Power Mech Projects Limited (NSE: POWERMECH) Q4 FY23 Earnings Concall dated May. 31, 2023
Corporate Participants:
J. Satish — Chief Financial Officer
S.K. Ramaiah — Director, Business Development
Analysts:
Dixit Doshi — Whitestone Financial Advisors — Analyst
Deepak Poddar — — Analyst
Pratik Shah Datkare — Equitas Investments — Analyst
Prasheel Gandhi — Nirmal Bang Institutional Equities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Power Mech Projects Limited Q4 FY ’23 Earnings Conference Call hosted by Nirmal Bang Institutional Equities. [Operator Instructions] Please note this conference call is being recorded. I now hand the conference over to Mr. Prasheel Gandhi from Nirmal Bang Institutional Equities. Thank you, and over to you, sir.
Prasheel Gandhi — Nirmal Bang Institutional Equities — Analyst
Thanks, Vikram, and good afternoon to all participants. Nirmal Bang Institutional Equities welcomes you all to 4Q FY ’23 earnings conference call for Power Mech Projects. From the management team we have S.K. Ramaiah sir, Director, Business Development and Mr. Jami Satish, CFO. I now hand over to the management for the opening remarks, post which we can take questions from the participants. Thank you and over to you, sir.
J. Satish — Chief Financial Officer
Yeah, thanks, Prasheel. Is it audible?
Prasheel Gandhi — Nirmal Bang Institutional Equities — Analyst
Yes, you are, sir. Just go ahead.
J. Satish — Chief Financial Officer
Thank you. Dear friends, good afternoon. This is Satish. Also with me, Mr. S.K. Ramaiah, Director, Business Development. Once again, welcome you all to the earnings call quarter four and 12 months FY 22-23. We are happy to share biggest development of Power Mech during the recent period. Overall, the performance of Power Mech is well within set plan and is in line with our internal targets. Performance for the company continues to be robust and healthy.
Let me first start with the quarterly and yearly performance with numbers. Reported total income for quarter four FY’23 is around INR1,183 crores. This is once again all-time performance in the history of 24 years journey of Power Mech in a single quarter. And the reported EBITDA is close to iNR 140 crores. And the reported PAT for quarter four is around INR75 crores. During quarter four of last financial year, the total income was INR905 crores and EBITDA was INR997 crores and PAT was around INR48 crores. The total income has gone by almost LIKR strike 32% whereas EBITDA has gone by almost like 43% and PAT has shown a growth of almost like 58%, which is quite robust.
The revenue mix for quarter four FY’23 is as follows. Erection business has contributed INR148 crores whereas last year it was INR521 crores. Civil business, including railway, water and distribution, as well as construction, power-related [indecipherable] work, it has contributed close to INR760 crores, whereas last year it was almost like INR516 crores. Operation and maintenance has contributed INR247 crores. And last year, it was around INR217 crores. Electrical business, it has contributed close to INR18 crores and last year it was INR17 crores. The domestic business has contributed close to 1,070 — it is close to 91% and the rest has come from the international business, which is close to 9%, whereas during quarter four of last year, the domestic business has contributed close to 85% and international business has contributed almost 16%. Similarly, the power sector including operation and maintenance, okay, power-related work, during quarter four, it has contributed 43% and non-power, it’s almost like 57%. Similarly, during last quarter, last year it was almost like 56% and 44%.
Similarly, the total reported income for 12 months, the entire year FY 23, it’s close to INR3,680 crores whereas last year it was almost like INR2,728 crores, there is a growth of almost like 33%. And the EBITDA for this year is close to INR421 crores whereas last year it was INR303 crores. There is a growth of almost like 39% with increase in the margin. And PAT for this year, it’s close to INR209 crores, it was almost like INR139 crores during last year. There is a healthy growth of almost like 50% plus.
And in terms of revenue mix. erection business has contributed almost INR606 crores wheres last year it was INR521 crores. There is a growth of 16% in erection business on a 12-month basis. Civil business has contributed almost like INR1,995 crores whereas last year it was INR1,290 crores, there is a growth of 55%. And O&M business has contributed close to INR930 crores whereas last year it was INR804 crores. There is a growth of almost 16%. And electrical businesses has contributed INR69 crores whereas last year it was INR93 crores. There is a fall of almost INR24 crores which is 25%. And on a 12-month basis, domestic business has contributed almost like 88% and international business has contributed 12%, whereas last year, domestic business contributed close to 84% and international again 16%. And the revenue mix between power and non-power on a 12 month basis, power has contributed close to 54% and non-power 46% whereas last year, the mix was power 62% and rest had come from non-power which is almost like 38%.
