which focuses on enhancing multimodal connectivity across the country. Significant opportunities are emerging in the railway sector as well, especially in modernization infrastructure, key areas, including electrification, the development of high-speed corridor, multitracking and comprehensive station upgradation under Amrit Bharat scheme. Additionally, the introduction of Metro Line and Metro rail systems in smaller cities aim to address lighter traffic needs efficiency with INR 2.55 trillion allocated to railway infrastructure, the government's plan for -- also includes the rollout of 50 high-speed Vande Mataram and number of Bharat trains FY '25. This gives us ample opportunity to expand our presence in this sector. In renewable energy, the Rajasthan renewal policy target 65 gigawatts of solar and significant wind energy capacity by FY 2030 emphasizing wind solar hybrid system for efficient resource use and [indiscernible]. Meanwhile, the Central Electricity Authority that is CEA presents 34 gigawatts of battery storage, that is 136 gigawatt hour by 2030, supported by the government fund scheme of INR 3,760 crores of 4,000 megawatt hour, this funding will boost renewable energy integration into the national grid. India's renewable energy momentum has been significantly strengthened with the Ministry of New and Renewable Energy, initiating annual grid for 50 gigawatts with solar energy comprising around 80%. This major push towards a solar-driven energy efficient future presents EPC player with an annual opportunity of INR 150 million. Looking ahead, Solar Energy will be critical in achieving India's ambitious target of 500 gigawatts of renewable energy by 2030 that plans to hit 200 gigawatts by FY '28. Let me begin by sharing the journey in this quarter and providing you a glimpse of our operational highlights. As of first half of FY '25, our order book totals around INR 15,624 crores with a breakdown of INR 12,326 crore of roads and highways, INR 2,387 crores from railways and metro and INR 1,911 crores from solar projects. Our portfolio consists of 67% EPC and 33% HAM projects reflecting a well-balanced approach, we are currently active across 13 states, demonstrating a strong and diversified geographical presence. Regarding the upgrade of EPC projects, the Ganga Expressway project is 71.5% complete and progressing on schedule, and we expect to complete by end of this financial year. The Delhi UER project has reached 96.4%, where the completion has already been applied, which we expect during the quarter only. The Kalimandir Jamshedpur project is currently at its early stage with progress of around 3.7%. The appointed date for this project was recently received on 14th of September '24. Meanwhile, the Neelmangala-Tumkur project which stands at 26.5% due to land availability challenges. We are actively collaborating with NHAI to expedite regulatory clearance and are also discussing with potential settlement agreements from pre closure on this project, with some delinking and descoping, and we expect the same to be closed before in this quarter only. The MSRDC project has been delayed mainly due to nonavailability of adequate land possession. Regarding the HAM project, the Karnal ring road project has achieved 46.1% [indiscernible]. The Raipur-Visakhapatnam project of OD5 and OD6 are progressing well at 79.1% and 86.6% completion, respectively. The Raipur-Visakhapatnam project, which is 81.3%. The Khammam-Devarapalle project has achieved 59.6% in package 1 and 62.7% in package 2. We would complete all these 3 projects of Orissa and AP and both projects of Khammam-Devarapalle that is KD 1 and 2 before March '25, and will target -- sorry and by June '25, the project -- balance of the scope of completion [indiscernible] will be done. The Chennai-Tirupati Package-II package is currently at the initial stage of fulfilling condition [indiscernible]. With financial closure achieved in September '24, we anticipate the project date to be in December '24. Varanasi-Ranchi-Kolkata package 10 and 13 of Jharkhand are currently in the advanced phase of land acquisition and forest clearance. [indiscernible] of these projects is anticipated in the third and fourth quarter, respectively. Regarding the equity requirement of HAM