Patel Engineering Limited (NSE: PATELENG) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Kavita Shirvaikar — Managing Director
Rahul Agarwal — Chief Financial Officer
Hitesh Agarwal — Investor Relations
Analysts:
Dheeraj Ram — Call Moderator
Rajan Jain — Analyst
Harsh Patel — Analyst
Dheeraj Ram Singh — Analyst
Prashant Kshirsagar — Analyst
Tej Patel — Analyst
Chirag Shah — Analyst
Sahil Vora — Analyst
Arnav Sachdev — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY25 Earnings Conference Call of Patel Engineering Limited hosted by Ashika Institutional Equities. [Operator Instructions]
I now hand the conference over to Dheeraj Ram from Ashika Institutional Equities. Thank you, and over to you, sir.
Dheeraj Ram — Call Moderator
Thank you. Good evening, ladies and gentlemen. Ashika Institutional Equities welcomes you all for H1 FY25 Earnings Conference call of Patel Engineering Limited. This is Dheeraj Ram speaking. Today from the management team, we have with us Ms. Kavita Shirvaikar, Managing Director; and Mr. Rahul Agarwal, Chief Financial Officer.
Now without any further delay, I hand the call over to Ms. Kavita Shirvaikar, Managing Director, for her opening remarks, post which we’ll open the floor for the Q&A session. Thank you, and over to you, ma’am.
Kavita Shirvaikar — Managing Director
Thank you. Thank you, Dheeraj, and good evening, everyone. Welcome to the Q2 FY25 Earnings Call of Patel Engineering Limited. We have shared a presentation summarizing our performance for Q2 and H1 FY25, along with the results on the stock exchange for your reference.
Let me tell you, this quarter has been challenging for us. We began the period with the unfortunate loss of our late CMD, Mr. Rupen Patel. Despite these challenges and even it is being a monsoon quarter, we have been able to achieve a revenue growth of around 15% in the quarter as compared to last year.
Our profit saw an impressive increase of over 150%, rising to INR81 crores, up from INR32 crores in the same period last year.
On the order inflow front, we had informed earlier that due to the election season, we were able to secure an L1 position of INR240 crores from NHPC for Teesta project. Additionally, we have formed strategic alliance with PSUs like RVNL and Ircon, reinforcing our long-standing relationship built over 75 years of operations.
This quarter also saw significant progress in our projects. We commenced the final concreting of the powerhouse of one of the India’s largest hydro project, 2,000-megawatt Subansiri Hydroelectric project in Arunachal Pradesh.
I want to reassure our stakeholders that with a 75-year legacy, we remain committed to sustainable growth. We have a robust, experienced and professional organization dedicated to overcoming challenges and achieving steady long-term success.
Now let me provide a brief outlook on the sector. India has committed INR11.11 lakh crores for infrastructure MDCS project. After being reelected, the government has started taking various steps to meet their infrastructure goals.
Last month, key stakeholders in India’s power sector caters to plan the future of the energy sector where the Union Minister emphasized the importance of renewable energy. India currently has 200 gigawatts of renewable energy capacity. The goal is to reach 500 gigawatts by 2030 and over 600 gigawatts by 2032.
India has 18 gigawatts of hydroelectric projects under construction. The total hydro capacity is expected to reach 67 gigawatts by 2031 and ’32. The government has recently approved INR12,460 crores to develop 31,350 megawatts of hydropower project over the next few years. The focus is on the North states like Arunachal Pradesh due to its strategic location.
Now coming to PSPs. The government has increased its attention on hydro PSP to support renewable energy and meet peak power demand. Accordingly, 39 hydro PSPs of 47 gigawatts are planned to be ready by 2029, ’30. These projects are likely to achieving India’s Net-Zero carbon emission target by 2070.
Now coming to the irrigation and water management. The government aims to expand irrigated land and improve water efficiency. Under the Pradhan Mantri Krishi Sinchayee Yojana initiatives like Per Drop More Crop and Har Khet Ko Pani are being implemented. Around INR93,000 crores has been allocated to support around 22 lakh farmers. Over INR70,000 crores has been allocated to the Ministry of Jal Shakti in the 2024-’25 budget. Ongoing river interlinking projects will improve irrigation and reduce droughts across the country.
