Pennar Industries Limited (513228) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Pennar Industries Limited Q3 FY '22 Earnings Conference Call hosted by PhillipCapital (India) Private Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital (India) Private Limited. Thank you. And over to you, sir.

Thank you, Janice. Good morning and very warm welcome to everyone. Thank you for being on the call of Pennar Industries. We are happy to have with us management of Pennar Industries here today for question-and-answer session with the investment community. The management is represented by Mr. Aditya Rao, Vice Chairman and Managing Director; Mr. Shrikant Bhakkad, VP Finance; Mr. J. Krishna Prasad, Chief Financial Officer; Mr. Manoj, Head Corporate Affairs; and Mr. K.M. Sunil. Before we start with question-and-answer session, we'll have opening comments from the management. Over to you, sir.

Welcome to our Q3 FY 2022 financial results...

Mr. Aditya, please go ahead.

Say that again, please?

Yes. Correct. We are able to hear...

Should I go ahead?

Sir, you may please go ahead. Thank you.

Okay. Thank you. So as I was saying, I wish all of our stakeholders on this call a warm welcome to our Q3 FY 2022 financial results conference call. The structure will be asked for a standard format. I will first take us through the company's financial numbers for Q3 FY 2022 and for an analysis of our performance for the quarter, our CFOs, Mr. Shrikant Bhakkad and Mr. Krishna Prasad, will then present their analysis of the numbers and their commentary on the quarter. We will cover financial metrics, including revenue growth, profitability growth, margins and capital efficiency ratios. For my initial comments in the third quarter ending December 31, we had consolidated net sales of INR 533 crores. Our consolidated PBT was INR 14.13 crores. And compared to the third quarter of last year, the net revenue was higher by 29.38% and the PBT was higher by 315%, mostly due to Q3 last year being a very muted quarter because of the pandemic. On a sequential quarter basis, our PBT was higher in Q3 FY 2022 than in Q2 of this financial year by 28%. Profitability-wise, Q3 again saw a consistent and sustainable increase in our profitability compared to the previous quarter, Q2. We believe this trend will continue and are very confident of good growth in PBT in Q4 from Q3. It's important to mention that Q4 last year saw capital gains being recorded from the sale of one of our land parcels to the tune of about INR 20 crores. So that should be taken into account when we speak in a few months for our fourth quarter and for the financial year performance. Next, I will cover liquidity. Our working capital usage from a number of days' point of view has further improved in Q3 to 91 days from 103 days in quarter 2. Our medium-term target here is to achieve 75 days of working capital for the company, and we intend to take a couple of quarters to achieve this. If you recall, in our last conference call, we have said we would want to reach 90 days in a couple of quarters. Over 1 quarter, we've more or less reached that with 91 days right now. So we are resetting our target to 75 days, which we believe has been benchmarked well with industry standards. I will next talk about growth. We are currently executing the following projects: Body in White, large diameter tube, an expansion of our hydraulics capacity, hydraulic cylinders, and an expansion of our module capacity. We expect that these projects once commissioned will -- they will increase our PBT substantially and allow us to continue on our profitability growth journey. And we are eager to get these projects up and running soon. In conclusion, our focus at Pennar will continue to be on sustainable profitability; appropriate use of working capital and maintaining liquidity; and finally, having a sustainable growth plan in hand for our PBT growth. As we continue to make process -- progress, sorry, on the strategy, I thank all of you for your support and your candor. Thank you again. And I would like to hand the call over to our CFOs for their analysis.