The growth in business is significant. The above growth is on account of strong order book built, increase in in-house education bandwidth, improvement also seen in overall margin profile and the same [indecipherable] expected to improve gradually. Depreciation cost as a percentage to revenue remained lower side due to planned capital spending. And finance cost, again, as a percentage to the revenue remained lower side and continued to be controlled on account of improved working capital cycle and cash flow management.
With better deployment of capital and improvement in margin, we have also seen improvement in return on capital employed and return on equity, which is quite healthy, and we see this improving going forward too. The overall execution bandwidth is still increasing quarter-on-quarter on account of various initiatives and strong increase in in-house resources. Company is well set to execute projects now in the range of INR900 crores to INR1,500 crores per quarter.
Quarter recent developments and updates includes, for the projects executed and completed at Andhra Pradesh, Andhra Pradesh Medical Tech Park. We have received during last week the entire amount of INR42 crores plus from AP government. This was held with AP government for a long time in spite of we completing the project on a record time. The realization is a major development for Power Mech and will help in a big way to improve the cash flow and also the overall liquidity for our growth. Also the retention money of around INR40 crores, which is due now is expected to be realized next 30 to 40 days, all final led book already been done and this is — we are quite confident of getting that 20 crores next 30 to 40 days. With that, the amount of AMTZ will be completely recovered.
Generated positive operating cash flow during the year is around INR180 crores plus. And the free cash flow is around INR120 crores plus, which is quite healthy. And we’re also working on the same to improve further. The average monthly collection of the company is seen improving month-on-month basis with the growth in the business collection ranging per month, now it’s in the range of INR320 crores to INR400 crores, which is significant. More importantly, the net current days excluding cash and cash equivalents has substantially reduced on account of improved working capital cycle, change in business mix and change in customer concentration. The net current days has come down to 130 days as on 31st March 2023. And the same used to be 150 days as on 31st March 2022, and 205 days as on 31st March 2021. There is significant improvement in overall working capital cycle.
Now, the gross debt and the net debt remain [indecipherable] despite growth in the business and order book. FY ’23, if we see, the gross debt is around INR470 crores and the net debt is INR241 crores whereas it was INR527 crores and INR320 crores during FY ’22. The debt-to-equity as on 31st March 2023 is around 0.37 as against 0.51 as on 31st March 2022. Similarly, the net debt to equity has come down from 0.35 to 0.19 as on 31st March 2023. And this is direction debt to equity ratio is quite healthy.
The company continued taking various steps to strengthen its resources including strengthening ERP [indecipherable] training program, focus on safety and quality, strengthening supply management system because of increased [indecipherable] material component in the business model, and also the risk management. There has been continuous induction of the senior management from different experts from different industry to strengthen our execution capability and also to strengthen the senior management level, so that we can sustain our growth and cope up with the changes. Recently, we have inducted Mr. Surendra Babu Akkala. And he has joined as Head of [indecipherable] business. He has vast experience of more than 30 years in the field of development and augmentation of several coal and iron ore mining blocks in India. He was earlier associated with Western Coalfield, Central Coalfield, Southern Coalfield Limited in various positions and also with Adani Enterprises Limited as a Senior Vice President in natural resources and mining business.
Apart from that, Mr. Ratnadeep who has joined as Senior Vice President as business development and operations head, he is in-charge of the business development and operations in Saudi and Bahrain. Following a meticulous academic [indecipherable] in electrical engineering and global business management as well as a vast experience of teaching interest on business development, strategy, business tunaround and global operations. He gained solid knowledge in software optimization and strategic partners building growth [indecipherable]. Earlier, he was associated with reputed organizations like ABB, Siemens with Interconnect ETC. So his excellence will help in a bigger way in developing the business operation in especially in the Saudi market. Along with him, Mr. Srinivas who is CEO of international market, he will be concentrating on Nigeria market and Ratnadeep will continue to head the Saudi market, which will help in a big way to improve the international operation business.