projects, [indiscernible] HAM project requires INR 1,458 crores. As of September '24, 790 crores have already been induced with a projected infusion of INR 370 crores in the remaining 6 months of FY '25 and balance will be infused in FY '26 and '27, respectively. Turning on to the projects of railway. The DMRC project is at around -- progressing well at around 63.9% and [indiscernible] further scheduled time lines. The Bilaspur Himachal Pradesh railway project or of RVNL, 42.8% is being completed. And now we are on track targeting as the completion within the time line. The Kanpur Railway project is 10.3% complete, and there has been some clearance issues of land and utility in this, which is now settling down. The appointed date of Dhule-Nardana project, which was received on 4th September, 2024 is currently at 4% completed. The Karanjaon and Gaya-Son Nagar railway station projects where the project date was declared on 22 June, they are around 3.3% and 2.4% competed, respectively. Regarding the solar project, during the financial year, we strategically capitalized on the [indiscernible] in the rapidly growing solar sector by actively pursuing and securing solar power projects under the [indiscernible], the government initiative aimed at promoting the development of renewable energy across India. And the result of these efforts, the company successfully acquired a total of one utility solar power plant, collectively contributing a substantial capacity of 700 megawatts daily. Of this total [indiscernible] representing a total capacity of 628 megawatts with an estimated EPC value of INR 2,243 crores, which is excluding the GST. The land agreements for these projects are progressing well, with more than 50% of the required already leased. The company is actively working on identifying and securing the remaining land parcels with the expectation that all land regions will be finalized in the coming quarters. As of now, the execution of this project stand at 14.8% with the work progressing smoothly and in line with the project timeline. The debt funding of solar projects will start rolling out from this month only and will be concluded in next few months, fulfilling our debt requirement for the said project and all the PPA will be filed with the authority by December '24. In terms of funding, the total liquidity requirement from these solar projects is estimated at INR 732 crores. And as of September 30, 2024, just INR 3.5 crores has been infused in this project. It is estimated that additional INR 350 crores will be infused during this financial year, that is '24, '25 and the remaining balance to be contributed in FY '25, '26. This structured capital infusion plan ensures that the company can maintain the financial security needed to meet its project milestones while supporting the long-term growth of its solar energy portfolio. Let me now share other significant updates for quarter 2 and half yearly FY '25. In Q2 FY '25, we successfully secured two HAM projects. Those are newly declared [indiscernible] cost of INR 753.11 crores and upgradation of 6 lanes from Narol Junction to Sarkhej Junction in Gujarat valued at INR 781.11 crores. Additionally, we recently have been selected as the successful bidder by NTPC Vidyut Vyapar Nigam Limited for 185-megawatt that is equivalent to 375-megawatt hour just in a share of 700-megawatt project this will be a tariff rate of [indiscernible] per megawatt per month expected to yield annual revenue of approximately INR 52.83 crores. Over the tenure of 12 years, this project is to generate a total revenue of around INR 633.90 crores OHG. The COD of Kundal-Jhadol package 1 in Rajasthan was received on 1st October 2024. The COD of Nandurbar-Prakasha-Khetia in Maharashtra was received on 10 July, 2024. Now I will provide you an overview of financial highlights of Q2 and half yearly FY '23. The standalone financials in quarter 2 FY '25, our revenue from operations grew by 22.4%, reaching INR 1,064 crores, up from INR 859 crores in Q2 FY '24. EBITDA for the quarter stood at INR 174 crores with a margin of 16.4% compared to INR 138 crores and a margin of 15.9% in the same period last year. Profit after tax for Q2 FY '25 INR 189 crores, reflecting a margin of 8.3%, and [indiscernible] crores and a margin of 7.1% in