As regards road, the Ministry of Road Transport and Highways stands to build 74 new tunnels across India, covering 272 kilometers. An estimated of around INR1 lakh crores will be spent on this. With elections and the monsoon season behind us, we anticipate a strong economic recovery and a healthy increase in order inflows in the coming quarters.
See, let’s now discuss our current order book position. Our order book as on 30th September is around INR17,260 crores. Out of that 64% is from hydro sector, 21% from irrigation, 10% from tunneling, and remaining 5% from other sectors.
In Q2, we received the letter of award for the Jigaon Water Lifting project valued at INR317.6 crores for which we earlier declared lowest bidder. Our share in this project is around INR111 crores. This project will enhance water resources and benefit communities in Maharashtra.
We have also been declared L1 for the Teesta V hydropower project in Sikkim with a contract value of around INR240 crores from NHPC Limited. This project supports our strategy to expand in renewable energy. It aligns with our ongoing work in hydropower, including the Teesta VI project and our experience of completing over 85 dams.
Over and above, we have signed MOUs with two major PSUs; RVNL and Ircon International Limited. These partnerships will strengthen our ability to deliver infrastructure projects both domestically and internationally, improving project execution through shared expertise.
As regards to upcoming projects and bidding pipeline, we have a bid for projects worth approximately INR10,000 crores that are currently under evaluation. Additionally, projects worth around INR40,000 crores have been identified and are expected to be available for bidding soon.
Moving on to monetization of non-core assets. This year, we had planned to realize around INR150 crores to INR200 crores per year from monetization of non-core assets. In Q2, we have sold 5-acre land parcel in Electronic City Bangalore for INR36 crores. We also received INR55 crores from an existing arbitration award.
In the previous quarter, we had realized around INR240 crores from arbitration claims. Thus, the total realization from non-core assets in the first half of the year has been around INR330 crores.
Additionally, after September quarter, we also realized INR100 crores from the sale of our stake in Welspun Michigan Engineers Private Limited.
So, overall, we remain committed to growing this company steadily in its core business, guided by strong values and commitment to creating value for all stakeholders, including our 4,500 employees. Through effective execution, consistent order inflows and efficient fund management, we aim to build a sustainable future for Patel Engineering Limited.
That was a small brief from my side. I will now invite Rahul to walk you through the financial performance of the company.
Rahul Agarwal — Chief Financial Officer
Thank you, Kavita. Good morning, and welcome to all. I will now take you through the company’s financial performance for Q2 and H1 FY25.
Revenue on a consolidated basis has gone up by around 14.98% to INR1,174 crores, driven by strong project execution. Operating EBITDA is INR162 crores, which is an increase of 15.8% year-on-year, and it stands at — EBITDA margin stands at 13.81% compared to 13.71% in Q2 FY24.
Our profit after tax has been INR81 crores as compared to INR32 crores in the corresponding quarter previous year. On a standalone basis, the revenue is INR1,155 crores, which is an increase of 14.07%.
Operating EBITDA is again up by 12% at INR152 crores and EBITDA margins at 13.16%.
Sector-wise revenue breakup. It is — Hydro is 56%, Irrigation, 18%, Tunneling 12%, Roads and other sectors, 14%.
On a half yearly basis, our revenue from operations is INR2,276 crores and operating EBITDA is up 6.5% to INR331 crores. EBITDA margins for half year is 14.54% and our profit after tax for the first half year is INR129 crores.
On a standalone basis, the revenue is INR2,237 crores, Operating EBITDA is INR313 crores. EBITDA margin at 14%.
Now coming to debt and working capital numbers. Our gross debt on a consolidated basis as of September is INR1,438 crores as compared to INR1,992 crores in the corresponding period last year. And as of March, it was INR1,885 crores. Hence, in last one year, we have reduced the debt by more than INR500 crores.
We have client advances of INR745 crores as compared to INR760 crores at the end of FY24, and we have a cash balance of INR247 crores. So the debt-equity ratio is coming to around 0.39 times which is we believe is a healthy debt-equity ratio.
And breakdown of debt is — working capital debt is around INR800 crores and term debt is INR650 crores.
