Capacit’e Infraprojects Limited (CAPACITE) Q3 FY23 Earnings Concall Transcript

Capacit’e Infraprojects Limited (NSE:CAPACITE) Q3 FY23 Earnings Concall dated Feb. 14, 2023.

Corporate Participants:

Rohit Katyal — Executive Director and Chief Financial Officer

Unidentified Speaker —

Analysts:

Mohit Kumar — DAM Capital — Analyst

Dhananjay Mishra — Sunidhi Securities — Analyst

Unidentified Participant — — Analyst

Shreyans Mehta — Equirus Securities Private Limited — Analyst

Parvez Qazi — Nuvama Group — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Vishal Srivastav — Swan Investments — Analyst

Faisal Hawa — H.G. Hawa and Company — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Capacit’e Infraprojects Q3 and Nine Months FY ’23 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

Before we begin a brief disclaimer, the presentation, which Capacit’e Infraprojects has uploaded on the stock exchange and their website, including the discussions during this call, contains or may contain certain forward-looking statements concerning Capacit’e Infraprojects business prospects, and profitability which are subject to several risks and uncertainties. And the actual result could materially defer from those in such forward-looking statements.

I now hand the conference over to Mr. Rohit Katyal, Executive Director and CFO. Thank you and over to you.

Rohit Katyal — Executive Director and Chief Financial Officer

Good morning, everyone. On behalf of the company I welcome you all to the Q3 and nine month FY ’23 earnings conference call of the company. Joining me on this call is Mr. Alok Mehrotra, Mr. Nishith pujary, and our IR team. I hope everyone has had an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchanges and our company’s website.

Our progress in the quarter and nine months of the current financial year under review reflects our resilience amid a challenging macroeconomic environment coupled with excellent team work of our colleagues. With a healthy order book, sustained order inflow, and all expertise in executing and delivering projects on time, we are optimistic that we shall witness a healthy and sustainable growth.

We will continue to expand our reach, invest in our talent pool, and unlock efficiencies to deliver a robust performance year-after-year. The strong impetus from the government for housing sector in the recent budget announcement and favorable policies all are very positive for the sector and overall economy. The project awarding has seen an uptick and likely to gain further momentum in the coming quarters. We are confident of achieving our guided order book for the current financial year. Our robust execution capabilities coupled with strong repository of asset base, enabling efficient execution reflected in the strong revenue growth.

Let me appraise you with the key updates. The company has been awarded projects worth INR3,313 crores excluding GST for the nine month ending FY ’23. Appeals against the income tax block assessment orders have been completed for the period up to March 2020. All the disallowances made by the department have been decided in favor of the company. As a result, the contingent liability relating to income tax demand amounting to INR31.15 crores as disclosed in Annual Report of 2022 will no longer be required.

Goldrich Realty has come in as a developer along with DB Realty for one Mahalaxmi project earlier known as Radius DB Realty project. The company has entered into a settlement agreement for INR11.33 crores. Accordingly, the client has released the first tranche of INR6 crores in the month of January ’23 and we will be releasing the balance amount before the end of the current financial year.

The company is expecting recoveries from others slow-moving book[Phonetic] debtors as well.

Now let me come to the performance highlights for quarter three FY ’23. Revenue for the operations Q3 FY’ 23 grew by 21% to INR443 crores as compared to INR367 crores in Q3 FY ’22. EBITDA for Q3 FY ’23 grew by [Indecipherable] crores as compared to INR64 crores in Q3 FY ’22. EBITDA margins for Q3 FY ’23 stood at 20.1% as compared to 17.2% in Q3 FY ’22. EBIT for Q3 FY ’23 grew by 5.1% to INR56 crores as against would be INR37 crores in Q3 FY ’22.

EBIT margin for Q3 FY ’23 stood at 12.4% as compared to 9.9% Q3 FY ’22. PBT for the current quarter ending Q3 FY ’23 grew by 62% to INR31[Phonetic] crores as compared to INR19 crores in Q3 FY ’22. PBT margin for the quarter FY ’23 stood at 6.9% as compared to 5.1% in Q3 FY ’22. PAT for Q3 FY ’23 grew by 15% to INR23 crores as compared to INR14 crores in Q3 FY ’22. PAT margin for the quarter ending Q3 FY ’23 stood at 5.1% as compared to 3.7% in Q3 FY ’22.

Now turning to the performance highlights for the nine months ending December ’23 — ’22. Revenue from operations for nine month FY ’23 grew by 36% to INR1,352 crores as compared to INR993 crores in nine month FY ’22. EBITDA for nine month FY ’23 grew by 59% to INR275 crores as compared to INR173 crores in nine month FY ’22.

EBITDA margin for nine month FY ’23 stood at 20.2% as compared to 17.3% in nine month FY ’22. EBIT for nine month FY ’23 grew by 66% to INR166 crores as compared to INR100 crores in nine month FY ’22. EBIT margins for nine month FY ’23 stood at 12% as compared to 10% in nine month FY ’22. PBT for nine month FY ’23 grew by 97% to INR99 crores as compared to INR50 crores in nine month FY ’22.

