15,000 Crore Orderbook In 1 Year: Patel Engineering’s Strong Guidance For FY25

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00:00We are joined by the management of Patel Engineering, Kavitha Srivakar, MD of Patel Engineering

00:07joins in.

00:08Kavitha, good morning.

00:09Thank you very much for joining us.

00:11The company has been in use for the recent big order that you won in the hydro project

00:15space.

00:16But before I talk to you about that, our condolences, I believe Mr. Rupin Patel passed away, but

00:22two months ago, it must have been a big, big shift and move.

00:26I hope things are okay.

00:27Yeah, yeah.

00:28All things are okay.

00:30Thank you, ma'am.

00:32See, we are a 75 year old company.

00:35We have till now completed more than 250 projects.

00:38So it demonstrates our execution capability and we have a strong team of engineers, technic,

00:45all technocrats.

00:47So I think the show must go on and we are executing the projects at full speed.

00:55I think we completed T-14 and T-15 project.

00:58It's a part of a railway.

01:02So things are fine, ma'am.

01:03Thank you so much.

01:04Good.

01:05Good to hear, Kavitha.

01:06We are hoping for and good luck, of course, going ahead as you take on the realm of affairs.

01:12But good news has come in a few days ago.

01:14You managed to bag a big bang hydro project order and the government's focus on this is

01:20something that's kept Patel Engineering also in the news.

01:23So lots of tie-ups, lots of activity.

01:24You want to walk us through what's going on and how is business at this stage?

01:28See, recently, you might be aware, we have a tie-up, we have signed MOU with RVNM.

01:36It's a PSU.

01:38So it's a first collaboration between public and private partnership to execute future

01:43hydropower projects, large value projects and other infrastructure projects.

01:51What is the size of this collaboration, the size of the business that you will do with

01:55RVNL, ma'am?

01:56See, it depends on the whichever projects.

01:59See, it is a collaboration, it is a joint venture.

02:02Okay, for future projects, we will bid jointly for the large hydro projects and other infrastructure

02:08projects.

02:09That's why it depends on the projects.

02:10What will be the revenue share between you and RVNL?

02:13What are the sort of financials that have been worked out?

02:16That will vary based on the project to project, ma'am.

02:19Ma'am, but there must be some broad outline that you all have agreed upon?

02:24It is depending on the project which we get.

02:28We will bid jointly for the project.

02:30Okay, let me just ask you a bit about, Kavita ji, your order book.

02:34And I was looking at your order book for Q1 FY25.

02:37There's already an order book at Rs. 17,901 crore.

02:43What is your outlook for the full financial year?

02:46Because your FY24 order book in totality is about Rs. 18,600 crores.

02:51See, our order book is around Rs. 18,000 crore.

02:5560% coming from hydro, around 21% from irrigation and rest from other sectors.

03:02See, going forward, we see huge opportunity available in the sector where we operate in.

03:08Hydro itself, there is a potential of 133 gigawatt in India.

03:13So far, project development is around 46 gigawatt.

03:17Balance, around 90 gigawatt, there is a potential.

03:21Out of that, 30,000 megawatt project is already announced for the bidding in near future.

03:29So, we are targeting to bid for large hydro projects, plus irrigation, plus tunneling.

03:36And we have already shortlisted, identified around 50,000 worth projects,

03:42which we are going to bid in near future.

03:45So, in this financial year, what is the number you've earmarked, Kavita ji,

03:50in terms of your order book?

03:52You're already at Rs. 18,000 crore at the end of this FY25.

03:57Where do you expect to be at?

03:59So, we expect in next year to add around 10,000 to 15,000 crore order book in next FY25.

04:08Got it.

04:09Mr. Shirvaikar, good morning.

04:12You know, amongst the other ideas to talk to you was also this large order win that NHPC had

04:18wherein they have signed up for a 7,300 megawatt set of projects with Maharashtra.

04:23I'm sure if it's happening in Maharashtra, it's happening elsewhere.

04:26Now, when we had spoken to Mr. Rupen Patel at the time of your QIP,

04:29you had spoken about how you have a good market share in this field

04:35and you probably enhance it based on the strength of your balance sheet.

04:39So, one is the order book accumulation that you will get,

04:42two is the execution that you do.

04:44What's the guidance, informal, internal assessment that you may have

04:52about what you would do in FY25

04:55and what you're likely to do over the course of the next two or three years?

04:58So, considering our current order book, FY25, our target is to revenue increase by 10%.

05:07We'll be able to maintain the margin 14 to 15%.

05:11Going forward, as we are planning to add around 10,000 to 15,000 crore new orders in one year.

05:18So, we see going forward from FY26 onwards,

05:22there will be revenue growth we expect 15 to 20%.

05:26Okay. So, if the order book is so strong, why is it just a 10% growth number?