In terms of working capital, the net working capital days after adjusting for land, arbitration awards, and borrowings and cash and bank balances around 112 days.
That concludes the financial overview. We are now happy to take any questions that you have.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rajan Jain from NV Capital. Please go ahead.
Rajan Jain
Good afternoon, and thank you for the opportunity. Am I audible?
Operator
Yes.
Rahul Agarwal
Yes, sir.
Rajan Jain
Yeah. So I had a couple of questions. Sir, you talked about INR25,000 crores of order book by FY25. So out of this, how much bid already submitted? And when do you see this bid to be — will be finalized?
Kavita Shirvaikar
So, see, as I mentioned that around INR10,000 crores bids are under evaluation which is coming for near — bidding for a near future. Another INR40,000 crores also we have identified, which will come up for bidding shortly.
Rajan Jain
Okay. And like — and most of the bids are in domestic market or this bids are in over — are — or — are this from overseas market also?
Kavita Shirvaikar
No, most of them are from Indian market only, domestic market only.
Rajan Jain
Okay. And like going forward, what will be our strategy in terms of sector and in terms of bidding strategies going forward?
Kavita Shirvaikar
So our current focus is — yeah, sorry.
Rajan Jain
I mean are we also planning in terms of irrigation, roads and all of that?
Kavita Shirvaikar
Yeah, we are planning. See, our major focus will remain hydro, but along with hydro, we’ll be focusing on irrigation, water sector, pipeline work and road sector. Other sector also, we are targeting.
Rajan Jain
Okay, okay. Got it ma’am. I’ll join the queue in case of further information. Thank you. Thank you. Thank you and all the very best.
Kavita Shirvaikar
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Harsh Patel from Share India. Please go ahead.
Harsh Patel
Congratulations for a good set of numbers. Can you throw some light on debt reduction going forward? And in case of Afcons, which are being listed, how competitive we are bidding comparative to Afcons in hydro projects?
Rahul Agarwal
So see, we have a term rate of around INR650 crores right now. We expect to pay at a term rate over the next few years. say, around three years — three-four years from now. So that is our target that we’ll pay off the term debt. However, with the increase in new orders, even if we take more working capital debt or client borrowings, the overall borrowing in terms of borrowing plus client advances, we don’t expect that to increase.
In terms of bidding with Afcons’ IPO and all coming, see, there are enough works for all to take. So there is no issue. We go selectively anyways for our projects what we want.
Harsh Patel
And can you show on margins in coming quarters, what would be the EBITDA margins we would be expecting?
Rahul Agarwal
See, we anticipate on an average 13%, 14% margin. So that we’ll maintain.
Harsh Patel
Okay. Okay. Thank you so much.
Rahul Agarwal
Thank you.
Operator
Thank you. The next question is from the line of Dheeraj Ram Singh from Ashika Institutional Equities. Please go ahead.
Dheeraj Ram Singh
Hi, ma’am. My first question is the recent project that we have secured of almost INR240 crores, which is a hydro project, could you please throw some light on it, like what is the completion cycle and what is the margin that we can expect and where it is from?
Rahul Agarwal
So it is — it is a small project. It is nearby for our existing project, INR240 crores to be completed in almost two years time. And the margins are similar to what we get in hydro. So we expect on an average same 14%, 15% margins to be maintained.
Kavita Shirvaikar
We have a strategic advantage because it’s nearby. We are already executing one project in that area.
Dheeraj Ram Singh
Okay. Got it. So if you can provide the segment-wise EBITDA margin breakup, is it possible?
Rahul Agarwal
See, segment-wise EBITDA, what we see is our average margin is around 14%, where hydro gives us around 100 basis points, 200 basis points higher. And the other segments are around 200 basis points lower and hydro being more than 50%, so average comes at 14%.
Dheeraj Ram Singh
Understood. And — okay, got it. So one last question is we have recently formed MoU with Rail Vikas Nigam and Ircon International. So is it to venture into railway infrastructure division? Or what kind of opportunities can we see going forward?
Rahul Agarwal
See, it is mainly to do an alliance or tie-up for large projects. So there are various large projects expected to come up. So we can do strategic alliance and go for bidding together with Navratna company bidding with us. So the likelihood of getting projects all may increase.
