Kaynes Technology India Ltd (NSE: KAYNES) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Bhoomika Nair — Analyst
Ramesh Kannan — Managing Director
Jairam P Sampath — Whole Time Director and Chief Financial Officer
Analysts:
Unidentified Participant
Ankur Sharma — Analyst
Dhananjai Bagrodia — Analyst
Siddhartha Bera — Analyst
Rahul Gajare — Analyst
Renu Pugalia — Analyst
CA Garvit Goyal — Analyst
Deepak Krishnan — Analyst
Bharat Shah — Analyst
Akshay Kaila — Analyst
Keyur Pandya — Analyst
Aniruddha Joshi — Analyst
Indrajit Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Technologies Q3 FY ’25 Earnings Conference Call, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Bhoomika from DAM Capital Advisors Limited.
Bhoomika Nair — Analyst
Thank you, and over to you, ma’am. Good morning. Yeah. Good morning, everyone, and a warm welcome to the Q3 FY ’25 earnings call of Technology. We have the management today being represented by Ms Savita Ramesh, Chair; Mr Ramesh Khanan, Managing Director; Mr B., Whole-Time Director and CFO; and Mr Rajesh Sharma, Chief Executive Officer.
At this point, I’ll hand over the floor to Mr, Kanan for his initial remarks, post which we’ll open up the floor for Q&A. Thank you, and over to you, sir.
Ramesh Kannan — Managing Director
Good morning, everyone. On behalf of Kings Technology team, I would like to welcome everyone to this earnings call for quarter three FY ’25 results. I have along with me Mr Savita Ramesh, Chairperson of our Board; Mr, Whole-Time Director and CFO; Mr. Rajesh Sharma, CEO; Mr, Sumit Varma, Investor Relations; and Orient Capital, our Investor Relations partner.
I am pleased to inform you all that we have been able to achieve an operating revenue of INR17,373 million during the first 3/4 of the year FY ’25, which represents a strong growth of 49% year-on-year. The operational EBITDA margin excluding other income for the first 3/4 of the year FY ’25 was at 14.2% and PAT margin was at 10.1%, which were higher by 50 basis-points and 120 basis-points, respectively on year-on-year basis.
Coming to our performance for quarter ended Q3 FY ’25, our total revenue was at INR6,612 million, which signifies a growth of 30% on year-on-year basis. Our Q3 FY ’25 operational EBITDA was at INR940 million at 14.2% signifying an increase in EBITDA of 50 basis-points over corresponding quarter of last year. Similarly, the PAT was INR665 million at 10.1%, signifying an increase in PAT percentage of 120 basis-points over corresponding quarter of last year.
In the coming quarter of this year, we expect to pick-up the revenue growth rates such that the annual operating revenue growth would exceed 55% on year-on-year basis and an expansion in terms of profitability for year FY ’25. There is a robust growth in business outlook with the order book growth in keeping with our expectations. Our order book surged from 54,228 million at the end of Q2 FY ’25 to 60,471 million at the end of Q3 FY ’25.
Industrial and EV, aerospace, medical and automotive were the key verticals of growth in the order book where several large orders were booked. This is in-line with our expectation of a robustly growing, profitable and a diversified business portfolio. All new initiatives are on-track and speed of implementation is gearing up with revenue start target as Q4 FY ’26 for both OSAT and HDIPC boards.
We have taken position of land and started construction activities of the OSAT factory at Sanant in Gujarat and of the HDIPCB factory in Oregada in Tamil Nadu. We have made significant growth and progress in developing and onboarding the team and customers for OSAT facility. Integration of India into our fold is underway and proceeding smoothly. The smart meter factory at Hyderabad is in serious production and we are happy to inform you that several lakhs of meters have been supplied and robust and growing order book makes it mandatory to increase capacities, which we are working on vigorously.
We have acquired a majority stake in an AI-based railway network safety solution company called Sensonic which operates globally. We believe in fostering a diverse and increased sea workplace. We are proud to have a significant number of women on our team and now we have a couple of our large factories headed by women team members.
Our success is a direct result of our team’s hard work and our customers’ loyalty. The enduring relationships we have built demonstrate our commitment to delivering exceptional value. We as we go-forward towards our cherished goal of growing our revenues at a high CAGR, thereby becoming a large fully-integrated ESGM company. We are working on strategies to operationalize additional beachheads in terms of geographical presence, ODM capability and deepening of our technology footprints. These are critical initiatives that will take us for — from millions of US dollar revenues to billions of US dollar profitability in the future.
With this, I would like to sincerely thank each and every one of our excellent investors for their encouragement so-far, in our journey and expect continuing support in the future too. Thank you all once again and we look-forward to exciting times ahead.
I will now hand over the call to Sambas to take you through our financial performance. Thank you., over to you.
Jairam P Sampath — Whole Time Director and Chief Financial Officer
Yeah. Thank you, Samesh Kandan. And first of all, thanks to all the participants for joining today’s call. As we start the new quarter, I’m happy to share Kings Technologies financial results for the period ending Q3 FY ’25 and share with you the highlights of the same.
We — for the first 3/4 of FY ’25, we have been able to achieve a revenue of about INR17,317 million, which represents a strong growth of 49% year-on-year. The operational EBITDA stood at INR2,431 million with a year-on-year growth of 53%. For Q3 FY ’25, consolidated total revenues were at INR6,612 million, representing 30% year-on-year and consolidated EBITDA for the quarter was INR940 million, showing a 35% increase in the year-on-year.