Thanks, Aditya. Good morning to all the investor community. Pennar Industries Q3 FY '22, we have achieved a consolidated revenue of INR 533 crores, and which is up by 29.38%. In terms of EBITDA, it is at INR 46.93 crores, which is up by 25%; and PAT at 10.7%, which is up by 291% (sic) [ 292.30% ]. In terms of -- we have also started comparing the cash PAT, which is now up by 20 -- cash PAT is INR 24 crores, and it is up by INR 61 crores (sic) [ 61.91% ] and it is the Q3 FY '22. And the highlights -- these are the highlights for this quarter. Our order book of PEB has grown. It is now at INR 406 crores in terms of the overall days. So this quarter has been good where we have achieved our PBT and the target that we have set ourselves. We have improved in terms of working capital number of days. And our U.S. Ascent is on the path, and it's -- as it stabilizes its operations in the coming quarters. So that's all I have for this, and we can now move to Q&A.

[Operator Instructions] The first question is from the line of [ Jai ] from ValueQuest.

Congratulations on the good set of numbers. So sir, I have two questions. Firstly, on the order book. So this quarter, we have reached INR 400 crores order book in the PEB segment. So what do we see the order book going forward? How is the visibility in the order book?

So our order book businesses currently are in PEB and in our U.S. businesses. For both these business verticals, we project continued increase in order book. And our U.S. business is currently at about $42 million order -- on an order book balance, open order book basis. And as you had mentioned, our India PEB business is at INR 406 crores. So this will continue. It may increase also. We are aspirationally targeting INR 500 crores. I'm not committing that, but that's what we're targeting for our India PEB business.

Right. And secondly, sir, a question on margin. So we haven't seen any margin pressure due to the commodity price increase. So what explains the reasons?

We had a pass-through the vast majority of our businesses, the time gap between when a price increase is declared in the market and our ability to pass it on to our customers is quite quick. Some of our automotive businesses, there's an automated price increase linked to the SIAM index as it's called, the automotive price index. So there's not much we have to do. We invoice them and then we supplementary invoice them in a few weeks. So consequently, we don't get exposed to raw material price variations. Another aspect of this is with some of our supply chain raw material steel vendors, they have quarterly contracts. So if there is a price increase, let's say, in the month of October or November, we only see that increase in January of the fourth quarter of the -- after 2 months or 3 months. So on average, we have 1.5 months gap on average, sometimes it could be as high as 3 months from a price increase being recorded in the market and for us to be able to see it. So that's also helping us out a little bit. This is not across the entirety of our procurement, but some aspects of. So because of these reasons, we are not projecting -- we are not seeing clearly because our EBITDA margins are increasing, and we are not projecting a decline in profitability due to raw material price variations.

[Operator Instructions] The next question is from the line of Vikram Suryavanshi from PhillipCapital.

Yes, sir. Sir, particularly in custom design and building solutions where we have, I think significant part of PEB business. On a Q-o-Q basis, we have seen some weakness on margin. So you can give some outlook about the profitability of this custom design building solutions segment. And what the kind of margin or sustainable margin or long-term margins one can expect in these businesses?

So custom design buildings effectively is pre-engineered buildings business in India. Our engineering services business in the U.S. [indiscernible] buildings business in the U.S. Those are the 3 verticals, which are comprised on that. From a margin point of view, the -- typically, our U.S. businesses, Q4 tends to be a little slow. While we saw that in some of the verticals, we didn't see it in all of the verticals. However, going forward, for Q4, at least, I can definitely project that we will have stable order books and stable profits -- operating margin, sorry, for all of these business verticals. And we do expect scale to come in, in our India business for PEB and also our engineering services vertical. So I would not guide to any decline in operating margins for the custom design building services verticals that we have.

You have given some idea about few growth in PEB order book can be expected. But looking at the kind of manufacturing growth the government is targeting with a couple of PLI schemes and all, so are we seeing traction in the ground level or how is feedback for industries to set up factories and all that? So if you are -- are we really seeing some kind of ground level activities? Or you see it will take some quarters to really pick it up?

Well, the government's performance-linked incentive schemes are good for the market as a whole. We ourselves are not depending on that or nothing on that. It can apply to some of our investments in Body in White and our solar module businesses. But we are not taking that into account. I -- it is our belief that businesses should stand or fall on their own merits and not on incentives. So we are not really -- we have been making the efforts to apply, but our growth strategy is not predicated on those at all. We don't want our growth strategy to be dependent on incentives from the government or from anyone.

