'Public Sector Continues To Dominate Our Orderbook': Capacite Infraprojects' Subir Malhotra
Category
🗞
NewsTranscript
00:00We are joined by Subir Malhotra, who is the Executive Director at Capasite Infraprojects,
00:04who joins us now.
00:05Welcome to the show, Subir.
00:08You know, first off, I'll start with the order book itself.
00:11You know, you have a standalone order book of roughly 8,800 crores.
00:15Help me understand as to what's the breakup for this order and what are the execution
00:19times looking like, timelines looking like?
00:22Well, thank you for having me over once again.
00:25And yes, the healthy order book is there for all to see.
00:29The order book is generally divided into the government sector and the private sector.
00:34The government sector is almost 70% of our order book, whilst the private sector is 30%
00:40of the order book.
00:42And I can very confidently say that both are showing very healthy and robust, you know,
00:49orders coming out in the near future.
00:52So you know, like you rightly mentioned that, you know, your public sector has roughly 70%
00:56and private has 30%.
00:57Will this mix change going forward?
00:59Are you seeing that shift?
01:03And if yes, what direction will it go to?
01:05Well, in the present market scenario, you see, on the private sector, even the real
01:10estate cycle is going through a major boom, whilst the government infrastructure, as we
01:14are all aware, is going gung-ho about its own pace.
01:18So as a percentage, I really don't see a very major shift happening any which way, whilst
01:24the numbers may keep on going up.
01:26But on a percentage, I don't see very major change happening either which way.
01:30All right.
01:31And in terms of the order flow that is targeted for FY25, that's roughly 3000.
01:37And this is apart from the project, the BDD project, which is of around 1000 crores.
01:42You know, what are the execution timelines for this particularly?
01:46For the order book to flow in?
01:47Yeah.
01:48Yeah.
01:49Well, we've already started blocking orders over there.
01:50We've got a new order from payments.
01:51We are looking at some more.
01:53We've already got an order which is coming in from some other sources.
01:57And as we speak, I can say confidently, the pipeline is quite, I would say, choked and
02:05ready to flow out any which way.
02:07All right.
02:08And I really don't see a problem on that 3000 crore number at all.
02:12All right.
02:13And what is the bidding pipeline like right now?
02:15And what is the kind of conversion ratio that you usually have?
02:18Well, we normally have approximately a hit rate of 1 is to 6 or 7.
02:24And as I can say, we have a bid pipeline which is in excess of almost 15-20,000 crores at
02:32the moment.
02:33All right.
02:34And in terms of geographical expansion, you know, you have actively, you have been actively
02:39bidding in public projects for Bangalore, Hyderabad and Maharashtra.
02:42What is your aim there?
02:43What is the kind of geographical expansion that you're planning?
02:47And how will this overall, you know, benefit the company?
02:50Well, let me put it this way, that we are more interested on the size and the scale
02:58and the type of the job rather than the geography of the job.
03:03So if there is a good IT park which comes out in Chennai, we are very ready and more
03:07than keen to bid for it.
03:08If there is a data center or a hospital happening in the eastern part of the country, we are
03:13more than willing to bid for it.
03:15So, from a perspective of answering your question, we are actively bidding for projects
03:22besides our standard geographies of the west and the north and Bangalore, we are bidding
03:28for projects in the east, we are bidding for projects down south.
03:32Hyderabad is a big market which is coming up and we look at very major closures happening
03:39from these geographies.
03:40All right.
03:42And what about your Gift City project because that has been progressing well and you expect
03:48that to get completed by, I believe, January.
03:52What is the kind of progress there and what are the kind of revenue inflows you're expecting
03:57from that particular project?
03:59Well, Gift City is one of our marquee clients.
04:03We are intending to actually top off the building sometime maybe early next month, October for
04:11sure.
04:12And we have around about four or five months for closure of that.
04:15And as we speak, quite a substantial part of the turnover will now start coming in because
04:20of the fact that all the finishes and the MEP works are now going to start actually
04:27falling into place for this project.
04:29All right.
04:30And, you know, you've said that you're projecting a minimum growth rate of 25% in FY25.
04:36What are the kind of levers that will, you know, auger this kind of growth?
04:42So I would say FY25 is a given because of the fact that our present order book itself
04:51demands that kind of output from us.
04:54And rather it would demand a wee bit more than what we are saying.
04:58So I don't see any issue in achieving those numbers given the fact on how you see Q1 numbers
05:06have come out in which we have come out very strong as far as our performances are concerned.
05:11We have come out almost, you know, 30% higher on a quarter on quarter basis.
05:17And because you see a lot of our jobs are actually quite profitable on the bottom line,
05:24any incremental turnover is actually adding huge increments on the bottom line also.
05:31Our EBITS and our ACTS have gone up very substantially in this quarter.
05:35Right.
05:37So if you expect, you know, your revenues to go up by 25%, where do you expect your
05:41margins to be at by the end of FY25?
05:45And also your bottom line, if you can quantify that for us?
05:48Well, I would not want to make a future projection for that.
05:52But I would say we would very well be in line with what we have been doing at the moment
05:56and maybe a wee bit better than that.
05:59Right.
06:00And in terms of margins, you've said that potential expansion of margin depends on the
06:04execution speed.
06:06If it improves beyond 550 crores, your margins might improve.
06:10So some kind of number there, because your margins currently in Q1 were at roughly 19%.
06:16So where will they go if your execution becomes better over a period of time?
06:21Well, I can only say this, that they will definitely improve, undoubtedly.
06:26And given the kind of jobs that we are doing and the future jobs that we are bidding for,
06:32in which we are going beyond the vanilla shell and core works into actually specialised
06:38works like hospitals and data centres, I can always with a lot of confidence say that the
06:44bottom lines are always going to be on an upward trajectory.
06:47All right.
06:48And in terms of your gross debt level, FY23, your gross debt level was roughly 370 crore
06:54and Q1 FY25, it was at 336 crore.
06:58So any plans for debt reduction overall?
07:01Well, we are at a net debt basis, 0.06, which is a very healthy ratio, given the kind of
07:09industry we are in, and I would say given the industry at large.
07:14So an internal mindset is that we intend to be net, if not gross debt, at least net debt
07:25zero very soon.
07:27All right.
07:28And in terms of the anticipation of increased revenue from EPC contracts, what are your
07:35expectations there?
07:36What are the kind of trends that you are observing there?
07:40In the sense that EPC contracts have become the standard norm of the government.
07:45And be it hospitals, airports, low-cost housing, EPC contracts are always the new way in which
07:54the government wants to put a lock-in into the final price of the contract.
07:59I would say it has worked well in both ways.
08:01It has worked well from the client, i.e. the government, and from the sector of the industry
08:08also, because there's a lot of value in generating that the industry can get to it, in the kind
08:13of technologies that they can get into it, in the kind of equipment that they can get
08:18into it, so that the specifications that are demanded by the client are met to the T, as
08:26well as improving the quality of the building and the general structure.
08:32All right.
08:33And Mr. Marotra, any kind of fundraising on cards?
08:36I would say at the moment we are sitting pretty, but we are open to any kind of interesting
08:44fundraising which can come our way.
08:46All right.
08:47Well, Mr. Marotra, thank you so much for giving us those insights on cap-set infraprojects.
08:53And thank you so much for taking our time and speaking with us at NDTV Profit.