The EBITDA margin for the quarter stood at 14.2%. Our consolidated PAT for the quarter was INR665 million, up by 47% year-on-year and PAT margin for the quarter stood at 10.1%. Consequently, our ROE and ROCE adjusted for unutilized portions of proceeds is at 17.3% and 17.7% respectively for the first 3/4 of FY ’25.
Our order book spreads from INR54,228 million at the end of Q2 FY ’25 to INR60,471 million at the end of Q3 FY ’25. The average monthly order inflow grew from 3,188 million in Q2 FY ’25 to 4,085 million in Q3 FY ’25. Net working capital days at the end of December quarter was of 107 days, which is smaller than the previous year’s same quarter figure of 117 days.
Our inventory day was 117 as we have made vast purchases keeping in mind requirements of the upcoming quarters as we plan to execute revenues as per the expectations in FY ’25. With the expected ramp of our revenues in the coming quarter of FY ’25, we are confident of making good improvements in the average net sales in working capital days by the end of year FY ’25.
Our project is underway in Saland Gujarat following government approvals for capital subsidy. We have provided regular updates on the construction progress. We will provide having completed the groundbreaking other developments already. We’ve also secured government approval for our HBITC port project in Tamil Nadu and we’ll be sharing updates on that as well. Both projects are — will start yielding significant revenues from the Q4 of FY ’26 as planned.
Before I end the call, I would like to thank DAM Capital for hosting this earnings call and would like to thank all the participants for committing their valuable time for attending this call.
Now I’ll leave the floor open for questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Participants are requested to limit their question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of from Unicon Assets. Please go-ahead.
Unidentified Participant
Hi, sir, good morning. Good set of numbers. So first question would be on the margins front. So what makes us confident that going-forward, we will have a better margin in terms of net margins as well as the operating margins. So if we see that regularly — going-forward, our expenses would definitely increase based on our new contracts with the clients that we are acquiring as well as the new talent that we need to acquire for the purpose and also our interest costs and other depreciations would also increase. So what makes us competent?
Jairam P Sampath
Yeah. So thank you for this question. So essentially, the margins have two drivers. One driver is, of course, the gross margins, which is depending on blend of business. And as Red talked about it during our Managing Director’s initial remarks, the order inflow has been in the areas like industrial, aerospace, IT, medical, etc. So those are high-yielding areas. So that pushes up the gross margins better than what has happened in the past.
The other source of margins is also the operating leverage, which have actually deleveraged in the last quarter because we have added newer teams. We had added newer teams into our hold and mainly, we had an acquisition in the US, we had some acquisitions in India and so on and so forth. So these teams revenues will start ramping-up from the 4th-quarter onwards. So we will start seeing some better operating leverage too coming up. So we are confident that our EBITDA margins will definitely be better than what we had projected. And for the year, we are confident of exceeding 15% EBITDA based on these two trends.
As far as the employee cost is concerned, I have already broadly explained to you the construct because we have onboarded new businesses and where the costs have kicked-in, but the revenues get to kick-in and that’s likely to happen in the 4th-quarter. So we are confident that this — from now on, you’ll start seeing some better operating leverage with the revenues going up.
Unidentified Participant
We want to highlight some share some highlights on what are the bifurcations in terms of order book or should we assume that the —
Jairam P Sampath
No.
Unidentified Participant
I think for nine months.
Jairam P Sampath
I’m not able to share exact numbers, but our order books have significantly come in the area of aerospace and defense, then smart meters, then automotive, especially exports and then medical and then IT. And these are large orders. Each order is in excess of — each of them is in excess of INR300 crores INR500 crores execution? Of course, execution spread over a timeframe depending on the kind of business that we do with them.
Unidentified Participant
Okay. And sir, on broad-based…
Operator
Interrupt Mr, I would request you to rejoin the queue for your follow-up question. Thank you. The next question is from the line of Ankur from HDFC Life. Please go-ahead.
Ankur Sharma
Yeah, hi, sir. Good morning. Thanks for your time as always. Two questions. One was on the rail segment where we see this decline both nine months and also for the quarter. So if you could just help us understand what’s the reason behind that? I would assume there’s been some delays in offtakes there. So if you could just help us what’s happening on the rail side?
And similarly, on the industrial business also, if I understand right, there were some delays on shipments of smart meters. So if you could just help us understand, is that a one-off, what’s really happening there and how are we seeing Q4? Yes. Thanks.
Ramesh Kannan
So., I will take this question. Ramesh here.
Ankur Sharma
Yeah.
Ramesh Kannan
And yeah. So what is happening is the impact of earlier delays of ordering and then projects went down slow during election time is being seen slowly in the last quarter. And in the coming quarter, I’m sure it will get picked-up, but definitely in next two quarters because order inflow has increased, right? So that is a pattern of expansions are happening. But earlier there was a slowdown, but at that time, we had enough projects under approval stage and completion stage. So we could ship it out. Today, there is offtake has come down slowly.
Then in our meter side also, we are a new company. We have just started manufacturing. So there are some small delays in the factory doing productions and then shipments going out and all. So these are all one-off cases, it will catch-up in the next two quarters, this quarter — coming — this quarter and the coming quarter. And hope I am saying so I get it.
