Kalpataru Projects International Limited (KPIL.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Kalpataru Projects International's Q1 FY '26 Earnings Conference Call, hosted by DAM Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, ma'am.

Thanks, and good morning, everyone, and a warm welcome to the Q1 FY '26 Earnings Call of Kalpataru Projects International Limited. We have the management today being represented by Mr. Manish Mohnot, Managing Director and CEO; Mr. S.K. Tripathi, Deputy Managing Director; Mr. [ Sanjay Dalmia ], Executive Director; Mr. Amit Uplenchwar, Director, Group Strategy; and Mr. Ram Patodia, President, Finance and CFO. At this point, I'll hand over the floor to Mr. Mohnot for his initial remarks, post which we'll open up the floor for Q&A. Thank you, and over to you, sir.

Thank you, Bhoomika. Good morning, everyone, and thank you for joining us on today's earnings call. I'm happy to share that we have had a strong start to FY '26. The performance for quarter 1 of '26 marks our highest stable Q1 revenue and profitability in the company's history. This performance reflects the underlying strength and resilience of our diversified business model, robust balance sheet, and working capital management and relentless focus on project execution on back of strong capabilities to execute EPC projects across diverse geographies. Let us now move to the business performance. At the consol and stand-alone level, both revenue on for Q1 grew by a strong 35% Y-o-Y, led by strong project execution and holdback. In Q1 FY '26, improvement in profitability has significantly outpaced revenue growth as our consol EBITDA grew by 39% Y-o-Y, PBT grew by 11% Y-o-Y and PAT was up by 154% Y-o-Y. Similarly, at stand-alone level, EBITDA was up by 37% Y-o-Y, PBT grew by 7% Y-o-Y and PAT was up by 72% in Q1 26. This was on back of 20 basis point improvement in consol EBITDA margin, which stood at 8.5% and 170 basis point improvement in consol margin. Our stand-alone EBITDA margin was up by 10 basis points to reach 8.5% and PBT margin improved by from 100 basis points to 5.4% for Q1 '26. As guided earlier, margin expansion remains a major focus area for us on back of strategic building, diversified business mix, prudent working capital and operational efficiencies. Our finance cost as a percentage of sales has come down to 1.7% at stand-alone level and 2% at consol level backed by efficient working capital management. We continue to maintain a strong balance sheet as we close the quarter with 33% Y-o-Y reduction in stand-alone net debt to INR 1,940 crores and 26% Y-o-Y reduction in consolidated debt to INR 2,765 crores. Our net working capital has improved significantly compared to similar quarter last year with net working capital days at 106 days at stand-alone level and 91 days at consol level, which is an improvement of 19 days and state level and 12 at consol level compared to the similar quarter last year. Our order inflows remained healthy at INR 9,899 crores till date in FY '26 with significant wins in the B&F and T&D business. Our order book stands at INR 65,475 crores as of June 30, 2025, up 14% Y-o-Y with fairly diversified and provides strong visibility for future growth. Now coming to the performance of individual businesses. Our Transmission & Distribution business delivered a strong revenue growth of 56% Y-o-Y, supported by robust order backlog and project execution in India and overseas market. We received new orders of INR 3,288 crores in the T&D business, supported by India and international markets. Our D&D order book stands INR 26,725 crores, a growth of 30% Y-o-Y, reflecting good growth visibility in coming quarters. We continue to strengthen our capabilities and market reach in the T&D business as we have secured new equity project and strengthened presence in the Middle East and Nordic region. LMG widen as reported revenue growth of 72% Y-o-Y to INR 774 crores. LMG received orders were across INR 850 crores till date in FY '26 and have an order backlog of around INR 3,200 to 30th June 5. We have initiated a strategic overview on LMG where various options are being evaluated, including options related to IPO, subject to market conditions. In this regard, merchant bankers and other advisers and intermediaries have been appointed to assist with such evaluation and LMG has initiated certain preparatory steps. Overall, the outlook for our T&D business remains very optimistic in domestic and overseas market with tender pipeline in excess of [ INR 120,000 ] crores in the next 12 to 18 months. driven by investments in energy transition, grid modernization and the growing demand for power. We are confident that our T&D business is well positioned to continue its growth trajectory with improved profitability going forward. In Q1 '26, as Buildings & Factory business maintained its growth momentum regarding a 13% Y-o-Y increase in revenue. We have secured record orders worth INR 6,711 crores, taking an order book to an all-time high level of over INR 16,600 crores in the B&F business. This performance is driven on back of a strong capabilities to win and execute large sized design and build contracts from both long-standing and new clients. Notably, we have secured our largest B&F order on design build business till date in our history for development of over 12 million square feet of residential buildings in 1 single project. Additionally, we expanded our presence in the data center business with additional works on an existing project. In the building and factories business, we continue to focus on establishing strong footprint in key markets expanding our portfolio with large-scale design build projects while sharpening our competitive to robust execution and timely delivery. Our oil and gas business delivered strong growth with revenue more than doubling to INR 588 crores progressed with good progress on the Saudi project. Looking ahead, we are actively working to improve our presence in international markets to drive the next phase of growth in this business. Our water business saw a decline in revenue by 5% Y-o-Y to INR 70 crores. Collection in the water business has started to improve in a few states, while progress in certain states still remains very slow on the collection front. We expect collection intensity to improve going forward. With an order book in a backlog of INR 8,900 crores, we remain comfortable on the execution front in the coming quarters and also in the next few years. Our [indiscernible] business delivered strong performance this quarter with a 42% Y-o-Y growth driven by progress on material projects, both elevated and underground. We are continuously building our capabilities in execution and delivering to capitalize on the growing pipeline of opportunities in metro systems, elevated condos and tunneling infrastructure. In our railway business, we recorded revenue of INR 54 crores during this quarter with aligned with the current strategy of prioritizing project closures while being selective with new orders given the competitive intensity in this business. Lastly, daily revenue from our lower road assets rose to INR 72.6 lakhs in Q1 '26 from INR 63.6 lakhs in Q1 '25. Importantly, we have not infused any funds in the 3 road SPVs during the first quarter. Our subsidiary, Wainganga, has issued terminating express WPL has issued termination notice to NHAI in 15 in July due to various contractual defaults on the part of the concession. The company does not expect any material impact on the termination of our -- on our financials. We are progressing well on approval for sale of Vindhyachal Express and expect to complete the transaction in Q3 of '25/'26. Moving now to our outlook. We remain confident to deliver on our targeted growth and profitability for FY '26. We are on track to achieve revenue growth in the range of 20% to 25% at both stand-alone and consol level. with heavy improvement in PBT margin. Our order visibility remains very positive in most of our businesses as we continue to target order inflows of INR 26, 000 to INR 28,000 crores for full year '26. We also remain committed to efficient working capital and prudent debt management to support execution and competitiveness. With strong momentum across more of our businesses, we are confident in delivering sustainable and profitable growth in the quarters ahead. Thank you for your continued support. We now look forward to your questions. Thank you.