PBT margin for nine months FY ’23 stood at 7.3% as compared to 5% in nine month FY ’22. PAT for nine month FY ’23 grew by 98% to INR73 crores as compared to INR37 crores in nine months FY ’22. PAT margins for nine months FY ’23 stood at 5.4%, so these are the 3.7% in Nine-Month FY ’22.

Gross debt stood at INR353 crores, excluding promoter’s debt with gross debt-to-equity ratio at 0.3x. Net debt stood at INR214 crores, with net debt to equity at 0.2x. The company continues to focus on increased execution across projects[Phonetic]. Order book on standalone basis stood at INR9764 crores as on December 31st, 2022, public sector accounts for 67%, while private sector accounts for 33% of the total order book. The floor is now open for questions. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have a first question from the line of Mohit Kumar from DAM Capital. Please go ahead.

Mohit Kumar — DAM Capital — Analyst

Yeah, good morning, sir, and congratulations on another good quarter and good to see delfsliabilities getting off the books. So, my first question is, are you still expecting flat revenues for Q4, given that our guidance for INR1,800 — INR1,800 crore? Or do you revise our guidance for Q4, especially?

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah, good morning. Our target continues to remain unchanged at INR1,800 crores and with the performance of nine months which I’ve just been elaborated. We are confident of achieving that figure for the current financial year.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. Secondly, sir the order inflow. I think we have surpassed our guidance of 22 billion. We already had 33 billion if I am not wrong. Sir, how does the pipeline — so do we have the appetite, more appetite to not — to take the orders for the next couple of quarters? And how is the pipeline looking at this point of time especially [Indecipherable].

Rohit Katyal — Executive Director and Chief Financial Officer

The pipeline is extremely strong across sectors, including residential, commercial, healthcare, and institutional. But on the private sector side, there are various launches plan. And therefore, we do expect certain repeat orders from existing clients within the same location which obviously should not and cannot be avoided.

So from a guidance perspective, as we stand today, we are L1 in over a INR800 crores of projects in the public sector. We should get translated within this quarter, early next quarter. Apart from that we are expecting a couple of repeat orders totaling to about INR500 crores in this quarter.

As rightly said, we have surpassed our target for the whole financial year. But repeat orders as such that the client who has been there during thick and thin with the company over the last five years, six years, and more, cannot and should not be refused to. For the next financial year while the guidance will be given during the next earnings conference call, we are very confident that the momentum will continue and we should continue to maintain the 3.5 to four times order book of our next financial year’s projected revenue.

Mohit Kumar — DAM Capital — Analyst

Are there some large tenders in pipeline where we are bidding for?

Rohit Katyal — Executive Director and Chief Financial Officer

Now the definition of large, if you can elaborate?

Mohit Kumar — DAM Capital — Analyst

Anything around more than INR1,000 crores, sir.

Rohit Katyal — Executive Director and Chief Financial Officer

Number of projects, we have data centers which we are actively looking at. We have residential buildings which now — as you are aware, Government also is constructing buildings, which are in excess of 45, 50 stories[Phonetic]. And when they are in lockheed the value obviously doubled from — doubles or maybe it is 2.5 times have been compared to shell and core. So there are various projects across. RLDA, the railway land development authority who is entrusted with upgradation and construction of 170 railway stations. Most of the tenders are upward of INR600 crores, INR700 crores. So there are substantial stations. In value in excess of INR1,000 crores going all the way up to INR5,000 crores.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. Thank you and all the best, sir. Thank you.

Rohit Katyal — Executive Director and Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Dhananjay Kumar Mishra from Sunidhi Securities. Please go ahead.

Dhananjay Mishra — Sunidhi Securities — Analyst

Hello, sir, congrats on decent set of number. I just wanted to check — am I loud and clear?

Mohit Kumar — DAM Capital — Analyst

Yes.

Dhananjay Mishra — Sunidhi Securities — Analyst

Yeah, so just wanted to check where we are in termsof our [Indecipherable] bank guarantee limit and the retention of — release of retention money, which were expecting very soon. So where we are on that front?

Rohit Katyal — Executive Director and Chief Financial Officer

So the proposal is in final stages with State Bank of India. The lead bank has the — already circulated its final assessment note, and we expect that in the current financial year the tie up should be complete. So accordingly, the retention release will be planned on the release of the bank guarantee.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay. And..

Rohit Katyal — Executive Director and Chief Financial Officer

[Indecipherable] the cash flow collection is at about 77% of our top line and with the release of bank guarantees for retention, you should see an uptick [Indecipherable] to 90% of the cash profit of the revenue[Phonetic]

Dhananjay Mishra — Sunidhi Securities — Analyst

So why is this delay happening, because — I mean you already have applied for this bank guarantee? So, any specific reason why banks are not taking decision on that?