Now coming to the order book. The order backlog as on 31st March 2023 stands at INR23,000 crores for the entire year of FY ’23 and ’24, the current financial year, the company has set a target for achieving new orders worth almost like INR10,000 crores, which is including the spill of orders of around INR1,200 crores that the projects which are on L1 status close to INR1,400 crores. And the projects already added during quarter one of the current financial year, Including around INR720 crores. And we are quite confident that this INR10,000 crores numbers can be achieved. We have identified different projects, domestic, international, in different segments, close to INR40,000 crores plus. And the conversion of INR10,000 crores is quite achievable. We are also exiting good amount of order booking and execution cycle at international market too. Now the team has been strengthened. Because of COVID, there was a lack of two years, but now the momentum is picking up. We had a major breakthrough at Nigeria [indecipherable] and there multiple happening, so we’re expecting close to INR500 crores of orders booking in international markets too this year. The existence of strong enough risk management policy, team to review each project progress, identified associated risk helping us to partially mitigate [indecipherable] associated risk in various ongoing as well as new projects. Now, various initiatives taken few years back helping us now for a sustainable growth across all the verticals in a large rate. Now, the targeted biggest segment broadly include international operation, both the O&M and distribution mechanical business we are targeting close to INR400 crores to INR500 crores. Operation and maintenance, domestic including the projects which are getting renewed during this year, we’re expecting close to INR1,000 crores plus. Power business, the traditional, because lot of projects are coming up, especially, with the projects which are getting revived. Civil power and FGD put together, we are targeting close to INR2,200 crores. Of this, already, the projects which are L1 includes close to INR1,200 crores.
On top of the railway metro, we are working aggressively the [indecipherable], we are expecting close to INR1,200 crores. Material handling, we are targeting close to INR500 crores. Water distribution works, we are targeting close to INR2,600 crores, mostly Madhya Pradesh, Maharashtra. And specialized construction, around INR450 crores, and electrical business INR450 crores to INR500 crores. The company has built strong expertise in execution and business development. Now for the [indecipherable] opportunities are many to choose. Standalone pre-qualification bid for any new projects for government increased significantly in projects like railways, road, water [indecipherable] material handling. EPCM specialized construction. Execution for FY ’24, FY ’25, and FY ’26, next three years is going to be robust and healthy on account of improved order book, large targeted projects in pipeline and increased execution content per month. Also, the margin profile, we have seen improving and expected to improve further gradually.
We are working to build business model to have recurring long-term service model income to the tune of INR3,000 crores plus. That is including operation and maintenance and MD operation from FY ’26 onwards. In addition to the business growth, this will help in improving margins. This INR3,000 crores pie is expected to improve at least 18% CAGR from FY’26 onwards for this will help in a big way whatever — to a large extent, it will also help improving overall working capital and cash flow.
Now I request Mr. S.K. Ramaiah to update on various project developments before we get into Q&A session. Thank you.
S.K. Ramaiah — Director, Business Development
Yeah. Thanks, Satish. And good afternoon to all our participants. Satish has given the overall number for the revenue, the order backlog and order book position, and how the numbers on the financial side. And what is important to understand is that we see. I would like to emphasize that there is a — first of all, the market fully for us. That is the first time we had seen so much of penetration is there. And thanks to this national infrastructure pipeline, which is in [indecipherable] for the last [Technical Issue]. And this is visible in terms of the value of the orders what we have booked in the preceding year, almost it is 100% more than the previous year what we have booked about INR4,441 crores of this — the preceding year, it is INR8,479 crores, almost 100%. And this has been significantly possible, some of the major orders what we have taken in [indecipherable] railway job, significantly railway and metro jobs, and then some of the maintenance jobs and also on the traditional jobs on the power plant works happened [indecipherable] metro mechanic shop what we are doing is a very interesting job [indecipherable] opportunity for the 27 — with another 14, 15 cities are coming up. And this is a type of opportunity which has happened and if you look at the overall figures the [indecipherable] MDO development. The backlog of the orders are INR8,855 crores as on last year March 22, it has gone up to 13,733 crores, almost 55%. And the significant contribution has come up in the exhibit unit on the mechanical side almost four times the backlog has gone up from INR1,650 crores to [indecipherable] crores. Field work, there is a modest increase of INR5,842 crores to INR6,136 crores, and O&M, yes, last year, there has been some of the opportunities got postponed, and there is a dip in the overall backlog, and electrical is overall the same. That overall increase in the order backlog is 55%. And on the domestic [indecipherable] domestic continues to play a leading role because of the opportunities which are available in energy sector, infrastructure sector, railways and various other non-power sectors and that domestic sector almost contributes to the backlog of 97% and internationalized as Satish said of the post COVID, there had been [indecipherable] in the investment coming up in the [indecipherable] and now perhaps it will open up.
Then the power sector business is significantly geared up at 56%, INR9,131 crores is the backlog. Non-power sector is INR4,602 crores and this also is a good product, which is there. Therefore, overall, if you look at some of the major jobs what we are executing as on today, we’re executing [indecipherable] job we have completed that is in Tamilnadu. Buxar, also 2×660 megawatt boilers for L&T in Bihar [indecipherable] advanced stage of completion, 85% for INR285 crores, and the bigger job INR830 crores, we have done 70%, on today. We are good, it wouldn’t go job we sell some month-out of the job. We have completed that is in can region of Tamil Nadu. I’ll also system baldness for L&T behalf what 32% is under advantage of competition, 85% for [indecipherable] effect and the biggest drop the pretty close to around 70%, Maitree Bangladesh INR855 crores, we have done 80%, and the very interesting thing, what is happening for us is drinking water, INR2,927 crores is the original order value, it should significantly go up by 30%, 40%, that we have done about 15% in the last year and this year it will further improve.
