J.Kumar Infraprojects Limited (JKIL) Q3 FY23 Earnings Concall Transcript

J.Kumar Infraprojects Limited (NSE:JKIL) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Kamal J Gupta — Managing Director

Madan Biyani — Chief Financial Officer

Analysts:

Mohit Kumar — DAM Capital — Analyst

Rahil Shah — Crown Capital — Analyst

Parth Kotak — Alpha Plus Capital — Analyst

Raj — Arjav Partners — Analyst

Aman Agarwal — Individual Investor — Analyst

Bhavin — Individual Investor — Analyst

Prem Khurana — Anand Rathi Shares — Analyst

Shravan Shah — Dolat Capital — Analyst

Ankit Babel — Shubkam Ventures — Analyst

Parikshit Kandpal — HDFC Securities — Analyst

Vasudev Ganatra — Nuvama Wealth Management — Analyst

Saket Kapoor — Kapoor & Company — Analyst

Panjul Agrawal — Green Portfolio — Analyst

Rajesh Jain — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the J. Kumar Infra Projects Limited Q3 and Nine Months FY ’23 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there’ll 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 J. Kumar Infra Projects has uploaded on the stock exchange and their website, including the discussions during this call, contain or may contain certain forward-looking statements concerning J. Kumar Infra Projects business prospects and profitability, which is subject to several risks and uncertainties and the actual result could materially differ from those in such forward-looking statements.

I now hand the conference over to Mr. Kamal Gupta, MD, J. Kumar Infra Projects Limited. Thank you and over to you, sir.

Kamal J Gupta — Managing Director

Good afternoon, everyone. On behalf of J. Kumar Infra Projects, I welcome everyone to the Q3 and nine months FY ’23 earnings conference call by the company. Joining me on this call is Mr. Madan Biyani, our CFO; Mr. Arvind Gupta, VP Taxation; and our IR team; and Mr. Nalin Gupta, MD of J. Kumar. I hope everyone has an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchanges and our company’s website. We are excited to deliver another quarter of healthy performance with stable EBITDA margins and debt levels. We are witnessing strong execution momentum across all our projects and are focused to create value to all our stakeholders. We are honored to have played our part EPC construction of Metro — Mumbai Metro Park Project 2A and Line 7 compromising of 35 kilometers or wider and 13 stations constructed in two phases. The project was recently dedicated to Mumbaikars by our Honorable Shri Narendra Modi ji, our PM.

Secondly, we have also opened the Kalwa Bridge, which is at Thane, on 30th November 2022. We also received appointment date of Vadodara Mumbai Expressway project of 19th Jan 2023. Further, we are in process of constructing a further 61 kilometers of metro rail network across India. The recent Union budget with highest ever capital outlay of INR10 lakh crore clearly reiterates government focus towards building a world-class infrastructure in the country. The multiplier effect which the infrastructure sector plays in overall economic growth has been exercised. J. Kumar with its execution track record and sound financial health will be clear beneficiary of the government’s continued impetus. Coming to the performance highlights of Q3 FY ’23. The revenue from operations for Q3 FY ’23 has gone up by 10% to INR1,062 crores as compared to INR966 crores in Q3 of FY ’22. The operating margin that is EBITDA for Q3 FY ’23 stood at INR152 crores as compared to INR139 crores of the preceding year.

The EBITDA margins for Q3 stood at 14.3%. The PBT for Q3 has gone up by 17% to INR97 crores as compared to INR82 crores of the preceding year. And the PBT margin stood at 9.1% as compared to 8.53% in Q3 of FY ’22. The PAT for Q3 FY ’23 grew by 21% to INR71 crores as compared to INR59 crores in Q3 FY ’22. PAT margins for Q3 FY ’23 stood at 6.7% as compared to 6.1% in Q3 FY ’22. Coming to the performance highlights of nine months ending FY ’23. Revenue from operations for the nine months has gone up by 27% to INR3,069 crores as compared to INR2,413 crores in the preceding year. The EBITDA for nine months stood at INR438 crores as compared to INR345 crores of the previous year. PBT for the nine months has gone up by 53% to INR73 crores as compared to INR179 crores of the previous year. And the PAT for nine months of FY ’23 has gone up by 52% to INR201 crores as compared to INR132 crores of the previous year.

Our order book — total order book as on 31st December ’22 stand sat INR11,209 crores. The order book includes metro projects elevated and underground contributing to 52% while flyover, bridges, roads contribute to 34% and the others contributing to 14%. While we are optimistic on India growth amidst the continuing geopolitical uncertainties. Before taking the Q&A, I would like to reiterate the vision of the company. One, with strong financial and technical merits, we envisage becoming $1 billion revenue company by FY ’27. Our endeavor is to reduce gross debt level in minimum terms and the object is continuously to improve shareholders return ratio by investing in people, technology, and process. Thank you so much.

Questions and Answers:

Operator

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

Mohit Kumar — DAM Capital — Analyst

Hi. Good afternoon, sir, and thanks for the opportunity. My first question is on the order inflow guidance. If I remember correctly, I think the order inflow guidance given was INR5,000 crore and till date we have done INR1,600 crore if my numbers are correct. So, how do you see Q4 in general? And also can you comment on some orders from — there are some order from Chennai Metro just waiting to get finalized, I think nothing has come so far as of now, right?

