Larsen & Toubro Limited (500510) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the L&T Q2 and H1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. P. Ramakrishnan from Larsen & Toubro Group. Thank you, and over to you, Mr. P. Ramakrishnan. Yes. So thank you, Sagar. Good evening, ladies and gentlemen.

A warm welcome to all of you to the Q2 FY '27 earnings call of Larsen & Toubro Group. The earnings presentation was uploaded on to the stock exchange almost an hour back. I hope you had a chance to have a quick look at the numbers. As per past practice, I will first walk you through the important highlights for Q2 FY '27 in the next 20 to 25 minutes, post which we will be taking the Q&A. Kindly note that when the Q&A session starts, I will also have with me our Deputy Managing Director and President, Mr. Subramanian. Before I begin the overview, the disclaimer from our end, the presentation which we have uploaded on the stock exchange and the website very back, including the discussions we may have on the call today may contain certain forward-looking statements concerning L&T's business prospects and profitability, which are subject to several risks and uncertainties, and actual results could materially differ from those in such forward-looking statements. I would request you to go through the detailed disclaimer, which is available in Slide 2 of our earnings presentation that we have uploaded. India's economy has remained resilient despite a difficult global backdrop, supported by domestic demand and investment activity. Policy measures remain focused on maintaining macroeconomic stability. However, the outlook continues to be influenced by the trajectory of external developments, which are likely to remain important factors shaping growth outcomes. The recent reescalation of the conflict in West Asia and the resulting volatility in oil prices have contributed to increased uncertainty in the global economic environment. More broadly, volatility in energy markets, logistics and trade disruptions, rising input and financing costs and the continued uncertainty surrounding a resolution to the West Asia conflict remain relevant considerations for the operating environment. Having covered the macroeconomic landscape, let me now turn on a few developments and achievements for L&T. First is on hydrocarbons. The L&T Hydrocarbon business has been selected as 1 of the 4 contractors under a 6-year EPC framework agreement with the Petroleum Development of Oman. The agreement positions the company to participate in major EPC opportunities under PDO's capital investment program. The framework further strengthens our presence in Oman's hydrocarbon sector and provides a platform to pursue future project opportunities. The next one is on data centers. The data center business of the company is being reorganized under Vioma AI Limited, wholly owned subsidiary. While this subsidiary will house the colocation business, the AI compute operations are being developed through its wholly owned subsidiary, L&T N Compute Private Limited. The L&T N Compute is establishing an AI factory at its Chennai campus with a planned capacity of over 10,000 NVIDIA B300 GPUs. It has entered into a long-term deployment agreement with together.ai for a significant portion of the GPU capacity. The commissioning is targeted in January '27. I move on to semiconductor business. This business is housed in a wholly owned subsidiary called L&T Semiconductor Technologies. This subsidiary continues to strengthen its semiconductor platform through product innovation and strategic partnerships. The company unveiled 40 semiconductor products and platforms across power, compute, connectivity and analog technologies, including its first 1,200-volt silicon carbide MOSEF platform. The silicon carbide expands the company's presence in the high-efficiency power semiconductors serving applications such as electric mobility, renewable energy, industrial systems and data centers. During the period, the company partnered with Azure Motor Technologies to advance SiC and power semiconductor solutions and with Tata Electronics to support indigenous manufacturing of semiconductor products for domestic and global markets. I move on to the Electronics business. The Electronic Products and Systems business continued to expand its capabilities across power electronics, industrial automation and mobility. During the period, the business secured an initial best order and commenced capacity expansion at the Kanshibaram facility to support the assembly and integration of battery energy storage system solutions. The business also progressed