Then the road projects in Telangana and also in Karnataka and Mizoram, we have done about 40%, 45% of their work. And Adani one, we have already taken up. And then, [indecipherable] is an interesting job, the Metro medical shop that we have already started the work immediately. And in terms of the [indecipherable] deployment, today, we have lot of optimization has gone redeployment and still utilization of the skills available in different segments in infrastructure, installation, O&M, exports, contract management, business development. I think we have done a significant excise on improving — in optimizing the manpower. It has almost come down by 10% in spite of order backlog on the turnover is going down, that is where it is also to some extent contributing for the better margins. At the end of last year it was 32,000, now it has come down to 28,500.
Now, I would like to bring down certain things on the major segments that we work. Railway jobs, today, we are doing 8 major jobs, about INR1,300 crores to INR1,400 crores, and most of the jobs are faring pretty well, railway and metro jobs. And drinking water, this is happening in the UP for three areas, Bulandshahar, Etah and Pratapgarh and Fatehpur. The order booking is expected — the original order, which was awarded around INR2,720 crores is expected to go up to INR4,320 crores based on the project approvals of the Indian villages and blocks and therefore, about 2,903 villages will come ultimately and the good thing is that we have provided 100% drinking water for both 102 villages. Therefore, that the company having diversified it and working in different villages and we are having a distributed mechanism of our managing the various villages with the key managers posted in district-wise and area-wise that is yielding results for us. And we have completed last year about nearly INR571 crores of jobs. And these projects are well structured in terms of payment terms and other things without any retention on these and advance. And we are focusing a lot on these, and because there is so much focus on investments, the government side also, because of the need for the villages.
Now coming to the, what are the opportunities will come up down the line. I think gross, which are what Satish shared was INR10,000 crores. It should be possible based on the track record and the market availability of the opportunities. And there are couple of things a person has to understand these. One is that there is a revival of the stalled project about 5,270 MW Monnett Ispat, [indecipherable] Meenakshi, Amarkantak [indecipherable] etc and already we are at this spot, we have taken jobs from the JSPL who has taken this job. [indecipherable] we are aggressively following with Vedanta Group for the 2×600 MW and about INR400 crores of offer has been given and we are well placed to get the entire job of that, that is left over job. And now [undecipherable] undertaking finishing job what we have demonstrated [indecipherable] and also Monnett Ispat already we have mobilized that. So this is the revival of the projects and there is also bit of information on the new green and brownfield projects expected as NTPC is planning 14 sets and overall 28 sets are expected [indecipherable] MW, we hope these things will take shape to balance the energy mix between power and renewable. And if that happens, another 21,000 MW of new greenfield and brownfield plants would come up, already [indecipherable] project is there [indecipherable] MW that has to take shape and there are many projects from NTPC also on the pipeline, therefore, this is an opportunity we have obtained based on our expertise. And the recent diversification we have done in the mining space and the material handling and coal handling, we are executing quite well at [indecipherable], then that should give us lot of expertise in handling EPC job. And there are about 70 coal handling projects at the Coal India itself and Coal India is investing about INR50,000 crores. And apart from that, there is a huge emphasis on the capacity expansion of the steel plants again 140 plus million tonnes to it should go up to 2 to 3 million tonnes and the immediate expansion what is expected is all the steel plants, for example, JSW, Arcelor Mittal, Ispat, and JSPL, they are planning to invest [indecipherable] 3 lakh crores to pamper the capacity to 60 million tonnes. So overall government target to enhance the steel capacity to 250 million tonnes by end of this decade that is already there with the investment of $156 billion [Phonetic]. Now the expertise what we’re gaining implemented before projects in [indecipherable] JSW Bellary. There are significant opportunities in these for the project work, there maybe structural, mechanical, equipment, piping and we will certainly take a call on these and this is [indecipherable] pursue.