Kamal J Gupta — Managing Director

So Mohit, in case of this order book, we have done an order book of INR1,680 crores as you rightly said and we have also bagged an additional order for — as the variation for our Delhi project which is INR500 crore, which we received recently. So, altogether this will — this takes it to something like INR2,200 crores. And the order book as of today stands at INR11,200 crores, including that INR500 crore variation order that we have received. So, that is the current status. And with regards to Chennai Metro, the date of submission has been extended so we are awaiting the fresh dates when it will be submitted. And we have also — we are already at the verge of the final submission for two tenders for MCGM, which is one of the Goregaon-Mulund link road and the other of the Bhayandar Coastal Road, which is INR3,000 crore and INR7,000 crore approximately. So, close to like INR10,000 crore approximate orders that we are going to bid for. So that is again a very — we will be very keen on that project. And again there are various orders that’s coming up to the tune of around INR11,600 crores that we have already bidded so — and out of which we are also in one tender of Vst2, which is again a sea bridge tunnel for MCGM. And so, the order pipeline looks to be quite strong. So in Q3 we should be able to achieve the target given by us — Q4 what we have mentioned and maybe one month here and there if there is any change.

Mohit Kumar — DAM Capital — Analyst

So, we have maintained the guidance of INR50 billion, right, for the entire year, right?

Kamal J Gupta — Managing Director

In the Q1 also like maybe because of the processing. [Speech Overlap]

Mohit Kumar — DAM Capital — Analyst

Understood that. Sir, one thing was on the Dahisar coastal road and Ghodbunder, do you expect this to happen in Q4?

Kamal J Gupta — Managing Director

Goregaon-Mulund Link Road.

Mohit Kumar — DAM Capital — Analyst

Goregaon-Mulund Link Road and Dahisar coastal road do you think or both of these can get finalized in Q4 or it will spill over to Q1?

Kamal J Gupta — Managing Director

It should be Q3 — Q4 or it can also go to April. That is Q1….

Mohit Kumar — DAM Capital — Analyst

The bid submission happened or you’re still waiting?

Kamal J Gupta — Managing Director

So when you say extension, which is as of now, which the submission date is 10th of February. So there are some minor internal changes happening in the department for scope. So, that’s how the tender is getting delayed for a week or so.

Mohit Kumar — DAM Capital — Analyst

And sir, on the INR116 billion [indecipherable] where the bids have been submitted, what are the kind of projects they are? Are they still in Maharashtra or they are across Pan India? Could you just throw some — give some color?

Kamal J Gupta — Managing Director

They are across pan India. It’s not only Maharashtra. We reported something in Bihar, Bangalore, Pune, and Mumbai.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. Thank you, sir. Best of luck, sir.

Operator

Thank you. We have the next question from the line of Rahil Shah from Crown Capital. Please go ahead.

Rahil Shah — Crown Capital — Analyst

Hello, sir. Just a question about the guidance for the next financial year in terms of…

Operator

[Indecipherable]Mr. Rahil sir,, your audio is very low. Could you go off the speaker phone and come closer to the microphone?

Rahil Shah — Crown Capital — Analyst

Hello, is it audible?

Operator

Yes, this is better.

Rahil Shah — Crown Capital — Analyst

Okay. Just asking about the guidance, if you can provide something in terms of revenue growth and EBITDA margins for the next financial year, how does it look? I see your order book is quite strong. So, can we maintain these numbers?

Kamal J Gupta — Managing Director

The guidance for this year will be mostly surpassing our guidance of INR4,000 crores what we have given for FY ’23. So, we feel it will be around INR4,000 crores to INR4,200 crores and we’ll be able to maintain the similar EBITDA margins of 14% to 15%.

Rahil Shah — Crown Capital — Analyst

Okay. Okay. Perfect. Thank you, and all the best.

Operator

Thank you. We have the next question on the line of Parth Kotak from Alpha Plus Capital. Please go ahead.

Parth Kotak — Alpha Plus Capital — Analyst

Hi, sir. Congratulations on a good set of numbers. Sir, you talked about in your comments before the con call about a $1 billion target., What kind of capex do we envision to do to reach this target and what kind of gross block should we look at an approximate ballpark number that you would have in mind?

Madan Biyani — Chief Financial Officer

So, around INR100 crores to INR150 crores of capex — incremental capex as well as some new for the existing maintenance of the existing machineries and some for buying the new ones. So, INR100 crores to INR150 crores is what we are expecting. And it would also depend upon the geography and in which area we bag the order. So depending on that, the capex would vary. But — and also like one is geography and the other is nature of work.

Kamal J Gupta — Managing Director

So Mr. Kotak, it is like INR100 crores to INR150 crores of capex we’ll be incurring every year. So like for that $1 billion by ’27, it will be for the three years as we foresee.

Parth Kotak — Alpha Plus Capital — Analyst

Right. So INR500 crores of capex, fair enough. And secondly, sir, I also want to understand your thought process. Is my understanding correct that in terms of qualifications for the projects that you’re bidding you’re up there, in the sense we’ve done so many prestigious projects so in terms of qualifications, there should be no stoppage. So then why can’t we achieve this $1 billion top line slightly earlier. I’m saying by FY ’27 is also a great target to achieve. But I’m saying there are infra companies who probably have this problem of qualification for bidding for large orders, which shouldn’t seem to be the case in our company.

Kamal J Gupta — Managing Director

So, we always believe in giving a figure which is more realistic and the growth that we look for is a stable growth for our company because we always — if you look at the financial numbers of J. Kumar, you will see that we have been growing at a CAGR of almost like 16% to 17% for the last five years. And looking at this, I think 2027 is more realistic number. And of course with the amount of the projects that are being planned by the government, if it happens earlier, always it’s only good sign. But 2027 is more realistic what we would — what we are trying to put it here.