Q2 FY '24. The revenue for half yearly FY '25 stood at INR 2,570 crores, marking a 20.1% year-on-year increase compared to INR 2,141 crore in first half of FY '24. EBITDA for the half yearly stood at INR 418 crores with an EBITDA margin of 15.3%, showing a 21.7% growth from INR 343 crores in first half of FY '24. PAT for the half-yearly stood at INR 228 crores with a PAT margin of 8.9% compared to INR 180 crores and a margin of 8.4% in the half yearly FY '24. On a standalone basis, our gross debt stands at INR 884 crores. This comprises INR 279 crores in working capital debt, INR 588 crores from term loans and current maturities along with INR 15 crores of ancillary. There has been significant increase in the working capital and term loans to accelerate the solar power project progress as a bridge the funding requirement for the procurement of solar modules and inverters and other [indiscernible]. Thus, same was also needed to give momentum to the progress of highways, which was slowed out due to erratic and good rainfall during the monsoon. Moving on to the consol numbers. In Q2 FY '25, our consolidated revenue from operations stood at INR 902 crores compared to INR 955 crores in Q2 FY '24 and EBITDA remained steady at INR 220 crores with the margin improved to 24.3% from 23.1% in the same quarter last year. PAT at Q2 FY '25 was INR 81 crores with the margin of 8.9%, down from INR 96 crores and a margin of 10.1% in Q2 FY '24. And for half yearly FY '25, we reached a revenue of INR 2,430 crores, reflecting a 5.4% year-on increase from INR 2,306 crores of half yearly FY '24. EBITDA stood at INR 532 crores with a margin of 21.9%, up slightly from INR 501 crores and a 21.7% margin of the same period last year. PAT for first half FY '25 was INR 243 crores with a profit margin of 10% compared to INR 247 crores, with a margin of 10.7% half yearly for first half FY '24. On a consolidated basis, our gross net stands at approximately INR 2,404 crores. Just the reason for this in revenue and PAT in consol as for the inter group connection between H.G. and SPV related to solar projects. We eliminated our consol financials. As a result, revenue and expenses from these projects do not appear in the consolidated P&L statement but are recorded as a capital work in progress under [indiscernible]. At the standalone level, H.G. Infra recognizes remaining from EPC work and [indiscernible] income. However, in the consolidated accounts, both revenue and costs from these intercompany transactions are eliminated. Reducing the overall figures and margins compared to the [indiscernible] financial. The PET expense in these earnings remains impacting consolidated margins negatively until the SPV generated revenue from unit production. Once revenue start flowing, this effect will reverse improving the consolidated financial performance. This is an update regarding the monetization of [indiscernible]. As informed earlier, we have successfully monetized our 3 projects, [indiscernible] consolidation of INR 315 crores were received in FY '23, '24 only and [indiscernible] crores is received in October '24, post approval of [indiscernible] GST change in the opening. Regarding the 4 HAM project that is Rewari Bypass, NOC was received from NHAI and [indiscernible] in March '24. The compliance with SPV condition is in progress and expected to complete by '24. There is around INR 145 crores including the residual amount of INR 6 crore for the first tranche expected to be received from the Rewari Bypass where we have invested equity of INR 75.7 crores. We are targeting an order inflow of between INR 11,000 crores to INR 12,000 crores for FY '25. And till date we have successfully secured approximately INR 5,500 crores in projects from highway sector and around INR 780 crores from solar sector. We are confident to maintain our EBITDA margin of about 15% to 16% and achieved revenue growth of 17% to 18% in the upcoming quarters. Furthermore, we are actively pursuing opportunities in new segments where consolidating and operational efficiency, prudent capital allocation and a strategic project selection to sustain margins and enhance shareholder value. With that, I conclude the updates on Q2 and half yearly FY '24 and I'll open the floor for question and answers.