[Operator Instructions] We have our first question from the line of Mohit Kumar from ICICI Securities.

And congratulations on a very strong quarter. But sir, my first question on the despite very, very strong order flow, it seems like the India T&D was low in the Q1. Can you please comment on that? And how do you see that's going that I'm falling forward?

Mohit, if you look at our T&D order inflow in the India side, you would have seen Q3, Q4 we won orders more than INR 7,000 crores. Typically, you see a lot of orders coming in Q3, Q4, driven by all the tenders of power grid and [ RSC PFC ] bidding. We have not seen much bidding in Q1, which is a typical strategy. But while we go ahead, there's a huge backlog. We've seen tenders of more than INR 50,000 to INR 60,000 crores to be paid over the next 6 months. primarily for grid expansion, which were tenders are all being quoted by REC PFC. So we remain very confident that you'll see that growth coming in very, very soon. From a last 9 months perspective, we have got orders in domestic T&D of more than INR 7,000 crores to INR 8,000 crores. So it's just a timing issue. And getting into Q2, Q3, you'll see growth coming back in terms of order book also in domestic T&D.

But is it fair to say that India saw roughly $1.3 trillion quarter of big [indiscernible] in FY '25? Is it fair to assume that a lot of these projects are yet to close the EPC contract?

So it's the mix. It's a mix of a lot of orders have been closed. A lot of orders are under in the stage of a pipeline in terms of bidding. But the plans going forward to achieve the 2022 target, which is the NA target, I think we'll have to grow at least 20%, 25%, if not 1 more in the next 3 years in the T&D space.

Understood. The second question is on the building and factory wins. This quarter was surprisingly very good. Can you comment on the spread, geographical spread arising by few clients used by a large number of clients?

On the B&F side, the geographies, our biggest strength continues to be Southern India, where whether it is in all the markets, whether it is Bangalore, Hyderabad, Chennai, Visa, all of them. That would be closer to 60% of our order book 60%, 65%. The balance, 35% would be driven between West and not primarily. As far as the client concentration is concerned, we work with selected clients. The biggest clients of the country, whether it is prestige, whether it's DLF, whether it is [indiscernible], or whether it's [indiscernible], right? We work with selective clients, but these are the biggest clients of the country. We do not see any client concentration risk in any form because majority of the projects which we're executing have already been launched and significant sales are visible in those projects. And given the [ RERA ] given the current RERA environment, we see minimal stress on any of those projects from a client concentration risk perspective.

We have our next question from the line of Gaurav Uttrani from Axis Capital.

Congratulations on the bid side of number. I just wanted to comment on the water segment, like how we are seeing recovery in the segment? And are we seeing new inflows to sort of come in the segment? Similarly, for the railways, if you can highlight like what would be the progress going forward? And what would be our strategy to grow this segment as a whole?