product development and commercialization initiatives in industrial automation. In mobility, it achieved production readiness for EV traction motors with commercial production scheduled to commence in Q3 FY '27, while continuing to advance opportunities in ADAS and e-powertrain systems with leading automotive OEMs. I move on to Development Projects segment. As previously communicated, the company signed a share agreement in Q1 of the current financial year with Hyderabad Metro Rail Limited, a wholly owned enterprise of the government of Telangana for the divestment of its entire stake in L&T Metro Rail Hyderabad Limited. The expected completion date for this transaction has been revised from September 30 to December 31, 2026. I now move on to the group performance for the quarter ended 30th September 2026. We recorded our highest ever quarterly order inflow at INR 1.48 trillion, registering a growth of 28% Y-o-Y, led by receipt of ultra mega and mega orders across offshore, onshore hydrocarbons and carbon light businesses within the Energy Conventional segment. Within the projects Product and Manufacturing, that is PPM portfolio, the order inflows reached a record high of INR 1.26 trillion, registering a robust 32% Y-o-Y growth. The growth was broad-based across both domestic and international markets with order inflows rising 49% and 24%, respectively. International orders accounted for 62% of the portfolio mix compared with 66% in the corresponding quarter of the previous year. Turning on to the prospects pipeline. The prospects pipeline for the PPM core business for the balance 6 months of the current financial year remains healthy at approximately INR 10.3 trillion, which is almost at the same level like last year. The broad composition of this overall prospects pipeline is as follows: Infrastructure Utilities has a share of INR 5.84 trillion as compared to INR 5.81 trillion last year. Energy Conventional, the order prospects is for INR 2.07 trillion vis-a-vis INR 3.35 trillion last year. Energy Green, the order prospects is INR 2.04 trillion as compared to INR 0.93 trillion last year. Manufacturing and Products, the order prospects is INR 0.33 trillion vis-a-vis INR 0.29 trillion last year. Moving on to the order book. The total order book, including the realty segment stood at INR 8.54 trillion as on September 26 and was up 28% vis-a-vis September '25. In terms of portfolio compensation, 42% of our total order book is from infrastructure utilities, 34% from Energy Conventional 17% from Energy green, 5% is from manufacturing and products and 2% from VT. In terms of the geographic mix, 46% of this order book is domestic, while 54% is international, reflecting the increasing share of international orders secured over the past year. The average execution of this order book is 33 months. The total domestic PPM order book stood at INR 3.72 trillion. The share of private sector orders increased to 39% from 30% as of September '25, driven by order wins across the Carbon Light solutions, residential, commercial buildings, factories and the metals and minerals business, along with select awards in heavy civil infrastructure, transmission lines and airports. Within the public sector portfolio, the combined share of central and state government orders declined to 30% of the domestic order book, comprising 11% from central government and 19% from state government as compared with 38% a year ago. The PSU exposure remains largely stable at 31%. Of the international order book of INR 4.62 trillion, the Middle East accounts for 73% of the portfolio, underpinned by our long-standing presence in the region. Europe contributes to 13%, reflecting the growth in our offshore wind business over the past few quarters. The balance 14% is distributed across other international markets, including Central Asia, Asian and the SARC regions, providing further geographic diversification. With respect to the additional details on the order book, 7% of the total order book is funded via bilateral and multilateral agencies. In addition, as of September 2026, slow-moving orders constituted around 1% of the overall order book. During the quarter, orders were deleted for less than INR 10 crores. Turning to revenues, supported by strong execution progress across energy-related projects that comprises both conventional and solar and healthy growth in the Financial Services segment, the group revenues rose to INR 787 billion, registering a robust 16% growth. International revenue contributed to 58% of the total revenues during the quarter. The revenues from the PPM portfolio stood at INR 584 billion, reporting