Dheeraj Ram Singh
Got it, sir. Any guidance on the closing order book for FY25?
Rahul Agarwal
Right now, we can only say that from — one year from now, we are looking at around INR10,000 crores, INR12,000 crores order inflow.
Dheeraj Ram Singh
Got it, sir. Thank you, sir.
Operator
Thank you. The next question is from the line of Prashant from Unived Corporate Research Private Limited. Please go ahead.
Prashant Kshirsagar
Good evening, ma’am. And Just a bookkeeping question. What was the arbitration claim amount as of 30th September, total arbitration claim on your side — from your side?
Rahul Agarwal
So we have arbitration claim and arbitration awards cumulative of around INR3,500 crores, INR3,400 crores.
Prashant Kshirsagar
INR3,500 crores as of — as on 30th September.
Rahul Agarwal
September, correct.
Prashant Kshirsagar
Yeah. And on 31st March, how much was the amount? Just curious.
Rahul Agarwal
So we had almost INR5,000 — INR4,000 crores, but we got some money and we have done some settlements under Vivad se Vishwas. So right now, it is INR3,400 crores-INR3500 crores now.
Prashant Kshirsagar
Okay, INR3,500 crores. And in this quarter, how much arbitration — I missed the point in the opening remark. How much arbitration money you got from the government?
Rahul Agarwal
INR55 crores we have got from arbitration.
Prashant Kshirsagar
INR55 crores. Okay. And what do you expect — how much money you should expect in this fiscal or?
Rahul Agarwal
See, this fiscal, we cannot put an exact number. What we are looking at is maybe next six months, one year, we get around INR100 crore – INR150 crores more,
Prashant Kshirsagar
INR100 crores, INR150 crores. Okay. And the second question is on the Subansiri project. You have started the final completion. So what time line you expect your powerhouse to get over? Hello?
Operator
Yes, sir. The management is there.
Prashant Kshirsagar
Hello. Should I repeat my question?
Operator
Yes, sir.
Prashant Kshirsagar
On Subansiri Hydroelectric project, you have started the completion…
Operator
Sorry to interrupt you, sir. The management line has been disconnected. Wait for a second. I’ll reconnect.
Prashant Kshirsagar
You please let me know.
Operator
Ladies and gentlemen, thank you for patiently holding. The management is back on call. Sir, please continue.
Prashant Kshirsagar
Yeah. On the — in the presentation in one of the slides, you had mentioned that final concreting of powerhouse of Subansiri Hydroelectric project has been commenced. So what timeline you have for completing the powerhouse project in Subansiri?
Kavita Shirvaikar
Sir, this is — Subansiri project, we got LOI in the financial year of 2021. So in four years, we completed around INR1,500 crore work. Balance is around INR250 crores, INR300 crores work is pending, which we expect to complete in the next 12 months then.
Prashant Kshirsagar
It will take 12 months to complete the powerhouse for Subansiri?
Kavita Shirvaikar
See, because it’s a last leg of work where more of the finishing work is left because major work is already done. And that finishing work is interdependent on other contractors.
Rahul Agarwal
Yeah, because see, we are doing civil work, there are H&M, E&M contractors will work in parallel. So we have to work in with them.
Kavita Shirvaikar
So it’s interfacing and interdependent work.
Prashant Kshirsagar
So that’s why it will take 12 months you mean to say.
Kavita Shirvaikar
Yeah, maximum 12 months we are saying.
Prashant Kshirsagar
Yeah, okay. But approximate timeline you have, maximum can be 12 months, but say, six months or seven months.
Rahul Agarwal
Yeah, between six to 12 months.
Prashant Kshirsagar
Six to 12 months. Okay, fine. That was my question. Thanks a lot.
Operator
Thank you. [Operator Instructions] The next question is from the line of Tej from Niveshaay Investment Advisory. Please go ahead.
Tej Patel
Hi, sir. Am I audible?
Operator
Yes, sir.
Rahul Agarwal
Yes.
Tej Patel
Thank you so much for the opportunity. Pardon, some questions I repeated. I am new to the company. I Just wanted to get an idea of out of this INR10,000-odd crores of projects which we have bidded, how much are for, let’s say, hydro and PSP and how much would be for irrigation?
