Vascon Engineers Limited (NSE: VASCONEQ) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Akhilesh Gandhi — Investor Relations
Santosh Sundararajan — Whole Time Director and Group Chief Executive Officer
Somnath Biswas — Chief Financial Officer
Analysts:
Unidentified Participant
Himanshu Upadhyay — Analyst
Kanishk Shah — Analyst
Puneet Agarwal — Analyst
Vedant Joshi — Analyst
Mihir Vyas — Analyst
Diwakar Nigam — Analyst
Presentation:
operator
The conference has now been recorded. It. It. It. Sam. Ladies and gentlemen, thank you for patiently holding. The conference is expected to start shortly. Please continue to hold. Ladies and gentlemen, thank you for patiently holding. The conference is expected to start shortly. Please continue to hold. It. Ladies and gentlemen, good day and welcome to The Vascon Engineers Limited Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 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 Mr. Akhilesh Gandhi from Stellar Investor Relations. Thank you. And over to you, Mr. Gandhi.
Akhilesh Gandhi — Investor Relations
Thank you, Vishakha. Good morning everyone. I, Akhilesh Gandhi, on behalf of Stellar Investor Relations welcome you all to Vascon Engineers Ltd. Quarter one FY26 earnings conference call. We shall be sharing the key operating and financial highlights for the first quarter ended on June 30, 2025. We have with us today the senior management team of Vascon Engineers Ltd. Dr. Santos Sundarajan, he’s a group CEO. With him we have Mr. Somnath Biswas. He’s a Chief Financial Officer.
Before we begin, I would like to state that this call may contain some of the forward looking statements which are completely based upon the company’s beliefs, opinions and expectations as of today. The statements made in today’s call are not a guarantee of future performance and also involve unforeseen risk and uncertainties. The company also undertakes no obligation to update any forward looking statements to reflect development that occur after the statement is made. Documents relating to company’s financial performance including the investor presentation have already been uploaded on the stock exchanges.
And I now invite Dr. Santos Sundarajan to state his opening remarks on the company’s performance for the first quarter ended on June 30, 2025. Post that, we will open the floor for question and answer session. Thank you. And over to you sir.
Santosh Sundararajan — Whole Time Director and Group Chief Executive Officer
Thanks, Akhilesh. Good morning everyone. I warmly welcome you all to the earnings conference call of Vascon engineers for the first quarter ended June 30, 2025. Thank you for taking the time to join us today. I hope you’ve had the chance to go through the Q1 FY26 results as well as the investor presentation available on the stock exchange as well as the company’s website. We would like to share that our overall revenue has been a healthy improvement during the quarter supported primarily by continued execution in our EPC segment. While early monsoons in certain regions presented logistical challenges, our project site remained operational and execution progressed in line with our internal plans.
However, these weather related disruptions did temper the pace of execution a bit resulting in a modest year on year growth of 13% in Q1 FY26. We believe this reflects the strength of our project pipeline and operational preparedness across sites. Coming to our segmental performance, our EPC business continues to be on the cornerstone of our growth journey. Over the years we have built a strong track record having successfully completed more than 225 projects covering over 45 million square feet of construction across India. Our execution strength is backed by a team of over 500 skilled professionals across the project management and engineering functions.
In addition, our in house design and planning capabilities enable us to offer complete turnkey solutions covering architectural design, structural engineering and execution. This integrated approach reduces dependence on external agencies and speeds up decision making and helps us maintain healthy markets. We continue to focus on lost high value civil construction contracts especially from government bodies and reputed private players. A strong track record of quality work and timely delivery has helped us build long term relationships with marquee clients such as Ames, NBCC, Citco, MMRDA, etc. And other leading institutions across healthcare, education, industrial and residential sectors. In Q1FY26 our EPC revenue stood at 204 crore registering a year on year growth of 6.25%.
This growth was achieved through timely and efficient project execution despite challenges posed by early monsoon disruptions across multiple regions which tempered the overall pace of execution. As of June 30, 2025 our EPC order book stood at 2,902 crores which is about 2.9 times our FY25 EPC revenue offering strong visibility for the next two to three years. The breakup of our current order book is as follows 2469 crores from external EPC contracts and 433 crores from internal real estate projects. About 73% of the total orders are from government backed projects which ensure timely payments and strong cash flow visibility.