Ankur Sharma
So now that with orders setting up, executions are also targeting up.
Ramesh Kannan
You see my order book has really grown-up. So this is a one-off case only.
Ankur Sharma
Okay, sir. Good to hear that. Thanks.
Operator
Thank you. The next question is from the line of Dhananjay from Ask Investment Managers. Please go-ahead.
Dhananjai Bagrodia
Hi, sir. So wanted to understand apart from automotive and industrial, how are we looking at the other segment scale-up in terms of medical, IoT? How are they scaling up? And B, regarding our capex is for the next few projects, how would the IRRs look on those because there would be some mismatch in terms of payment and collection from the government for the same, right?
Jairam P Sampath
Yeah. So I say yes. So broadly you’re looking at the order inflow from the non-traditional sectors, that is things like medical, etc. So I’m happy to tell you that in medical, we have acquired a large client and we are having a certain successive RFQs coming in. And so this is a European-based company, which has acquired some companies in US too. And so these are large businesses. We were lacking this large cliente in the medical, which has been fulfilled.
On the IoT and IT front, the business is coming as we expected. One of the largest say government customers is with us and we are likely to see some good expansion in this business in the coming year or two. And in terms of — if I understand correctly, you’re talking about government support and subsidiaries, et-cetera, we don’t depend too much on the production-linked incentives at this point in time. Of course, we do get some benefit in the IT sector as we are PLI holders there. But our — our help comes more in the capital subsidy front and we have seen absolutely no trouble in terms of getting our papers through, et-cetera.
And since we got our Semicon assembly approvals a tad later, that is post-election. So the process got may be delayed about two, three months, but then that has nothing to do with the government’s process. And we find that all the agreements and processing exercise pretty much on-time. So we don’t expect any major delays in the capital subsidy front of now.
Dhananjai Bagrodia
So — but there would be a mismatch. We will have to do the capex first and then the capital subsidy would come in later. Is that correct understanding?
Jairam P Sampath
Yeah. So there are two different projects. There is a project in Semicon wherein there is a capital subsidy from the central government, it’s about 50% and it comes in Pari Paso, that comes in advance of investment. As soon as we put in money, government also puts in money. There is a small portion, which is 20% 25% which is state government which comes post commencement of operations. So that is like a — that is somewhat like a reimbursement, but that’s also a cash subsidiary. So the delay is only in the first a series of implementation of capex and then after thereafter it’s a cyclical so central government subsidy in comes in advance and the state government subsidy comes as a host post-op commencement of operation.
As far as the TC Board is concerned, both of them are linked to commencement of operation. It is like nine months from the start of projects typically. And so both central government and state government subsidies will come in nine months. So we manage the, let’s say, implementation project through our equity and some small amount of debt that we will take and which will be kind of paid back by these government subsidies that come in post commencement of operation, which is like a nine months delay, basically.
Dhananjai Bagrodia
Okay. That will be a delay. And so sir, finally, just how much capex are we going to do over the next two years? And could you break it up by segment? So we have an idea?
Jairam P Sampath
Yeah. So as far as the EMS business is concerned, I think it’s just kind of self-funded now. And we expect at least capex anywhere between range of INR200 crore INR300 crores per annum coming in because that has to help in terms of doing the additional volumes that we expect in the FY ’26 and ’27, et-cetera.
As far as the capex for semicon is concerned, the total capex is about INR3,300 crores, out of which, 70%, 75% comes from Central — central and state government. Remaining is our equity. And so that’s semicon and then that will probably get consumed by FY ’28, ’29 timeframe.
And similarly for SBI PC Board, we have a capex of about INR1,400 crores and this also will consume fully by about FY ’28, ’29. And here also close to about 50%, 60% is the state and central government’s share in terms of capital subsidy, the remaining is what we put up. So over the next almost INR4,800 crores of capex is likely to be coming up until about FY ’28, ’29, starting from this year. And in the newer projects, which is the Chemicon assembly as well as the PC board, but the bulk of it is in terms of 60% to 70% is 60% to 75% is about government subsidy. So the full cash outflow from the company will be much lower.
Dhananjai Bagrodia
Okay. Sure, sir. Congratulations on a good set of numbers.
Jairam P Sampath
Thank you.
Operator
Thank you. The next question is from the line of Siddharth Beira from Nomura. Please go-ahead.
Siddhartha Bera
Yeah. Hi, sir. Thanks for the opportunity. Sir, first question is on the smart meter side. We have seen a couple of new states also sort of giving orders, I think Bihar and Rajasthan. So if you can just guide us about the order book in smart meters, how much are we planning to execute over the next one year if we have got anything more?
And second is basically on this guidance cut also for this year, is it more of pushback to next year because you said that you are going to catch-up the last sort of revenues in the current quarter in a couple of the coming quarters. So some sense there the reason for the cut and how should we think about next year?
Jairam P Sampath
Yeah. Thank you,. See, see, fundamentally, let me ask the second question first. So this guidance cut is more like time-frame not available. So first two quarters, we probably should have done a little more in a regular year and should have done more in the railways in all those sectors, which obviously due to elections, etc., got that delayed.
And as we now move — we have completed 3/4 and pretty much very near the year end, right? January is almost complete now. So we find that physical time availability for execution of all those orders, it will be putting too much pressure into the system trying to maintain the original number. So the orders will remain on our book. If you see the order increase is there every month, INR4150 crores per month of order inflow compared to INR360 odd crores last quarter, which is significant increase. So these will get executed it’s a continuum, right? So we continue to execute this quarter, that is last quarter of this year and next quarter too.