In the case of drinking water, for us, there is a significant progress and out of 19.5 crores of households, the balance of drinking water to be provided 7.25 crore households and government has allotted funds of INR70,000 crores for this. And Opportunities we are tracking in Maharashtra, In Madhya Pradesh,, then Odisha, Karnataka and we are looking for a couple of projects there thinking based on the experience what we have gained in that. Then the electrical side, the ongoing investments continue to be there in the DISCOMs, only thing the company [indecipherable] DISCOMs investments and then transmission investments [indecipherable] coming up. And then most important thing is railways, I think we have seen the current budget, road and railways have been given bulk of the budget about INR10 lakh crores and we are doing pretty well in both the sectors, railways and roads also, and we have now a significant organization setup to implement all these things.
As far as the World Bank is concerned, some of the projects which were not taken up, we can take up in this year both in the domestic market, international market and domestic markets we are searching opportunities for more than INR2,000 crores and this is possible and we should be able to later on INR1,000 crores, about INR200 crores of renewables are there and then we are already L1 in Raichur about INR130 crores. And also in Vedanta, we have taken some INR40 crores jobs. So that should give us a reasonable visibility for the [indecipherable] improving and the other important thing is metro projects, for example, what we have taken up out the Metro Rail project [indecipherable] the total government plans are the expansion of metro network from [indecipherable] to 27 stations, that should should bring lots of opportunities in terms of maintaining short [indecipherable] interest now, because we have already taken up. And we will be looking at whether the main work also we can take up with from that we are looking-forward and these are very good investments coming up with good implementation plan and all. And with our expertise what we gained in civil works in the last 8, 10 years, perhaps it is doable also.
Then [indecipherable] around 50,000 MW are to be added, that will be [indecipherable]. And drinking water I told you, railway and metro. Then roads are also there. [indecipherable] going on aggressive basis, and four, five projects, we are looking at it in Telangana, Karnataka. And we’ll see how to take it forward. Therefore, on an overall basis, we have identified about INR40,000 crores of opportunities in the domestic market and also international market. Nigeria got a big setup there with O&M and Nigeria is a growing country [indecipherable], then Ghana is there, then Africa, things will open up in a big way and the Middle-East, what is our plan is that plus 400 gigawatt, because of the COVID, there was a lull in the investment both on the power sector as well as in the oil and gas sector. That should take shape now, because their plan is to original plan, the MENA region, is to ramp-up the capacity to 650 gigawatts. And we have got a strong presence in — we got an office in Dubai and we [indecipherable] and completed 600 MW of plants we have commissioned, and that experience and background should help us [indecipherable] opportunity. That is what. I would say. Thanks for your time.
J. Satish — Chief Financial Officer
Can we move to Q&A.
Questions and Answers:
Operator
Thank you very much, sir. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] We’ll take our first question from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead.
Dixit Doshi — Whitestone Financial Advisors — Analyst
Yeah, thanks for the opportunity. My first question is, obviously you mentioned — see, last year, our order inflow was INR8,500 crore approx, of which only one order was almost INR6,000 crores. So other than that, the order inflow was slightly lower. So what gives you confidence in terms of competitive intensity also quite high, so what gives you confidence of almost INR10,000 crore order win for the next year?
S.K. Ramaiah — Director, Business Development
I think that comes obviously by the improved investments and infrastructure and also the private investment which is catching up now because earlier a lot of investments were the government sector. Now the private investments also are catching up. And if you really look at the investments that are coming in various sectors, Whether it is infrastructure sector, roads, railways — roads and railways visibility is very clear. Then energy sector also, some of the projects are getting revived and [indecipherable] 21,000 MW. Then on the industrial side and then oil and gas, a lot of investments are being planned. And the other thing what I said about drinking water still a lot of opportunity there. And then the FGD balance opportunities are there. Last year also we had a significant thing, but now the things take shape fully, es, we would have got more also, but now in this current year, the opportunities what is available and with the experience gained, and qualification also gained, a INR40,000 crores to INR50,000 crores of opportunities [indecipherable] for us to target these INR10,000 crores.
J. Satish — Chief Financial Officer
More importantly, we set the target of close to INR10,000 crores last year, okay. So that taking various projects, including the FGD part. Okay, so we did close to INR8,500 crores around INR1,200 crores got spillover to this year. So we got INR720 crores and L1 status INR1,400 crores maybe next few days we will add that, so excluding the INR1,500 crores, the additional is INR8,500 crores. Of that, the orders like O&M the projects which are going to be renewed. Okay, that itself close to a larger number of close to INR550 crores, INR600 crores. And International, we’ve kept because we didn’t had much this time, we are targeting almost close to INR500 crores. And apart from that, large 5F FGD yet to be awarded. So we are already in advanced-stage of discussion to find it, So on that two-plus three the traditional O&M power, civil and the mechanical put together, it’s close to INR2,500 crores, that’s adding up. And what we didn’t add much last year because our kitty was full, now multiple opportunities are coming up, Maharashtra and MP that itself we are targeting INR2,500 crores plus because 2021. almost 40 months back we added close to INR3,000 crores of order book and we wanted to focus on execution. So 2022, we didn’t add much within the backlog. Now, the kitty was full. Now, we intended to add — the execution cycle is going well, on average, monthly, we are doing close to INR100 crores, to INR150 crores run rate. So now, there is an opportunity to this, so we’re trying to add INR2,500 crores here itself. And [indecipherable] it’s quite large, okay. slightly we have kept a target of INR500 crores to INR700 crores, taking all these things the number looks to be quite achievable.