[Operator Instructions] The first question comes from Shravan Shah from Dolat Capital.

Sir, just to clarify, you said that 17% to 18% revenue growth in coming quarters. So does that mean in the second half, we are looking at 17% to 18% growth?

So overall, as we have targeted about INR 6,000 crores, which of INR 5,100 crores is around 18% to 19%. So we have already held around -- touched around 20% growth in first half and we are targeting to see that number coming in around INR 6,000 crores as an entire year top line.

And then even going forward, the similar 15% plus kind of a growth can be looked at?

Yes. For the [indiscernible] years.

And in terms of the order inflow so we have already -- I think, if I total it about close to INR 6,280-odd crores, I think we have received. So now remaining [indiscernible] so how much are more we looking from the road, how much we have already bidded previously. We have mentioned that we have bidded in the road, railway, all these if you can help us in terms of how much we have already bidded in each sector, road, railway or maybe any other sector and how much more are we planning to bid? And how much in terms of the broadly we are looking from the including the road, railway and solar or water.

As far as roads are concerned, we are already -- we are awaiting the results, which bidded around INR 21,000 crores per project. The results are yet awaited and the railways is around INR 7,400 crores being -- already being bidded so as of now solar also, we have bidded around, say, INR 1,200 crores. So again, these are the projects which the results are awaited. Apart from the bidding pipeline, if we see that the -- in highway, of course, it is a bit delayed, but we are looking at about INR 75,000 crores of project pipeline, which for us, we have taken into consideration for NHAI as [indiscernible] project. And railway also, we have identified INR 25,000 crores, which are yet to be bidded, where the project pipeline is there for the new project. And for solar, we are looking to the opportunity where battery storage and [indiscernible] storage as well as hybrid projects are yet to be and even a few of the projects we're segregating [indiscernible] is being invited by the government on the HAM models.

So in terms of value would be broadly how much for solar?

Solar, we are looking at about INR 10,000 crores to be bidded in the bid pipeline, which is already visible.

Just a couple of things. So in terms of the -- whatever the pending appointed date is that if you can help us project-wise when whatever the projects are pending for appointed date when the contract date likely to be received?

Yes. As of now, the project [indiscernible] were Jharkhand, highway 13 and Tirupati so these are the projects, which in any case by December, we are expecting to get the appointed date for projects 10, 13 of Varanasi-Kolkata package 13 and followed by a package number 10 of Jharkhand in March quarter. Apart from these, there are 2 new projects, which financial closure and condition [indiscernible] likely to happen in quarter 1 of FY '25, '26 only...

And in terms of the [indiscernible].

And the projects of Maharashtra where the NOI just not released, which [indiscernible] the 70% of the land, which is the conditions set for issuance of [indiscernible] which will be -- by January, it will be completed. Post that only the LOA will be issued and followed by the [indiscernible].

So most likely MSRDC revenue should very, very, very less revenue in this year. So execution will be [indiscernible] onwards.

This year, hardly there can be any single percentage of execution possible on those projects.

And lastly, just a data point, the equity requirement in hand in FY '26 and '27 and returns on money mobilization advance and unbilled revenue.

HAM equity is consolidated around INR 790 crores already done, balance of INR 670 crores. In FY '25, INR 370 crore followed by INR 177 crore and INR 131 crores in '26 and '27. In solar, it is INR 728 crores, in '25 this is around INR 300 crores, followed by INR 420 crores in FY '26. [indiscernible] and what about the [indiscernible] INR 239 crores.

Unbilled revenue and retention money?

The retention money is INR 110 crores on all the projects and debtors is INR 1,035 crores. That includes retention. Solar, SPV, unbilled as well as SPV RAM and one of the [indiscernible] approval, which is yet awaited in Ganga Expressway [indiscernible] INR 1,353 crores.

INR 1,315 crore is of unbilled revenue?

Okay.

[Operator Instructions] The next question comes from Vaibhav Shah from JM Financial Limited.

You mentioned that the solar order inflow for the year is around INR 780 crores. So last quarter, the order book was around INR 1,700 crores. And this quarter is -- if you look at the order book, it's around INR 1,900. So I have seen the order inflow for 83-megawatt solar projects in Jodhpur, which was INR 499 crores. So apart from that, which is the other project beyond the Ultra Vibrant Solar Energy project?

So this is one project which we have received as [indiscernible] NTPC but also those have contributed to it.

So that is another INR 300 crores?

Sorry?

What is the value of that project?

This is around INR 450 crores.

Okay. NTPC [indiscernible] that project?

Correct.

And sir, we have seen that EBITDA margins have been quite good in second quarter as well, and we have done significant execution on solar side as well in the first half of around 14-, 15-odd percent. So how have been the margins in the solar segment so far?

Solar has showed us the significant good margins around 18%. So that's why we have seen a significant jump during this quarter where solar execution is around INR 262 crores, which is being executed that has been executed during the quarter only.

Sir, are these margins sustainable ahead in the solar segment?

Yes. Solar margins because of there are 2, 3 reasons. One is the stabilization or the price of [indiscernible] that is very low now and we all booked the orders. And that is why we have taken that order -- has been booked without [indiscernible] also. So that will gives us a sensible results when the margins that would be in this range only for the entire balance completion of these projects.

Sir, and lastly, on the railway side, how are the margins?

For Railway do have the margins of around 10% to 12% in every of the project, except for metro DMRC where the margins are 3%. Rest all because it is a very small portion versus INR 100 crores balance. But rest all projects do have the margin of about 20%.

In the DMRC project is 3% margins?

Yes.

Why the margins are so low at 3%?