Got it. And last question from my side. There has been continuous news about renewable energy and a lot of again renewed talk on solar opportunities in this budget also. So how big will be this segment for us in terms of solar? And if you can give some outlook and growth for us in terms of solar segment?

Solar and energy industry sector would be very, very important for us. We are continuing to add capacity, as I mentioned, currently at about 100 megawatts. We will ramp that up to 500 megawatts very soon. There is no end to this. The technology continues to evolve. And we believe we figured out a way to stay abreast of technology changes and make sure that a project doesn't become obsolete, that we stay relevant as the years go by in solar module manufacturing and also other aspects of the energy sector. So it will continue to be extremely important for us from a revenue point of view. If you look at 5 major growth verticals for Pennar, which is automotive, infrastructure, yes, energy and also rail and aerospace and engineering services, energy solar is one of the big growth drivers for us. So it's important for us.

[Operator Instructions] The next question is from the line of Aditya Sen from RoboCapital.

I had this question about the ERW plant that we have in Chennai. That wasn't PBT positive by last quarter, and it was supposed to become PBT positive by Q3. So do we have any updates on this?

Yes. And it's not good news. Well, it's a mixed bag. We have had problems because of the Omicron variant and the surge in cases. We had problems commissioning the plant on time. The plant has now been commissioned. We are undergoing trial production, but that has unfortunately shifted us reaching our target profitability for that by a quarter. So we are now projecting Q1 as when we'll reach. For the plant itself, as we're in February right now, it's been commissioned and it's -- we are making progress. Supplies have started. Yes, there's a 1 quarter delay in us hitting our target profitability in the BIW plant.

Okay, sir, noted. And we were supposed to -- like are we back to our pre-COVID capacity utilization levels?

Across verticals, yes and no. In our PEB vertical, no. In our tubes vertical, we are almost there. And in some others, we are vastly in excess of area, like in our U.S. plant, our hydraulics capacity, for example. So it's a mixed bag. But overall, we are at about 50%, we have to reach 70%.

Okay. So we are roughly around 50% of capacity utilization.

As a blend, but it can be -- I request caution when using that number because it can be very misleading. There are some business units where we have a long way to go, and there are some which are -- we have to add capacity immediately. So...

[Operator Instructions] The next question is from the line of [ Venkat Subramanian ] from Organic Capital.

The railway minister in response to budget sounded very optimistic on quite a few launches, et cetera. My questions are 2, what is the ground reality? You sounded a little cautious with respect to the railway vertical, however. Are we seeing any positive developments there, which is one? And two, on the ground level check in response to a previous question, you said while you don't want to depend on any government support, the government action should possibly be seen on the ground fairly soon. So I was wondering what you see with respect to our PEB operations. So really 2 verticals.

Yes. So the railways, the budget as such spoke for the rapid expansion of lines. They spoke of 400 additional coaches, Vande Bharat coaches, if I'm not wrong with the 400 number. And that's definitely the benchmark. All of those are good things. My concern here, however, is this is -- it is dependent on what ICF and MCF do. This isn't to them, but their outlays have not exactly been very stable over the last 3, 4 years. It's been very volatile. ICF has gone from 3,000 coaches to 1,000 coaches to 2,000, ICF. For us, as a corporate, we make investment and capital allocation, whether it be working capital also, decisions based on how dependable and sustainable within revenues, will that business exist 5 years from now. It's not project business where we allocate capital, get our revenue and profitability and exit, right? These are hard physical assets we need to build up. Consequently, I would still continue to be conservative. I think the intent is good, but will it come to an action, we -- I don't know, but we are hopeful. On the ground action, we are seeing some increases in our railways business, that I can comment to. But how sustainable it is, what positive bias there is over the next couple of quarters, I cannot speak. So government incentive, as I mentioned, we don't depend on them, but we do. I mean just we received sales tax incentives also recently. We received -- we are applying for others. We'll continue to apply for them under the government. As you said, on the ground, government incentive action is there. We are there for it. But as far as our ability to project credit margins and take CapEx, investment decisions are concerned, we depend on them because these tend to have very long tails. It's very possible for us to be granted a government incentive and receive it 5 years or 10 years later. I'm not exaggerating, this can happen. So in that scenario, I think it's better to not take them into account as hard, slows or hard annuity-based revenue streams. So it's not appropriate to do that in my view, but we will apply. We will apply and see where we get. And as they come in on an accrual basis, we'll recognize the profit and obviously declare it. But that's...