a robust growth of 20% Y-on-Y. The performance were driven by strong execution across the energy portfolio, supported by the progression of recently secured ultra mega projects and the continued conversion of the expanded order book into revenues despite continuing logistics and supply chain challenges during the quarter. Moving on to EBITDA margin. Our group level EBITDA margin, excluding other income for Q2 FY '27 is 8.7% as compared to 10% in Q2 of the previous year. The EBITDA margin was primarily impacted due to lower margin across the group's portfolio and change in the revenue mix. When I mean revenue mix, I'm referring to a higher share of the PPM portfolio in the overall revenue stack up. Our PPM manufacturing business EBITDA margin for Q2 FY '27 was at 7% and declined by 30 basis points compared to the corresponding quarter of the previous year. The decline in PPM margin is primarily due to cost pressures in the wet projects, that is water and effluent treatment, increased supply chain costs and a higher proportion of projects yet to reach the margin recognition threshold. Our group PAT for Q2 FY '27 stood at INR 52 billion, registering a strong growth of 33% Y-o-Y. The growth was primarily driven by a significant pickup in activity levels across the projects -- products in the manufacturing portfolio, coupled with higher treasury income, supported by the release of funds through improved working capital management within the PPM portfolio. The detailed insights on the group's performance, the P&L composition and key drivers of variances across the business segments and functional heads are provided in the earnings presentation. You may refer to the same for further details. Moving on to working capital. Our focus on working capital efficiency and the changing underlying nature of the order book has continued to yield positive results during the quarter. The NWC percentage improved to a record low of 1.7% as on September 26 as compared to 4.1% as of March 26. The improvement of NWC percentage was supported by a reduction in the gross working capital percentage from 51.7% as on March 26 to 48% as on September 26, along with customer advances received against the recently secured large orders. Our group level collections, excluding financial services for Q2 FY '27 stood at INR 740 billion as compared to INR 600 billion in Q2 of the previous year. The cash flow from operations, excluding financial services increased to INR 128 billion during the quarter as compared to INR 48 billion in the quarter of the previous year. Our group cash flows, excluding the Financial Services business has been provided in the annexures alongside reported cash flows to enhance the clarity on the cash flow movements. Finally, the trailing 12-month ROE for Q2 FY '27 stood at 16.7% vis-a-vis 17.2% in Q2 of the previous year. As this metric has been calculated on a trailing 12-month basis, it continues to reflect the impact of the onetime labor court provision, which was recognized in the Q3 of the previous year. Very briefly, I will now comment on the performance of each business segment before we give our final comments on the outlook. We start with the Infrastructure and Utilities segment. Following a robust Q1, order inflows for this segment stood at INR 355 billion during the quarter, declining by 13% Y-o-Y. The major orders were secured in the airports and power transmission distribution business in India and UAE, along with the orders in ferrous metal plants, data centers and central and state government-funded public buildings. Private sector orders contributed to contribute meaningfully at 59% of the domestic order inflows, same as previous year, reflecting the continued strength in private funded CapEx. The segment order book stood at INR 3.61 trillion as of September 26, providing strong revenue visibility with an average execution cycle approximating to 29 months. As I mentioned earlier, the infrastructure and utilities prospects pipeline for the remaining 6 months is approximately INR 5.84 trillion. The pipeline comprises of domestic prospects of INR 4.59 trillion and international prospects of INR 1.25 trillion. The subsegment breakup of the total order prospects is as the transportation infra, 24% Heavy Civil Infra, 19%; Buildings and Factories, around 18%; power transmission distribution, 17%; Metals and Minerals at 14% and water and effluent treatment at 9%. Revenues for the quarter grew by 6% year-on-year, driven by a pickup in execution momentum across domestic private sector projects, supported by strong activities in the residential, commercial factories, transportation