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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Ahluwalia Contracts Q3 FY '23 Results Conference Call hosted by Anand Rathi Shares and Stock Brokers. Please note that a copy of disclosure is available on the Investors section of website as well as the stock exchange.
Please do note that anything said on this call, which reflects outlook towards future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. [Operator Instructions]
I now hand the conference over to Mr. Prem Khurana from Anand Rathi Shares and Stock Brokers. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen. On behalf of Anand Rathi Share and Stock Brokers, I welcome you all to Ahluwalia Contracts Q3 FY '23 and 9-month FY '23 post results con call. To discuss the current state of affairs and the way forward, we have from the management with us Mr. Shobhit Uppal, Deputy Managing Director; Mr. Vikas Ahluwalia, Whole Time Director; Mr. Satbeer Singh, Chief Financial Officer.
We will begin this call with opening remarks from the management, and then we'll follow it up with the interactive Q&A session.
Over to you, sir.
Yes. Welcome, everybody. Satbeer, can you make the opening remarks?
Yes, yes. Ahluwalia Contracts announced financial years of our quarter 3 financial '23. During the year quarter 3 financial '23, the company achieved turnover of INR 743.25 crores and PAT of INR 45.01 crores in comparable to turnover of INR 683.50 crores and PAT of INR 42.33 crores in quarter 3 financial year '22. EPS of the company for quarter 3 financial '23 is INR 6.72 compared to INR 6.32 in corresponding last quarter. During quarter 3 financial '23, company's EBITDA margin is 12.53% as compared to 10.989% and PAT margin, 6.06%, as compared to 6.919% in the corresponding period. During the 9-month financial year '23, the company achieved turnover INR 1,975.34 crores and PAT of INR 121.95 crores in comparison to turnover of INR [ 1,951.2 ] crores and PAT of INR 112.90 crores during the 9 months ended financial year '22. EPS of the company for 9 months financial year '23 is INR 18.20 compared to [ INR 15.185 ] in 9 months ended financial year '22.
During 9 months financial '23, the company's EBITDA margin is 10.86% as compared to 10.75%. And PAT margin is 6.17% as compared to [ 5.76% ] in the corresponding period.
Net order book of the company is INR 8,113.14 crores [indiscernible] 24 to 30 months. Total order improved during current year [indiscernible] is INR [ 4,017.63 ] crores and [indiscernible] one project amounting to INR [ 663 ] crores.
And besides that, general information, this is -- our working capital days is [ 63 ] days. And cash position is INR 297.68 crores [indiscernible] INR [ 158.83 ] crores. Retention money is INR 193.27 crores. [indiscernible] advance INR 283.96 crore. [indiscernible] revenue, INR [ 415.86 ] crores. Inventory, INR 231.21 crores. [indiscernible] INR [ 456.76 ] crores, and retention money total INR 193.27 crores [indiscernible] INR [ 662.76 ] crores. Interest bearing [indiscernible] is 41%. [indiscernible] is [ 22% ]. And regarding order book, this [indiscernible] commercial, 6.73%; infrastructure, 11.75%; institutional, 39.82%; residential, 11.56%; hospital, [ 29.35% ]; hotel, 0.79%.
Regarding [indiscernible], government, 82.46%; private, 17.54%. And the [indiscernible] 41.98%; north, [ 35.82% ]; west, 11.46%; south, 5.30%; and overseas, 5.44%.
And now you may proceed, please.
We are ready to take questions.
[Operator Instructions] The first question is from the line of Mr. Mohit Kumar from DAM Capital.
Congratulations on a very good set of order inflow, especially for the 9 months. My first question is on the revenue guidance. I think we were expecting some incremental Q-o-Q substantial jump, which hasn't happened in this quarter. Can we expect the Q4 to be slightly better? And are you still holding on to the margin of revenue guidance or you're revising it?
So yes, we are holding on to a revenue guidance of 10% to 15% year-on-year. If you see, we have jumped from last quarter, we have jumped more than 20%. And traditionally, the fourth quarter always -- run rate is the highest. So yes, we think we will cross INR 3,000 crores of the revenue in this entire financial year.
And margin guidance of 10%, is that number right, sir?
Yes.
Second question on the order inflow of -- we had a very good fiscal year to 9 months. How do you see Q4? And [indiscernible] the large opportunities, which you would like to highlight?