There has been some issue with respect to the design and with respect to the [indiscernible] line underlying. So because of that, there has been time overrun and the cost of overhead increased, which we have anticipated in the similar way when we are doing railway or highway projects to cost of overhead, which remains around 6%. Where this project is way up at about 12% to 13% because we have very less production every month.

Okay. So initially when you bid for the projects, the margins were in the 10% to 12% range, but.......

It is usually 8% to 12%. Yes.

The next question comes from [ Maximal ] Capital.

Sir, firstly, now when you see the consolidated numbers, these are quite low compared to the stand-alone numbers. So you're knocking off the related party sort of transactions, right, which your one entity, stand-alone entity doing the EPC work for your solar entity. That is the reason, right?

That is the reason in all solar projects. Once this project being commissioned, so till the time whatever execution is happening as per the top line, which is coming into stand-alone H.G. Infra, where the margins are also there. But in consolidation, the margins are totally eliminated, but there is a tax liability also is there. So this is the top line and bottom line net effect, which in this quarter, which is around INR 62 crores of bottom line is being affected. So this will happen for subsequent quarters as well. So this will come back with a [ call correction ] once we commission and start billing the project, billing the tariff.

So the overall impact, sir, how much? You mentioned INR 62 crores was the overall impact on profit before tax or profit after tax?

Profit after tax, INR 62 crores is a profit PAT impact which we have seen during the quarter.

INR 52 crore, sir?

INR 62 crore.

INR 62 crores. So it would have been INR 140 crores-odd instead of INR 80 crores.

Yes. Definitely, this has impacted -- this is absolute number, which I'll [ pay ].

Yes. So net of this impact, it would have been INR 140 crores instead of INR 80 crores which you reported?

But this is accounting standard, which always would be coming in such kind of a solar project. So solar projects and BOT projects, they do have a different set of accounting standards.

And sir, you mentioned about higher solar margins, right, which you are anyways knocking off. So this is because they are related parties. So in that sense, because these are all related party contracts, then what is the sanctity of the 18% margin in this contract because you may get higher margins from your other party because that is anyway the related party. So how should we read those margins?

In any case, any project being executed for SPVs or rather for HG holding companies. So they are all the subsidiaries where the contract is awarded to HG Infra and HG Infra, who is doing the project where the entire procurement to bought up items to execution [indiscernible], EPC is there. So put together, there is a margin there. So we are keeping a balance of the equity IRR, which is more important as well as the EPC margin to HG Infra.

And net of all this.....

There are several other participants waiting for there.

Yes, just finishing just along with this question. So because you mentioned equity IRR, sir. So what is the target equity IRR, including the EPC margins and the cash flows that will occur in the BOT or solar?

So if we consider that the equity IRR along with the EPC margin would be roughly around 30%, 32%.

The next question comes from Vishal Periwal from Antique Stock Broking.

Okay. Sir, this is regarding your one slide in which you mentioned that the [ L1 ] orders that you received. See, for the Ultra Vibrant client in EPC mode, the solar plant that we are building in. This is the EPC project costs include even the module and the cell that you need to procure or it's only the EPC work, the civil -- I mean how exactly structure?

No, no project of [ 83 ] megawatt, they are acquired from Ultra Vibrant. So once we have acquired the project, the entire acquisition cost being paid. And post that, whatever EPC, including solar PV modules and inverter transfer, everything is included in the cost.

So basically then the cost works out to be INR 4 crores, 90 lakhs per megawatt. So that is -- I mean is your assumption in this particular element order, right?

Correct.

And similarly for this NTPC 1, the INR 370 crore project cost, which is there, so this includes your battery or it includes only -- like how exactly this one is...

This includes battery as well as some bought out other than battery items, which are inverters and others creating that infrastructure of substation.

So I mean, generally, these -- I mean, the NTPC order that you are saying even the IRR will be -- what, upward of 13%, 14% equity IRR and then plus EPC margin will be there. Is that a fair way to understand?

Yes. That is again a similar question. The EPC margin are around 14% and equity IRR is again 14%.

And maybe one last thing from my side. I think, initially, you touched upon like the [ PMO ] in the road side, they have done an approval of INR 50,000 crores worth of order. So anything that you're hearing like when this will see a light of day in terms of tendering because this is -- this was approved long back, but not heard anything in terms of award.