Sure. Thank you, Gaurav. Gaurav, on the water segment, as I mentioned earlier, we're seeing some improvements coming in some states in terms of cash flow. So when I look at states like MP, [ Orissa ], we're seeing good improvements coming on cash flows. We're getting paid whatever we are billing today. But in some states, primarily UP and [indiscernible], we are still not seeing too much traction on release of our whole outstanding. We believe that it's only a matter of time because it's all projects funded by the center and all budget allocation has been done. We are cautious in terms of delivering -- we're primarily focusing delivering our states, which are paying us on time. So to that extent, we are slightly cautious, but I wouldn't say we have reduced it significantly. So going forward, we believe next couple of quarters, the balance should also start paying, and that would help us, again, to actively look at projects from a long-term perspective. Our current order book on water is good enough for the next 2, 2.5 years. So we are not worried in terms of an order book building immediately, given the current constraint on cash flows. As far as railways is concerned, we've been slightly bearish in this business for the last couple of years because we've seen huge competition, plus 95% plus of the country is already electrified. We do see some projects coming up on electrification, on metro electrification as well as civil projects, but we are very, very cautious. So both water and railways, we continue to explore international opportunities, and I personally believe that during the current year, we should at least see one large win in both the segments on the international front.

Got it, sir. And sir, our margins have been really good this quarter, like at 8.5%. So it's taking into consideration that water segment would have performed well. So what would be the impact negative impact that on the margin due to underperformance of the quarter segment, if you can highlight that?

So we have already built in this when we gave our projections at the beginning of the year, where water segment was not supposed to grow so much during the current year because we knew that these challenges might continue for some more time. So whenever we have given our profitability target of 5%, 5.5% PBT level, we had already included that impact. So water is right now at more at a -- if you look at it on a quarterly basis, more at a breakeven level. they've not done highly posted, they're not highly negative. But that is what was already budgeted in the numbers when we gave projections to the entire market.

[Operator Instructions] We have our next question from the line of Vaibhav Shah from GM Financial.

Sir, firstly, on the B&F business. So we have seen a strong uptick in order inflows and order book also strengthened in the past few quarters. So how would you see the revenue growth in this segment? So it should be in line with the company's overall growth guidance? Or it can even surpass the growth given the strong order pricing?

Vaibhav, we believe that the order book, the revenue growth would be in line with whatever we expected for the company as a whole, the 20% to 25%. A lot of these new orders which have come are more design-build orders. So converting them to revenue would take some more time. It would not happen in Q2, Q3. It would only start in Q4. So on an annualized basis, we believe that B&F business should be very similar to the growth target, which is given for the entire company?

Okay. Sir, secondly, on the [ JJM ] side, Will we see a decline in Water evolution for the entire year like it was in the first quarter? And what were the outstanding receivables results for June?

So on an annualized basis, we believe that the water business will do slightly better than what they did in the previous year. It might not be a huge growth, but it would still be a single-digit growth in terms of revenue. As far as JJM outstanding are concerned, they are in excess of INR 1,000 crores as of 30th June, which includes build and build all of them. And we are wondering that closely. And I said earlier, some of the states like UP and Jharkand outstanding is much higher, but the other states the outstanding have improved significantly. .

Okay. And sir, lastly, on the margin bit. So you mentioned that in water, we are at breakeven levels and railway also should be at similar levels or a negative level. So how do you see the margins, especially in the T&D and the B&F segment because the major contributors for there?

So I think as we've guided earlier, T&D, B&F oil and gas, all of them in terms of margins are much stronger more in the range of 9% to 10% EBITDA for all of these businesses. And some of the other businesses are much lower on EBITDA, and that's why this is mixed bag of 8.5%. We believe that this would continue for the balance part of the year also wherein some of our transmission domestic international as B&F Oil and gas will deliver much higher margins and the other businesses would be subdued slightly subdued on margins.

And lastly, on LMG and [indiscernible], how has been the margin performance in the first quarter? And what is the guidance for FY '26?

I think the margin performance for LMG in the first quarter I think at an EBITDA level, they have done 8% plus. As far as [indiscernible] is concerned, they continue to be negative on EBITDA even in the current quarter. We're not able to provide guidance for the current year given that the process of looking at options to fund raise has started for LMG, but we are on track on whatever we have given at the beginning of the year on the business plan of LMG.

Sir, execution was very much very strong in the first quarter for LMG. So the momentum should continue?

Yes, because the order book looks very good. So we believe that we should be on track for a reasonably good execution going forward.

We have our next question from the line of Mihir Manohar from Carnelian Capital.

Congratulations on a situation on returners. Sir, I wanted to understand on the [indiscernible] side you mentioned excess of INR 1,000 crores bus and base book together. What is the bifurcation between build and unbilled? And what was this number individually on March quarter?