Dixit Doshi — Whitestone Financial Advisors — Analyst
Second question on the Jal Jeevan mission site. So we have order from UP. I think recently in last four-five months, many orders would be in the Madhya Pradesh as well. So are we bidding in the MP and any other states?
S.K. Ramaiah — Director, Business Development
Yes sir, we are focusing total projects in Madhya Pradesh, then UP also — UP also we are assuming it because already we have started it and perhaps Karnataka also, Karnataka quotes 50% Jal Jeevan mission projects have to be implemented there, there is a lot of backlog there. The new government has come, but that can get the initiatives and Karnataka we have got a good base because we are doing Bangalore, and then we are doing Mysore and other places. So that should help us to, as Satish has said, this is a focus area for us based on the experience, what has been gained and it is a good project to be implemented with strong investment, because government has got scheme to invest the money in that, it has got benefits to that overall households. We are bullish on that.
Dixit Doshi — Whitestone Financial Advisors — Analyst
And just last question on this Jal Jeevan mission. So how is the competitive intensity over there and our margins in these projects will be similar to what our company-level margins are.
S.K. Ramaiah — Director, Business Development
I think we are comfortable with 15% to 18% EBITDA margins. And the PAT will be around — reasonable PAT will be there.
J. Satish — Chief Financial Officer
The site is quite large, actually. If it gives opportunity to, okay, of course, there is [indecipherable] because the quantum is too large and the rate at which it’s working, it’s quite good because if you see the PVC or the price escalation, not much, okay, increase in prices. And it’s a short-term hardly 24 months. So we can easily work 14% to 16% plus, okay, but conservatively, it should at least beat our existing margin that we’re working on.
Dixit Doshi — Whitestone Financial Advisors — Analyst
Okay. Okay fine. That’s it from me.
Operator
Thank you. We’ll take our next question the line of Deepak Poddar.[Operator Instructions] Mr. Poddar, please go and ask your question. Hello. Please go ahead, sir.
Deepak Poddar — — Analyst
Yeah, thank you very much sir for the opportunity, sir. I just missed the point you mentioned about the execution cycle, so what’s the capability we have right now and what’s the rate — what is the rate that we’re doing right now?
J. Satish — Chief Financial Officer
See, now the execution, it’s the bandwidth is well set-in terms of the resources that manpower, the equipment base. Okay, the infrastructure, the manpower, base in terms of so skilled and take everything put together, now it’s almost like on average INR900 crores to INR1,500 crores per quarter we can execute because if you see like we have demonstrated almost like almost INR1,200 crores to INR1,200 crores in a single quarter now ramping up to INR1,250 crores to INR1,500 crores is well set now, okay, gradually we have to see over a period of 24 months, okay, once India stabilizes, [indecipherable] and all, maybe after 2026, ’27, we will consolidate which are various to grow and where to restrict.
Deepak Poddar — — Analyst
So INR1,200 crores to INR1,500 crores per quarter is our execution capability, right?
S.K. Ramaiah — Director, Business Development
Capability is well set now.
Deepak Poddar — — Analyst
And what is the rate we are doing right now. You mentioned something about that.
J. Satish — Chief Financial Officer
It’s ranging between INR900 crores to INR1,200 crores because quarter four itself we have demonstrated close to INR1,200 crores. Now the resources in terms of the asset base and all, okay, the range is iNR 900 crores to INR1,500 crores per quarter we can execute.
Deepak Poddar — — Analyst
Okay, understood, understood. And in terms of revenue. I think, earlier we were — we were of the view of INR5,500 crores kind of a revenue visibility this year right. So that includes the FGD that order that got transferred from the execution got transferred fourth quarter to first quarter or it excludes that?
J. Satish — Chief Financial Officer
See, FY’23, we are on track, okay, we did what we planned. Okay, FY ’24, okay, the order book is quite healthy. Okay, we should be able to convert 37% to 40% plus. Okay, so we see this quarterly progress improving each quarter. This is what we did, quarter ’23, so the order book is quite healthy, so very high possibility and scope to improve quarter-on-quarter.