infra and the Minerals and Metals business. The international business witnessed steady execution in select core civil infrastructure projects as the business continued its selective expansion in this space, while the Middle East-focused power transmission distribution business saw a marginal moderation in the activity level. The EBITDA margin for the Infrastructure and Utilities segment was at 5.7% in Q2 of the current year as compared with 6.2% in Q2 of the previous year. The margin for this segment has been impacted by continuing cost pressures in the water and affluent treatment portfolio and a higher proportion of jobs yet to cross the margin recognition threshold. Moving on to the Energy Conventional segment, which comprises the Hydrocarbon Carbon Light solutions and the modification revamp and upgrade of the process plants business. The segment witnessed robust order inflows of INR 784 billion during the quarter, more than doubling Y-o-Y basis. The Hydrocarbon business witnessed strong traction in the Middle East as well as India, particularly in the offshore business, while the Carbon Lite Solutions business secured a mega order from NTPC for the main plant package of the 2 into 800-megawatt Lara Stage 3 thermal power project. The order book of the Energy Conventional segment stood at INR 2.87 trillion as on September 26, with the Hydrocarbon order book at INR 2.13 trillion and Carbon Lite Solutions at INR 0.71 trillion. The Energy Conventional segment continues to see a healthy opportunity pipeline led predominantly by the hydrocarbon opportunities across international markets, while Carbon Lite Solutions prospects remain largely domestic in nature. The order prospects pipeline for the remaining 6 months of FY '27 stands at approximately INR 2.07 trillion, comprising hydrocarbon prospects of INR 1.67 trillion and Carbon Lite solution prospects of INR 0.40 trillion. The Q2 FY '27 revenues for the segment stood at INR 173 billion, registering a strong growth of 29% Y-o-Y basis. The growth was driven by sustained execution momentum in off-site activities in the hydrocarbon business and increasing execution intensity in the Carbon Lite portfolio with BTG orders secured in recent quarters now translating into higher revenue recognition. The Hydrocarbon margins improved from 6.7% to 7.5% during the quarter -- the Carbon Light Solutions and MRU margins, however, declined from the elevated levels seen in the corresponding quarter of the previous year, which had the benefit of favorable customer price variation claims. Segment margins were further impacted by certain large carbon Light solution projects remaining below margin recognition thresholds. Consequently, the overall segment margins stood at 7.4%, down 80 basis points Y-on-Y basis. Moving on to the next segment, which is Energy Green. The segment comprises a relatively mature solar business with a strong presence across GCC markets, complemented by growth platforms in the onshore wind and the developed market-focused offshore wind business. The order inflows in this segment stood at INR 66 billion during the quarter, declining 45% Y-o-Y, primarily due to deferral of certain solar projects in the Middle East. The order book in this segment was INR 1,436 billion, comprising of solar projects of INR 703 billion, onshore wind projects of INR 168 billion and offshore wind projects of INR 565 billion. The prospects pipeline for this segment is INR 2.04 trillion, comprising of solar EPC prospects of INR 1.47 trillion, onshore wind prospects of INR 0.19 trillion and offshore wind prospects, which is primarily in Europe of INR 0.38 trillion. The segment revenue for Q2 FY '27 stood at INR 115 billion, registering a strong growth of 43% Y-o-Y, aided by commencement of large value projects in solar and ramp-up of offshore wind projects. With the first set of offshore wind orders having been secured late last year, the segment is now transitioning from order booking to execution, driving higher revenue recognition as the project activity gains momentum. The margin for the segment was largely stable for the quarter. Moving on to the Manufacturing and Products segment business. The segment order inflows during the quarter was aided by receipt of export orders in the Precision Engineering and Systems business. The order book of the segment is INR 429 billion as of September 26, with the Precision Engineering order book at INR 218 billion, Heavy Engineering segment order book at INR 81 billion, Electronic Product and Systems order book, which currently includes the defense-related electronics as well at INR 65 billion and