Mihir, I might not have the exact details of that with me right now. I think compared to March quarter, I know that the incremental cash, which we have given in the current quarter is only around INR 150 crores or as far as details specifically in terms of what is -- how much is built in Anil, if you can connect with any of our team members post the call, they'll be able to give you those details.

Sure, sir. I mean on the UP side, you were expecting the numbers are in this recovery to happen roughly April or around. But however, there are still August the number has not come in. Broadly, I mean, what is the reason for UP and Jharkand that the money is not flowing in?

But we wouldn't know the exact reasons have not got the funding from the center as of now. We are in continuous touch with them. We still continue to work on majority of the projects in UP while Jharkand have slightly slowed down our work execution. We have had recessions both at the state and the central level at across all levels We've been given to understand that we should see some cash flow coming in as early as August, September, September, this next few months itself. We'll just keep our fingers cross, continue working and continue pushing to see that the cash flow comes sooner than later.

Understood. Sure. Second question is on the LMG side. I mean we are exploring options for either basing capital over there or target listing. I just wanted to understand it tones because I mean it is also a T&D business and sitting in KPIL. So what is the strategy and thought process of making it a separate subsidiary listing or subsidiary?

I think the strategy is very simple. I think it is accretive to the shareholders of KPIL to create value for some of our subsidiaries where we've invested a lot of time in the last 10 years. So that's one approach. And second is also to build a kit to make sure that if there are further opportunities of growth in the European segment, then LMG itself could look at those opportunities using the cash flow, which we could raise over a period of time. So it's a mix of both of them. And as I said earlier, we're looking at various options, and we're exploring that, and we've appointed bankers and advisers for that.

Understood. Sure. And then the last question was on the interest side. On the international we exit projects also?

Yes, we do, but not across the globe in some part of the world, it's Latin America, Chile, we're doing an HVDC. So some parts of the globe, yes, we're doing HVDC projects. but not across the ore Brazilian, yes, we didn't not so much. But it's a mix, yes. So it depends on whatever opportunities exist in any of those countries. But if your question is, have we qualified to PTC projects at a global level, the answer is yes, we qualify to do HVDC.

Okay. Understood. Just on the HVDC global are the margins and ROE ROCs better than the low HVDC or lower TV projects just on fundamental expective?

So I don't think there's any difference in terms of HVDC or non-HVDC projects when it comes to margins or gross or ROE because we built all that in the tender costing and effectively, we build at similar margins. So it's not that if it is versus nonequity the margins would be different in any form.

Understood. Sure. Right. And my last question was just on the guidance. I give a good trajectory, which was there in 1Q and also a robust CapEx across the power can space. Do we expect our guidance to be reviewed?

So if you -- I'm sure you would have heard my opening remarks. At the beginning of the year, I said 20% plus. Compared to that, right now, we have said 20% to 25%, and I personally believe we should be more closer to that 25% level in terms of revenue growth guidance. With margin guidance being similar of 5% and 5% at a stand-alone level.

We have our next question from Amit Anwani from PL Capital.

Congrats for the good set of numbers. First question, sir, on the debt levels, what kind of target debt levels we are looking at this year also, the PL transaction, if it happens, what is the value you are expecting, how much we invested and will that help making up a sheet better. Some color on the debt position and how we feel is also going to benefit us in terms of the balance sheet?

Amit, we continue to stay cautious on our debt levels, and that's been our model all throughout the last 10, 15 years. We believe that our net working capital days will be below 100 days at the year-end, which is 1 of our targets. And driven by growth, you'll have appropriate debt. Q1, typically, you see debt going up. That's been a trend of the industry as a whole, and you've seen that now also. So my own view is Q1, Q2 debt should go up, and it should start stabilizing in Q3/Q4. On absolute numbers, it will be driven by how much growth we achieved with working capital days below 100, net working capital is below 10 at a standard level. That's how we're driving it. As far as debt and net working capital is concerned.

Right, sir. So you're expecting in the real estate, so any update has that imposed? And is the money received? And the second same for or the soon logistics, what exactly you'll be looking for in the subsequent quarters as a strategy yes?

So Shree Shubham Logistics, we continue to explore opportunities of selling some of our warehouses and land fasters which were there and reducing external debt. We should be selling at least 2, 3 large warehouses in the current year. One of them may be as early as Q2. Our target is to reduce external debt significantly by the end of the year, and then we could look at strategic options getting into the next year for Shree Shubham. As far as the real estate is concerned, I think we have already given on the indoor side, majority of our projects are major, if not it 99% of residential and shops are sold. We have to collect approximately INR 100 crores, which we believe collection should all happen in Q2 or early Q3, not beyond that. That's on the Indore project.

The amount which you're expecting?

It's close INR 100-odd crores. .

[Operator Instructions] We have our next question from the line of [ Abijit Singh ] from Systematics Group.