Rohit Katyal — Executive Director and Chief Financial Officer

I have not understood. Pledge is not for the consortium limit. If you’re asking that. Can you please repeat your question?

Dhananjay Mishra — Sunidhi Securities — Analyst

BG — BG limit, bank guarantee limit.

Rohit Katyal — Executive Director and Chief Financial Officer

The delay is basically because it’s a consortium banking arrangement and only after the lead bank circulates the assessment note, do the other banks take it up. So we have seen the delay and we have called for the co-bankers who are meet and the banks that — then the lead bank State Bank of India has taken up the matter with the other banks very aggressively. And we hope that the resolution should happen very, very quickly.

Dhananjay Mishra — Sunidhi Securities — Analyst

And on CIDCO — hello?

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah.

Dhananjay Mishra — Sunidhi Securities — Analyst

Yeah. On CIDCO project, what was the contribution in this quarter? And what will be the contribution next quarter we are expecting?

Rohit Katyal — Executive Director and Chief Financial Officer

The contribution in the last quarter was close to INR70 crores from CIDCO project, and we continue — we hope and we believe that the momentum will continue. The seventh location has been formally handed over to the company of CIDCO and the environmental clearances from the client are expected in the next week. So we do believe that the preparatory work will start in the seventh location from March onwards now since the location has been handed over. And it will start translating into revenues from the quarter one of next financial year. So we do see extremely robust revenues from CIDCO as you saw in the last quarter, getting into the current quarter, and the whole of the next financial year.

Dhananjay Mishra — Sunidhi Securities — Analyst

So it has come down from INR85 crores in Q2 to about INR70 crores this quarter, right?

Unidentified Speaker —

INR80 crores to INR75 crores.

Rohit Katyal — Executive Director and Chief Financial Officer

From INR80 crores to INR75 crores because certain variation bills will be billed in the current quarter.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay. So this quarter — in last quarter, you’ve indicated that Q4 will be about INR150 crores. So we are there at INR150 crores for this quarter. And if you see the monthly run rate of Genen[Phonetic]…

Rohit Katyal — Executive Director and Chief Financial Officer

Sir, I do not believe that we’ll be at INR150 crores because MHADA project has also started which has contributed close to INR30 crores in the last quarter. And we believe that it will also contribute close to INR35 crores in the current quarter. And CIDCO, we believe that once our variation bills get billed we should be close to about INR90 crores to INR100 crores in the current quarter, because seventh location bills[Phonetic] start from the next quarter only, and that is when you will start peaking at INR60 crores per month.

Dhananjay Mishra — Sunidhi Securities — Analyst

From the Q1 FY ’24?

Rohit Katyal — Executive Director and Chief Financial Officer

Absolutely.

Dhananjay Mishra — Sunidhi Securities — Analyst

Okay, sir. That’s all from my side and all the best.

Rohit Katyal — Executive Director and Chief Financial Officer

Thank you.

Operator

Thank you. We have the next question from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead.

# — H.G. Hawa and Company. — Analyst

Yes. Sir, our asset turn ratio has been pretty poor over the last so many years as compared to, say, Ahluwalia Construction. So will this [Indecipherable] latest rise in sales and overall execution getting better to raise the asset turn and what is the asset turn we are now targeting for the next financial year?

Rohit Katyal — Executive Director and Chief Financial Officer

Mr. Hawa [Indecipherable], you see that a 35 year old company cannot be compared to a nine year old company who has created a gross block of INR650 crores. The net block is at about INR440 crores of the core assets. In the current financial year, we should be at about 4.5 times asset turn and we should increase that to 5.5 times as explained in the last call. I believe that 5.5 times with an average asset life of six years or lower is a very strong asset turn to have.

# — H.G. Hawa and Company. — Analyst

But then why are we not — because this is depressing our ROC, ROE, so — and it’s like a constant thing with our company. And that’s why the valuations also tend to get this depressed. So is there — I mean while you according[Phonetic] taken about a young company there, but, is there no other steps that we can take to mitigate this?

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah, the steps have already been taken. We have refrained from taking any projects, which are high on CapEx. And therefore, the CapEx will be substantially lower than the next financial year or the prior years. The CapEx plan for the next financial year also is about INR45 crores, and therefore, we do believe that the net value of the core assets taking INR50 crores of depreciation of the core assets will fall in the next financial year as in the current financial year. And with the addition of only INR45 crores you should see a net asset value of close to INR390 crores. And with the revenue stated to go up by approximately 25%, your asset turn will increase substantially close to 6%[Phonetic]. So 6%[Phonetic] will be the highest asset turn of the company in its short history.

And as this asset turn goes up and the value of the net block comes down of the core assets, yeah, your ROE, ROCE will see substantial improvement, however, on the other parameters, therefore, we have declared our EBIT in this quarter. And if you see, there has been substantial improvement on all those other parameters.