As of now, looking ahead, our focus will remain on bidding for larger projects in the range of 600 to 700 crores and maintaining cash flow positive execution, further strengthening and working on our design and build model. We are confident of delivering 20 to 25% annual growth in our ECT segment in the coming years. Let me give you an update on the real estate segment in Q1FY26 we continue to see steady progress across our ongoing projects. During the quarter we achieved new sales booking worth of 40,500 square feet with a total booking value of 55 crores and a collection of 65 crores.
While these numbers will reflect in the financial upon revenue recognition, the operational activity on ground has been very strong. We currently have four real estate projects under active development with a total saleable area of 0.77 million square feet of which 0.61 million square feet is attributable to VASCOM. These include tulips phase three at Coimcore, good Life at Talega Tower of Ascended Karadi and the redevelopment project Orchids at Santa Cruz Mumbai. So far we have sold 0.44 million square feet and booked total sales worth 272 crores and collected 198 crores. 116 crores of revenue has already been recognized from Tulips and Good Life.
Looking ahead, our near term real estate pipeline is Strong and includes JV residential project in Povai, 4 acre high density housing project in Karadi and a tower of future commercial projects in Bane Pashan Prakash Housing Society which is a redevelopment project in Santa Cruz. Together these projects total up to 0.82 million square feet of saleable area attributable to ASCON which is roughly an estimated top line of 1100 crores of sales. With ongoing projects progressing well and a robust pipeline in place, we are confident about a meaningful and consistent contribution of the real estate segment from current year onwards.
Coming to the financial performance of the company in Q1FY26 the company reported a consolidated total income of 242 crores in Q1FY26 a 22% year on year growth over 198 crores in Q1FY25 which includes profit from the sale of investment in Ascent Hotels Private Limited in Poland. EBITDA exporting profit from the sale of investment in Ascent Hotels for the quarter stood at 16 crores compared to 18 crores in the same period last year while the EPC EBITDA margin stood consistent at about 9. 10%. The real estate EBITDA margins declined due to higher marketing costs incurred this quarter. Profit after tax is at 22 crores compared to 9 crores in Q1FY25. To conclude, our strong financial performance, robust order book in EPD segment and a healthier balance sheet gives us confidence for the future. We remain committed to delivering value through disciplined execution, innovation and a dedicated team.
With that we now welcome any 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 N1 on the Touchstone telephone. If you wish to remove yourself from the question queue you May Press Star N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Himanshu Padhya from Bugal Raw pms Please go ahead.
Himanshu Upadhyay
Yeah, hi, good morning. Am I audible?
Santosh Sundararajan
Yes.
Himanshu Upadhyay
Yeah so my first question was on the profitability okay, if we look at the Note 6 which states that the profit from sale is around 17.5 crore which is included in other income if we remove this other income, okay and make it like to like our PVT margins for the quarter went down to 3% on standalone basis okay? So that is the part one and second when we look at the segmental numbers it seems that the profit on sale of this asset is included in EPC business and if we remove this numbers from EPC business then EPC was at a very nearly zero profit type of numbers for the quarter so why would this be the case and why the margins have been because seem to be so low on the EEPC business.
Santosh Sundararajan
Number one, if you remove that the sale of investment in SNL obviously if you look capital table comparison percentage wise slightly less as compared to last year the reason will come back we’ll get back to after this thing but if you are talking about the segment as in segment it has been that clearly 17 and half crore clearly shown that it is a unalcosil it is not classified it is the spite of this endocobal it is showing the 19 crore.
Himanshu Upadhyay
So I could not hear you can.
Santosh Sundararajan
You just see if we remove if you look at that segmental report which has been presented in the industry presentation that 17.5 crore has been clearly sold as that investment on unallocable so it is not part of this thing and if you look at that etc ept is showing 19 crore EBITDA so what you are talking that EBITDA is zero that is not the right picture there’s an 8% debit margin it is clearly shown in the slide 8 of US.
Himanshu Upadhyay
Because I’ll tell you when we look at the page nine of what you have put on the result presentation okay.
Santosh Sundararajan
Page eight I think you have to.
Himanshu Upadhyay
Look at page eight page the segmental numbers okay?
Santosh Sundararajan
Yeah, yeah look at the page 8 no,
Himanshu Upadhyay
I am not talking about the. Quarterly presentation I am was talking more on the press Release.