Great to see an amazing set of results from this quarter on. My first question is, given the current mix of the order book, what is the sensitivity to an increase in commodity prices like copper, et cetera, whatever the commodities that are the input costs. So what is the -- I mean, a portion of fixed price contracts to the contract for the PET clause and other variables which could go into the sensitivity?

So Abijit, just to that to be very clear, we are exposed to 3 or 4 kinds of commodity risk, still being the largest aluminum second copper and zinc. As far as aluminum and copper and zinc are concerned, we are significantly hedged if not fully hedged. So there will be no impact of any price movements going forward. On an overall book, if you look at our order book, there's around 65% of our order book, which is fixed in nature. So that 65%, we do not believe that there will be impact of an improving -- any increase in any of the commodity prices. There's 35%, which is variable. And out of that 35%, significant is already hedged. So personally, if you ask me, there could be very, very minimal impact in case prices go up significantly. Less is double from here, which we saw post COVID when suddenly still at double itself until that happens. We do not believe there will be any impact on margins given by volatility at least in the current year.

So only seen and sharp increase could impact substantially?

Yes. When I say sharp, it doubles itself from here, which we've seen only once in the last 15 years, that was post COVID. If it doubles, it sellable itself from here. You still have a 3- to 4-month inventory. So you will not see that impact coming significantly in the current year. It will only come in into next year for that order book, which is more fixed in nature.

Right. Then on the -- you mentioned in your comments about the B&F and water business that you are expecting on order in the international geography. So could you comment on I mean the geography and the kind of addressable market that we are looking at there and the margin profile. So I mean, a general idea of how we're looking at these markets?

So on my commentary, I spoke more about water and railway on the international front, it wasn't B&F. The segments for water continue to be more focused on the Middle East side, where we're looking at options with a few large developers in the Middle East. This would be high-value projects and margins similar to what we got in India in terms of EBITDA and PBT. As far as railways are concerned, we are looking at options more in the Africa side, and we are looking for tenders more in the African region. It might still take some more time before we really get into which exact geography of Africa, but as I said earlier, it should be high value with margins similar to the Indian margins which we quote.

Right. So lastly, is there any impact of the increased tariffs by the U.S. and Indian imports on our business?

I think on our business, we have looked at -- we have a -- we have a 0 impact because we have 0 exposure to U.S. and every farm and all the businesses. We do not do any imports. We do not do any exports nothing from U.S. directly as well as indirectly.

We have a next question from the line of Bharat Sheth from Quest Investment Advisors.

Congratulations, Mohnot and team for...

Sorry to interrupt you, Mr. Bharat, Can you please be a little louder?

Yes. Congratulations for excellent performance. Sir, my question is, one is, how do we see opportunity in European region, what was here and now? And how do we see it changing?

Bharat-bhai, as KPIL, we have always been very bullish on the European segment on a few specific sectors. One of the sectors where we're very bullish is T&D. And I think we continue to stay bullish whether it is in the Nordic market or whether it is Germany or whether it's the neighboring markets. As of today, if you look at it at Sweden, we are among the top 3 through [ Linjemontage ], and we continue to be staying in that position. So from a 2- to 3-year perspective, we continue to stay very bullish. And personally, if you ask me, even from a 5-year perspective because majority of the European states now have becoming clean in terms of energy by 2035, which requires them to build a very strong grid. Given that, I think we continue to stay bullish in this market, at least from a 3-year, 3- to 5-year perspective.

And how much capability investment that we are planning? And what's it for? I mean during the future opportunity?

So, Bharat-bhai, I might not be able to speak a lot on the future opportunities, given that we've started a process I can only see that whatever business plan we have given at the beginning of the current year, we're confident of achieving that. And we've geared up in terms of competencies to make sure that we achieve that and further growth also if required.

And how about the parcel? How do we see, I mean, and when do you expect the PBT breakeven?

So we've had -- we still continue to see -- have some challenges on parcel. Q1 was good on revenue growth, but on profitability, it was not necessarily a good quarter. I personally believe getting into Q3 onwards, we should be at a breakeven level. Q2 is also slightly difficult quarter. But from Q3 onwards, at Parcel, we should be at a breakeven level. We've also been very selective in terms of taking orders there, and we will be revisiting our strategy in terms of future growth of Parcel maybe Q3, Q4, and then we'll revert back to all of you. .

Sir, last question after weaning a large project in oil and gas in international market. So how you are seeing now? And then how important are you from 2, 3 years perfectly?

So Bharat, on the international front, when it comes to oil and gas, where we qualified with majority of the international Middle East players, whether it is ADNOC, whether it is Saudi Aramco or whether it is the neighboring countries there with the oil and gas utility. We're seeing a lot of opportunities coming up there. Our first thing was to make sure that we have taken a large project that we create a team and focus on delivery, and that's why we did not take any projects in the previous year. Over the last 12 months, we are now seeing that our team has delivered better than what we had expected. With this, we now continue to refocus on building an order book and this on the international front. And we believe that before the end of the year, we should have some large wins coming up the international and on the oil and gas business.