# — H.G. Hawa and Company. — Analyst

And sir, where do we stand on orders from the — from MHADA? Do you feel that it can be — we can get further orders also in this Central Mumbai space? Because this project looks like it will be expanded. And how do you see the railways space panning out for us? You feel that we could get fairly substantial orders there also?

Rohit Katyal — Executive Director and Chief Financial Officer

So we are an end-to-end player in the construction space of our buildings and we target quality clients across the spectrum. And therefore, we are bidding the very cautiously given our strong order book for projects which are accredited to our bottom line and add positively to the overall profitability of many[Phonetic].

So therefore, we are not — it is difficult for me to say whether we are focusing on Central Mumbai or south like an NMR[Phonetic]. There is opportunity across the geography where we operate, including opportunity in Delhi-NCR, especially from government and autonomous bodies floated by the government, and the order book target, which has been surpassed by nearly 30%, 33% this current financial year, clearly shows the trend where the private sector continues to give repeat orders and government sector spending which we just spoke about during my opening comments.

# — H.G. Hawa and Company. — Analyst

And sir, there was a lot of this service revenue that we are going to get to the MHADA contract. Has that also started coming in? Is it — and is that playing also on increasing the EBITDA?

Rohit Katyal — Executive Director and Chief Financial Officer

Absolutely. Absolutely. So the design charges have started — have kicked in MHADA project. The first tranche of INR4,000 crores, which has been subcontracted at 35% to Capacit’e Infra and 65% to Tata Projects Limited is in full swing. And we do believe that the efficiencies of scale as committed will kick in, in the next financial year in MHADA itself.

# — H.G. Hawa and Company. — Analyst

So at least 1.5% to 2% EBITDA increase would be due to the service revenues coming in?

Rohit Katyal — Executive Director and Chief Financial Officer

I wouldn’t like to comment on that. It’s quite early. Our guidance with the accounting mechanism which we follow is 18% to 18.5%. On the full year, I do expect that since nine months have been completed, we should be doing a tad better than the estimate given of 18% to 18.5%. So currently, we are at 20%, so there has been an expansion of 1.5%. It would be nice to end the year on a similar note.

# — H.G. Hawa and Company. — Analyst

Sir, I appreciate to answering my questions so well. Thank you.

Rohit Katyal — Executive Director and Chief Financial Officer

You’re welcome.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Mukul Varma from Varma Associates.Please go ahead.

Unidentified Participant — — Analyst

Yeah, good morning, sir. Congratulations on a good quarter.

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah.

Unidentified Participant — — Analyst

Question is that last quarter in the con call you had mentioned that you signed some settlement agreements with your old projects with the Radius Group and some — High Court has sanctioned some favorable verdict in case of the IGIMS project. And you were expecting to receive INR55 crores in coming three quarters. I just wanted to know how much have you received in the quarter gone by? And what is the received target for current quarter?

Rohit Katyal — Executive Director and Chief Financial Officer

So in totality, against the verdict received in IGIMS, our bills have been submitted and expected to be certified over the next 15 days. We have already received INR3.55 crores against that project.

Secondly, against the Radius Project, one Mahalaxmi, I just said in my opening comments that we have already received out of INR11.33 crores an amount of INR6 crores. The remainder of INR5.33 crores will come in this quarter along with some substantial money expected from IGIMS. There are other projects also where the settlement agree in final stage. However, I shall be better placed to comment on that by March mid or thereabouts.

Unidentified Participant — — Analyst

And since we have won this income tax thing, is there any refund coming from them? Or it was just a liability

Which has been..

Rohit Katyal — Executive Director and Chief Financial Officer

INR6.55 crores has been received. INR12.28 crores has gone to the treasury and another refund order of INR12.5 crores or thereabouts has been approved and is under processing. So the total cash inflow from income tax refunds expected by the end of the current financial year will be [Indecipherable] of INR30 crores or thereabouts.

Unidentified Participant — — Analyst

Okay. That’s great. And if you can give any color on the MHADA thing for the ensuing financial year? Like how much would approximately be contributing to the top line of the company?

Rohit Katyal — Executive Director and Chief Financial Officer

I believe that we should be close to INR60 crores.

Unidentified Participant — — Analyst

For the full year?

Rohit Katyal — Executive Director and Chief Financial Officer

No, the revenue is basically kicking in more so in quarter three and quarter four. Quarter two was I think INR10 crores.

Unidentified Participant — — Analyst

No, no, I’m saying in FY ’23, ’24 for the full year, what would be..

Rohit Katyal — Executive Director and Chief Financial Officer

For the full year? For the full year, we are committed to do close to INR250 crores to INR300 crores at capacity inflow level as a subcontractor to the LLP. At the LLP level, obviously, the revenue will be much higher, but we cannot recognize that revenue. Obviously, the PAT at the LLP level will be recognized as profit from associates in our financials.

Unidentified Participant — — Analyst

Okay, that’s great, sir. Thank you. That’s it from me.

Rohit Katyal — Executive Director and Chief Financial Officer

Thank you.

Unidentified Participant — — Analyst

All the best.