Parth Kotak — Alpha Plus Capital — Analyst

Perfect, sir. Perfect. That’s all from my side. Thank you for taking my questions.

Operator

Thank you. [ Operator Instructions ] We have the next question from the line of Raj from Arjav Partners. Please go ahead.

Raj — Arjav Partners — Analyst

Looking at your FY ’24, how were to be the sales look like — looking at the strong execution you have?

Kamal J Gupta — Managing Director

So, like there will be growth of like 15%. This is what we have said before also. For FY ’24 also, like there will be growth of 15% from the existing numbers.

Raj — Arjav Partners — Analyst

All right, thanks. That’s it.

Operator

Thank you. We have the next question from the line of Aman Agarwal an Individual Investor. Please go ahead.

Aman Agarwal — Individual Investor — Analyst

Is there a buyback plan on promoting to the stake on the cards?

Kamal J Gupta — Managing Director

Not on immediate basis, Mr. Aman. We don’t have any buyback plan on immediate basis. Let’s see how it goes.

Aman Agarwal — Individual Investor — Analyst

And any plan to increase order book up to INR20,000 crores? And what is the timeline to achieve INR20,000 crores order book?

Kamal J Gupta — Managing Director

Yes. So like when we have said that we want to be a $1 billion revenue company by FY ’27, we also emphasized that by that time our order book will be minimum INR20,000 crores.

Aman Agarwal — Individual Investor — Analyst

Okay. So it will be [Indecipherable]

Kamal J Gupta — Managing Director

Coming up, we expect that it can happen in one to two years’ timeline, we should be able to achieve this INR20,000 crore order book also. But we always like to emphasize, J. Kumar likes to book order always with margins that are — that we have been maintaining. So bagging orders and taking your order book on a higher side is I don’t think a big challenging job. But if you take orders of the right, I would say, technically expertise job, expedite job and where you can make margins what we have been making of 14% to 15% is something which is what we are looking at. So already sitting at an order book of INR11,000 crores plus. To bag INR9,000 crore order at the right time and at the right location is what we are looking at. And we are very hopeful that in a year or so time we should be able to come very — reach this INR20,000 crore order book target.

Aman Agarwal — Individual Investor — Analyst

So majority of the project will be metro project only or it will be a diversification of metro and road and flyovers, irrigation project?

Kamal J Gupta — Managing Director

So as of now if you see, we are at 54% approximately. You see order book and revenue 50% to 55% that’s coming from metro sector. So we expect looking at the huge amount of metro works and the rail jobs that has been planned by — in the current budget as well, we should be able to — it would be like a 50%/50% sort of mixture that we should be having in the order book.

Aman Agarwal — Individual Investor — Analyst

Okay. Thank you, sir. And good luck for the upcoming quarter.

Operator

Thank you. We have the next question from the line of Bhavin, an Investor. Please go ahead.

Bhavin — Individual Investor — Analyst

Congratulations for a good set of numbers, sir. Just a quick question on the debt position as on December, if you can elaborate on that? And a follow-up question would be on the return ratios. I’m sure on annualized maybe if you can throw some light on that as well?

Madan Biyani — Chief Financial Officer

I guess your first question was regarding debt. At INR450 crores — INR454 crore to be precise is the current debt with a debt equity ratio of around 0.2 gross debt. And what was your second question? I couldn’t get you.

Bhavin — Individual Investor — Analyst

Sir, if you can — related question was on the return ratio on an annualized basis, ROE and ROCE.

Madan Biyani — Chief Financial Officer

So ROE, ROE has been 12.7% as on December ’22 to vis-a-vis 10.4% as of March ’22. There has been increase of 2.3% in ROE and ROCE has been approximately 17.8% in — as of nine months FY ’22 vis-a-vis 15.5% as on FY ’22. So, there also an increase of almost 2.5%.

Bhavin — Individual Investor — Analyst

Okay. Thank you so much, sir.

Operator

Thank you. We have the next question from the line of Prem Khurana from Anand Rathi Shares. Please go ahead.

Prem Khurana — Anand Rathi Shares — Analyst

Thank you for taking my questions, sir, and congratulation on good set of numbers. So I think — I mean, when we interacted the last time during the Q2 results call, we had bid by kind of almost INR300,000-odd crores. But when I look at the way it’s been for us in this quarter, we could have only one project of almost of INR320 odd crores. So possible to share what happened with the balance INR27,000-odd crores of order backlog, whether I mean the bids are yet to be opened or we couldn’t have success with some of these or these are yet to be kind of be bid out. If you could help us understand the competitive intensity is what basically I want to understand.

Kamal J Gupta — Managing Director

Mr. Prem, the big pipeline what we said of INR30,00 crores, all the tenders have not come for tendering stage. So, they are like into the process. So whatever tenders have come, like INR11,000 crores, we already bid for. So, that’s now in process and like we’ll be quoting in this coming quarter as they are like mature.

Prem Khurana — Anand Rathi Shares — Analyst

Sure. And sir, any comments on competitive intensity, how is the competitive intensity? And we had some bids in Chennai and all and we participated but we couldn’t have success. So, does it mean the competition is getting aggressive or that someone else could have [indecipherable]?