Deepak Poddar — — Analyst
I mean, quarter-on-quarter, we should see improvement. That’s what we are saying, right.
J. Satish — Chief Financial Officer
Yeah.
Deepak Poddar — — Analyst
Because I mean 37% to 40% of order book, we are looking to execute. So that excludes the MD order, right, excluding the MD order?
S.K. Ramaiah — Director, Business Development
MD order we are not including yet right because FY 24 maybe a small amount INR40 crores plus we should convert and it should reflect in a bigger way from FY’25-’26 onwards.
Deepak Poddar — — Analyst
FY’25 is INR40 crores, INR50 crores, right.
S.K. Ramaiah — Director, Business Development
No ’24, if all goes well, FY ’24 quarter four, we’re expecting close to INR40 crores plus.
Deepak Poddar — — Analyst
Okay, understood, understood. Fair enough. I understood. And that 37% to 40% is in the range of maybe what 5,000 to 5,500, I mean that really the range and maybe working things for FY 24. Hello. So sir, I missed your point.
S.K. Ramaiah — Director, Business Development
Yes, you’re right. Splitting the order book, excluding the MDO.
Deepak Poddar — — Analyst
So that amount about INR5,000 crores to INR5,500 crores, right. I mean in terms of 37% to 40% —
J. Satish — Chief Financial Officer
That’s the range, because I can’t say very specific but there’s a range what we should be able to achieve.
Deepak Poddar — — Analyst
Understood. Fair enough. And in two years. I think we were targeting about 13% EBITDA margin, right, so. So are we kind of targeting the same thing as we speak now?
J. Satish — Chief Financial Officer
In terms of margin profile, you would have seen like last four quarters, there has been improvement in FY’23, and the FY 24, of course, there will be some improvement on account of various regions like the project order mix where we had JV qualification bought and the royalty we used to pay that fine is coming down, number one. Number two is like the new mix, okay, the new orders, we are now targeting anything 12.5% to 13%. So this will also help in terms of improving the margins. I mean said that once this MDO stabilize, which we’re expecting FY 25-26, okay, then you’ll see that margin contribution will be in a larger extent from MDO that will help to push the blended margin, gradually, we’ll see number improving.
Deepak Poddar — — Analyst
I understood. So once the MD operations stabilizes, what’s the steady-state margin we can see in MDO operation.
J. Satish — Chief Financial Officer
See, MDO, we are expecting anything in the range of 16% plus. Yeah, so that definitely should help us to improve the blended margin.
Deepak Poddar — — Analyst
Understood. Fair enough. I think that’s quite helpful, sir. That’s it from my side. All the very best. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Pratik Shah Datkare [Phonetic] from Equitas Investments. Please go-ahead.
Pratik Shah Datkare — Equitas Investments — Analyst
Thanks for the opportunity. Just wanted to know what would be the top order that will be executed during FY ’24.
J. Satish — Chief Financial Officer
Yeah, so the top order will include FGD, the water UP, then Yadadri in Telangana [indecipherable] Maharashtra, then BM RCL Bangalore Metro. Then Kazipet, that’s again railway. [indecipherable] top orders which will contribute substantial amounts. Of course, Maitree Bangladesh. Yeah.
Pratik Shah Datkare — Equitas Investments — Analyst
Okay. So, how do we look at margin profile for FY ’24, do we expect to see any improvement?
S.K. Ramaiah — Director, Business Development
There is a small marginal improvement here, okay. We are seeing the pie incurring okay quarter-on-quarter. Okay, on account of various reasons, now we can expect some improvement in FY’24 too.
Pratik Shah Datkare — Equitas Investments — Analyst
Okay and how about the working capital requirements. Since we are talking about execution of about INR5,000 crores. How can we look at the working capital and short-term borrowing for FY 24.
S.K. Ramaiah — Director, Business Development
If you see FY 23 in spite of large order book and improvement in execution plus 32% growth, okay. We have kept debt controlled the reason being the net current pace. Okay, mainly the retention money, receivables okay, other line method to be kept control payable almost 75 days plus and keeping the cash-flow also. On a project-level, okay, we could able to bring down the net current debt to 130 bps which is a great achievement, we kept the target of 135 honestly, we brought it down to 130 which is a great achievement, we just did 200 bps plus in FY 21 and 154 bps FY 22. So that helps us to improve the operating cash-flow and the free-cash flow, so we were able to control the finance cost and we could able to retain the debt level more or less intact. Okay, of course, it has come down to INR30 crores to INR40 crores. And so the thought process IS now the amount what we have got from MTZ Andhra Pradesh INR42 crores plus we are going to get another INR20 crores, so it will cross INR60 crores of additional surplus cash flow to the system, so that should help us to support to be working capital going-forward for 12 months. Okay, so. I don’t see much — I don’t see any increase in the debt. Maybe the finance cost may remain more or less flat or maybe a small increase of INR5 crores to INR6 crores. So as an absolute number it may in the range of INR90 crores to INR95 crores. But as a percentage you will see a drastic percentage coming down, finance cost as a total to the revenue it will come down significantly.