The other question that you had on the smart meter, we started getting the — of course, I’m not at liberty tell you exactly where, but we — earlier we started with a mainly PGCIL based orders and now three more states orders have been added and also some AMISPs orders also have been added. So these have been — so let’s say, four new set of large orders have been added post-acquisition of and we can definitely on a next running 12-month period, do almost INR1,000 crore kind of number of in the smart meters alone. That’s a clear possibility. Let’s see where we get there.
Siddhartha Bera
Understood, sir. And in the other segments like probably aerospace as well as railways, I think the execution has been a lot slower. So we were expecting some stronger ramp-up in the next year in FY ’26. So some thought process there, where are we in terms of the execution and seeing the benefits in the order book and revenues?
Jairam P Sampath
Yeah. So as far as aerospace is concerned, now we have secured orders and aerospace, I think is coming back to its expected number. So we can get to a larger number on an annual basis. Maybe in FY ’26, we can expect some significantly higher numbers than what we have seen in the past.
As far as railway is concerned, I think we’re just starting up this quarter we have cited some orders and I’m sure post-budget, which is going to be announced sometime in a short while. So post that we will get clarity on exactly when the government plans spend. But it’s our expectation that next four years time-frame, I think with all the election troubles and all the other US troubles also behind us, hopefully government will get on to its job of infrastructure building and then railway is a key part, which almost got delayed by two years now. And so we expect in FY ’26 also significant resurgence in our railway business too. With also our coverage program coming in. So this year we will complete the POC and next year we will probably start delivering revenues on coverage too.
Operator
Thank you.
Ramesh Kannan
As far as — now one minute, I also wanted to add-on this. As far as aerospace orders are concerned, we are well within what we have projected and you will see a real good remarkable execution in the year ’26 onwards.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Rahul from Hingtong Securities Private Limited. Please go-ahead.
Rahul Gajare
Yeah, hi. Good morning, gentlemen. Thanks for the opportunity. Many of my questions are answered. I just have two small clarifications. One, you know, if you are confident, I mean in your guidance you’ve indicated of 15% margin. This 30% — gross margin of 30%, you’re confident of that number also or that will be volatile based on the mix?
Jairam P Sampath
No, actually, yeah, Raji, thank you for your question. So like I said, the profitability determinant mainly is gross margin and then operating leverage. So the good news is that this year we have come back towards the kind of gross margins that we normally deliver in our business. And that is based on the blend of business, which is based on the order book of about INR6,000 crores. So it won’t materially change all of a sudden.
It will slowly improve with more-and-more orders coming in the higher-yielding sectors. There could be medical, there could be aerospace, railways, all of these kinds of industrial, et-cetera, etc. So you can — you can see stability in the margins, so if not an improvement. Gross margin levels.
Rahul Gajare
Yeah.
Ramesh Kannan
Our team exercises orders only within whatever our range of orders. So our gross margin will be upward north of 30 plus.
Rahul Gajare
Okay. Yeah. Thanks. The second question is in your order book, which where we’ve seen a significant jump. Can you tell us how much is exports and if possible, the US share if there is anything that you all are doing for the US market.
Jairam P Sampath
There is — okay, these are international exports, part of it could be US. So roughly in a INR6,000 crore order book, the recently we’ve got about INR800 crores worth of exports locked-in, which is in addition to whatever earlier, 10%, 15% used to be exports. So you are — you can see in the order book perspective also it’s increasing. And next year-by 4th-quarter, the other two businesses, which is PC board and semicon assembly is also start-up, which will primarily have exports. So from that perspective, next year for FY ’26, you can expect 20% 25% of our business being export, sir.
Rahul Gajare
Okay. Sure. Thank you very much, sir and all the very best.
Jairam P Sampath
Thank you all.
Operator
Thank you. The next question is from the line of Reno Pogalia from IIFL Securities. Please go-ahead.
Renu Pugalia
Yeah, hi. Good morning, team. Just two short questions. One, on the revenue guidance, just want to — on the annual guidance, just want to reiterate, you mentioned 15% margins that for the quarter or on an annualized basis for the full financial year?
Jairam P Sampath
Yeah. So revenue guidance will be somewhere between INR2,800 crores and INR2,900 crores and the margins will be 15% plus.
Renu Pugalia
For the year. For the annual — and basis your comments on the mix of order book, do you think these margin profile are comfortable and maintainable in the next fiscal year as well going ahead?
Jairam P Sampath
Yeah, yeah, they are imminently feasible based on whatever orders have been set for execution, we also completed one month. So we are quite confident what we are seeing now.
Ramesh Kannan
We have done our sensitivity analysis and it is very clear that we will have this margin.
Renu Pugalia
Okay. Perfect. Secondly would be on the QYP. There are quite a few queries here. Recently there were some announcements. So can you help us understand what are the kind of funding requirements you have for the business and to what extent these will be met through the external funding that we are planning. Any timelines do we have for these external funding?
Jairam P Sampath
Yeah. So, basically, we are right now getting an approval from BGM so that we can execute the QIP in a short, let’s say, time-frame. The QIP essentially is being done for the future in mind and not for the current businesses. Current businesses like ESBM, Semicon assembly and PC board assembly. They are now funded enough for next, let’s say, up to about FY ’28, ’29 timeframe. And then thereafter, we will look at — and some of it will start turning in cash and then they probably will be on their own growth path.