Kamal J Gupta — Managing Director

So competition has always been there. It’s not that it’s not there. But we put our numbers with EBITDA margins like 14%, 15% and try to get it. So like we had of course finished that Kochi work with a very close margin. But there’s many more to come, Mr. Prem, so there’s no issues. So, competition is existing very much in the market and the specialized jobs which are there. So, we try to focus on that. National highway, you can see that there are — the amount of competition is pretty high. So we keep bidding at our price, but we are very hopeful that to achieve the order book that we are targeting, maybe one quarter here and there, but we will be able to achieve the target that we are looking at very comfortably.

Prem Khurana — Anand Rathi Shares — Analyst

Sure. In terms of INR11,000 crores number that you already bid for, could you break down in segments and then how much would be in metro and how much would be your other segment whether it’s like flyover, bridges, or civil?

Kamal J Gupta — Managing Director

So metro is constituting to around only INR1,000, INR1,500, so majorly other flyovers and bridges.

Prem Khurana — Anand Rathi Shares — Analyst

Okay. Just some bookkeeping question if you could help me with, please. I mean, how much is the capex that we’ve incurred during the nine months or, let’s say, Q3?

Kamal J Gupta — Managing Director

Sorry, come back, explain.

Prem Khurana — Anand Rathi Shares — Analyst

Capex, capital expenditure that you have incurred during Q3 or nine months, whatever is readily available with you?

Kamal J Gupta — Managing Director

Our capex for like nine months is INR115 crores and like for this quarter it was INR54 crores. We are looking for as we have guided like INR150 crores on the year-end, which includes this INR115 crores.

Prem Khurana — Anand Rathi Shares — Analyst

So another INR35-odd cores roughly.

Kamal J Gupta — Managing Director

We have order for 1 TBM, which is costing around INR50 crores additional.

Prem Khurana — Anand Rathi Shares — Analyst

Okay. Okay. Sure. And sir, currently help me with the bookkeeping number in terms of mobilization advances, trade receivables, payables, inventories.

Madan Biyani — Chief Financial Officer

Mobilization advances has been INR560 crores as on December ’23. And what else did you ask?

Prem Khurana — Anand Rathi Shares — Analyst

Trade receivables, unbilled revenues.

Madan Biyani — Chief Financial Officer

Trade receivables has been INR1,190 crores as of December ’22.

Prem Khurana — Anand Rathi Shares — Analyst

And unbilled revenues, how much would that number be? Unbilled revenue.

Madan Biyani — Chief Financial Officer

Has been INR546 crores so as of December.

Prem Khurana — Anand Rathi Shares — Analyst

Okay. And sorry, one more last, trade payables if you could help me please.

Madan Biyani — Chief Financial Officer

Trade payable was in the tune of INR598 crores as of December.

Prem Khurana — Anand Rathi Shares — Analyst

Sure, sir. Thank you. All the very best for future.

Operator

Thank you. We have the next question the line of Shravan Shah from Dolat Capital. Please go ahead.

Shravan Shah — Dolat Capital — Analyst

Sir, just continuing the previous question so what is the inventory number and retention money?

Madan Biyani — Chief Financial Officer

Inventory, I told you work in progress, the INR546 crores and raw material inventory was INR377 crores. And trade payables as I told you INR598 crores.

Shravan Shah — Dolat Capital — Analyst

Retention money?

Madan Biyani — Chief Financial Officer

Retention money has been INR238 crores receivable.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it. Also two things. First, even for this year so now the start of fourth quarter, so last time we said that we are looking at close to INR4,200 crores revenue for this year. So that means for the fourth quarter we need — maybe we will be looking at a degrowth. So can we see a slightly higher number in terms of our guidance? So can we see INR4,350, INR4,400 crore kind of a revenue for this year?

Kamal J Gupta — Managing Director

Mr. Sharvan, it’s like last year, it was INR1,114 crores. So of course, we will surpass this and we believe in saying less and doing more, Mr. Sharvan. So when we are giving you the guidance of INR4,000 crores, INR4,200 crores so that will be around INR1,200 crores of revenue for Q4.

Shravan Shah — Dolat Capital — Analyst

Okay. Because even then also the growth should be lower even if I look at INR1,200 crores so it will be close to 2%, 2.5% growth. So normally till now we have done at 27% this quarter.

Madan Biyani — Chief Financial Officer

INR1,200 crores will not be 2% growth. The last number was INR1,114 crores so INR1,200 crore would be around INR85 crores more and will be around 7%, 8% or so. It will not be 2%.

Kamal J Gupta — Managing Director

And if you see, Sharavan, like year-on-year it will be around 20% growth.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it.

Kamal J Gupta — Managing Director

Year-on-year growth and not the quarterly, in some quarters, you get as more and less. So what is important is on the year which is what we are making at the total topline. So that will be 40% plus.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it. So — and in terms of the working capital core, whatever the numbers you are saying. So broadly it remains the same at 78-odd days. So do we expect some improvement by year-end or will it remain at the same level?

Kamal J Gupta — Managing Director

Yes, there has been continuous efforts to improve the working capital cycle. There also, if you see in comparison to last quarter it’s a minor increase by one or two days only as on December. But by year-end the cycle improves much better, the collection efficiency and all and the plan in terms of — so we are on track and we want to bring it down to 120 days.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it. The other thing is that in terms of the date also would like to remain at the same or current INR450 crores, INR454 crores. So — or do we see a INR40 crore, INR50 crore kind of a reduction by year end?