The pipeline is good, but we are being conservative going forward. I think there is there, competitive intensity continues to be high. So since we already have a good order book appetite, we are not that hungry. So -- but still, we are bidding. There are a few marquee private sector clients for whom we've submitted bids. Over the next couple of months, the focus is going to be more on private sector clients.
And based on the current order book, sir, how do you see revenue for FY '24?
So I did say that there will be last time around that we would get 15% -- target of 15% growth in FY '24.
The next question is from the line of Mr. Shravan Shah.
Congratulations for strong order inflow for this year. Sir, just wanted to clarify, you said for this year, we are looking at more than INR 3,000 crore revenues. So that comes -- close to about [ 12-odd ] percent kind of a growth. So just trying to understand, sir, to achieve that, we need at least INR 1,000 crore plus kind of a revenue in fourth quarter. So are we confident...
Yes, yes, that's what our target is. If you see, traditionally, fourth quarter [indiscernible] increase. We've done about INR 750 crores in Q3. So with a 20% jump -- between Q3 and Q2, there was a 20% jump. And we feel we can get that 20% [ in Q4 ].
Okay. Okay. That's great. Secondly, just in terms of the EBITDA margin, I think you last time mentioned at 12%, including other income, and just kind of answer to the previous participant, you said 10%. So just wanted to clarify because until now in terms of -- including other income, it is 10.9%. So just trying to...
It's about 11%. It's about 11% where it stands as of now. So I am giving you guidance that it will be around that.
Okay, 11%. So even for the [indiscernible], will it remain at 11%? Or will it...
No, it should go up. It should go up.
So closer to 12% that outflow that we are looking...
Yes, yes.
Okay. Just to clarify on the INR [ 653 ] crores L1. So is it that [ Tata Memorial ] still L1 or this is a separate order?
This is only Tata Memorial, which is the same.
Okay. Previously, I think it was INR 710. So you mentioned [ INR 653 ]. So I just wanted to clarify. And any update in terms of when it will be getting converted into orders?
We feel that maybe it may happen in this financial year -- towards the end of the financial year, end of March. .
Okay. And in terms of the bid pipeline, what is it? And how much is the private and in terms of the central and state government? And do we see any further order inflow in 1.5 months?
Yes, there should be maybe around INR 400 crores to INR 500 crores. My answer to Mohit's question. I did mention that we are now a little more focused on the private sector. So because we want to hedge our [indiscernible] as far as [indiscernible] are concerned. .
Okay. So then the bid pipeline right now is how much and how much is out of that is private?
It's about INR 3,000 crores, and about 40% is private.
Okay, okay. 40% is private. And in terms of the CapEx, how much we have done for 9 months? And what is left? And because last time, you guys are saying close to INR 50 crores, INR 60 crores this year and next year. So just wanted to reach [indiscernible].
Yes. So [indiscernible], this year is on a CapEx of about INR 80 crores because we have -- because of the sudden jump in the order book and a lot of new projects starting in new geographies like Bangalore, Hyderabad [indiscernible] and also Maharashtra, we have exceeded our CapEx target. That is to be expected because of these new projects. So it's about INR 80 crores. And in the balance in the last quarter, it should be about INR 8 crores.
Okay. And next year, will it come down to...
It will come down. It will come down. .
Okay, okay. Satbeer, sir, if you can repeat how all the numbers -- actually, it was -- I was not able to write it up in terms of order book and the balance sheet numbers. So if you -- slowly, if you can speak up.
Yes, please. This is -- working capital days is [ 63 ] days. And cash and cash equivalent is INR [ 297.65 ] crores; bank position is INR [ 168.83 ] crores; retention money, INR [ 193.27 ] crores; [indiscernible] advance, INR [ 283.96 ] crores; unbilled revenue, INR [ 463.86 ] crores; inventory, INR [ 231.21 ] crores; and debt is INR [ 466.76 ] crores; interest-bearing [indiscernible] advance, 41%; trade [indiscernible], INR [ 662.76 ] crores; [indiscernible] contract, 20% [indiscernible]. And besides that, you want order book also?
Yes, sir.
[indiscernible] commercial, INR 6.73 crores, 73%; [indiscernible], 11.75%; institutional, 39.82%; residential, 11.56%; hospital, 29.35%; hotel 0.79%; and [indiscernible] government, 82.46%; private, 17.54%. Region-wise, eastern region, 41.98%; north region, 35.82%; west, [ 11.46% ], south, 5.30%; and overseas, [ 5.44%. ]
[Operator Instructions] The next question is from the line of Mr. Parvez Qazi from Nuvama Group.