I'm sorry, I think I probably phrased my question inappropriately. I was referring more to the CapEx and capital formation based on government's confidence spend and then actually wanting to spend, et cetera. So that, in addition to some private -- some early signs of private CapEx should probably result in higher inquiry levels and execution on the PEB side. So are you seeing early signs of that is really what I asked?

I'm sorry, I totally misunderstood your question. The short answer is yes. We are -- in the last month itself, we've had record order booking in our PEB business vertical. And we are seeing that -- now is it because of government incentives? Again, I can't say. But private sector gross fixed capital formation, CapEx is definitely on the upstream, that I can definitely confirm.

And a follow-up question on our earlier conversation on railways. In a couple of previous conference calls, you talked about not wanting to depend on Indian railways alone and improving our technology to improve our offering for some overseas customers, et cetera. And you said there is some work in progress and then you will come back and share with us. So is there anything interesting that you want to talk about?

It's imminent, sir. There's some -- corporate actions are considering specific to our railways and aerospace business internationally. But yes, that remains the narrative. My request is to give us a quarter more to give you some news on this. But yes, we do -- there are actions which are on the table, which we have greenlit, which we're about to take. But as of right now, they have to remain unspecified. But these will not be massive in nature. So I don't want -- to set expectations, right, this isn't -- these are incremental investments and customer acquisition steps we are taking. So some good growth in the railway business. But from a materiality point of view, it will be okay. It's not something big sometime.

And we see that at a possible joint venture/ acquisition last quarter. Has there been any development there? And can you be -- throw more light on that?

So with a company called Cadnum, we have executed a term sheet and we are in the process of trying to acquire them, but no formal decision has been made. Once it's made, we will communicate that. But that is what I'm referring to. That is the opportunity we are looking at.

And lastly, in response to a previous question, you talked about our possible offering on the solar side. Will we -- will -- our offering is more on the technology side because we probably are -- my short question really is, will there be a significant value add to the customer in what we are offering and is it questionable?

It's the module business. And that is -- if you're asking if it's commoditized or if the value addition is significant, it is. It's double-digit operating margin, which is what we look for. And it's a scalable opportunity. And there are substantial entry barriers. It's not just a capital thing, you need to have proper certifications in place and even marry as well with our MMS business and our solar, other business verticals, including building integrated photovoltaics. So there's -- it's a differentiated value proposition that we have in solar, not really commoditized. But that being said, we have competitors like as we do in any of our businesses. And I can -- I guess the best way to answer your question is, I'm confident of double-digit operating profits in our solar business for the foreseeable future.

Got it. Yes, that's kind of quarter I was looking for. And just one more question in case I can squeeze it in. On our U.S. operations, you said that we are sitting on close to about $40 million plus kind of current order book. Since it's a fairly recent operation, do you want to spend a little more time on that in terms of where we want that to go and how well are we executing and what the challenges are and et cetera?