Kamal J Gupta — Managing Director

So we will — we are looking to maintain these debt levels of around INR450 crores to INR500 crores, Mr. Shravan.

Shravan Shah — Dolat Capital — Analyst

Okay. One more thing in terms of the — when we said we are L1 in one tunnel project from the MCGM, what’s the value and when can we see the [Indecipherable]?

Kamal J Gupta — Managing Director

So, it’s a INR420 crore approx job and wherein J. Kumar share is around 60%.

Prem Khurana — Anand Rathi Shares — Analyst

Okay. So we will be only doing a 60% or for the technical qualification we have taken — bidded in the JV.

Kamal J Gupta — Managing Director

So 60% is for J. Kumar.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it. And so apart from the INR1,600 crores that we have bidded. So this entire in terms of opening the bids by March end the tender will be open?

Kamal J Gupta — Managing Director

Yes, more or less it should be opened by March.

Shravan Shah — Dolat Capital — Analyst

Okay. So any specific big — any big projects that you want to either — you mentioned the INR1,500 crores is a metro, INR1,000 to INR1,500 crores. So any other big project that you want to highlight?

Kamal J Gupta — Managing Director

No, we will highlight when we become L1, Mr. Shravan.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it. So — and apart from that, what’s the pipeline in terms of the — by March end how much more we are planning to bid?

Kamal J Gupta — Managing Director

As we told around INR30,000 crores.

Shravan Shah — Dolat Capital — Analyst

Sorry, sir?

Kamal J Gupta — Managing Director

The bid pipeline is as we said around INR30,000 crores. So INR11,000 crores is already done. So maybe another INR15,00 crores to INR20,000 crores are in pipeline so which may be bidded by Q1 of the coming year. Something will be in Q4 and some will be in Q1.

Shravan Shah — Dolat Capital — Analyst

Okay. Got it. Thank you and all the best.

Operator

Thank you. We have the next question from the line of Ankit Babel from Shubkam Ventures. Please go ahead.

Ankit Babel — Shubkam Ventures — Analyst

Good afternoon, sir. Sorry I joined late so pardon me if I’m asking a repetitive question. Sir, two questions from my side. First was that I read in some of the media reports wherein J. Kumar was disqualified in one of the high speed rail orders so that was a surprise to us. So just wanted to know what was the reason and why we got disqualified?

Kamal J Gupta — Managing Director

So, even the reasons have not been specified to us till now. So we have gone to the court, its sub judice for the moment.

Ankit Babel — Shubkam Ventures — Analyst

So you have not been told that either, they just disqualified you?

Kamal J Gupta — Managing Director

Yes. So it’s not been specified so we are in court and the matter is sub judice at the moment.

Ankit Babel — Shubkam Ventures — Analyst

Okay. And second was, again, on the order inflow side. I mean, the first nine months seems to be subdued in terms of inflows and our order book also has not been growing much since last two, three years, I mean, it is stuck at INR11,000 crores, INR12,000 crores. So what kind of inflows you are targeting for this full year including what you have received in the first nine months? And on that base, what kind of inflows you are targeting next year?

Kamal J Gupta — Managing Director

So if you see, Mr. Ankit, our order book as of now is almost 2.7x to 3x of our revenue so that puts us in a comfortable position. But of course we are looking for a bigger inflow number as we have guided like INR5,000 crores inflow in FY ’23. So we have already procured around 2,200 — 2,100 plus the L1 which will take it to 2,300 plus we already bidded for some projects and we are hopeful to achieve these numbers if not by Q4, by Q1 positively.

Ankit Babel — Shubkam Ventures — Analyst

Okay. And next year, what you are targeting, sir? Inflows?

Kamal J Gupta — Managing Director

So next year again we are targeting the sales of around 15% growth on the existing year.

Madan Biyani — Chief Financial Officer

So, minimum INR5,000 crores is what we are expecting to bag orders for the next year also.

Ankit Babel — Shubkam Ventures — Analyst

Okay. And you expect your margins to remain in this 14%, 15% level?

Madan Biyani — Chief Financial Officer

See, there is a slowdown in the order booking because we don’t want to compromise in terms of our order booking, a lot of opportunities, but we want to pick up orders at our price because we are not right now at a situation where we have to be desperate because as Kamal has already mentioned, we have — we are already at 2.5x to 3x of the revenue that we have been doing. So, the order book is quite comfortable and we don’t need to be desperate. So that’s how we are bidding with the right margin, which is beneficial to the company in the long term.

Kamal J Gupta — Managing Director

And I think Mr. Ankit if you see, there is sufficient opportunity for everybody so everybody will get their piece of cake at the numbers what everybody is looking for, which will not be a problem

Ankit Babel — Shubkam Ventures — Analyst

Okay. So, you’re not worried on the inflow side even considering the competition?

Kamal J Gupta — Managing Director

No, absolutely not.

Ankit Babel — Shubkam Ventures — Analyst

Okay, sir. That’s it from my side. Thank you.

Operator

Thank you. We have the next question line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal — HDFC Securities — Analyst

Sir, congratulations on a good quarter. My first question is on the — these two large projects, the coastal road and the GMLR. So these will be like how many passages will be there in these two?

Kamal J Gupta — Managing Director

There is a single package of GMLR, which is costing around INR6,500 crores approx. And there are other two projects which have come up of the similar side from Thane to Borivali, which is costing around INR7,200 crore each. They are again by tunneling by TDM. So there are — and again there is one more tender which has come from Orange Gate to Marine Lines. So there are road tunnels as well as metro projects and the road and flyover projects. There are N number of projects where I think we should get some good share of project that we are looking at.