Okay. And sir, last question with your permission. When you are talking about 3 years opportunities, say, on India side, I mean, growing on T&D side, 20%, 25%. So again, I mean, what are the major or I mean challenges that you are taking? And how really, we are building continue to gear up to encase those opportunities?

So going back to challenges, our biggest challenge continues to be labor availability and also the movement of flavor. To me, if you ask me, the biggest challenge, 1 challenge and challenge 3 continues to be only that. As far as our plant capacity is concerned, we are in the range of 2.25 lakh plus tonnes, and we can easily expand that in a few months to whatever we need. As far as our management team as well as our design engineering team, our equipment base, our CapEx base, I think we can even do double of what we are doing today. So today, we do not have a challenge on any front except label availability, and that's also improving in terms of where was the same time previous year to where we are right now, I can see some improvements, but it needs to improve significantly for us to continuously growing this at 25%, 30% for the next 3 to 5 years.

Okay. Okay. And same thing on B&F side?

Yes, I think it's exactly the same on B&F. The opportunity looks good. We work with the large guys. We're doing large-sized projects design-build thanks to RERA, we do not have any challenges in terms of liquidity, cash flow, any of that. We've also invested usually in CapEx over the last 3 years at the B&F side. So that also helps us having a good CapEx base. So our only challenge continues to be labored on the B&F side also.

We have our next question from the line of Teena Virmani from Motilal Local Financial Services.

And some suasion for extremely good set of numbers. Sir, my question is related to the previous question on growth across segments. Given the way this pipeline is strong and order inflows for KPI also have been strong in the last 3 years. Beyond this labor issue, which probably can be a temporary issue, what can be a constraint to grow even at a 30%, 35% growth rate going forward? In the sense, like I just want to assess whether you can grow on a full year basis by more than 25% or 25%, is it possible or not? Because which has a seasonal impact. Q3 and Q4, generally, the execution ramps up and all those labor-related issues also get sorted out. So can you be at even 30%, 35% growth rate if things fall in line?

So Teena, a good part of our business is that it is driven by external factors as well as -- as much as driven by our own capabilities and competencies, right? On an order book front, yes, we have good visibility for all the business. We have seen in Q1, we've grown at 35%, and that's why annualized, we're confident of 25% plus. We do not believe that at least for the current year, we have any challenges on achieving a targeted growth. But our businesses always have internal and external factors, both. We would rather be cautious and continue growing at 25% and not target 35% for a year and then come back to 10 or 15 in the next year. So our own belief is that we would like to continue this 20%, 25% growth for the next 2, 3 years. focus on improving margins and focus on selecting projects which we want to deliver in the shortest time frame. So to answer your question, we believe 25% is a good number. We can do better than that, but we'll be happy with doing this sustainable instead of doing it in a year and then coming down next year.

Got it. Because to some extent, FY '25 base also was lower and particularly for Q1, the base was lower. That's why I was trying to understand that on a low base also, can the growth be a little better than what you're guiding for. But I take your point that you want to maintain it as of now at 20%, 25%?

Sure.

And my second question is related to any kind of CPC provisioning. Have you done anything for this year in the current quarter? Is it part of the numbers? Or is it -- is there any provision done in the balance sheet?

So we continuously do CTC progressing on a monthly basis. It's not on an annualized basis, right? So projects wherever CTC provisioning is acquired happen on a monthly basis, quarterly basis. Now if your question is, have we created additional provisions in the current year on warranty guarantee, even in the current quarter, we have provided for additional INR 28 crores. So that number compared to March has gone up by INR 28 crores. On ECL, we had similar numbers as of March. On CTC, there will be some small movements, but not significant. It could be plus/minus INR 10 crores, but not significant.

We have our next question from the line of Parikshit Kandpal from HDFC.

Congratulations on a great quarter. So my first question is on the funding. So you said that this quarter, there's no nonfunding. So is it right to assume now after the veneration, that there wasn't any loss funding from here on?

Parikshit, I just want to recorrect your understanding. I don't -- we have stopped lost funding maybe a few years ago. We've been primarily funding to repay debt.

Anything I was talking about.

There's a big difference but anyway, I'm sure we understand both of us. So our belief is that we might have to do some funding on WPL to repay the small debt, which is with bankers now. Our debt with bankers is around INR 40 crores. So while WPL is being terminated, we do not want to get into this discussion with bankers of an NPA, any of that. This will eventually come back in the form of a claim, but our finance team is right now discussing with the bankers to see that how do we fund that. So that would be the only funding which might be required. So to answer your question, a max of INR 50 crores, out of which INR 40 crores will be more to repay debt of APL, INR 2 or INR 40 crores, I do not remember the exact numbers. And there could be INR 5 crores to INR 10 crores further, but we would target that to be kept at a minimal level.