Santosh Sundararajan
Okay, so you are right in general there is a reduction of couple of basis points on the ETC margin nowhere near zero. The habit is still at 8. We would normally it is normally in the range of 10. We did have a write down in one of our projects GOA whereby we constitute a call along with the board and the auditor to not recognize revenue beyond a particular point on that because that project is under arbitration and whenever the results of the arbitration are out we will be getting bonus recognition of revenue. But as a postulate measure we stop recognizing further revenue from that project except beyond what is accepted by the client at this stage.
So that actually we had to pull back about 4 crores to 5 crores this quarter in a reversal. So that is affecting our numbers in terms of profitability of the EPC segment which is specific only to this quarter. But even then it’s nowhere near zero. We are at about 8% EBIT. The PBP would be at around 6 to 7% this quarter. But we are confident that we can pull this towards 8 and 9 as the year goes on. Because anyway this quarter is the lowest contributing quarter for the year. Generally speaking on the real estate side there is a minor loss.
So that also I mean that is because of the revenue recognition as 7 method. As we said, we’ve incurred marketing costs on our Bombay project this quarter and we’ve achieved sales as well in line with those marketing costs. However the sales don’t come in as we all know as per aslm. But those marketing costs have already come into the books. So the real estate segmental you will see is at a marginal loss of about 5% in EBIT and the EPC is at about 8% in EBIT and the 17.5 is not included in this.
Himanshu Upadhyay
Okay. And one more thing, in last one year our debt has reduced materially. Okay? After sale of assets and everything. But if I look at our cost of finance or the finance costs last year versus this year it is still increased by 1718. Okay? So why would my finance cost increase so much when my debt has reduced significantly in last one year?
Somnath Biswas
If you look at the cross debt. Remain. Upside only if you are talking about the net debt, net debt has been substitute substantially reduced. But if you look at the gross debt number there is upside of the gross date number as because some data has been taken for the real estate project. So obviously once the growth rate is increased there will be some increase incremental part of the finance cost will be there.
Himanshu Upadhyay
Okay? Okay. And I have one more question. We have spoken about Diversifying our order book in past and we have some discussions on it on the call. But if we look at one of our peers, okay. Northern peers who also used to have a similar order book profile with nearly 80 to 90, 80, 85% from government and in only 17, 18% from private sector. Three years back it’s moved to 42% government order book and 58% from private. Okay. But in our case it is still predominantly government with 78% as of Q4 and I think 74, 75 as of Q1, FY26 we have not seen many orders one from the private sector.
The and residential sector is the place where others have grown quite materially and institutions and that has been a lagging point for us. So what are the challenges and how are we thinking of overcoming them and grow business even on the private sector? Because seems very slow though we have won one order this quarter, significant 228 crore but it has lagged the way the market has grown on the private side or we have lagged. Some thoughts on that will be helpful and what direction are we taking?
Santosh Sundararajan
No, I agree with you. We are also, you know, pretty keen to increase the ratio of exposure to private sector. We do not want to be skewed towards one sector. Having said that, we have no complaints from the government sector at this point of time. The kind of project we slot into, you know, in the 300 to 600 crore range and the hospitals that we are working on, we see that, you know, these are the kind of projects where there is no payment issues from government even if it is state government, even if it is in the phase of elections or whatever.
So we are pretty happy to be skewed towards the government even at this point of time. But however, as a prudent business call we would want to be closer to 60 government, 40 private at least and not 75, 78 government. So we are working on that. We are looking for projects in the private sector. We’ve burnt our fingers in the past in the private sector, especially with builders, especially residential projects. And therefore we are still having very stringent terms when we sit across the table for negotiations with private builders in terms of the bank guarantees, we are comfortable providing in terms of the terms of the contract.
There are a lot of terms which have taken us in the past so those bonds haven’t been forgotten. So we are a bit picky when it comes to negotiation on the private side and we have let go of many tenders where the client is insistent on certain terms which do not go in line with our mandate from the board as well. But having said that, we are aggressively trying to increase our exposure on the private side also with no desperation, but looking for good projects in the meantime. If a government project comes by which is good and this ratio remains in this range for a short while, we are okay with it. We are not going to let go of government projects waiting for private projects. But we do have a separate business marketing cell we have put up now which we are trying to aggressively set target for private side. So I take your point and we will work on it.
Himanshu Upadhyay
Okay. And how big is the team which is working on private side? The marketing team, private side.