Parikshit Kandpal — HDFC Securities — Analyst

And what about the Dahisar coastal area INR7,000 crore which you mentioned earlier?

Kamal J Gupta — Managing Director

So, Dahisar coastal road is also there. It is in process the bidding. So like it should be done in this month or March.

Parikshit Kandpal — HDFC Securities — Analyst

My question basically, these are such large orders, if you get one order of this size, INR6,000 crores or INR7,000 crores. So in the past we have done that in ’19. So how do you build in in our estimate if we get this order…

Kamal J Gupta — Managing Director

You’re not audible properly.

Parikshit Kandpal — HDFC Securities — Analyst

Sir, I’m saying if you can — if we get one of these orders of this size of INR7,000 crores. So how do you basically factor in your execution and all, how do you do it?

Kamal J Gupta — Managing Director

So first of all, like this big order. Some of these orders will be coming in JV. So our proportion will be slightly less like 50% or 60% of this. And executing these projects of this size is absolutely no issues for J. Kumar. If you see like we are already handling projects worth INR5,000, INR6,000 crores independently standalone. So like the Metro line 3, both those projects put together is almost INR5,500 crores and we have been — we have completed almost 88%, 90% of it. So, it’s very comfortable. We can, in fact, handle a single project of INR10,000 crores also. There’s no issues.

Parikshit Kandpal — HDFC Securities — Analyst

You will be jointly — so all these projects you will have JVs in place basically.

Kamal J Gupta — Managing Director

Some of these projects.

Madan Biyani — Chief Financial Officer

It depends on the size of the project and what the project is like we are also bidding for the three projects also, which is for HSR of around INR16,000 crores. So J. Kumar, we are quite confident and with the excellent team of J. Kumar that we have, bagging orders of INR10,000 crore or INR15,000 crores single order is also not a challenge for us at all. The team is entirely geared up and ready to take up such works but at our price.

Parikshit Kandpal — HDFC Securities — Analyst

But in MCGM, what is your other qualification in terms of like single project, the largest size can be?

Kamal J Gupta — Managing Director

Right, we can be bid a standalone. We can bid a project of INR2,000 crore to INR3,000 crores standalone depending on the different departments, different politician criteria. And we can take up projects of INR10,000 crores to INR15,000 crores and do it. That’s absolutely no problem.

Madan Biyani — Chief Financial Officer

MCGM does not stand — does not have some different set of qualification criterias. Though every department may vary slightly from their department to department, but the standing bidding documents still the same. So up till like INR2,000 crores to INR3,000 crores single order on a standalone basis, we have only bagged if you see in the past. Mumbai Metro Line 9 is also INR2,000 crores. Delhi Metro is INR1,600 crores. Our Worli is around INR1,400 crores INR1,500 crores. Our Mumbai metro line 2b is again of INR1,400 crores. So these are very regular sizes of jobs for which we qualify on a standalone basis now.

Parikshit Kandpal — HDFC Securities — Analyst

You were talking about this larger INR6,000 crores to INR7,000 crores, where you will require a JV basically to qualify for bidding that?

Madan Biyani — Chief Financial Officer

Yes, because the conditions in the contracts are such where there are different type of experiences that are asked for. So certain things, J. Kumar must be having — certainly have to go through with the help of the joint venture partner. So we’ll be doing JV.

Parikshit Kandpal — HDFC Securities — Analyst

Just lastly, sir, on the Building segment. So how is the pipeline shaping up there and if you can just show some color on that?

Kamal J Gupta — Managing Director

So, it depends like whether the projects are coming up in that particular vertical. So we have very good credentials in building lines by completing this hospital buildings of INR800 crores standalone. So we can bid for INR1,000, INR1,500 crores overall. So we had bidded like four months, five months back of INR500 crores, but we could not succeed in that. So we are looking for good opportunities [Speech Overlap]

Madan Biyani — Chief Financial Officer

We just bagged a Siddarth Hospital order of INR300-plus crores, INR325 crores. And we are also in the process of bidding for other hospital buildings and other building projects in Mumbai and outside.

Parikshit Kandpal — HDFC Securities — Analyst

[Indecipherable] bidding for the project. So if you can just highlight how big is the pipeline and are we looking to add more projects?

Kamal J Gupta — Managing Director

NHA of course, we are going ahead with the bidding. So we had bidded for one Kochi project where we lost it by a very, very thin margin. So we have bidded for some more additional NHA projects in Bihar also and we are looking forward to quote more in NCR and other states.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. Okay, sir And lastly one, what is the net working capital days in Q3 and nine months?

Kamal J Gupta — Managing Director

Right now it is 130 days and we are focusing it to get down to 120 days.

Parikshit Kandpal — HDFC Securities — Analyst

Okay, sir. Thank you and wish you all the best.

Operator

Thank you. We have the next from the line of Vasudev from Nuvama. Please go ahead.

Vasudev Ganatra — Nuvama Wealth Management — Analyst

Thank you for the opportunity, sir. So I wanted to know the status of some projects like the Dwarka Express Way, CIDCO Coastal Road project, and the Surat Metro project?

Kamal J Gupta — Managing Director

Yes. So, the CIDCO Coastal Road project is yet to take off. It is in the final leg of getting clearances like all the state governments have cleared it, it is now — the hearing was supposed to be this week, but it’s postponed to next week. So by March, it should start positively. Coming to the Dwarka project so Dwarka there were two packages. Coming to the two packages, we have completed around 70% of the work, but we have got some additional work of INR464 crores plus GST. So looking to all the three put together, the project is completed to 60% and so by this December the entire project will be completed.