Operator

Thank you. We have our next question from the line of Shreyans Mehta from Equirus.

Shreyans Mehta — Equirus Securities Private Limited — Analyst

Yeah, thank you for the opportunity. My first question is, sir, I just wanted to check how big is the data center opportunity? And what is our scope of work in that?

Rohit Katyal — Executive Director and Chief Financial Officer

The data centers which come in the private sector have a [Indecipherable] that is shell and core and the electromechanical works. However the data centers coming in government, we now see that it’s a complete lump-sum turnkey project. So if the shell and core is let’s say INR350 crores to INR400 crores, the electromechanical could be close to INR1,200 crores. So data centers ‘opportunity across India are both from the private sector, but players like Amazon, Google, and alike is tremendous. Apart from that, there’s a government push for data centers both at the state and central level. We are currently constructing data centers for the Department of Telecommunications through BSNL…

Shreyans Mehta — Equirus Securities Private Limited — Analyst

All right.

Rohit Katyal — Executive Director and Chief Financial Officer

Which is on the final verge of completion. We should be through that project over the next six months. So we do see the opportunity, a very big opportunity in this segment. However, I cannot pin down a specific number that it would contribute to our order book or the revenue for the next fiscal. The market for data centers is — has recently matured, if I may say in India. And it definitely shall be one of our focus areas in the coming financial years starting from the next financial year.

Shreyans Mehta — Equirus Securities Private Limited — Analyst

Got it. Sure. Sir, some bookkeeping questions. CapEx till nine months, how much we have done and how much is pending? And secondly on debt, where do you foresee by this year end?

Rohit Katyal — Executive Director and Chief Financial Officer

The total CapEx, which has been done is INR66.19 crores for the nine months ending. I do not see much CapEx in the current financial year — in the remainder of the next — current financial year. The next financial year CapEx at the moment is stands at estimated between INR45 crores and INR50 crores. However, we are trying to push whatever can be done in a private sector to the client’s scope of work. That’s one thing.

Shreyans Mehta — Equirus Securities Private Limited — Analyst

Sure. On the debt?

Rohit Katyal — Executive Director and Chief Financial Officer

On the debt side, we don’t see any increase in the fund-based limit though there is a INR25 crores tie-up which is pending. We are hopeful of getting our bank guarantees. Basically, the company has to collect close to INR250 crores in advances and retentions against submission of proportionate bank guarantees. And if that’s done, then, obviously the company becomes net debt-free and further has INR100 crores cash available for expanding operations.

Shreyans Mehta — Equirus Securities Private Limited — Analyst

Got it. Sure. And sir, lastly, in terms of our unbilled revenues details retention and mobilization advance?

Rohit Katyal — Executive Director and Chief Financial Officer

Sir, this is a very long question. You may please send a mail to our IR team. They will respond immediately.

Shreyans Mehta — Equirus Securities Private Limited — Analyst

Sure. Thank you and all the best, sir. That’s from my side.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Parvez Qazi from Nuvama Group. Please go ahead.

Parvez Qazi — Nuvama Group — Analyst

Hi, good afternoon and thanks for taking my question. Sir, my first question is on the competitive intensity in the industry. I mean, obviously, there are a lot of opportunities. So are we saying that we may be able to get, let’s say, a premium pricing or margins which are maybe higher than what we have done historically while bidding for new projects?

Rohit Katyal — Executive Director and Chief Financial Officer

So the competitive intensity perspective, building sector is one sector, where the organized players are seven to eight at best geographically speaking except L&T and Shapoorji, who are pan-India players, you don’t have any specific [Technical Issues] India players, okay? Like us they maybe in five cities or six cities. Or you may call them six or seven states, like Delhi NCR is one state — one geography for us. For some it may be mentioned as three states.

So from that perspective, most players in — organized players in the building construction segment, which include ourselves, L&T, Shapoorji, GMC Building Division, NCC, Ahluwalia, PSP, B. L. Kashyap and maybe a couple of others are more focused excluding L&T and Shapoorji on their geographies and where their supply chain management is strong.

So we will continue to focus on that. And therefore, with limited players being the competitive intensity in building construction for projects, which are upward of INR350 crores, INR400 crores in the public sector because private sector obviously is on invitation only and not open to anyone and everyone. So in public sector, the competitive intensity in projects above INR400 crores is fairly low, which gives us a good opportunity and other players as well a good opportunity to bid and win projects at fair pricing.

So that’s one thing. Number two, players who execute on lump sum turnkey basis, including design build basis are even lesser. And therefore, when you see our order portfolio nearly 60% of that comes from design build LSTK projects, where engineering efficiencies come into play, thereby giving us an opportunity to improve our margins whether it may be at EBIT level, EBITDA level or PAT level.

Parvez Qazi — Nuvama Group — Analyst

And in terms of MHADA project, what is the status in terms of how much work area have we got designed, et cetera? What has been completed and how do we see the project shaping up in FY ’23?