Rahul Agarwal
So around 55% — 53% is hydro PSP. And irrigation is around 15%, 16%. Rest is tunneling, roads, other segments.
Tej Patel
Sorry, irrigation, you said 15%, 16%.
Rahul Agarwal
Right.
Tej Patel
Okay. Got it. And sir, what was the value you mentioned at the start about how much money did you receive from the tunneling business that you sold to Welspun.
Rahul Agarwal
Sorry, come again?
Tej Patel
I mean how much realization did we got from the sale of tunneling business to Welspun?
Rahul Agarwal
No, no, we didn’t sell a tunneling business. We had a subsidiary where we had 10% stake, Welspun Michigan Engineers.
Tej Patel
Okay.
Rahul Agarwal
We sold that for INR100 crores.
Tej Patel
Okay. Okay. And how much — what gigawatts of tenders are we expecting to come out in, let’s say, two, three years for both, let’s say, hydro and PSP? So I just wanted to get an idea of how much time does projects under S&I takes to reach tendering stage.
Rahul Agarwal
See, it varies from project to project. But what we see is that around 30 gigawatt of projects should come up for bidding in the next one year, 1.5 years.
Tej Patel
This is combined hydro and PSP, right?
Rahul Agarwal
Right, right.
Tej Patel
Okay. Okay. And I just wanted to understand why is our working capital so stretched. I mean, if I see your debtor days are about, what, 50, 60 days. And then I think — I don’t know what’s — I mean, a lot of money stuck up in inventory. So if you just give a clarity on why — I mean, why the working capital for us is so stretched. Is this because of projects getting delayed? Or I mean, I’m just trying to understand why our inventory is always so high and why we are relying on borrowings too much because our payments is not coming on time or is this something like that?
Rahul Agarwal
See, I’ll tell you, inventory is component of two, three things. One is there is a stock of land parcels also, around INR350-odd crores is stock of land. So as I mentioned earlier, so our net working capital days is around 115 days, if I remove the average normal working capital. That excludes some arbitration claims, which are expected. Money is realizable through arbitration claims, which are continuing in inventory, plus there are — the stock of land is there. So if you exclude that, then my normal working capital is around between three months to four months only, so which is normal.
Now only thing is our nature of business is such that the initial mobilization expenses what is incurred in the first year, that is realized over the project life cycle of four, five years. On a percentage completion basis, that continues in inventory as work in progress. So the overall number looks high, but my overall working capital cycle, if I exclude this arbitration claims is around 115 days.
Tej Patel
Okay. Okay. Got it. And do tenders, I mean — I mean since you said to the previous answer that you have to work in combined with the HEP developers and the electromechanical developers, there is a whole complete package of tender or the tender comes in, let’s say, civil part is different and then HE hydromechanical is [Speech Overlap]
Rahul Agarwal
Separate. Normally, it is civil. We take the civil part. The HEP and electromechanical work goes to other contractors. Okay. Got it. So you basically kind of subcontract them the electromechanical and hydromechanical work? No, no. Actually, the client only is now giving it a separate contract.
Kavita Shirvaikar
It depends. If it is EPC, then we subcontract or else client give separately to them.
Tej Patel
Got it. And what I observed is, especially in the hydromechanical — I mean, hydro projects, there’s been a delay of about three to four years and for some projects, it’s been like more than five years. And so what gives us confidence, let’s say, that projects, the tenders which are coming out, the execution — normal execution will be about, let’s say, four to five years, won’t exceed the normal time line then would be completed on time because there has been always an issue of getting environmental clearance and kind of a bit back because of the — probably because of the delays from the government side. So what gives us confidence that all these issues are resolved and probably now projects on — which we’ll be getting from now on would be probably completed on time?
Kavita Shirvaikar
So I’ll tell you a very good question. In earlier, what used to happen, why the project is to get delayed. There were two reasons. One is land acquisition. And as you rightly mentioned, second is environment clearance. Now let me tell you, I gave you the example of Subansiri that in four years, we completed INR1,500 crores of work and project is almost under completion.