One is the separate approval of the project where any greenfield or any such kind of projects are put to for approval. Then post the approval, there is a second part, which is the [ SFC ] approval, which is now vary -- the committees which we are going to approve the DPRs and everything. So this is now keep on a strong and fast pace being done. So we are expecting right after this November also, in December, January, February, everything which they are in the planned 5,000 kilometers is likely to be rolled out and to be awarded.

The next question comes from Ajay Kumar [ Surya ] from [ neveshai.com ].

Sir, I'm new to the company so I just wanted to understand on the KUSUM order, which we have got. So we have got an order of around 700 megawatts or, I guess, INR 1,800 crores to INR 2,000 crores. Sir, if you can help me explain -- understand the working of this order like -- it is a part of KUSUM component C as well as other feeder level solarization. And you commented that we have started ordering the modules and other components. Sir, will the pumps will also get changed in the FLS part, if you can help me understand or give us some thoughts on the working of this KUSUM component C in the order which they are won. And sir, we have been hearing the pace of execution in this [ yojana ] has been pretty slow compared to the KUSUM component B, so if you can also highlight the problems we are facing maybe in terms of acquiring the land or getting any regulatory approval. So as you can just show what is working in the industry as of now, that will be very helpful.

This sector is KUSUM-C where we need to align the land, which is being taken on the lease basis, so over 50% of the land parcels already in place. And we have all started -- they all -- wherever we having the land in place, we already started the project. Around 60 to 65 days, we usually are looking or seeing that once the project being started, the completion is happening, then 15 to 20 days more for the commissioning. So thus we are seeing that if the land availability is insured, then most of the 88%, 89% of any problem and any dynamic problems remain settled. And other regulatory affairs, where the PPAs being signed, and we are receiving the SPV and PPA. So these are the regulatory things which are happening parallelly. So in this [indiscernible] as well as PV modules and inverter, transformer, we have already have [ jumped ] orders whether all such big chunk of supplies should be aligned well with completion. So this we have done. And within the last three months, see most of those things being done, design being done. So now the progress is on track, we believe, that, say, in the month -- in the quarter of December, January and March and June. So most of these projects will be completed.

And sir, on the FLS part, are the pumps also getting replaced? Or like the pumps are not getting replaced, it's only the electric pumps that are getting solarized?

No, these are not pumps. They are nothing related to electric pumps. They is related to power, the energy, which we are producing. The power is to be sold to the nearest grid substation of [indiscernible]. So it's very near, like 1, 1.5 kilometer of transmission line needs to be laid.

[Operator Instructions] The next question comes from [ Yashovardhan Panka ] From Tiger Assets.

Are we looking at any recent upcoming government orders?

Sorry?

Are we expecting any upcoming government orders?

Government orders?

Yes.

Government orders, orders which we are -- project which we are bidding, in continuation, we already are bidding the project. But as of now, there is no result yet as what the results, which I just expect that in highways, around INR 20,000-plus crores and railway INR 7,000 crores on projects where the results are yet to be declared.

The next follow-up question comes from [ Maxim ] Capital.

Yes. So on the railway part, you mentioned that the margins are 10% to 12%. So that is significantly below the company average. But on the capital side, is it more capital efficient in terms of the cash flows or what is the benefit apart from diversification that we are getting by aggressively getting into that projects?

Railway projects, one thing is very unique. It's not that there is a big difference between the capital allocation or working capital cycle. It's almost similar as in highway EPC. But very important is if we are looking into projects where the weighted margins are very important, it can be HAM highway road projects and then highway EPC projects. And in highway EPC projects, which we are having a similar kind of a margin around 12%, 13% even in a project like [indiscernible], which we are doing, it's a similar kind of a margin. So in EPC, margin ranges are [indiscernible]. In HAM projects, the margin range around 18%, 19%. And in solar also margins are around 18%. So put together, weighted average is around 15% to 17%, 16%.

And the 4 assets that we have sold. So I think the price to look on that was around [ 1.4 ]. But on our invested equity, what kind of IRRs were we able to get, including the EPC margins that we had accrued earlier?