Rohit Katyal — Executive Director and Chief Financial Officer

So we have only started the works practically from last seven, eight months. As on today, eight buildings of 40 stories are under construction and in full swing. We expect total 18 buildings of the rehab of 40 stories to be made available as committed by the client by first quarter in a phase-wise manner. 18 buildings would mean approximately INR3,500 crores of work front will open, Capacit’e’s share being 35% of that.

Parvez Qazi — Nuvama Group — Analyst

That’s it from my side and all the best.

Rohit Katyal — Executive Director and Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello.

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah, go on.

Deepak Poddar — Sapphire Capital — Analyst

Yeah, thank you very much for the opportunity. Sir, first off, I just wanted to understand, I know you mentioned this year by FY ’23 and we are looking to release some retention money. I think around INR160 crores of retention money was locked in, right? So that entire amount we expect to get released — expected to get released by this March or so, some timeline on that?

Rohit Katyal — Executive Director and Chief Financial Officer

See, we are expecting our bank guarantees sanctions. And therefore, the quantum which would be released, there has been released of about INR20[Phonetic] crores INR25[Phonetic] crores over the last two quarters, including the current quarter. However, the retention continues to be at about INR169 crores because the revenues also have gone up and there is retention on the executed portion also.

So when I said INR250 crores, I include the advances of close to INR90 crores in those collections and INR169 crores of retention. However, what will come through in March, it will depend on the bank guarantee release date and that we will be able to convey — communicate to you only by this month end. However, we are very optimistic that over the next two quarters, this entire money should get released and into the system of the company, thereby making us net debt-free and adding substantial working capital, reducing our net working capital, and fueling the growth of the company to our projections.

Deepak Poddar — Sapphire Capital — Analyst

Okay. So effectively, these bank guarantees we are expecting in next 15 days. I mean..

Rohit Katyal — Executive Director and Chief Financial Officer

That is what our belief is. Of course, all the guarantees do not get released on one day. So it will start from bank-to-bank. So at the moment we expect first release from the State Bank of India.

Deepak Poddar — Sapphire Capital — Analyst

Okay. And in two quarters, we are expecting that this entire INR170 crores retention money should get released and..

Rohit Katyal — Executive Director and Chief Financial Officer

Not the entire INR170 crores because maybe INR20 crores, INR25 crores would be payable after the DLP[Phonetic] which is generally one year. However, having said that, I am combining the mobilization advances of the orders in hand which have yet to be taken plus a portion of the retention which needs to come into the company, which are due and payable.

Deepak Poddar — Sapphire Capital — Analyst

Okay, understood. So this — are we facing any time — any kind of execution? I mean, generally, what we see third quarter is always better than the second quarter, right? But it’s largely the same this time around. So is it because of the — I mean the retention money or the lower bank guarantees that we are facing some hiccups in execution level? Would that be a fair understanding to have?

Rohit Katyal — Executive Director and Chief Financial Officer

Sir, we have crossed the FY ’21 numbers. We were at INR1,350 crores for the first nine months, and we are slated to do close to something better than INR1,800 crores for the full year FY ’23, which is an increase of nearly 35%, 37% over the last financial year. So the operations at all projects are going on

Deepak Poddar — Sapphire Capital — Analyst

Okay.

Rohit Katyal — Executive Director and Chief Financial Officer

When you see flat revenues, that means we are working — we are all woking in optimum. However, the location number seven of CIDCO has been just released. That will get translated into revenues from first quarter of the next financial year. So your entire order book as on today, which we just mentioned close to INR9,800 crores is operational, and therefore should translate into the revenues what we have just been discussing. And therefore, there is no doubt that money in-house is better than money with the client.

Deepak Poddar — Sapphire Capital — Analyst

Correct.

Rohit Katyal — Executive Director and Chief Financial Officer

And therefore, if INR200 crores would have been there — you would have seen that reduced finance charges, number one. You would have seen a much better working capital cycle. And number three, you would have seen cash and bank balance with the company, which — towards which we are working for. So it has not impacted the operations, but it definitely has impacted the profitability as the finance costs would have been much substantially lower with this money with the company.

Deepak Poddar — Sapphire Capital — Analyst

Fair enough. I understood. And my final question is on your revenue. I mean, in the previous call, we have said that we are looking at, what, 22% to 25% revenue growth for the next few years, right? Now FY ’23 we have already given a target of INR1,800 crores plus. So from FY ’24 onwards is that the range we should be working on with?

Rohit Katyal — Executive Director and Chief Financial Officer

That’s given because that is a commitment to the client. So as I told you the orders which currently are with the company are all operational. And we have grown our plan for the next 24 months. We suggest that the growth has to be what you just mentioned of over 20%, 25%.

Deepak Poddar — Sapphire Capital — Analyst

Exactly, from FY ’24. Okay, okay. Yeah, that’s it from my side, sir. All the very best. Thank you so much.