So this — as far as this potential QIP that we talked about is concerned, is to help our strategies are free from the strategy that we have, which is in aid of preparing for future. So come FY ’28, we have a nice target of about $1 billion, et-cetera. But beyond that to grow, we needed additional beachhead. So first is the geographical beachhead that means we want to expand our footprint into bigger geographies like US, etc., North-America. So — and that’s not possible by organic growth and starting up. So we need to acquire some good companies with reasonable profitability and similar businesses and maybe a good price point. So that is one use for the funds that we are talking about.
The other one, of course, we have worded the entire QIP in a generic form, but inorganic acquisition and those kinds of things are some of the major, let’s say, users. The other users could be something like an ODM. We are infused by our investment into companies like Sensonic, etc. So that opens out a whole new range of solutions for us, wherein design becomes our key focus area and that helps us to shore up the margins also. So as part of growth, we have geography, as part of margins, we have ODM.
And the third one is we also believe that in areas such as, say, semicon and all other areas, we should also have some technology footprint deepening. That means we should be in a position to strengthen our credentials in certain niche areas, which are now we are getting access to. And so you will be happy to note that in the newer areas like high-density PC board and the semicon assembly, we’ve been able to, let’s say, in advanced talks with some very good clients. And so it’s even better than what we thought earlier. So in that thing, we need to also extend that, let’s say, trend and make some inorganic investments in areas which can strengthen our credentials in those new technology areas.
So our QIP with a potential QIP is going to be used for strategically shoring up a geography additional geographies, which could be North-America, Europe and South Asia. B, it could be ODM and C, it could be technology footprint deepening.
Renu Pugalia
Got it. Thank you and best wishes team. Thank you.
Jairam P Sampath
Thank you.
Operator
Thank you.
Ramesh Kannan
Thank you.
Operator
The next question is from the line of CA Goyal from Envis Analytics Advisory LLP. Please go-ahead.
CA Garvit Goyal
Hi, am I audible, sir?
Operator
Yes.
CA Garvit Goyal
Okay. Good morning, sir. Congrats for a good set of numbers. I have two questions. One is on broad macroeconomic environment. So our company caters to various end industries like auto industrial, aerospace, including railways and semiconductor as well. Can you please honestly guide on like based on whatever discussions happening with respective ministries, like we all know that it’s all capex story and we all know our government is expected to play a great role here. So do you see any budget cut at their end or are they looking to take-back step here and mobilizing the funds from growth of the nation to any other area? Or are they looking to do it to control the fiscal deficit? So what’s your take on this.
Jairam P Sampath
Yeah. So there are two-parts to your question, I think. One part is on the commitment of money in terms of subsidies, etc. So those are done and dusted through government orders already. So we don’t see any variance in that.
As far as government purchases are concerned, I think there have been sectors which have been starved of these purchases while they were very important for the country like safety of railway network, improvements in the power infrastructure, telecom and all of that. And so we think that over next four-year time-frame, government will definitely make steps to make these investments come through. And as-is the government’s policy of Bharat, they are going to give us a prominence and they are going to give preference to Indian companies to do both design and manufacturing. So we think that, that augurs well for all of us.
So our take is that government will get back into this entire infrastructure push and especially which requires electronic components like the three areas that I mentioned. And also the other area of which our Honorable Prime Minister has also mentioned of using more-and-more growth to let’s the supercomputer based server to improve the, let’s say, technical capabilities of our R&D, science and headwin networks.
CA Garvit Goyal
So in the upcoming budget, you are very much towards our end industry, right?
Jairam P Sampath
If I understand the sense of your question, in the current budget, we will see some beginnings of government’s intention towards investing into electronic infrastructure in many areas.
CA Garvit Goyal
Understood, understood. And sir, like China has unveiled deep, right, a new AI that is more efficient in terms and cost-effective as well as compared to the existing JPTs and we are also like entering into the chip manufacturing. So is it going to anyway impact our plans or our projections in the terms of lower chip prices going ahead?
Jairam P Sampath
So as far as the silicon manufacturing is concerned, we work with a global supply-chain. So most of our customers are also global. So most customers have presence in manufacturing in Taiwan, China, in Malaysia, Thailand, US, etc. So we don’t see any changes in that. However, the implication of deep seek, the way it is being construed is from a different perspective than manufacturing. I think it’s more in terms of technological leadership and security-related concerns that countries seem to have.
But it’s of course, we really don’t know which way this will pan-out, but I don’t think it will change the landscape of manufacturing as such. We will still require good advanced packaging capabilities and India would still require capacities in semiconductor manufacturing, PC boards, etc. And like I made the initial remarks, we talked about we also — we are now cited good customers who are now talking to us in terms of fine-tuning the capex so that they can give us the orders, etc. So from a manufacturing perspective, it will only improve the amount of, let’s say, technology production. Yeah, from political and other constructs, it may cause some very, let’s say, anxiety in the short-term.
Operator
Thank you. The next question is from the line of Deepak from Kotak Institutional Equities. Please go-ahead.
Deepak Krishnan
Hi, sir. I hope I’m audible.
Operator
Yes, sir, you are.
Ramesh Kannan
Yes.