Sure. Let me give you a broad level overview. So our U.S. operations are in our subsidiary Ascent Building systems. They have done a really good job implementing the plant. The core team is in place. We have a strong talented team over there, which covers sales, operations, engineering and also the back-end operations such as finance and HR. They've done a good job building up a strong order book, as I had mentioned, and that has started resulting in revenue as well. As we speak, they're profitable and they are increasing their margins. I'm confident that in the fourth quarter, this quarter, they will have -- they will achieve and exceed their target profitability levels on a percentage and value basis. Working capital efficiency is also quite good. Their working capital days is well in control. And the combination of good execution skills, good asset, good order book and adequate liquidity being available will, in my view, ensure that they achieve their targets from a revenue profitability point of view. They will probably exceed as well. So I can give that color. And we are -- in the next quarter, we'll be able to give you, I guess, even give you a more in-depth overview of what is installed because they are growing quickly. They're an ambitious team. But I think it's important for us to walk before we run. So we are holding them back a little bit, make sure that they hit their revenue profitability clearly. Their working capital also now is in control. And then we'll slowly, steadily scale up -- sustainability scale up. That's our -- but so far, they have outperformed.

[Operator Instructions] The next question is from the line of [ Dilip Sahu ], individual Investor.

Yes. Congratulations, Aditya, for a good set of numbers. I think you've picked most of the boxes. One that is of a bit of a concern is still the profitability of the business. We are quite a distance away from our desired level of profitability. And my question is that if I look at last 20-odd quarters that I have been following, you have been around INR 500 crores to INR 550 crores kind of revenue accepting the COVID quarter as well. There was a -- of course, the business mix sales changed for better, but still, the top line is around that. So my question is, when and how do we go to the next orbit of growth, maybe INR 700 crores quarter? With the proper mix of business, what are the levers? So that's question number one. Primarily, we have 2 buckets of business, some 14% operating margin business at a business of 7%, 8% operating margin businesses. So how do you move obviously for the better? That's question number one. Question number two is a little bit more color on the U.S. business, the Ascent business. We -- if I remember correctly, we're in a $15 million -- $15 million order book in February last year, went to around $30 million in the middle of the year and now we're at $42 million. I just want to understand the rundown of this order book. How does it really -- the execution happens because the way we are ramping up the order book is -- when is it going to reflect in the revenues? That's my second question.

Thank you, sir. So two questions. One is how do we -- you noticed, as you have said, and your observation is right that our profitability margins, our PBT is still 2.5%, which is not good. I agree with you completely on that. And you said, what is our plan to grow profitability and revenue? Effectively grow that from a value and a percentage basis. And that was the question -- first question. Second question on U.S. order book right now is scaling up quickly. It's more than tripled in the last 1 year. What about revenue as per that? So those are the two questions you had. And the first question, from a revenue profitability point of view, yes, because we're a blend of businesses, the revenue may look stable, but effectively, the mixture has undergone a change. Over the next few quarters, as I've said, we'll continue to consistently add new revenue. If you add something like INR 100 crores, let us say, right, per quarter, we will see substantial improvement in our PBT percentage and value because our operating margins are all above 10%. So a lot of these have low base effects, which we are well placed in order to grow. So I'm quite confident that you will see -- and I would also suggest at this point, I hope you will buy my argument on this. But what I would suggest is, do look at PAT plus depreciation -- PAT percentage plus depreciation also as a percentage as the cash the company throws off because we do have a very high depreciation, and those are not actual expenses. So if you were to add both of those up, then you get a substantially better number. My argument here is basically that, that number should at least double so that in extension, our PBT percentage should at least increase by about 4 to 5 percentage. We are hard at work to affect this, and it's not going to be very difficult for us to achieve this. All we need to do is add INR 100 crores per quarter. We don't need [indiscernible] INR 700 crores per quarter. INR 600 crores, INR 650 crores in a quarter, INR 100 crores additional added at 10%. All of that drops down to PBT, and it will increase our margins substantially. So that is our goal going forward, to keep adding double-digit percentage revenue -- operating profit revenue. And we have order books which are in place for that. So the combination of scale and the margin profile increasing will give us that. The time frame in which you should see these things happening is over the next financial year. On that, I think my team and I can definitely commit to you. The second question you had, which is our order books are high in the U.S. Yes, they are high, and they are -- and you will see -- you are seeing revenue increase as well. In the next financial year, very conservatively, I can say we are going to do about $50 million. We'll almost certainly beat that from a revenue point of view in our U.S. business, in our international businesses. But you will see it translate into revenue growth, but not at the same clip. We are not saying we'll triple it because we're pushing our order books out more and more. We also have price escalation clauses in our order book. So as we slowly increase capacity -- carefully increase capacity, we will go long in order book. Sometimes, it will look like we are booking too many orders, but we will be disciplined about it. We'll make sure we're not exposed to commodity prices because we'll have high escalation clauses. But slowly and steadily, we will increase our U.S. revenue. So you can count on double-digit growth for our U.S. businesses in next financial year compared to this financial year. And you will see this quarter-on-quarter as we move forward. Did that answer the question, sir?