Santosh Sundararajan
And at this point of time we are not looking aggressively for private projects in other zones except in Maharashtra, Pune, Mumbai, we are not looking in NCR region also. We would prefer to stick to government in the north zone of India. In the south, in Bangalore, we are looking. In Chennai, we, we are looking and in Mumbai. So in all these places we have couple of business management people headed by one central business management person placed out. Of our head office
Himanshu Upadhyay
who is working for private sector.
Santosh Sundararajan
Correct.
Himanshu Upadhyay
Okay, thank you. I’ll join back in the future.
operator
Thank you. The next question is from the line of Ganesha from SR Capital. Please go ahead.
Kanishk Shah
Yeah, Am I audible?
Santosh Sundararajan
Yes.
Kanishk Shah
Yeah. So while the Royal Rides and other small WINS like around 300cr has been announced, the pace of new inflows, you know, seems slower than expected. Could you just elaborate on the current bidding pipeline and the expected, you know, conversion in Q4 and HQFY 26?
Santosh Sundararajan
Yes, that is, I mean, if I may accept, you know, for everyone, that is definitely a short term concern. We have not backed any significant order in the last six months except that one order you mentioned. We have lost out on at least three projects of 700, 650, 750 crore size range by very small margins. We are realizing that the competition is intense in the market and the rates at which people are backing these projects are a bit lower than what our expectation is. So we’ve always set a guideline for ourselves of about 15% gross profit on EPC project so that we are able to hit closer to about 9 to 10% PPPs that we aim in this segment. But it looks like it’s been six, eight months and we are not desperate, but we are definitely a bit concerned and we want to be bagging the order target for the year. So maybe a percentage point or two we will bring down and we will aggressively look at this and hopefully in the next Nine months we will achieve our targets.
Kanishk Shah
Okay, okay. And the other question I have is there is a 440crore land item in the balance sheet. So what exactly does this figure include? Like how many land parcels are there and where are they? What is their book value and all individually.
Santosh Sundararajan
we can share the total breakup of it to you. You know, I mean through Stellar. If you could just post, call, give us an email we can send you the details. It primarily consists of our holding in Githhane land and then we have a project in Kalyani Nagar where we land, you know, prime parcel over there where we hold the rights to construction and a few others. So we can send you the detail brick.
Kanishk Shah
Sure, sure, no problem. Just one last thing that you mentioned that currently about 3.7 million square feet is being executed annually at 90% capacity utilization. Right? So against the overall capacity of 8 million square feet per annum this implies that the company is still significant at the, you know, idle capacity likely due to maybe limited order inflows. So if the order inflow improves meaningfully and you are able to use the full capacity what would be the maximum annual revenue and potential that VAS1 could achieve from this EPC segment?
Santosh Sundararajan
So sadheep, that is a very complicated question. There is a short term answer to it, there is a long term answer to it. One is our execution capacity. We are quite comfortable at this point of time in terms of our senior management bandwidth or assets that we have even if you have to. We have almost utilized most of the assets that were lying idle in our yard about four or five years ago. But even augmenting assets is not a big problem with small capex that we might incur going forward for growth. We can carry on this growth story. There is another angle which is the BG limit. The BG limits always sort of put another guideline to the growth that we can estimate. So BP limit won’t double year on year. They will steadily grow based on our performance year on year and our relations with the bank. So we expect with all these factors kept in mind we have always projected for the last one year I’ve been saying we want to grow at 20 to 25% if possible.
25% year on year. On the EPC side we’ve done about 1000 crores last year. Our target for this year is 1200 if not a bit more and we still feel we are very much on track to achieve that the first quarter barring as I said a little bit of monsoons and one project that didn’t take off in full speed. But we are still very positive that in the next three quarters we will catch up and achieve the 1200 target for this year. For next year another 20% growth would mean we have to do 1450 or close to 1500.
Again the BB limits will grow for this year. The BG limits have already been tied up for next year. We’ll have to continue growing on the BG limit. As of now the only little concern is that the order booking has to happen otherwise the growth story will not pan out the way we are talking. So as rightly pointed out, and I think surely everybody would have that concern in mind that we haven’t booked good orders in the last six, eight months. Hopefully in the next nine months we’ll be able to reverse that and start next year with close to upwards of 3,500 crore order backlog in hand then this growth theory will definitely be achieved.
Kanishk Shah
Okay, yeah, just you know, given the strong long term opportunity, are there any plans to, you know, expand beyond even 8 million square feet or either by scaling up teams or adapting some kind of technology or into joint execution arrangements or something like that.