Deepak Krishnan
Just wanted to sort of understand how much of — so we certainly given a revenue guidance of INR4,500 crores for next year in one of the television interviews. Just wanted to sort of understand, does that include any of this future M&A that we are sort of thinking of? And this related part to that is what is sort of the revenue potential that we are seeing from some of these M&As and tuck-in acquisitions that you sort of announced?
Jairam P Sampath
Yeah. So whatever projections we talked about for FY ’26, right now does not have any of the acquisitions, etc., because we have not earmarked for these acquisitions. We have some, let’s say, in the pipeline, we are evaluating them, okay. So we are talking about our existing ESCM business plus PC board business and plus semicon business, yielding revenues and then going to whatever number that we talked about. So these also the profitability positions and everything else is also based on the existing set of projects and businesses?
Deepak Krishnan
And sure, sir, maybe just wanted to sort of understand, obviously, we’ve sort of seen a minor deferral this particular quarter margin lead to smart makers and some of those products but anything else that we have kind of seen from a hiccup perspective, given that we’ve expanded rapidly from to Nagar, now to Hyderabad and all these new facilities, from a capability perspective, how are we sort of positioned that in terms of team, in terms of size such that these kind of hiccups, there is a lower probability of that sort of happening in the future.
Jairam P Sampath
Yeah. So Deepaki, we must first of all understand that the production and all of these things are a continuum, right? So we set-up capacities, we expect them to fire up a little earlier, sometimes it takes a little longer, especially if there are significantly different, let’s say, larger capacity like Chabad, like Hyderabad factory was a new factory. And so lots — now of course, it is running full steam. It took a little bit of time when you implement new factories. So these kind of hiccups will happen probably in the future too, but they will not be significantly major to, let’s say, change the cumulative business potential or cumulative business delay.
So yeah, maybe 1/4 some little less and 1/4 more will be there. But that’s nature of how expansion happens, like now we’re going to have semicon assembly coming in. So now we are taking lessons from the previous new projects to see to it that we don’t get into similar situations and delay our revenue delivery. So we are kind of pulling in a little bit the plans for revenue delivery in semicon and NPC board, et-cetera. So that even if there is a practical delay, it does not affect the commitment to our customers or markets, etc.
So we are just building in some little buffers, but this is a continuum. So if you miss something now, it continues and gets delivered later. So, yeah, there will be obviously, as we go along the challenges in execution, but now we have also onboarded a lot of people. You’ll notice that employee costs have gone up and so on. So we have onboarded newer companies, new top management, new, let’s say, technical management, etc. So we are honestly looking at making sure that we have enough of bandwidth in the manpower so that we can address all of these emerging businesses.
Operator
Thank you. The next question is from the line of Bharat from Ask Investment Managers. Please go-ahead.
Bharat Shah
Yeah. So for the — for the current year, when you talk about margins exceeding 15%, I suppose you mean operating margins without counting other income, right?
Jairam P Sampath
Yes, sir. This is just your operating EBITDA.
Bharat Shah
Other income is in addition to that.
Jairam P Sampath
Yeah, other income will be in addition to that because that is — does not require us to do anything. So yes.
Bharat Shah
And over recent quarters where the other income seems to have increased sharply, say anything special there?
Jairam P Sampath
No, sir, actually when the year-on-year basis, if you see, so the last year, same quarter, we had not got the QIP proceeds. This year we have the QIP proceeds. So whatever income comes out of unused KIP proceeds is showing up as other income here essentially. Otherwise, there is nothing different. So operating income also has shown an increase at least I think if I recall correctly about 40 basis-points compared to last year.
So that, of course, the operating income increase is driven by gross margin increase. And of course, we had a little bit of increase in employee costs and other costs. But despite that, we are able to deliver and then maybe next quarter onwards, these will also get leveraged. So hopefully, we will be able to do this 15% plus of operating EBITDA for the whole year.
Bharat Shah
And for the year of ’25, ’26, we are talking of operating margins without other income of 16%.
Jairam P Sampath
Yeah, that’s the target for 15% minimum, 15% is the standard margin that we talked about. We are hoping that some more leverage of expenses will happen. And so some percentage of expenses will come down because all of these new businesses that we have acquired will start also firing up on revenues. So yeah, we are — we are thinking of between 15% and 16% of EBITDA, which is on operating income basis.
Operator
Thank you. The next question is from the line of Akshay from CD Integrated Services Limited. Please go-ahead.
Akshay Kaila
Hello. Am I audible, sir?
Operator
Yes, sir, you are.
Jairam P Sampath
Yeah.
Akshay Kaila
Yeah, yeah, yeah. Thanks for the opportunity. Sir, my first question is regarding the electric vehicles. So this year EV models is expected to surpass the ICE models and we have seen many new launches of the EVs in the Bharat Expa as well. So how do we see our EV business picking-up in the FY ’26 and the coming years.
Jairam P Sampath
Sorry, I didn’t get this clearly. Can you just repeat the gift of your question, please? If you don’t mind.
Akshay Kaila
Hello. Is it better now?
Jairam P Sampath
Yeah. Better, sir. Can you repeat…
Akshay Kaila
Yeah. Yeah, yeah. Yeah, not an issue. Sir, I just wanted to ask about the EV. So in Bharat Expo, we have seen the many new model launches in the EV and it is expected to surpass ICE models. So how do we see our EV business picking-up? And can you give us some color on our customer fronts as well?