Yes. Yes. Certainly it does. One more question, if I may, and it's a suggestion more than a question is when you communicate to the market the order book position, I think there needs to be a little bit of a structure and a frequency, which is -- sometimes it come in January, sometime in December once in a year or sometimes twice, thrice in a year. So please give me some structure and some cohesiveness to this communication to the market. And regarding that, when you obviously communicate, you should give the time line of the order book instead of keeping it open ended because it doesn't -- one doesn't know really the communication whether the order book is for the quarter or 6 months or the year. So that is one suggestion that I had.

Fair enough, sir. So we've done some math, and you're right, it has been intermittent. So what we decided to do is do an order release once every 2 months. The intent for this is more to put this into the public domain, so we can talk about it to -- with investors and others. That's the intent here. We will make sure that we -- the frequency is once every 2 months. It's frozen. So the calendar for our order book press notes is frozen, and we will release it. Giving clarity on the execution time period, we will endeavor to bring that end, sir. I mean obviously, the operating periods for different order books is different. But I mean it's easy, in some sense, to calculate because in a month, we do about somewhere between INR 200 crores to INR 220 crores. So effectively, if you are releasing an order book every 2 months, then it pertains to changes in that because we're not giving -- we are giving the orders we have booked in that 2-month period. And effectively, your order bookings should ultimately equal your revenues. So that's an implication we have because -- otherwise, our order books keep growing and our revenue -- sales revenue becomes a multiyear order book, which you don't have in any business. So we will try to get more clarity on the time frame in our press releases, sir. Point taken. Thank you.

Yes. Yes. So one last small question regarding the other income for this quarter. It has gone up by around INR 9 crores on a smaller revenue sequentially. I just wanted to know what is the reason that's almost 1.5% on the revenue.

Could you repeat the question? There was a lot of...

The other expense this quarter compared to last quarter, there is an increase of almost...

Shrikant, can we give a breakup of what the other expenses are and why there is an increase?

Yes. Other expenses basically contains of the subcontract and the job work and process charges that we have, which occupies the majority of the expense, which has approximately increased by INR 4 crores, and we have erection expenses there. And also the stores and space consumption and the freight. So these are the main content of the other expenses. The primary reasons for increase is on account of changing the freight mix where we have shipped earlier, job work charges and erection expenses increased and the erection-related revenue increase. So that's the mix there. Certain parts of it, do not get classified in any of this A to F category. So all this flows to other expenses.

Sure. Sure. So it's -- as a percentage, we will fall back to normalcy because freight will eventually normalize, right? Is that what...

Freight will eventually normalize, also, in terms of job work processing charges, these are linked to more on erection revenue. And -- but predominantly, the changes because of the sales mix.

The next question is from the line of [ Arvind Joshi ] from Bateleur Advisors.