the construction equipment and industrial product and design and development order book at INR 65 billion. Our order prospects pipeline for the remaining 6 months in the segment is around INR 325 billion, comprising of INR 284 billion of Precision Engineering and Electronic prospects and the remaining INR 40 billion is from the Heavy Engineering business. The segment revenue at INR 45 billion registered a growth of 34% Y-o-Y and is reflective of the strong execution momentum in the Precision Engineering and the Electronic Product Systems businesses. The margin improvement in the segment is primarily reflective of execution cost savings and improved job mix. Moving on to the next segment, Technology Platforms & Services, which comprises the 2 listed entities, LTM and LTTS as well as the new businesses of digital platforms, data centers, semiconductor design and as well as a small portion of the divested Smart World and Communications portfolio. The segment revenues stood at INR 148 billion for Q2 FY '27, registering a growth of 11% Y-o-Y, led by growth in both LTM and LTTS. The salary hike and adverse ForEx variation LTM impacted segment margin, partly offset by a onetime gain on the SmartWorld Communications divestment in -- by LTTS. I will not dwell too much on this segment as both the companies in the segment are listed entities and the detailed fact sheets are available in the public domain. Now we move on to L&T Finance Limited. Here, again, the detailed results are available in the public domain. But very briefly, the Q2 witnessed a robust growth in retail disbursements and improved collection efficiency as well as asset quality. The return on assets remained healthy at 2.6% for Q2 FY '27. Moving to the Realty segment, which is now being reported as a separate segment following the segregation from the erstwhile Projects and Manufacturing portfolio. The order inflows for Q2 FY '27, which mainly represents L&T's share of presales stood at INR 13 billion. The segment order book representing unrecognized revenue stood at INR 184 billion as of September 2026. Revenue and margin are primarily reflective of the lower handovers of Realty units and the sales mix -- residential units, sorry. Supported by the strength of our order book, healthy prospects pipeline and continued focus on execution, let me now turn to the guidance that we have provided for the current financial year. I start with order inflows. The group order inflows recorded a robust 22% Y-on-Y growth in H1 of the current year with growth across domestic and international markets, notwithstanding bid deferments, particularly in the Middle East solar business. The prospects pipeline for the remaining 6 months remains healthy at INR 10 trillion with a marginal bias towards domestic opportunities, providing confidence in sustaining order inflow momentum for the next 6 months of the current financial year. Given the strength of the opportunity pipeline across the key sectors, we are confident of achieving our order inflow guidance of 10% to 12% for FY '27. Coming on to revenues. The domestic execution continues to gain traction across the residential, commercial, precision engineering and the Carbon Light Solutions business. In the Middle East, despite ongoing logistic disruptions, the project execution continues to progress well. Working closely with our clients, our teams continue to implement alternative logistic arrangements and execution plans to mitigate the impact of these challenges. In addition, the offshore wind business, which is now in its full year of execution is also expected to meaningfully contribute to the growth relative to FY '26. Considering the overall operating environment, we are confident of achieving our FY '27 revenue growth guidance of the 10% to 12% band. Moving on to the margin for the PPM portfolio. In line with our revenue growth guidance, we are reasonably confident of meeting our EBITDA margin target of 7.8% for FY '27. Closing with working capital, the collections remain on track across the key markets, including international markets. As mentioned earlier, the group net working capital stood at a record low of 1.7% as of September 2026, supported by significant working capital improvements in the Energy, Green and Hydrocarbon segment. Based on the current trajectory and improved volume of execution, we now expect the group net working capital to close below our earlier guidance of 10% for the year. So with this, I have given an overall synopsis of the performance for the quarter and the way we look at the next 6 months, we can now get into question and answer. Thank you. The...