Rohit Katyal — Executive Director and Chief Financial Officer

[Indecipherable]

Operator

Thank you. [Operator Instructions] We have our next question from the line of Vishal Srivastav from Swan Investments. Please go ajead.

Vishal Srivastav — Swan Investments — Analyst

Hi, sir. Thank you for taking my question. My most of the question has got answered, and congratulations for good set of numbers, sir. Sir, one bookkeeping question regarding the trajectory on depreciation last two quarters, in fact three quarters have been more or less in the range of INR42 crores, INR32 crores and INR34 crores.

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah.

Vishal Srivastav — Swan Investments — Analyst

During Q1, you have explained that this is — this was due to the change of method from — with material to without material for one big client, but it has not normalized. So we understand about the Q1, but Q2, and Q3 as well it remains elevated. So can you throw some light in this area, sir, please?

Rohit Katyal — Executive Director and Chief Financial Officer

The reduction and it has — it will be at about INR122 crores, INR125 crores. You have to — when you see the fine print or if you clarify with our IR team, they’ll explain to you that the site establishment which was INR225 crores as on March ’22, today stands at INR167 crores or INR162 crores, I’m sorry. So there has been a reduction in the site establishment after the accounting change which now is as a percentage to your sales — to your expenses, percentage completion method. And therefore, the depreciation of INR30 crores, INR32 crores per quarter will continue until the time the site establishment becomes zero and thereafter, the depreciation will be close to INR15 crores per quarter for the core assets alone. Hope to I answered your question.

Vishal Srivastav — Swan Investments — Analyst

Okay, sir. Okay. Okay. So this will be, as you said, till the site has been completed. So..

Rohit Katyal — Executive Director and Chief Financial Officer

No. Also I repeat, INR165 crores is the site establishment unamortized..

Vishal Srivastav — Swan Investments — Analyst

Okay.

Rohit Katyal — Executive Director and Chief Financial Officer

Which is getting amortized at a rate of close to INR20 crores per quarter,

Vishal Srivastav — Swan Investments — Analyst

Okay.

Rohit Katyal — Executive Director and Chief Financial Officer

Right? It could be higher in some quarters. It depends on the revenue. So if the revenue goes to INR500 crores, that much more amortization will happen. Or if it goes to INR600 crores, the amortization will increase further. So the site establishment is nothing but the initial expenses for the order book which you carry, which currently is less than 2%. And we believe that this amortization should happen in totality over the next eight quarters or earlier.

So once that amortization is complete the INR162 crores I just [Indecipherable] at INR20 crores per quarter approximately or a little bit more than that. You will not have anything to depreciate any more. And therefore, the depreciation per quarter thereafter will fall to INR12 crores to INR13 crores for the core assets alone, gross block of — net block of which is INR440 crores, INR450 crores.

Vishal Srivastav — Swan Investments — Analyst

Great, sir. Got it, got it. Clear now, sir. Thank you so much for this explanation. All the best for the future. Thank you sir.

Operator

Thank you. We have our next question from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead.

Faisal Hawa — H.G. Hawa and Company — Analyst

Sir, to me, this is now looking like we have like so many orders that we can actually now choose that [Speech Overlap]

Operator

Hawa, sir, I’m sorry, you are sounding muffled.

Faisal Hawa — H.G. Hawa and Company — Analyst

Can you hear me now?

Rohit Katyal — Executive Director and Chief Financial Officer

Sorry.

Operator

It’s still the same.

Faisal Hawa — H.G. Hawa and Company — Analyst

Can you hear me now?

Operator

No, Mr. Hawa. Use your hand set, please.

Faisal Hawa — H.G. Hawa and Company — Analyst

Yeah.So to me, this is now [Indecipherable] that you know we can actually pick and choose our orders. And, going forward, what is the kind of EBITDA margins you are targeting for new orders, so that our EBITDA can rise probably even further? And is it even a good option to raise the EBITDA and let some orders go?

Rohit Katyal — Executive Director and Chief Financial Officer

That’s exactly what, Mr. Hawa, we have been doing. We have not been picking up any orders [Indecipherable]. There were many questions in the first six months why have not we booked orders. And suddenly, you see in that one quarter, four months, your order book has crossed the yearly target. So the point is there is more pressure on the company to grow fresh orders at the cost of sacrificing the overall EBITDA guidelines internal to the company.

And more than EBITDA, we would like to focus on cash PAT and the free cash flows of a particular project would generate for the company because whatever investments at a high level of more than INR650 crores, INR670 crores at gross block level were to be done has been done by the company. It is high time that we start making cash margins from operations after adjustment of finances from next financial year onwards.

Faisal Hawa — H.G. Hawa and Company — Analyst

Okay, thanks a lot sir.

Rohit Katyal — Executive Director and Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Mukul Varma from Varma Associates. Please go ahead.

Unidentified Participant — — Analyst

I assume this year you would be clocking the highest ever PAT in the history of the company now that you — three quarters, you’ve already done 74[Phonetic]. So would you be going back to the dividend policy from this financial year?