So now going forward, whatever projects are coming, thanks to the government initiatives and various measures taken by the government, whatever projects is — LOI getting issued, they are ensuring that 90% land acquisition is completed. Environment clearance is in place and the kind of monitoring also from PMO office like large projects, it has been monitored from PMO office directly and like we executing the Kwar large projects in J&K, so we are witnessing that. So going forward, we see this kind of delay will not happen and projects — our execution will be more or less on time. So we are confident about that.
Tej Patel
Okay. Great. Great. And is there something like, for example, I just want to try to understand, is it something like, let’s say, you are probably, let’s say, 20% of the work is left, but is it something like majority of the revenues are booked when, let’s say, 20% of the work is left? I mean, are majority of the revenue booked towards the end of the projects? Or is it equally distributed as and when you complete those projects?
Kavita Shirvaikar
So it’s based on percentage completion. Whatever work we complete, we book accordingly.
Tej Patel
Okay. Okay. Got it. Got it. No, I was just trying to understand, is majority of the work done in the last few years, let’s say the project of four years, is majority of the work done in the last two years? Or it’s probably, I mean, equally distributed. I was just trying to understand that.
Kavita Shirvaikar
No, normally cycle, see, how it happens when a hydro project for six to nine months goes for mobilization, revenue starts coming from the second year, third year, third and fourth is the peak year. And the fifth year is again completion work, which is finishing work, which takes a little bit on the downside. So third and fourth year is the peak year normally in five year cycle.
Operator
Thank you. The next question is from the line of Chirag from White Pine Investment Management Private Limited. Please go ahead.
Chirag Shah
Yeah. Hi. So sir, two, three questions, Kavita and Rahul. First, in the presentation, I see your capex as a percentage of operating cash flow used to be upwards of 34%, 35%. And when I look at the numbers also in the past, it was very high, and suddenly, it is only at 4%. So can you explain that why it was higher at 34%, 30% plus for three, four years? And why it is and how to look at going ahead? And what drives this number?
Rahul Agarwal
On an average, every year it is between INR100 crore to INR150 crores only. This year because the order inflow for the first six months was low, so the capex has also been low. And going forward as and when the projects will start coming in, the capex will happen.
Chirag Shah
So why do you need to continue to have this kind of capex because — and I presume you include capital advance in this?
Rahul Agarwal
Yes, yes. We — capex is done mostly through client advances only.
Chirag Shah
Okay. So it is not more about fixed asses, it’s more about advances.
Rahul Agarwal
Correct.
Chirag Shah
No, I’m trying to understand this nature of capex because ideally the capex number should be going down, why it should be static at 30%. It becomes a variable-cost business and it’s not a capex from that perspective, I’m asking.
Rahul Agarwal
No, no. See, for us capex is planned and machinery what is required for the new projects. So when — because we run multiple projects. So when — as and when new projects come in, there are some equipments which we shipped.
Chirag Shah
Yeah.
Rahul Agarwal
Equipments which we ship from the existing project if it is free and there are some equipments which we have to buy new ones. So on an average, if I see an order inflow of INR5,000 crores per year and if the capex is INR100 crores, INR150 crores, it’s only 2%, 3%.
Kavita Shirvaikar
Yeah, actually, it’s a 5% maximum.
Rahul Agarwal
Maximum 5% of the order inflow. So because you are looking at — you have to look at from the order inflow side.
Chirag Shah
No, but if your revenue is not really growing at that pace, then it should not be so — okay, we’ll take it offline. So that’s one. But — so you are saying that next year when the order inflow happens, so basically of the order inflow that you book, 3% should be assumed as this capital in nature.
Rahul Agarwal
Yeah, that is what it is. Because see, our overall requirement is higher, but then we use certain own equipment, certain equipments on lead. So capex requirement will be on that rate.
Chirag Shah
Okay. And second is any thought process internally on expanding the scope of work like electromechanical thing in the hydro you don’t do. Now I know it’s small and specialized theme, but similarly, there will be other areas which you were not doing earlier and any thought process on expanding the scope of work from what you’re doing today?
Kavita Shirvaikar
So, based on the opportunity available, we may think about it. As of now, we are focusing on our core area.