I have a few questions. First of all, I'd like to come back to our railway business. You don't seem too excited about it, but the FM and the subsequent noise made by the railways was quite encouraging. And they are going to order 400 trains. It's I believe not 400 coaches. Just I'd like to get some clarity on that. And I'd like to also know, we were a major vendor for the train 18 projects where we did a lot of the frame, the coach part components, the internal, a lot of components were done. What exactly would we be able to do in a project like Vande Bharat? Could you just elaborate a little bit on that? And also, I'd like to also understand -- should I ask the questions first and -- or wait for the answers or I'll ask them one...

Ask the questions sir, we can. So right now...

Okay. Okay. Fine. So I'd also like to understand, we were doing some things in solar, and I would also want to know what are the areas where we are able to enhancing -- going to do -- something to do enhancing our footprint in solar into more value-added areas and where the redundancy don't turn to be too expensive like they turned in the past. And also, looking at the kind of work that is coming from data centers, does PEB participate in the data center opportunity by any chance? Also I'd like to know what are the special competitive positioning parameters that has been enabled us to get more work in the U.S., considering the kind of aggression they're showing in the growth prospects you're trying to get over the U.S. markets? And finally, on the suggestion somebody made to be a little more frequent in your disclosure, I think you should make disclosures the moment there's any material development, share it transparently and immediately is my feeling.

Thank you, sir. So the solar question to understand, let me answer the other questions, and I'll request you to repeat the solar question. Railway coach, yes, they are railway coach sets, not coaches. 400 coaches is not a massive. 400 coach sets is a substantial statement of intent. I don't want to obviously criticize our -- certainly we have our own [indiscernible] by. I would not say that I am not eager about the railway business, I'm not discouraged to anything. I think it has the potential to be a great business, to be a very good business. I'm just saying we need -- we can't be dependent completely on Railway Board orders. I think we need to have a wider net. And yes, and Vande Bharat 400 coaches, -- coach sets, sorry, we have played a pretty big role in the product development, and we are continuing to work with ICF on this.

Will that set us in a good stead for the future orders?

Could you say that again, sir?

Could you -- could that be a good positioning for us to look out for fresh business in the Vande Bharat trains for stock experience, learning curve?

Yes, we're continuously quoting and receiving orders from them. I don't want to leave you with a picture that I'm discouraged or disheartened with the Railway Board orders. It's fine. I'm just saying that it's -- by the very nature of the beast is that you can't plan for the next 5 years on those things. So it's a very -- there's a lot of restraints within it. That's the only thing I'm communicating. Vande Bharat, we have capabilities. The entire sidewall sets, as we call them, which consists of the sidewall, the roof, the trough floor, the assemblies, end walls, underframe assemblies, what are called as front parts. All of those are strong capabilities that we have. And yes, when they ramp up -- when the Railway Board ramps up orders, ICF and MCF ramp up orders, we are ready to service them. We are at their disposal. So that's point question number one. Data centers, we have done a lot of work on data centers for several companies such as controllers and others. We worked with them, and we will continue to have that capability. Effectively, a data center is a multi-story building, as we call it. And we have made many of those. So yes, the PEB market for that will be quite good. Just like warehousing is projected to do really well. The explosion of big data, the explosion of storage requirements in India will ensure that data centers continue to be a good opportunity for us. It looks a lot like the warehousing sector from a point of view of addressable market. I mean as warehousing grows, data centers tend to grow for some reason. I don't know the reason for that, but that's what seems to be happening. Work in the U.S., our goal is to replicate everything we're doing here ultimately, which is high margin in the U.S. And as you may be aware, the addressable markets in the U.S. for our products are very, very, very huge. To give you a comparison, the addressable market for pre-engineered buildings in India is about $800 million. In the U.S., it's $5,000 million. So there's a 6x, 7x more than that sometimes. And we intend to take advantage of the large addressable market in the U.S. to grow and sustain. So we're not constrained by our markets from a growth point of view in the U.S. However, we will do it in a measured way, slowly, carefully, methodically. What we don't want to do is dramatically increase our revenue there, deploy tremendous amount of capital and then not be able to deliver on execution or got further profitability. So we are a profit-focused entity, but a for-profit entity, so we should act like that and make sure that this management also is going hand in hand with growth strategy. Disclosures, I have understood, sir. We will try to make it as soon as we can. But the very nature of things because we have a -- we're diversified. Order booking happens almost on a continual basis. So I think to bring some method to the madness, I think the best way to do it is to do this 2-month disclosures to the exchanges, to the -- to our investors, and we will go ahead and do that. Could you repeat the solar question, sir? I didn't understand...