Rohit Katyal — Executive Director and Chief Financial Officer

Allow me to answer this question for something next time. So it will be dependent on the Board. I cannot take the decision. But yes, if your good wishes are there and we get our bank guarantees, you will see a good dividend payout. But dividend payout is not directly dependent on the net profit, but realization of the receivables, of which nearly INR250 crores is held up with the clients at the moment in time and we are actively engaging to get those released.

Unidentified Participant — — Analyst

So these bank guarantees what have been stuck for quite some time, do they have anything to do with our ratings, which we are supposed to go back to A minus [Indecipherable] then BBB+ or it doesn’t matter really?

Rohit Katyal — Executive Director and Chief Financial Officer

If you check up the companies who have been restructured three, three, four, four times, INR400 crores, INR500 crores more guarantee than me. So that is not the criteria.

Unidentified Participant — — Analyst

Okay.

Rohit Katyal — Executive Director and Chief Financial Officer

And it’s very well understand and the market, including you understand that no derating can go to BBB+ in three months.

Unidentified Participant — — Analyst

Correct.

Rohit Katyal — Executive Director and Chief Financial Officer

So we all know the facts and we do not visit the domain again. But having said that, there are procedural delays. We follow the straight line method in depreciation and also as far as our conducted consent. So there are procedural delays, let the guarantees come, and we will continue to try and get our moneys[Phonetic] which are withheld with the client due and payable over the current and the next quarter.

Unidentified Participant — — Analyst

Great, sir. Thank you. All the best.

Operator

Thank you. We have a question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello.

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah.

Deepak Poddar — Sapphire Capital — Analyst

I just wanted to have this follow-up. I mean in terms of depreciation, how we see the trajectory? I mean depreciation has been quite — I mean, like it used to be in the range of INR26 crores, INR27 crores, then it went up to INR40 crores. Now it’s in the range of INR32 crores, INR34 crores. So how do we project that? I mean some understanding, if you can provide on that. Yeah.

Rohit Katyal — Executive Director and Chief Financial Officer

As I explained in the quarter one, due to an adjustment of one single project, the depreciation was INR42 crores. Thereafter the depreciation is average INR32 crores. It will continue to be INR30 crores over the next eight quarters till the site the establishment lying in the gross block of the company is completely written off. The gross — the site establishment gross block was INR225 crores or thereabouts as on March ’22, after the — when the accounting policies were changed to input method.

Today, the depreciation — today, the gross block on unamortized or unwritten off site establishment is INR162.5 crores or INR165 crores. So there has been a substantial reduction in debt. This reduction will start impacting the lower depreciation in the coming quarters. However, at the end of eight quarters, starting March and ending March ’25, you will have zero site establishment in the gross block at which time the depreciation will fall to INR15 crores — INR12 crores to INR15 crores per quarter.

Deepak Poddar — Sapphire Capital — Analyst

That will be post-March, right? When we would have — I mean extend all this INR30 crores per quarter for seven to eight quarters?

Rohit Katyal — Executive Director and Chief Financial Officer

Absolutely. Absolutely. But if you can send a mail to our IR team, they will be able to explain to you better.

Deepak Poddar — Sapphire Capital — Analyst

No. No. I understood. I got a fair understanding. And even in the interest cost, post — we expect like in the next six months, the retention money to get released. So our interest cost would also kind of — I mean, the half timing from current levels of what ’24[Phonetic], ’23[Phonetic]..

Rohit Katyal — Executive Director and Chief Financial Officer

Yeah, it’s not hard. When you grow businesses, you issue bank guarantees also. When you issue bank guarantees, you pay commissions also, all right? Many companies recognize interest charged by the clients of mobilization advance in — at the site level, we recognize in the finance cost, all right? So it is not comparable the tw companies from finance cost perspective. Yes, we do believe that if INR250 crores is received, then fund-based debt will reduce by INR100 crores at bare minimum. And to that extent, approximately INR12.5 crores or INR12 crores of high cost debt interest will come down for the company.

Deepak Poddar — Sapphire Capital — Analyst

Annually. Annually. Annually, INR12 crores reduction?

Rohit Katyal — Executive Director and Chief Financial Officer

Annually. How much will be a saving on bank guarantees or LC discounting or discount charges that depends on the revenue which we are going to achieve. And even if that goes up or reduces by a couple of crores as a percentage through the top line will be lower with the interest coverage ratio improving significantly.

Deepak Poddar — Sapphire Capital — Analyst

Fair enough. I understood. Yeah, that’s it from my side, sir. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Rohit Katyal for closing comments. Over to you sir.

Rohit Katyal — Executive Director and Chief Financial Officer

I would like to thank all of you once again for joining us on this conference call today. We hope we have been able to answer the queries. Please feel free to reach out to our IR team for any clarification or feedback. Thank you and see you in the next quarter. Bye.

Operator

Thank you. Thank you. On behalf of Capacit’e Infraprojects that concludes this conference. Thank you for joining us and you may now disconnect your lines.