[Operator Instructions] Your first question comes from the line of Aditya Bhartia with Investec.

So just wanted to understand a bit more on the solar business. We are seeing deer in project awards, but at the same time, we are seeing very strong execution in international green projects. So what is really happening over there? And do you anticipate these projects to get bunched up and maybe ordering to be picking up in second half of the fiscal?

Yes. Mr. Sharma is there. He will answer this question.

So the solar business, I think we have a very strong presence in the Middle East and of course, also a bit in the domestic. And there are some delay in the first 2 quarters in terms of awards. But now we see that we have bid for many jobs and the bidding activities have picked up quite a bit. So we hope to pick up momentum in the quarter 2 and -- sorry, quarter 3 and quarter 4, the second half. And of course, also under that division, we have offshore wind business. And there, we had a very good run. We picked up additional contracts under the framework. And that -- yes, that project -- I mean, that project business is now doing well. So that's where we stand.

So Aditya, just to add just to what Mr. Sharma just now spoke, the first half of -- for solar was a little subdued in so far as ordering is concerned. And as I talked about the order prospects of the various segments, the prospects continue to remain strong. So hopefully, I think the ordering momentum for this segment from outside of India will regain traction in the second half.

Sure. But in terms of execution, we have not seen any major slowdown. And given that there were a lot of logistic challenges with some of these solar projects also, we have not even seen any impact on margins.

So let me put it like this. Yes, there has been -- to the extent wherever we have been able to supply into the site, we have tried to do that. despite all the logistics challenges. So, so far, we have done well. Now it needs to be seen depending on the situation, how we see in the next 6 months or so.

Sure. Sir, my second question was on margins in the Carbon Lite business and the way the Carbonite business gets recorded. Now given that a part of the business is being done through MHAI JVs and earlier, we used to split certain orders getting largely -- as margins in certain orders getting largely recorded in MHAI JVs and only a small part getting recorded in the main consol books. How is it being carried on right now? Is it fair to assume that bulk of the margins from here on would be seeing a line-by-line consolidation as opposed to a single line MHAIV consolidation?

So the projects have been secured by the Larsen and Tubro entity only. okay? And this, in turn, has been subcontracted some portions of it to the JV companies. So the EPC margins will continue to reside in the parent carbon Lite segment.

Understood. Understood. And -- but higher margins are likely to be -- equipment-related margins are likely to be recorded in the JVs?

I would say it will be a combination in both. But EPC margins since BTG as an opportunity is in EPC. So the EPC margins will be taken at the segment level. There will be some portion of margins because of efficiency and fuller scale capacity utilization, the JV companies also is expected to be profitable on this particular order.

Your next question comes from the line of Mohit Pandey with Citi.

Sir, first question is on the Energy Green segment. If you could give some color on whether the growth was driven more by the offshore wind ramp-up or by the Middle Eastern solar with regards to execution? And also how the supply chain here in the Middle East and solar differs from that for the infrastructure segment where growth has been slower, yes.

So the segment revenues for the quarter, which I talked about is driven more by solar. Offshore wind has just now started. So offshore wind will pick up execution in the following quarters. Speaker 4 Understood, sir.

And on the second part, how does the logistics supply chain differ any color vis-a-vis Middle East and infrastructure project?

Yes. So this -- Sharma here, this is -- logistics is more relevant for renewable business in the Middle East and to some extent for power transmission, less for hydrocarbon. And at this point in time, the infrastructure projects are in very early stage. So they do not have that much of impact of the logistics. On the renewable side, yes, I mean, I think it's taking a little longer for us to get the materials there is an extra cost. So we are in discussion with customers. Some cases, we are delaying the material dispatch -- in some cases, we are incurring the cost and agreeing to get that reimbursed from the customer. So a combination of that is happening. With some delays here, I think we expect some deferment of revenue on the renewable business. But we'll try to make it up with other projects in the domestic market and other countries. If not, there could be some shortfall on that particular business.

Yes. And sir, on hydrocarbon book, what percent of the order book would be still in the relatively early stage of execution, meaning getting executed from our India facility? Would it be 70%, 80-odd percent...

I think, yes, we picked up quite a few large orders in hydrocarbons between onshore and offshore in the last 2, 3 quarters. I would say maybe I have not done the math, but maybe...

But a major part of the order...

50%, 60%...

Will be under...

80% would be under the new one. It will start -- I mean it will achieve that threshold maybe in the next -- in the Q4 quarter, yes, Q4 and beyond.

Understood, sir. And sir, last question is on Precision Engineering. So our presentation mentioned we won some export orders. Possible to give some color around these. And this year, there has been large PSC approvals. Any key projects you want to highlight that we've been for...

This is an order from Vietnam.

Understood, sir. And with regards to the DA approvals that we have seen this year, any key projects that we might be in faith for Speaker 3 New orders.

Yes, yes, there is a possibility. The prospect pipeline look more reassuring. And hopefully, some order inflow conversion should be happening in the segment or whatever possibly in the -- most likely by the end of this year.