Vasudev Ganatra — Nuvama Wealth Management — Analyst

Okay. And what is the status of the Surat metro project, sir?.

Kamal J Gupta — Managing Director

The Surat metro, the work has been going on on two stations and the tunneling will be starting from next month. So we are expecting — we have already done a financial progress of close to around 17%. And there were some land acquisition issues and one big building at Medininagar station needs to be demolished because of which the work had not been started for the tunneling as well. But both the TBMs are — the fact test has been done and the TBMs are ready to be launched. So we got the permission last week from the Gujarat Government to start the tunneling work by bypassing that station. So, now we should be in a position to start the tunneling from the next month.

Vasudev Ganatra — Nuvama Wealth Management — Analyst

Okay. Sure, sir. And have you received the appointed date for the Arcon project yet?

Kamal J Gupta — Managing Director

Yes, we have received it on 19 Jan 2023.

Vasudev Ganatra — Nuvama Wealth Management — Analyst

Okay. And lastly, sir, what would be our cash balance as on December?

Madan Biyani — Chief Financial Officer

Cash and bank balances has been around INR31 crores cash and balance and INR32 crores also. And apart from that, we have fixed deposits of INR412 crores also.

Vasudev Ganatra — Nuvama Wealth Management — Analyst

Okay. That’s it from my side. Thank you.

Operator

Thank you. We have the next question from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor & Company — Analyst

Sir, you mentioned the debt number — net debt number at INR454 crores. Sir, when we look at your finance cost that is on a quarterly basis to the tune of INR22 crores to INR25 crores. So could you provide the breakup of what constitutes the finance cost?

Kamal J Gupta — Managing Director

This includes the interest cost and BT commission and margin cost.

Saket Kapoor — Kapoor & Company — Analyst

Breakup, can you provide, sir?

Madan Biyani — Chief Financial Officer

For the quarter three, there has been interest on borrowings at INR9.4 crores, financial and other charges, input cost fees etc., INR6.8 crores and BT commission and LC charges being INR5.9 crores — INR4.9 crores. So, totally it’s INR22 crores.

Saket Kapoor — Kapoor & Company — Analyst

Okay. And sir, if you take just our short-term borrowing, what is the cost of funds?

Madan Biyani — Chief Financial Officer

Cost of fund will be in the range of 9%, 9.5% or so weighted average.

Saket Kapoor — Kapoor & Company — Analyst

9%, 9.5%. Okay. And sir, if you look at the last rating, it was A+ that was given by India Ratings. So with the improved financials, do we have any rating upgrade in the anvil that will lower the cost and even today, sir, the repo rate has been hiked. So now is there any chance of the interest rate going down in the near term is not visible. So…

Madan Biyani — Chief Financial Officer

So currently, we don’t have an upgrade on rating, but it is going on as it has to be as per yearly exercise. So it is going on, this rating exercise and we’ll come up with a revised rating or whatever as and when it happens. So right now we are A+ and we are hoping to get a notch higher.

Saket Kapoor — Kapoor & Company — Analyst

So then going ahead, this interest cost will be in line with what the ratings is? Sir, when we look at your employee benefit cost as a percentage of sales, it’s around 7.5% or 8%. So going ahead also this is going to be the trajectory, sir? And if you could give the breakup, how much is the fixed employee cost here and what is the variable cost?

Kamal J Gupta — Managing Director

This is fixed only. The 7.5% to 8% is fixed employee cost. And like going forward also we are looking at similar numbers. It will marginally come down like because it is fixed, but it will be in the range of 7% to 8%.

Saket Kapoor — Kapoor & Company — Analyst

And sir, when we look at the depreciation line item, it’s around INR113 crores, INR114 crores for the nine months. So what is the gross loss there?

Kamal J Gupta — Managing Director

Gross loss is INR883 crores as WD of business and INR60 crores is the TWIC so INR940 crores approx.

Saket Kapoor — Kapoor & Company — Analyst

Okay. And sir, any granular details you can provide or where are these investments proceed to when the gross loss consist of pertaining and the life cycle of the equipment.

Kamal J Gupta — Managing Director

Gross loss is all of our equipment, machineries, centering, shuttering, and all. So like the life cycle is much more, but we consider as per the company’s act. So it is around 10 years.

Saket Kapoor — Kapoor & Company — Analyst

And lastly is about the concentration, I think out of the total order booking, what portion does the total order book of the Top 5 clients constitute. What is our outstanding order book as on 31st December, sir?

Madan Biyani — Chief Financial Officer

INR11,209 crores.

Saket Kapoor — Kapoor & Company — Analyst

And what is the client concentration, I mean what portion does the 5 top client contribute to the order book?

Kamal J Gupta — Managing Director

You want the client-wise breakup of the order book. Top 5 clients so of course MMRDA, BMRC, NHEI, Iscon, and MMRC, you can consider the top 5, 6 clients.

Saket Kapoor — Kapoor & Company — Analyst

Value wise?

Kamal J Gupta — Managing Director

Value wise this will be around 80%.

Saket Kapoor — Kapoor & Company — Analyst

Okay. And there was some mention about some Arcon projects, some which we got in the month of January. Could you elaborate what was you’re trying to explain in your previous question.