Chirag Shah
Because all these also require capability building. We need to be approved to those works, right? Technical qualification [Speech Overlap]
Kavita Shirvaikar
Right, Chirag Ji, parallelly we are working on the same. So as I said, immediate right now, we are focusing on core sectors. And parallelly, we are working on developing that strength in other areas
Chirag Shah
Okay. And lastly, I see your credit rating has improved now again further to A-minus. So how will it help? And has the benefits already started flowing in this quarter or the lower interest cost benefit will come in the subsequent quarter? So if you can just highlight that, it would be helpful.
Rahul Agarwal
So we have already highlighted to our lenders and even though in the recent past, some interest rates were increased, the bank rates, but our rates have not gone up and we expect the rates to start coming down. We are following up with the banks for that.
Chirag Shah
So is it like from Q4 onwards, we will see the benefit, there will be some time lag, right, or no, it could be much faster than that. And how much could be the savings in terms of percentage on — assuming other things being constant, if earlier it was X, how much it would be? It would go down by 150 bps or 100 bps, how much — how…
Rahul Agarwal
Between 5o bps to 100 bps.
Chirag Shah
Between 50 to 100 bps. Okay. And when will be the next review will be? Now this is the….
Rahul Agarwal
So the next review happens normally annually, so it will happen after March results.
Chirag Shah
After March results. Okay. Great. Thank you and all the best.
Rahul Agarwal
Thank you.
Operator
Thank you. The next question is from the line of Sahil Vora [Phonetic] from MS Associates. Please go ahead.
Sahil Vora
Hello, sir. Good afternoon. Thank you for the opportunity. I just had a couple of questions. Sir, firstly, in terms of other markets, are you seeing a slowdown like an unexpected slowdown or unexpected pickup and speed in any of the international or domestic market?
Rahul Agarwal
See, international, we generally don’t bid much. We are only present in Nepal and India. And here we see a lot of opportunities.
Kavita Shirvaikar
So as expected, see, last year because of election year, there was a slowdown in new orders. But now from Q3 onwards, now we see a lot of projects are coming for bidding, which we have already identified and started working on the same.
Sahil Vora
Okay, okay. And do you think that there are some key geographies that we would be able to secure orders in the next one or two years?
Kavita Shirvaikar
So what we are targeting like hydro because of strategic location, Arunachal, lot of hydro projects are coming. Nepal, the hydro projects are coming. So we are focusing J&K, Himachal, Arunachal and Nepal where we already have a presence as regards hydro.
As regards irrigation, which is most of the state work, so we are focusing on Madhya Pradesh and Maharashtra.
Sahil Vora
Got it, got it. My second question would be on the different segments that we operate in. Is there any segment that we are focusing on heavily or we would like to focus on in terms of what the market is giving us indications in the order?
Kavita Shirvaikar
See more or less, we want to remain in our core areas. Like PSP also a lot of opportunities are coming up where a lot of private players are also there. So we will take selectivity that kind of projects also. So more or less within our sector, whatever opportunity comes first, we are targeting that.
Sahil Vora
Understood. Understood. Okay. That’s it from my side. Good luck and all the best. Thanks.
Operator
Thank you. [Operator Instructions] The next follow-up question is from the line of Dheeraj Ram Singh from Ashika Institutional Equities. Please go ahead.
Dheeraj Ram Singh
So my first question is, what kind of opportunities that you see under river interlinking, especially for Ken Betwa and two or three more?
Rahul Agarwal
So we’ll be bidding for projects.
Kavita Shirvaikar
Yeah, it is on our list actually.
Sahil Vora
So has the bids open for this river interlinking project or they are about to.
Kavita Shirvaikar
They are about to. So like some of them already started and some of them is under evaluation and which will come up for bidding in near future.
Sahil Vora
Okay. And considering the amount of opportunities in this, so what is the kind of market size that you like to quote in this or what is the kind of opportunities that you quote in this?
Kavita Shirvaikar
So overall, as we mentioned that keys — we are targeting next year around — additional work of around INR10,000 crores to INR12,000 crores in next one year from now onwards.
Sahil Vora
Okay. And any guidance on how much can be from river interlinking in next two years or something?
Kavita Shirvaikar
Specifically, we cannot give. Overall, we have….