So as far as the EPC margin, this is a total different subject that HG Infra usually is executing the project on an EPC lump sum model only. And first for including the price escalation or including anything, there's a plus side of life. So this is one way when we are calculating the margin for coming to EPC to HG Infra, coming from EPC to HG Infra. And regarding the equity IRR, which we have seen in the earlier past that wherever such kind of HAM projects or solar project, we are usually maintaining about 14% of a rough guidance, and we should get equity IRR of 14% to...

The next follow-up question comes from Ajay Kumar [ Surya ] from [ Neveshai ].

Sir, my question is on, again, the KUSUM component C. Sir, If you can also explain us the tender, how are you awarded? So is it, the L1 gets the order? Or is it some technical qualifications, which are required, which is providing an advantage to HG Infra in winning the orders?

Earlier, the strategic partner was there. So we partnered with a technology partner while we bid for those projects in last year only. Now in KUSUM-C, there is a different model where the mandatory use of DPR. So now the projects are of a totally different model. So we are not at all participating in such kind of orders in this financial year also. So we are looking into new opportunities coming in where kind of a segregation of the distribution and networking with the best projects, which is a battery energy storage solution. So such kind of projects are now in pipeline.

And sir, if you can also throw some light on the opportunity side because if I look at the order book as of date, solar orders are around 9% to 10% of an order book. If you can also explain the opportunity size which lies in either the KUSUM component C for Infra or the overall solar scheme of things which are happening across the country?

So right now, as far as the total order is concerned, it was 14.5% of the solar orders. And apart that I already explained that we would not be very keen on adding more of the KUSUM-C. But again, as we are looking into some hybrid kind of a project where it can be battery to solar. So there's round-the-clock power to be generated. But then again, there are tenders which we would like to set up some projects, power plants. And it had to be a kind of a PPA from SECI or like some government also is inviting some projects on a HAM model, there are EPC projects. They are all EPC.

The next question comes from Uttam Kumar Srimal from Axis Securities.

Sir, currently, we have already diversified from roads to railways to solar and to power also. So are you also looking to diversify into power transmission segment as I think there has been a lot of traction from the government in this particular segment?

We -- technically, our team is examining such kind of a project where -- because they are against such kind of a project where the transmission or what lines are there. And the ROW constraint is again the limiting factor with such kind of a project because the project being delayed in earlier part because of the ROW also. So the government is also helping and keep giving the new guidelines for ROW procurement also. But we are working on it. As of now, we do not have any project pipeline where we will be bidding at least.

Okay. And sir, how is the competitive intensity currently in both EPC and HAM project?

I think not many projects have been awarded -- have been bided rather. But for sure, there are cost cutting and aggression has been seen in highway, but there are chances that prequalification criteria and something is going to be changed very soon in highway as well.

And sir, what would be your CapEx guidance in FY '25 and '26?

Not much of a CapEx is required because the projects which we are operating, the railways or solar, we do not have such a CapEx, big CapEx requirement. Highways, we do already having the big already midsized fleet, which is available. So hardly, there is a INR 30 crores to INR 35-odd crores, which is likely to be there in case of require any such requirement for the year.

The next question comes from Shravan Shah from Dolat Capital.

Sir, just to clarify, did you mention that the solar order book of INR 1,900-odd crore which is there will be completed by June '25?

Around 90% of this would be completed.

And sir, debt has gone up to INR 884-odd crore, [ INR 262 ] crores in Q2. So previously, we were looking at INR 500 crores to INR 600 crores kind of cost stand-alone debt.

As I already had explained in my remarks that because which we were very -- it was very important for us to block the module at the fixed price as well as transformer, inverter and all cable items. So these are the items which we have booked. That's why for the huge advances has been paid as well as what we have executed in solar. So we are seeing that our entire solar is either unbilled or it is yet to be received as a debtor balance because of meantime arrangement, but it will be all coming back to the normal level in Q3 and Q4.

So by Q3, Q4, it will be, again, back to INR 500 crores, INR 600-odd crores?

Yes.

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Thank you. I appreciate you all for taking the time out for attending today's investor call. And I hope all of your questions were answered adequately. In case there are still any follow-up queries, please feel free to reach out to us or our IR advisers, Go India Advisors. Thank you.

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.