Santosh Sundararajan
So as I said at this point of time, you know, see, I mean to scale up beyond this organic target of 20 to 25% which is purely based on internal accrual, which is purely based on performance year on year, improving the balance sheet, improving your relation with the bank, this is an organic target of 20 to 25. If we want to set a higher target and expand exponentially or a bit much more than this 2025 one, we would need capital investment because BG limit as I said won’t come through the business much faster than this. So we would have to tie up much bigger BG limit for which we would need funding and then technology. There are options. I mean we are always marrying new technology in every project that we do that is not in, you know, there is no choice on that even to grow at these rates. We will have to look at technology.
But yeah, to diversify or to look at different streams to you know, suddenly set ourselves a target of 2000 instead of 1400 the year after next would mean we would have to first look at inclusion of capital. At this point we are wary of taking debt on the EPV segment beyond the small PG elements that we carry. So at this point of time I would just like to add a board mandate also we are not looking to raise equity in the short term. So I think we would stick to our organic growth target of 20 to 25 for at least the next one year.
Kanishk Shah
All right, thank you. That’s all.
operator
Thank you. The next question is from the line of meet Agarwal, an individual investor. Please go ahead.
Puneet Agarwal
Yeah, I thank you for the opportunity. So just wanted to know that the company currently operates in Pune, Mumbai and Coimbatore. So are there any new cities being evaluated for the future for the real estate at this point?
Santosh Sundararajan
No, we are happy to stick to these three cities at this point of time.
Puneet Agarwal
Okay, got it. Thank you. Just apart from that, one more thing. So your real estate model is largely asset light through JVs and JDS structures. So how do you see this going ahead? So this wanted to know. So how do you decide between outside purchase JV or redevelopment? And how will this model look like.
Santosh Sundararajan
Going ahead again for the next two, three years? As far as our discussions in our board is concerned, at least we are pretty clear that we will be on the asset light side. Even if we have accrued capital coming in from the businesses. At this point we do not intend to be purchasing land. We would rather do two or three projects using that capital on a GV basis rather than put money into purchasing land. That is the current mandate that we have at our management and board level. So we will continue on this asset light model which is jv, redevelopment in Pune, Mumbai and. Coincidence.
Puneet Agarwal
Okay, Got it. That’s all from my side. Thank you.
Santosh Sundararajan
Thank you.
operator
Thank you. The next question is from the line of Vedant Joshi, an individual investor. Please go ahead.
Vedant Joshi
Hello. Thank you for the opportunity. Am I audible?
Santosh Sundararajan
Yep.
Vedant Joshi
Yes. So I just wanted to understand about the company’s asset monetization efforts. So since COVID period the company has sold some non core assets. So if you could walk, walk us. Through which assets were sold and how much was raised through this transactions.
Santosh Sundararajan
Primarily two big assets. I think we sold GMP which is the biggest non core sale that we did. I don’t remember the exact numbers. We declared it in our call a couple of quarters ago. But I think we raised about close to 100 crores for the company as cash flow in that sale. Recently we’ve sold our holdings in Ascent Hotels which is the highest hotel in Vimann Nagar. Again we got a cash flow inclusion of about 40 crores from this sale and a profit of 17 crores which reflects in this quarter. What else did we sell? We don’t have anything to sell.
Yeah. So these are the two big assets that we sold in the last two, three years. Well before that, about four, five years ago we sold a land parcel in I think Four years ago we sold a land parcel in Karadi through our agenta partnership company that we hold there. So these are the bigger ones. And yeah, at this point of time we really do not have any big non core assets left. We worked on all of this and we sold our stake in our Goa hotel also. That was again four, five years ago we bought the Kauai land in view of that which we are developing. So most of these non core assets on our books have been sold. And as of now going forward we only have honey land which is definitely not non core. It’s a four land. We will work on that. Other than that it’s business in real estate, asset light model and epc. You know, clearly operations.
Vedant Joshi
Okay. Okay. So my next question is regarding the order book. So 73% of the projects are government as mentioned. And does it impact the margins? So are the government projects have lower margin and.
Santosh Sundararajan
Again a bit complicated. See the one one aspect is that in the government project we have to be L1 to win. In the private side, you know, you can be, you need not be the lowest bidder if the client wants to award you. So sometimes in some cases on the private side we can protect our margins at the time of bagging the order. Currently as I said, you know, the government landscape become quite competitive and we are not. We’ve lost a few orders in the last four, five months where we have tried to protect our 15% gross profit target.