Kamal J Gupta — Managing Director

What was our…

Madan Biyani — Chief Financial Officer

That was the date of appointment we were mentioning that the order book we had got it in the month of March somewhere. But the date of appointment date has started in Jan.

Saket Kapoor — Kapoor & Company — Analyst

Okay. So what does that refer to, sir, if you could.

Kamal J Gupta — Managing Director

So it is like the work order date is that. So our 30 months will be counted from the 19th of Jan 23 to like 30 months for completing the projects.

Saket Kapoor — Kapoor & Company — Analyst

Okay. And what is the size of the order, sir?

Kamal J Gupta — Managing Director

INR1,058 crores plus excluding GST. This is like four lane two tunnels as part of Bombay, Delhi Expressway, and this is part of like Vadodara to JNPT section called Makaran tunnel. So there was a good — in Times of India day before yesterday.

Saket Kapoor — Kapoor & Company — Analyst

Okay, sir. And what is our trade receivable number, sir?

Kamal J Gupta — Managing Director

INR1,182 crores.

Saket Kapoor — Kapoor & Company — Analyst

And the cash conversion cycle?

Kamal J Gupta — Managing Director

The working capital cycle is 130 days.

Saket Kapoor — Kapoor & Company — Analyst

130. Any comparable number you can give, sir? Last year or the average for nine months.

Kamal J Gupta — Managing Director

As on September last quarter it was 128 days.

Saket Kapoor — Kapoor & Company — Analyst

128 days. And from 9 months comparable you can give for December ’21 and December ’22, how has the average being and what can we improve here?

Madan Biyani — Chief Financial Officer

120 days is what we are looking at. And the nine-month comparison is — nine months was 135 days, for the quarter it is 130 days, and we wanted to bring it down to 120 days.

Saket Kapoor — Kapoor & Company — Analyst

Thank you, sir, for all the answer and all the best.

Operator

Thank you. We have the next question from the line of Panjul Agrawal from Green Portfolio. Please go ahead.

Panjul Agrawal — Green Portfolio — Analyst

Hello, sir. I just wanted to ask have you opened the regional office in Chennai?

Kamal J Gupta — Managing Director

Sorry, ma’am. Come back.

Madan Biyani — Chief Financial Officer

We have not opened any regional office in Chennai.

Panjul Agrawal — Green Portfolio — Analyst

Okay. Because we are planning to do so. So what are we going to be more cost effective in the new geographies that we enter?

Kamal J Gupta — Managing Director

So, Ms. Panju, we are already working in like pan India, a lot of other states, apart from Maharashtra. So going in working in Chennai or Bihar and all is absolutely no issue to us because whatever size of projects we are quoting there are not INR200 crores or INR250 crores, INR300 crores. These are bigger ticket size projects so wherein the fixed cost does not matter.

Madan Biyani — Chief Financial Officer

And we don’t open up any regional offices in different states when we pick a jobs. Like we have been working in Gujarat and Delhi and as well as Rajasthan we’ve been for more than — almost a decade now. But we haven’t opened up any regional offices. We make fully self-sufficient project offices and it is fully controlled from the head office at Mumbai.

Panjul Agrawal — Green Portfolio — Analyst

All right, sir. Okay. That’s it, sir. Thank you.

Operator

Thank you. [ Operator Instructions ] We have the next question from the line of Rajesh Jain from [Indecipherable]. Please go ahead.

Rajesh Jain — — Analyst

Good afternoon, sir. Thank you for opportunity and congratulations on the good numbers. So my question is that what is the reason for increasing net working capital by around INR120-plus crores as compared to Q2 FY ’23? Did it mean that your collections were lower than your utilization, sir?

Kamal J Gupta — Managing Director

Yes. So receivables, if you say, which has gone up this year to INR1,180 crores and out of that INR450 crores we have already received till Jan end. So like whatever the major part is already received so that will be received. So that was the major reason of it. You’re right.

Rajesh Jain — — Analyst

Okay. Got it. My next question is that as you have said that for the current fiscal year you will have a capex of around INR150 crores, right? So can you guide something like what will be your capex requirement for the next two fiscal years and when it will get moderate so that our asset turnover improves — ratio improves?

Kamal J Gupta — Managing Director

So our capex, if you see, like it was INR100 crore, INR150 crore per year because there is a maintenance capex of around INR50 crores every year. So, we are forecasting around INR150 crore to — so INR100 crores to INR150 crores every year.

Rajesh Jain — — Analyst

Every year, okay. And sir, what would — like it will get moderated at INR150 crores?

Kamal J Gupta — Managing Director

Yes, that will be the max usually because every year some maintenance and some projects to get so like we have got this one TBM this year, which was added so INR50 crores is part of that INR150 crores. And also the existing TBMs that J. Kumar owns, we have to refurbish it when we relaunch it for it. So, J. Kumar we have got this Delhi metro, Surat metro, and Bombay. So altogether seven machines will be in operation. So the same machines, we have to refurbish and that’s how we cap this depreciation — incremental depreciation — capex keeps happening.

Rajesh Jain — — Analyst

Right. Okay, Thank you very much and best of luck, sir.

Operator

Thank you. That was the last question. I would now like to hand it over to the management for closing comments.

Kamal J Gupta — Managing Director

I would like to thank once again to all of you for joining us on this call today. We hope we have been able to answer your queries. Please feel free to reach out to our CFO or IR team for any clarifications or feedback. Thank you so much. Thank you all.

Operator

[Operator Closing Remarks]