Pratik Shah Datkare — Equitas Investments — Analyst
Okay. And one last question. Will there be any contribution of O&M whether the overall revenue was upwards of 25%, do we think we can sustain this number going ahead as well.
S.K. Ramaiah — Director, Business Development
Madam, see, the O&M now, it’s the execution range is close to INR930 crores to INR940 crores, this may go up to INR1,100 crores. Okay. So there will be improvement in terms of absolute number, okay, but as a percentage to revenue, it may slightly come down because the mechanical pie will contribute this year significantly and the civil pie will also contribute in a significant way, because water, railways it’s going up. It is still — water business used to be 4% or 5%, this year, it gained to 9%, but you’ll see FY 24 it will contribute a significant base, almost 25% plus and railways will contribute close to 8% plus. So with the mix. Okay, undergoing changes. I see,O&M as a percentage there might be a slight fall. But in terms of absolute number, it will go up madam.
Pratik Shah Datkare — Equitas Investments — Analyst
Okay and just one last question. I do want to have that towards that our total water orders from UP were about INR4,000 crores, is that amount correct.
J. Satish — Chief Financial Officer
Yeah, it was originally — originally it was around [indecipherable] What happened they give the project reports finalizing based on the actual scope of the work that is indicative tender on which it has been finalized. Then a further order will be [indecipherable] based on the detailed scope with the work and that has gone up to more than INR4,000 crores estimation.
Pratik Shah Datkare — Equitas Investments — Analyst
This is basis the executed —
J. Satish — Chief Financial Officer
[indecipherable] we have executed.
Pratik Shah Datkare — Equitas Investments — Analyst
Out of INR4,000 crores, how much have we executed?
J. Satish — Chief Financial Officer
INR571 crores.
S.K. Ramaiah — Director, Business Development
INR5870 crores to INR600 crores —
Pratik Shah Datkare — Equitas Investments — Analyst
Okay, close to INR600 crores, INR572 crores. Okay. All right. Thank you.
Operator
Thank you. [Operator Instructions] We take the next question from the line of Prasheel Gandhi from Nirmal Bang. Please go ahead.
Prasheel Gandhi — Nirmal Bang Institutional Equities — Analyst
Sir, there’s some questions from my end, [indecipherable] FY 25 what type of order inflow are we targeting given that we are targeting 100 million for FY 24?
S.K. Ramaiah — Director, Business Development
Fy 25, we kept the target of close to INR11,000 crores. the incremental amount what we’re targeting the pie of international market slightly will go up because the team has got strengthened and there is a huge scope to increase the quantum. We could see that account significant amount coming from international market in FY ’25, okay. That is number one. And the FGD ordering, which continues to be even FY ’25 too, there will be following orders okay. The complete awards will take two-and-a-half years. So that will be some opportunity coming up FY ’24, ’25 too, on top of that the material handling and the railway metro, we see a huge amount of opportunity. So we have kept an incremental target of another INR1,000 crores plus. So put together this is INR11,000 crores, that’s the target.
Prasheel Gandhi — Nirmal Bang Institutional Equities — Analyst
And what is execution this for FY 25?
J. Satish — Chief Financial Officer
Sir that range 37% to 40% plus, okay. That is the thumb rule we can say through the opening order growth, okay. Of course, this percentage may not bought 25-26 because the MDO will kick start there. Okay, so this is excluding MDO quite plus the MDO, maybe another INR180 crores to INR200 crores and it will be ramped up slowly in over a period of three to four years, the amount of MDO will go up to INR650 crores to INR700 crores per annum.
Prasheel Gandhi — Nirmal Bang Institutional Equities — Analyst
Okay, okay. Thank you sir. That was very helpful.
Operator
Thank you sir. Ladies and gentlemen we have reached the end-of-the question-and-answer session. I’d now like to hand the conference over to the management for closing comments. Over to you sir.
J. Satish — Chief Financial Officer
We have some more developments to come. I could not, the reason being, like there are some restrictions from the customer side so maybe next month we will come with some more developments and updates. Okay, so in terms of the order book and targets what we have kept, is on track. The development will update you in next month surely before the end of our first quarter call. Let’s discuss. Thank you all.
Operator
[Operator Closing Comments]