Jairam P Sampath
Oh, excellent, excellent. So basically EV business, of course, one year-ago, one, one and a half years ago, we used to be only four-wheeler EV. Last year we added two-wheelers. So now we have added three-wheeler EV and also EV infrastructure charges, et-cetera and some EV components. So what we have done as a company is that we have added a richer portfolio of EV production into our hold. And so we are ready to deal with whatever orders that there are there.
Obviously, as we go-forward, EV business will depend on marketplace, maybe the two-wheeler is already stabilized and it’s getting into some kind of a regular business. Four-wheeler, of course, lot of experimentation, a lot of new models coming in and infrastructure is out there, significant investments probably will be made in the coming year. So we are geared up to deliver a whatever EV business requires, both in terms of two-wheeler, four-wheeler components and infrastructure. So we have clients in each of these areas, so which are fires up, I think we stand to benefit.
Akshay Kaila
Okay, sir. And sir, my second question is regarding the Osset facility. So how confident we are to commercialize our facility in Sanand from the half-two of FY ’26?
And a follow-up on that would be that margins we have said earlier we have said that facilities margin would be higher in excess of 20%. So can our blended margin, what we have guided for 15% can be that increased in FY ’26 and the ongoing FY ’27 and FY ’28.
Jairam P Sampath
Yeah. So I’ll answer your second question first, the blended margins in FY ’26 will not be significantly altered because only 4th-quarter we will kick-in. And also the initial stage of production, you may not be able to maximize the margins. But yes, going-forward FY ’27, ’28, et-cetera, margins will be significantly higher in the area, which we have mentioned, it will be similar or even better.
So as far as the project progress is concerned, we have already acquired the land Bumi is done. Development is happening right now and maybe the first building is under-construction. So probably by the first-half of next year, we should have the factory running and we also got a target to kind of onboard some customers by then, but our real revenues will start in the 4th-quarter of FY ’26.
Operator
Thank you. The next question is from the line of Kir Pandya from ICICI Prudential Life Insurance Limited. Please go-ahead.
Keyur Pandya
Thank you. Sir, just one effect accounting question. So what — what is the cash-flow from operations for, say, nine months?
And related question is that the kind of growth guidance that you are giving for core business, INR4,500 crore of revenue next year, that incremental INR1,500 crore of revenue would require ballpark INR500 crore of working capital requirement. So I mean, looking at our balance sheet from net cash to net-debt because of our growth journey. So how — how this net cash, net-debt position and OCF would look say in.
Jairam P Sampath
FY firstly, FY ’25 itself, we had earlier talked about an OCF which was a significant portion of our EBITDA supposed to be. For some reason, up to 3rd-quarter, we have not been able to do, but I’m confident that by 4th-quarter, we will have definitely positive cash flows. OCF will be certainly positive. How much percentage of EBITDA will be OCF positive, we will have to see depending on how the working capital numbers have fall in.
So we had also projected an increase in net working capital days from last year’s 85 days to average net working capital to a smaller number. We are attempting to do that. I don’t know exactly how — where we will reach, how much, let’s say, money will get freed up by reducing the net working capital because also next year’s numbers have to be done and so there will be some, let’s say, pressure towards increasing inventory for April, May-June execution, etc.
But having said all of these things, see, fundamentally for the FY ’25, FY ’26 if you were to look at, the additional revenues, at least two-thirds of it comes from our business in EMS business and then maybe a third or even less than a third, little more than — so three-fourths in one-fourth let’s take addition comes from newer businesses and three-fourths come from existing businesses. And so they would require some additional, let’s say, working capital support.
So we are going to make sure that we work with our suppliers. Already we have talked to them that this program is a bit, let’s say, delayed right now. We probably should have done it by now, but anyway, it’s taking some time to keep local stock so that our inventory base can be controlled so that we don’t have to invest so much into working capital.
Second thing is we are also talking to many customers in terms of recourseless financing from their side. So they also have strong balance sheets and so on. So with these together, hopefully next year, we may not have — we may have less than proportional increase in our borrowings etc and make sure that we are able to improve the ROCE much better than what we have this year.
Keyur Pandya
Okay, just one follow-up. These two projects, PCB and OSED so are part of investment or by what — I mean, what are the timelines for, say, deployment of cash for say FY ‘2 — by what time you will deploy entire planned capex for these two projects?
Jairam P Sampath
Yeah. So the total — let me take the semicon project — first semicon project, total capex is INR3,300 crores. And are barring some land and building, et-cetera, land building certain types of — they think there is an eligible capex. And out of that, central government gives 50% and state government between 20% and 25%. We’re discussing with them for 25%, but at least 20% they give. So 70% of the eligible capex comes from the central government — from the government and the central government’s share of 50% comes on Pari Paso basis, which is like an in advance of the expenditure. The 20% or 25% of the state government comes in as reimbursement post commencement of operation.
So that comes with a — let’s say, if the central government gives it today, that will likely to come between six to eight months later. So — and so that’s the way in which it will happen. Of course, we have to bring in our equity portion along with the central government’s money. So our money, central government’s subsidy act together and then nine months, six, nine months later, the state government subsidy comes in.