The next question comes from the line of Puneet Gulati.

Great performance, I must say, on all fronts. On order inflow side, if you can help us understand how are you managing the risk there? What is the certainty on order execution time line and cost? Some color would be very useful.

So will you take it?

Yes. Go ahead, start.

So okay. So let me put it like this. I think in the first 6 months, what we have seen and especially on the international side, a majority of the order inflows outside of offshore wind has been largely led in the hydrocarbon segment. okay? We have seen some project performance insofar as solar is concerned. But as far as hydrocarbons is concerned, especially in the Middle East, we have seen the bidding activity to be quite robust. And we have also benefited from many of these orders that we have secured, okay? Competitive intensity continues to be there. It is quite strong. And -- but the fact is a major part of the international orders is coming from the hydrocarbons segment primarily. Despite the fluid situation in Middle East, this segment continues to witness bidding. And as far as not only bidding, I would also like to emphasize here, and Mr. Sharma can allude to the fact that execution momentum also has not been -- until now has not been disturbed. So that momentum continues to be reasonably strong.

And also solar will have a pickup in the momentum in the order inflow Second half.

Solar will pick up order inflow momentum. As I mentioned in responding to an earlier question, that is a second half story.

Okay. But in terms of cost, et cetera, you're not seeing any escalation when you're bidding for the projects. How are you sort of factor?

I think there is a cost escalation on the logistics and insurance as we have been saying. But we are very hopeful that a good part of it will get compensated by the customer. We have had good discussions with them. There's a good traction. There could be a bit of a timing issue that when we recognize the cost and when we get compensated, that we'll have to see how it develops.

Okay. And on the working capital is extremely good at 1.7%. How should one think about this? You've guided for less than 10%, but...

We should -- you should think about it. This is something we are breaking the record every quarter. I hope that we break the record again.

So Puneet, I think -- so the -- as far as the PPM portfolio is concerned, it's been a favorable negative 4%, okay, as of September. But at a group level, I did talk about that we are going to be below the guidance of 10%. Now -- the one of the important points, which I also talked about when I gave the working capital closing remarks on the guidance part, given that the volume of operations and the target revenue that we are talking about is quite a tall ask or steep ask for the next 6 months. So obviously, we do believe that this could have some amount of toning down or moderating the overall working capital trend. So it's quite possible that we may be better than what we have given, but we are going to be below 10. We started the year with 10. Now we'll be below 10% for the full year.

Understood. And just lastly, on your commitment of CapEx on the AI side, you talked about buying 10,000 NVIDIA chips, et cetera. What -- is there a plan of how much you want to commit on data center AI for next 1 year, 2 years and also on the semiconductor side...

So as it stands now, as far as the 10,000 GPUs are concerned, this is close to maybe around USD 750 million of investment, okay? And this is getting invested in our current data center of 30 megawatts near Chennai. We plan to put up another 50 megawatt of AI data center adjoining the 30 megawatt in Shriarmudu, that is Chennai. And looks like over the next 2 years, we may be putting up data center capacity using AI as an AI factory, 30 plus 50 plus another 30. So 100 megawatts plus is what we are looking for in the next 1.5 to 2 years.

Including the chip cost.

Yes, correct, correct. So as I said, the 100 megawatts, I'm referring to AI data center. Out of which 30 megawatts is already set up. The structure is set up. We may have to only invest in the AI chip. But the balance 70-odd megawatts, it's a combination of taking a new -- investing in a new data center, which is the civil part of it, along with the related investment in the then prevailing GPU series, whatever is prevalent then. But in the near term, 1.5 to 2 years, another total will be 100 megawatts of AI capacity.

Understood. So for 30 megawatt, you spent 750 for just the chips for another 70 we should think of at least $1.8 billion, somewhere close to that.

And depending on the chip value, Puneet, so it is not right to mention that. But another 70 megawatts will also have the construction cost of those data centers.