Rahul Agarwal
We have our success bid ratio of around 20%. So I mean we’ll bid and then let’s see what we get.
Kavita Shirvaikar
Yeah, correct.
Sahil Vora
Okay, okay. And sir, my next question is what is the percentage of this hydromechanical component in a particular dam? So if a dam is of 100%, then what percentage of cost is hydromechanical components?
Kavita Shirvaikar
So there is no standard percentage as such. It all depends on the location, design and other parameters of the project actually.
Rahul Agarwal
Our — generally, civil is more than 70%.
Kavita Shirvaikar
Yeah, 70% to 80% you can say?
Sahil Vora
Okay. Okay, got it. So is it fair to assume that hydromechanical can be around 10% to 15% then, taking out the engineering and design part.
Kavita Shirvaikar
You can say it. It ranges from 10% to 30%.
Rahul Agarwal
Yeah. hydromechanical is [Speech Overlap]
Kavita Shirvaikar
[Speech Overlap] both put together.
Sahil Vora
Okay, got it. So my last question is, what is the amount of client retention money that we can expect in H2 FY25, like let’s say 15% is the client retention money in a particular project, are we delivering any particular project in H2 so that we can get the client retention money back?
Rahul Agarwal
See, client retention is generally 5% and we keep on trying to realize monies against bank guarantees as and when cash flow is required for the project.
Sahil Vora
Okay. So just wanted to know if we are — if any of our projects which are up for completion, then would be yet to deliver in H2.
Rahul Agarwal
So there are few projects which are more than 90% complete. So we are targeting for completion of these projects in the next six months to one year.
Sahil Vora
Got it, sir. Got it. And one last question is, last quarter we have said we — INR50,000 crore — around INR50,000 crore is under is — under bid pipeline. So out of which what is the percentage of orders that we have secured?
Kavita Shirvaikar
What are the — sorry?
Rahul Agarwal
So INR50,000 crore is the bid pipeline. We have bidded around INR10,000 crore. Another INR40,000 crore more we expect to bid…
Kavita Shirvaikar
In near future.
Sahil Vora
Okay. And we — so is my assumption is fair, we haven’t secured many of these orders with a delay in suppose [Phonetic] some activity during tender. There is it?
Rahul Agarwal
Sorry, come again, maybe just the voice broke in between.
Sahil Vora
My question is regarding this, out of which you had bid last quarter, so from which have we secured any of those projects?
Rahul Agarwal
See, in the last quarter, we were relevant for one project for INR240 crores.
Sahil Vora
Okay. so only INR240 crores is the new project that has been taken during the quarter.
Rahul Agarwal
See, what we are saying is, we got L1 for one project for INR240 crores because the bidding started late after elections. Now till now we have bid almost INR10,000 crores. So that will — bid will open up in the next few months. So that will come. And apart from that, another INR40,000 crore INR50,000 crores is expected to bid in the next one year.
So overall, in the next one year, we should get more than INR10,000 to INR12,000 crores of work out of this year.
Sahil Vora
Got it. Got it, sir. Got it. Yeah. Thank you, sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Arnav Sachdev from Thrust Capital Partners. Please go ahead. Mr. Arnav? Yes, sir. Please go ahead.
Arnav Sachdev
Am I audible?
Operator
Yes, sir.
Arnav Sachdev
I just had one quick question. So on the building segment, is it all government projects or do we also have some private projects?
Rahul Agarwal
We have all government projects.
Arnav Sachdev
And are we looking to acquire — get some private projects or do we prefer only government projects?
Rahul Agarwal
So private project — pump storage projects we’ll look into for private also?
Arnav Sachdev
Okay. Okay, understood. Yeah, that’s it. Thank you.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Hitesh Agarwal for closing comments.
Hitesh Agarwal
Thank you for connecting us on the call today. I would also like to thank to the management for sparing the time and answering all the questions today. We are the Orient Capital Investor Relation Advisor to Patel Engineering Limited. For any queries, please feel free to reach out to us. Thank you, everyone.
Rahul Agarwal
Thank you.
Kavita Shirvaikar
Thank you.
Hitesh Agarwal
[Operator Closing Remarks]