And maybe we will have to come down a percentage point or two on that so that you know, we have order book in hand. But plus, minus all factors put together, you know, whether it’s private or government, the competition is big. And I think the margin remain in that range of you know, 12 to 15% growth at the project level. And because we have design and built CC mode of contracting that sort of helps us protect ourselves in this range rather than flip even further below.
Vedant Joshi
Okay. Okay, thank you. So that’s it from my side. Thank you.
operator
Thank you. The next question is from the line of Mihir Vyas from Nine Rays Research. Please go ahead.
Mihir Vyas
Hello. Am I audible?
Santosh Sundararajan
Yes.
Mihir Vyas
So can you share some development on the Thane land?
Santosh Sundararajan
On the Thane land we, we have a 45% stake in an entity which owns about 150 acres in that location in discontinuous parcel. Now at this point of time we are working on two things. One is there is a government corridor that has been announced which will be, you know, taking on taking over about 30 to 40 acres from this parcel of 150 acres. That is in process. That might take some time, but it has been announced. And whenever that acquisition from the government side starts that will be an automatic liquidation for us to the tune of about 28% considering we are half, we are 45% to the tune of about 18 to 20 acres.
That is one thing that will happen. The second is on our front. We are in the process of trying to accumulate about 20 acres out of which about 17 is in our hand, another three to four acres. We are trying to use a local partner and accumulate road touching 20 acres, one continuous parcel. So that process is on. We are talking to the local landowners for those depot acres. They are in smaller pieces in between our holding. And once we are able to achieve that accumulation of 20 acres road touch, we will then sense it, get an access.
Today there is an ala between the road and our land. So we would then go and get a, you know, culvert and the bridge access to our 20 acres. And once that is done, then we will decide, you know, how much of it we want to develop under our brand name, how much of it we want to or give off to someone else. So these are the two things we are working on. One we are working on, the government is working on as far as our tunnel land is concerned. The other parcels behind which are, you know, not contiguous for this point of time, we are not working on them. We just concentrating on these two.
Mihir Vyas
Okay, sir. Thank you.
operator
Thank you. The next question is from the line of Bivakar and individual investor. Please go ahead.
Diwakar Nigam
Hello. Hello.
Santosh Sundararajan
Yeah. You are?
Diwakar Nigam
Yes. Yeah. So I just want to reconfirm the guidance that you gave earlier. So you are guiding around 20% growth in EPC which will be 1200 crore revenue. And in real estate you are guiding for, for 175 to 200. Are you maintaining that guidance?
Santosh Sundararajan
Yes.
Diwakar Nigam
Okay. And on the margin front you were saying for EPC it will be 11% and real estate close to 15 to 17%. Is it still maintained?
Santosh Sundararajan
PBT, we’re talking of PBT is no PBT. EPC won’t be 11. It will be between 8 and 9. We are hoping at some point to push it to 10. But as I said, you know, there are pressures coming in from having to take jobs at 1 or 2% point less in terms of margin. So my guideline would still remain, you know, closer to 9 for this year. EPC.
Diwakar Nigam
EPC. Okay. 9% PBT. Okay. Yes. And it will be 15 to 17 EBITDA margin, right or correct?
Santosh Sundararajan
Correct. Yeah.
Diwakar Nigam
Okay. And so over the years we have grown in our EPC right from 300 crore to now 1000 crore.
Santosh Sundararajan
Right.
Diwakar Nigam
The real estate segment is quite I believe decreasing or it’s kind of, kind of over time. So we are expecting around 175. And what is the revenue recognition you’re expecting in 27 in next two to three years? Total revenue? Yeah.
Santosh Sundararajan
So I’ll just tell you, see the company, I mean to just summarize, you’re absolutely right. The company sort of went through a tough period in you know, the early part of the 2012-2016, 17, 18. We restructured, we did a rights issue, we had a shareholding change, we had a management change, all of that. And so we call ourselves Westcon 2.0 from say Westcon from 2017 18. Now the first thing we targeted to bring up was the EPC segment. It was less capital intensive. We focused on that, we changed our strategy. We went into the government sector and bid for a lot of government projects.
So as you can see the results of that are to be seen today. We are now from 300 as you said, we’ve crossed 1000 and we are at a steady target of 20% growth in that segment. The real estate segment was a bit more capital intensive although we are on the asset light model. But we would still need inclusion of capital to launch real estate projects. So we had kept that on hold for the first three, four years only. Last two, three years. We’ve been working aggressively on now growing the real estate engine of our company currently.