As far as the PC board is concerned, there are INR1,400 crores of total capex and we’ve been able to secure close to about 60% let’s say, government subsidy, both central and state put together. In this case, they are not coming in advance, but they all come within a year and they all come on commencement of operations. So there is six to nine months. So we put in our money first on our share and start getting the governments listening after six to nine months. That is commencement of operation. But they are also cash subsidies, we are not in-kind.
Operator
Thank you. The next question is from the line of Joshi from ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yeah. Sir, thanks for the opportunity and congrats for a good set of numbers. Sir, if we look at the guidance of INR2,800 crores and nine months results versus last year Q4, so we are looking at roughly 67% to 70% revenue growth in Q4 and to maintain 15% margin for the full-year, we are looking at a 16% plus margin in Q4. So is this understanding correct?
Jairam P Sampath
Yeah, I just…
Ramesh Kannan
You are right. You are right, because we are going to — this is Ramesh Khanan here. We are going to exercise orders of our aerospace and defense, which had actually pushed out so for the last quarter. So we have calculated this. So your calculation is right.
Aniruddha Joshi
Okay. Sure, sir. This is very helpful. Thanks. And secondly, second and last question. Now we are seeing a massive amount of consumption slowdown and in order to boost the consumption back, the government is coming out with various schemes like in Maharashtra or even in Delhi, we are seeing some promises, etc. So with that, do you think that there might be some slowdown in the — in the investment-related projects as government may prioritize consumption-related themes a bit more. So any broad understanding on that will help. Yeah, thanks.
Jairam P Sampath
Okay. I’ll just answer this question. So it’s — see, so-far we have seen a consumption start quote-unquote consumption start the market already. And so whatever revenue growth we are showing is on the face of not very-high government investment into infrastructure and all that. So it can only go up because there are certain essential investments that government has to do, like it has to do with railway safety.
Railway is one of the primary of transportation for citizens of the country. And so almost two years have been kind of two years have passed since themselves made a determination that they have to upgrade 6,000 stations and they have to put covers, etc. So we are hoping that this budget will make a beginning. So we don’t see the risk. In fact, we see an acceleration.
And also the other projects like telecom, etc will become very important for national security. As you know, the telecom infrastructure is what it is using all different types of nationalities equipment and I think government has a program to make it completely indigenous driven technology to for our safety security. So the kind of areas which help us are essential areas. So if even if there is a pressure, maybe non-essential areas investment that may get cut and not really essential areas and we work on the essential areas.
Operator
Mr. Anirud, does that answer your question? Due to no response. We will move on to the next question. The last question is from the line of Indrajit Agrawal from CLSA. Please go-ahead.
Indrajit Agarwal
Hi, thanks for the opportunity. I have a couple of questions. In the TV interview, and over here also you talked about US acquisition. So just to understand what kind of ticket size, what business profile are you looking at? Is it more on the downstream or similar EMS business?
Jairam P Sampath
Yeah. We target low ticket size anywhere between 25 million to $50 million apiece. We target companies which are similar or better in terms of profitability and we target companies which are working in areas which are where we don’t have ourselves a good portfolio of business. And we are also working for companies which can culturally be into our own system. The basic idea is that in respective geographies, you must-have a footprint there itself to grow the business. So it gives us some good starting the, let’s say, quantum of business, which we can. So that’s the kind of criteria for acquisitions that we are talking about.
Indrajit Agarwal
Sure. Thank you. My second question is, at the current gross block level of the EMS business, what kind of revenue can we clock?
Jairam P Sampath
So current gross block, see, the assumption embedded in that is that post-IPO, already I think there’s still about INR40 odd crores left to be invested out of those funds. So let’s say that will give us this year, let’s say, anywhere between INR200 crore and INR900 crores, plus that INR40-odd crores can give us another INR300 crores. So let’s say about INR3,100 crores we are good for.
And there will be investments also by end-of-the year, some cash generation also will be there. So we’d probably invest another — on an ongoing basis about INR200 odd crores of investment. So we can say that roughly the EMS business is good to grow anywhere between 40% to 50% on its own by generating its own revenues and then implementing capex?
Indrajit Agarwal
Sure. And lastly, it’s been a while almost quite some time that you have acquired Smarko. So any difference in the working capital days over there versus your existing business?
Jairam P Sampath
Gonna go? No, no, actually it’s exactly the way we thought and also slowly the complexion of business is also changing for network. So the problem that we face is not because of that. In fact, that is helping us actually in terms of quick turnaround because they are all simpler businesses to do in the sense the variety is lower and it’s a technology-driven business. So we don’t see any negative effects of that.
Indrajit Agarwal
Sure. Thank you. That’s all from my side and all the best.
Jairam P Sampath
Thank you.
Operator
Thank you. Ladies and gentlemen, we will take this as the last question. I would now like to hand the conference over to Ms. Bhoomika Nayer from DAM Capital Advisors Limited for closing comments. MS., your line has been unmuted.
Bhoomika Nair
I would like to thank everyone for the — for participating in the call and particularly the management for giving us an opportunity to host. I wishing you all the very best, sir and any closing remarks from your end.
Jairam P Sampath
Thank you.
Ramesh Kannan
Thank you for everybody in participating., you want to add anything?
Jairam P Sampath
No, that’s all. Thank you. Thank you very much. It was a good set of questions and we are also available for any — now that we are out-of-the silent period. So you could contact us and we can give you further explanations on any of these numbers that we are providing.
Operator
Thank you.
Ramesh Kannan
Thank you.
Operator
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.