Yes. I'd like to know what exactly are you currently doing and what exactly you plan to do at a future date to get into more value-added part of the solar opportunity. We migrate to a better value proposition in the solar opportunity and also ensure that we don't get hit when the cycle turns.

Understood. So our solar business right now consists of the manufacture of modules in the 400 to 500 watt peak range. We're expanding that to get into 600 watt peak. We are at about 100 megawatt capacity. We intend to increase that manyfold in the near future. We'll take module mounting systems and AC and DC works. So effectively, the framework on which the module sits, we design it, we manufacture the parts and we execute it at site. And...

So all the mechanical other than the electrical and electronics is our opportunity.

We do electrical as well.

We do electrical. What electrical parts do you...

Inside works, all of those. Yes.

Okay. Okay. Okay. The controller and all will be done by us or we will be buying it out from somebody?

No. That is bought out item, controllers, inverters, charge control -- no, charge controllers on solar EPC, but -- yes, I'm sorry, I misspoke. Not charge controllers, but yes, controllers everything is bought out.

Okay. Okay. Fine. Fine. And Aditya, I had one more slightly long-term-ish question. Now since our growth is occurring in the newer areas where the margins are relatively much better and looking too much to be a little more better as the U.S. market grows. Over the period of next 2 to 3 years, do you see our PBT level is touching coming close to double digits, any chances in the next 2, 3 years?

I articulated -- I would not comment on an abject PBT percentage target though we have it, sir. What I can comment to is that we are focused on doing businesses, which have double-digit operating margins. And the natural ceiling for your PBT is your operating profit minus your fixed costs. So as we increase scale, our operating profits minus our fixed costs get to that point. But I can tell you that most businesses we are adding have a PBT of double digit, 10% and plus. So that's our goal. On an overall basis, I will not be able to project right now, but I can promise you consistent, sustainable profitability, which is value and percentage growth in PBT. Right now it's -- and it's easy for me to do. It's a 2.5%. So I can comment to a substantial growth on that. But double digit, right now on PBT, I will not be commenting, sir.

[Operator Instructions] The next question is from the line of [ Dilip Sahu ], an individual Investor.

Yes. My question got answered about the solar business. But since I got an opportunity just on a lighter note, Aditya, I think last to last quarter, you said that our best-ever quarter is going to come this year. So is it still valid? Are we going to see the stable quarter this year?

I will commit to Q4 being better than Q3 by double-digit percentages, sir. Best-ever quarter, I think, in my view, what I had mentioned was that -- I mean, you're right in the sense that operating-wise, yes, the short answer is yes, operation-wise. But there are -- there was a land sale, which was about INR 20 crores, which came in, in the last quarter. There were some tooling sales, which have happened. So operationally, yes, 100%. We will see our best quarters very soon. Let me put it this way, sir. I think most important is sustain profitability. And I think last conference call, we have gone on record saying operationally, operating PBT, without these exceptional items, next year will be our best ever. That, my team and I will commit to. We have already committed, in my view, last quarter, and we will double down and reiterate that. That, we will do.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments.

Thank you for -- to all of you for your questions and support, sir. As discussed, we'll be focused on growing profitability and ensuring that we're [indiscernible]. Thank you again so much for all of your questions.

Thank you very much. On behalf of PhillipCapital (India) Private Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.