Yes, you’re right. We are only projecting 175 to 200 crores this year. But let us look at what is pending. We already spoke about four projects which will give us a revenue in the range of 1100-1200 crores based on share which are currently to be launched over the next 12 to 15 months. We are also looking at about 300 odd crores pending revenue to be recognized from our already launched project. So we are looking at 1500 to closer to 1500 maybe 1500 crores of revenue from just these four plus four eight projects in hand. As far as the real estate is concerned, even if these take four to five years to finish, we are looking at an average of upwards of 300400 crore coming in from these projects.
The only hit is that quarter on quarter we will not see this because we only get to recognize these at certain phases of completion. But all said and done, we have 1500 crores of revenue to be closed out over the next four years from These projects alone and then we are also looking at new tie ups on the asset light model in both Bombay and Pune. So that is where we are and we hope to. Yes, we want our real estate also to grow like the EBC has and we are working on that.
Diwakar Nigam
So just want to reconfirm. So you said four project that you are about to launch has a revenue potential of 11 to 200 crore. And and project already launched over the last four years. Five years. What is the revenue. Potential thats have already been launched.
Santosh Sundararajan
Right.
Diwakar Nigam
So what was the number sir? 1500,
Santosh Sundararajan
300, 300. I mean not unrecognized.
Diwakar Nigam
So this 300400 will come in next two years. Two years. Two years.
Santosh Sundararajan
These 304, 175 will come this year, another 200 will come next year. Hopefully next year and then the 1100 which we are launching will be start coming after that.
Diwakar Nigam
Okay, and so what will be the cost requirement? How much capital will you require in these four projects in next two years?
Santosh Sundararajan
Yes, we would need about 80 to 100 crore capital in totality for these four projects to be launched. We are. So our strategy is also not to take excessive but the need for capital also arises. One is of course your you know, launch costs and marketing and initial expenses at site. But before that you know sometimes you need, you need premium SSIs or you need certain payments to the government to launch these projects. So that’s where the need for capital arises. Although we are not buying land, these lands are already tied up. So what we will be looking for is, you know, certain short term financing strategies as well as certain equity infusion at project level from project level partners who will either come in at a profit sharing level or who would underwrite stock from the project at an early date at a subsidized rate.
So these are the two models. We do not want to be excessively borrowing from NBFCs until the approvals of the project are in hand because you know that timeline can be vague and then the repayment pressures start building up. So this is the strategy to launch these four projects. And just to add up all this aspect, since we were talking about what is the four project we are talking now out of this four already two has been capital has been tied up and that has been already raised. That’s why if you look at that our debt has been increased from 174 crore to 50 crore so that capital already been infused in the system another 7080 crore is required. That is for the remaining two project which is at the defined stage. Of approval and all these things. So two projects capital tie up is already done and infused.
Diwakar Nigam
Okay. And just one last question sir. Maybe you have covered this in opening mark. So the revenue resolution in real estate in this quarter was around 20 odd crore. So why is this that low? I mean we. We are projecting 170 lakh crore.
Somnath Biswas
But once again it is based on the completion. This quarter doesn’t have any competition. It is only the scale of unsold inventory impact in the complicated project. What we are Talking about PRNIP, 400 crore which is completed project is coming up in the different level. So from that this 24 has been done. So we will not have in real estate a linear kind of a target at all for the next three, four years. Because we haven’t reached that level to be completing something every quarter. So the reason we are projecting 125 to 200 is we expect to complete a project. The ToA will be completed, you know before March and so will part of the Concord project. So once those completions happen, those inventories that are held today in the form of inventory so called will then get converted to revenue.
Diwakar Nigam
Okay. So are you are in line with that completion, right? It is going.
Somnath Biswas
Yes. In all practicality it will be like that. It will not be in the Q2 also.
Diwakar Nigam
Okay. Okay. Thank you. Good luck.
operator
Thank you. As there are no further questions from the participants I now hand the conference over to Dr. Santosh Sundararajan for closing comments.
Santosh Sundararajan
Thanks everyone for keeping faith in the company and tracking us. Looking forward to meet you all again next quarter. Hopefully with some good news on some orders back. Thank you and I’ll see you again. Goodbye.
operator
Thank you sir. On behalf of fastcon engineers, that concludes this conference. Thank you for joining us and you may now disconnect your lines.