05:32Are there execution issues or are projects at the beginning stage

05:37because of which it's taking time, Ms. Sherbaikar?

05:39No, it is as per schedule only.

05:42See, as last year, because of election, order book was subdued.

05:46We see now going forward, it is going to pick up.

05:50So, considering that time cycle like hydro, we have 60% where the time cycle is 4 to 5 years.

05:57Considering overall, we expect this year FY25, 10% growth.

06:02What about the PSP vertical?

06:05There's also a big push coming in from the government on PSP

06:09and that also contributes to your top line.

06:12I know that you're optimistic on the growth numbers there.

06:14How well do you see that playing on any big conversations,

06:17bids that are currently underway for Patel Engineering in the PSP vertical?

06:21See, as you all are aware, last budget, government completely focused on

06:26renewable energy and development of power storage power projects.

06:30Ministry of Power has already, you know, there is a potential of 60 gigawatt

06:36which is under survey and investigation.

06:40NHPC signed MOU for 7 gigawatt.

06:43THDC recently signed MOU for 6 gigawatt.

06:46Other private players also have shown the interest in signing MOU with the government.

06:51It is to meet the picking power requirement.

06:54So, we see huge opportunity being a hydro player there itself also.

07:00And we have already shortlisted certain projects which we are bidding in near future.

07:05Kavita, you also have significant project exposures in the Middle East

07:09and historically, we've noticed that because of stress in that part of the world,

07:14some of your projects have got delayed.

07:16Any concerns there?

07:17What is your international project order book look like?

07:21You want to just walk us through it and any concerns on that front?

07:25See, right now, our focus is in India.

07:28And over in Nepal, India, we are executing one project for SDNL in Nepal.

07:33So, right now, our focus is in India only.

07:37So, one area that you would love to talk about is to tell us about the debt.

07:42You know, there were some concerns a few months ago on the fact that

07:45Patel Engineering, you know, had a fairly high debt.

07:49But we've seen that operationally improve, you've, you know,

07:52consciously reduced and lowered your debt as we see it.

07:55Give us a sense of the debt equity and how much more debt repayment

08:00are you looking at over the course of this financial year?

08:04As you all are aware, we are consistently reducing our debt.

08:09From peak 5,500 to we have reduced to 2,000 crore

08:14and now our current debt is around 1,500 crore.

08:19So, it is a debt equity ratio is around 0.42.

08:24Kavita ji, just a couple of things I want to understand.

08:27So, obviously, a lot of focus on hydropower with various states

08:31and you've just signed a huge set of projects.

08:34You're doing six PSPs with Maharashtra government.

08:37Just want to understand in terms of revenue, the state breakup.

08:41Is the focus and concentration more on some states rather than the other?

08:45Can you give us a bit of a picture there?

08:48Hydro, our focus is, you know, central PSUs largely.

08:53And some other states like we are working from Himachal and other states.

08:59You have a Maharashtra government pact which you've signed for 33,600 crores, right?

09:05It's signed by DHDC.

09:09DHDC has signed six gigawatts with Maharashtra government.

09:14Now, give me a sense of all of these orders that are coming in, Kavita ji.

09:19What is the kind of capex that you would be lining up for this going ahead?

09:23Would you need more capex coming in?

09:26Would you need to raise funds?

09:29Let me tell you.

09:31For hydro itself, there is 1,50,000 crore work is coming in near future for bidding.

09:36In irrigation, we see huge opportunity around 90,000 crore work is coming up.

09:42Over and above, we see dialing also.

09:45There is huge work in pipeline.

09:47So, our current focus will be in these areas.

09:50In addition to that, we will be looking for pipeline work in some of the selected states.

09:56So, overall, overall, there is a huge opportunity.

10:00And right now, our focus is to, you know, we are working on bidding of around 50,000 crore projects.

10:07Now, coming to the fund requirement, as you are aware, we have already raised 400 crores via QIP

10:14in current financial year only.

10:17So, this will meet our working capital requirement for the project.

10:24Ms. Shirvaikar, at least one question from my end is

10:28on how the targets for hydro have been bumped up by the government.

10:33So, would you reckon that this growth rate of between 10 to 20%

10:38is possible for the better part of the remainder of the decade

10:43or you do not have visibility for that far out?

10:47No, we are confident.

10:49Looking at the opportunity available in the sector,

10:51we are confident to maintain the growth of 50 to 20%.

10:55Ms. Shirvaikar, as things stand?

10:58Yeah, as things stand.

10:59No, but do you think you can do it for the next five years

11:02or is it only visibility for the next three years?

11:04No, we can do it for next five years.

11:07You can do it for next five years. Okay.

11:09Great. Ms. Shirvaikar, we'll leave it at that.

11:11Thank you so much for taking the time out and being with us

11:13and all the best for the quarters and the years ahead.

11:17Thank you so much.

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