Okay. So secondly, on the margin trajectory now. So the mix is to changing in high growth in double-digit segments like D&F and all. So as a trend, from year on a quarterly basis and railways and other segments slow down in terms of growth contribution. Do you think that additionally, what kind of margin expansion are you looking at PBT level in FY '27?

FY '27? Parikshit, it would be too early for me to give you a target on '27 in terms of margins. I can only say that the current order book in terms of margin visibility is much better than what we had in the last 2 years. So definitely, you would see margin improvements coming in next year also. I'm pretty confident about it. But exactly where would it be 25 basis points, would it be 50%? Would it be 75, you will have to give us some more time to come back to you. Current year, we stay confident that we would be at a PBT stand-alone in the range of 5% to 5.5%, more towards the higher side. And going into the next year, we'll definitely see an improvement but give us some time to come back with exact numbers. .

Any view on the TBCB revival on the state side, sir? So what's the opportunity you're seeing? And how big can that costing over the next few years?

Parikshit, sorry, today, our state exposure on an overall basis is less than 2% or 3% of the total order book. We continue to stay cautious on state-funded projects across all segments, and we would like to stay cautious going forward also, given the kind of opportunities we have with center funded with PSU funded and private sector funded. So as KPI, we will be cautious on building an order book on state-funded projects across all segments.

Okay. Just on the leasing now that escalates is listed. So any thoughts on how it actually move now? I mean, is it the peak in you've been talking about it last quarter, but now since the listing happens, how do we -- how do you want see the curing or let long term?

So I think we've seen a huge reduction in pledge over the last 2 years, with being below 25%. We've been given to understand by the real estate team that you should see pledge only coming down. We do not have a definite time frame with them, but we have a commitment that pledge should only start coming down going forward.

Okay. Just on the renewal opportunity in the Middle East, I thoughts how we can capture market share on the oil and gas side are going concern and we had a good opportunity? How much of the opportunity are you looking at? What could be the teapot of the size?

So we have built a very strong team on the renewable side to look at the international business. While we speak, we are a bid for 2 or 3 large projects and we remain very confident that we should have at least 1 large win on the solar project in Middle East before the end of this year. I will not be able to share details more than that at this stage. But once we have order win, I'll be happy to share more details on that.

And let me say last. So generally, what is the quantum of this launch win typically SP1 INR 1,000 crores plus is large for us. SP531123508 Okay. And just last question, sir, on the interest bearing utilization advance. So what is the contain, yes. So yes, if you can give me that number?

So our average interest on mobile and customer advance on a totality basis is more in the range of 9%, 9.5% in totality. Our total advances, customer advancements of this stage, I wouldn't have an exact number, but if anyone has a number in terms of what advances we have today. But you can take that one, but I know the interest cost on advances is more in the range of 9.5% to talent. So average advances in the range of -- it should be -- interest-bearing advantage should be in the range of INR 600 crores to INR 700 crores. .

And any interest in acceptances?

But that would be very minimal closer to 0 but we do not have interest-bearing acceptances at KPI.

We have our next question from the line of Ashwani Sharma from MTG Financial Services. .

Congratulations for a stellar set of performance. My first question is on the guidance. When you say 25% revenue guidance in the current year. Can you just give us some indicative indication on the mix in the in terms of segments and the domestic international motivation?

Ashwani, all our businesses ex water and railway, we expect them to grow at 20%, 25% plus, which includes T&D, transmission domestic, transform international, B&F, urban infra as well as oil and gas. They will all grow in excess of 20% to 25%. Our water and [indiscernible] business would not see any growth. Some of the businesses will grow more than 25%, and that's how it will get compensated on an overall basis. As far as geographic growth is concerned, I think our order book is primarily 60% domestic and 40% international today. And I see in terms of growth, international growing at a similar level at what the domestic business is growing.

Internationally, so you did allude to the labor challenges. How are you managing challenges as well as labor is concerned in the interaction geographies, especially in the Middle East or in the South Africa if you can test. What is your strategy? And what has been your strategy to overcome this challenge?

Our international labor channel is not as much higher domestic labor challenge, primarily for only one reason, that on the international front, we can take labor from various countries, including our neighboring countries, including European countries, including some African countries. And that's why on the labor front, internationally, we have not seen such high challenges as what we have seen in the Indian projects. .

Okay. My third question is on the CapEx. If you could just spell out your CapEx plans in the current and next date?

I mean for the current year, our CapEx plan is more in the range of INR 600 crores to INR 700 crores, what we had guided at the beginning of the year also. As far as next year is concerned, we are still not decided our CapEx plans, but we would be slowly moving to a CapEx target, which is more equivalent to depreciation kind of things. So we should be looking at a minimum of INR 500 crores even getting into the next year. Current year is more in the range of INR 600 crores to INR 700 crores.

We have our next question from line of [ Pala Subramanian ] from [Arian Capital Markets ].

