RITES · tone and specificity signals across the available quarters.
Language signals
The performance of Q1 has been muted. The two main challenges which we have been talking about in the past, the dynamics which changed in the inspection of IR business and the export business, this quarter, if you compare Q1 to Q1 YoY, hit us full on.
Moving forward, margins will be definitely not comparable to the earlier trends. I think this, to my mind, where we are today could be, let's say, the new normal and would be where the margins would settle down in the coming quarters and years.
We have got INR 3,000 crore orders in the last few quarters vis-à-vis INR 600 crore in the first H1 of last FY. So, it's about five times. And that is what we need to focus on: execution of these orders in the coming quarters.
The results have been flat. The order book, as you see, about INR 8,800 crores. A bulk of it, in fact, about INR 3,500 crores from about 300-plus orders, was added in the last two quarters of the last FY.
We are not an EPC construction company and will not be an EPC construction company. We are a consultancy company.
The worst seems to be over, especially in terms of execution coming in in this FY from the export orders also. And we had said that we aim at an overall, on an annual basis, an EBITDA margin of about 20-odd% and PAT margin of about 15-odd%.
This year was and will be the toughest year for us, as we had said at the beginning of the FY. It's a year of consolidation. We are trying to increase and improve the execution in Q3, Q4 to come as close as possible on an FY basis to the previous FY.
The worst in export is in terms of the number that we have now, about INR 1,300-odd crores of order book... these will start generating in the coming FY. The strike rate of getting export orders is not only one order, which was in Q4, which was the first order after a gap of about three, four, four years.
The current levels of EBITDA of about 20-odd% and PAT margins of about 15-odd%, that is the realistic levels of margin which we see a visibility, which is what we'll aim for.
We are very clear. We are not a construction company, we are purely a Consultancy company. And the turnkey order book that you also see, it is because it's a method of accounting. Our scope of work and everything remains same of a consultant.
With this export revenue now kicking in and building up. And as I said, consultancy showing a steady growth of 10%+. As also, the new order book in turnkey will start generating revenue definitely by end of the FY. We should be definitely, at minimum, be able to touch the levels of last year, top and bottom line. But we are definitely aspiring to grow above that, both in top and bottom lines.
I foresee a bump in the Turnkey revenue beginning from Q4/Q1. More than 2/3 of the Turnkey order book of about INR 4,300 crore is about 8-10 months old. And considering a lifespan of about 3-4 years, the initial designs, etc., approvals, and at the site level, including fixing of the executing agency, the revenue booking normally we have seen starts by the end of the first year.
Q3 YOY has a dip of about 15%-16%, both in top line and the bottom line. If you see sequentially, there has been an uptake in all the parameters, whether it is the top line, whether it is the EBITDA, the PAT, and in fact, both the EBITDA margins and PAT margins also have been about 1% growth.
We are aiming, as I said, for the coming FY, growth of at least about 20% on the top line vis-à-vis the FY 2024-25. Margins, we are aiming to aspire to maintain at the current levels of about 20-odd% on a console basis EBITDA margins and about 15%-16% PAT margins.
The 20-odd% margins which have been traditionally there in the export stream, the margins will be much, much lesser. Each order would have a different margin. So on a blended basis, it would work out to lesser. But overall, by and large, it would be definitely much lesser than 20-odd%.
Our assessment is that we are very frankly on a roll. Our performance in Q3 is completely in line, in a steady and focused manner in all the points and the roadmap which we had identified.
FY 2027 is going to be a year of disruptive growth. We are poised now to extract the maximum from these orders, and that's why Q4, Q1 onwards, even more, well, Q2, Q3 has been higher than Q2 in all parameters.
In terms of export stream of revenue... the margins are tighter than the margins of historical margins of export. And the levels that you see now are as the last two quarters... in this range, it will settle down on a quarterly or a half yearly basis.
It's not really realistic to take one quarter to be an indicator. But yes, definitely it'll be above fifteen [PAT margin] and above twenty [EBITDA margin] on an average six monthly or an annual basis.
The operational efficiency and the focused approach in Q4 helped us achieve, on an overall, at the end of the FY, dip in revenue of 8% and PAT dip in 14%.
We are a pure consultancy company. What you see as 4,200 crores as a turnkey in the order book, that's not really a construction... Our work, our content, our scope of work is exactly the same.
The erstwhile margins which have been there three to four years back are not possible to be achieved, and that was what makes us feel that we will be in the range of about 20% in EBITDA and about 15% to 16% in PAT margins.