So on the data center side, what kind of ticket size we are betting right now? And how does this margin RC profile compared to traditional P&L projects? And what is the[indiscernible]?

We are rightly sitting for 2 large projects, both in South India as well as West India. The new project which we've got is not very big in size because it's an additional building on the earlier project, which we did for our international client in Mumbai itself. But we build competencies to do the end-to-end data center, which includes civil electrical as well as MP. We believe that there should be some very good opportunities coming on that, and we are bidding for 2 or 3 projects while we speak.

Okay. So that the junction expressway monetization, what is the expected time line for closure? And how will [indiscernible] be utilized and any other noncore assets under review for monetization?

So as guided earlier, we believe that Vindhyachal Express Way should get approval in Q3. The total expected cash flow on that budget, as we guided earlier, should be in the range of INR 10 crore INR 800 crores, we rated going for debt and half of it should come back to us as equity primarily the cash flow will be utilized either for working capital or to reduce debt, but we'll take a call on that closer to the date when the money is expected to be received.

Okay, sir. Sir, but is and gas side, almost 1/3 of the project, please deliver for Saudi Aramco I just want to understand how we are managing our subcontracting like steady cost structures. And if you could throw some light on like how is the domestic oil in there? And how we are advertising Middle East market compared to drastic markets? And what kind of order inflows we can expect both Middle East and logic side?

So we're seeing a good traction on the Middle East front, as I mentioned earlier, and we're bidding for large-scale projects because there are only limited players from India who qualify with the large oil and gas utilities in Middle East. So we are bidding for some large projects. I wouldn't be able to give you a target as of now. But the international front opportunities look much bigger on oil and gas as compared to the Indian front. On the Indian find also, we're seeing some good opportunities coming up on both the pipeline as well as the pad side. But in terms of quantum, our focus is a lot more international as of now as compared to India. .

Okay, sir. So on the subcontracting side, how you are managing how these cost structures?

I think we're managing subcontracting. The way we do it across all projects in the country. No nothing different for oil and gas. It's exactly the same for transmission and oil and gas loss team, which manages this for -- it's exactly the same way for all our businesses. I don't have to understand what is the exact question on this.

Should I hear this oil and gas structure it compared to other projects?

No, I don't think that's actually correct. .

We have our next question from line of [ Maher Mundra ] from Nuvama Institutional Equities.

Yes. So my question is on the tax rate. So you've seen in the past 2 quarters, the tax rates have normalized to around 25% to 6% levels and it was much higher before that. So how do you expect for it to be throughout this year? And how does it work out?

So our taxes is primarily driven by the profits on specific projects in the quarter. So there are some international geographies, which have a higher tax rate. And also, there are some geographies where we are making losses, which you will not get a tax benefit. So I think we believe for the current year, we should be more in the range of this 26%, 28%, 30% not beyond that. But on a quarterly basis, it depends on the profits, which projects we are at profit. On an annualized basis, we should be more in the range of 28% to 30%.

We have a follow-up question from the line of Bharat from Quest Investment Advisors.

To understand that one, there is a more challenge on domestic side rather than the international. And since we are winning or large projects now even real estate also -- so how -- what is the opportunity for automaton, which can I will update this? And what are the stage we are and how you are investing in automation?

Bharat-bhai, we've been very focused on automation and mechanization of a lot of our processes. A lot of our projects, whether it is B&F, whether it's transmission, whether it's oil and gas, we have moved to a higher level of automation on every aspect right on the basics of, let's say, civil in terms of concreting to the basics of staging shuttering where we've moved up to aluminum formwork and even going beyond that to using cranes for tower erection for to using automatic welding machines for oil and gas to using steel prefabricated structures for building. So a lot of it is happening today. And today, a big focus of KPI is on mechanization, automation and related tax to it. Even at a plant level, we have automated to a great extent, whether it is on raw material handling, finished good storage, all of that. So it's a continuous process. I can assure you that we are completely on top of it, but it's also something which changes so fast that is something which happens yesterday, there's upsold tomorrow. So we continuously want to be making sure, and we have a lot of consultants helping us on this process also. A lot of our CapEx in the last 3 years. Last 3 years, we have done CapEx of more than INR 700 crores is also gone and back. So whether it's the interspacing chattering whether it's a plant automation, whether it is automatic building machines, all of that. So it's a continuous focus, but we need to also remember that this industry still is primitive in nature, right? We're still in that big order, right? We can't move to automation like, let's say, OEM or iPhone manufacturing or any of that. But within what we are able to do, we're doing one of the best things is what we believe.

As there are no further questions, I now hand the conference over to Ms. Bhoomika Nair DAM Capital for closing remarks. Over to you, ma'am..

Than particularly the management for giving us an opportunity to host the call. Thank you very much, sir, and wish you all the very best. Any closing remarks from your end?

Thank you, Bhoomika. Thank you, everyone, for being on this call. And we assure you that we'll continue to deliver similar results going forward. Thank you, everyone.

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