So a couple of questions from my side. First, what has been the payments from the trade government? Are we seeing some challenges, et cetera, there or they continue to be regular?
And second, on the bid pipeline, which are the segments that we are targeting? You mentioned that we are maybe looking at more private sector orders going ahead. So [indiscernible] in the institutional segment? Or are we open to taking orders even from private residential side?
So we bid pipeline out of that. As I said, we focused on the private sector. Private sector, we bid for -- a few hospital projects, have been and are bidding for a few hospital projects and some commercial projects. As far as the residential [indiscernible] is concerned, we have slowly started looking at proven -- at residential developers with proven track record. We are doing our due diligence, and we are not averse to taking up some jobs, but limited in number. What was your first question? I think I answered the second and the third one.
Sir, about the payment from the state government.
Yes. Sorry. So yes, situation has improved. In this quarter, Bihar -- I'll start with Bihar. There is a substantial improvement. The financial closure for the [indiscernible] project has happened, and the concerned department has got the first tranche of [indiscernible], and we will be getting live soon. As far as the 2 hospitals that we are doing, Nalanda, our preliminary inauguration was done by the Chief Minister with an eye on completing the entire project by May, June. And we have got about INR 100 crores of subpayment last month in that project.
Similarly, the Chapra project, because that is the Chief Minister constituency, [indiscernible] funds will start flowing in that project also. So there's a substantial improvement in [indiscernible].
As far as [indiscernible] is concerned, we have completed -- we were doing 2 projects -- 3 projects in the state government. The 2 projects are over. Milan Mela, where most of our payments have come in. As far as the auditorium is concerned, [indiscernible] are being certified. Our final bill is under check. That project is also complete. It's slated for inauguration in March. One project -- housing project for [indiscernible], that project is going on, and payment does not seem to be [indiscernible]. So that is as far as payments from state governments are concerned. Another, we've made [indiscernible]. We are doing 3 projects to the state there. There, we have no cost for complain.
And apart from this, sir, you called upon the project in [indiscernible] would also be great if you could touch upon some of our other major projects like the [indiscernible] and other -- some of the hospital projects that we are doing.
Yes. I should have mentioned [indiscernible] also. We are doing 2 hospitals to the state government there. And when the elections were happening, I mentioned in my last call, there were cash-through issues, but funds have started flowing there also. The [indiscernible] project in [indiscernible], we are targeting in August '23 completion. And the Chamba, we are targeting a completion by October, November. As far as the [indiscernible] Hospital is concerned, we are also targeting a completion by the end of this year. The pace on that project is picked up. That is the central government project, so funds have not been an issue there until now.
As far as [ Mondale ] is concerned, work there is also progressing. And if you've gone through the new order inflow detail, there is a INR 60 or INR 70-odd crore of structural steel work that has been added, obviously, through a tender. So that project is proceeding fine now.
Great. Last question for Satbeer. Sir, do we have any loans or borrowing [indiscernible]?
No, 0.
The next question is from the line of Mr. Parikshit Kandpal from HDFC Securities.
Sir, my question is on margins. Sir, it's all almost 14 quarters now where we have not hit the double-digit mark in terms of EBITDA margin. So even last quarter, we said that second half, we are looking to improve our margins in the range of 12% to 13%. And now again, you've downgraded it to 11%. Third quarter has been weaker than first and second quarter in terms of EBITDA margin. So how do we read this EBITDA margin trajectory? Because are we trying to reiterate that things will be better in the coming quarters. But again, we actually are not able to improve on the margin. Now the commodity prices have actually reduced. Even then, we are not getting that margin benefit.
First of all, let me correct you. We have double-digit EBITDA margin, right? .
This quarter, 9.6%, I think, the margin.
It's about -- other income stands at 10.9%.
I think I'm excluding other income.
Okay. So if you exclude the other income, then yes, it's at about 10%, yes. And there have been factors. Commodity prices, you mentioned commodity prices [indiscernible]. Again, the steel prices have gone up again. And so there is -- so we have -- as I said, by the end of the year, [indiscernible] guidance of about 11%. And if you do a peer comparison, I think we are much above our peers. I have a chart in front of me. If you look at the profit ratios or factory shows, we are much better off, right?
[indiscernible] new orders, which is coming in now. So I'm assuming that they are taking up -- assuming the elevated...
They are design build orders. It's now that the first 3 to 4 months [indiscernible] designing. It's now -- and the infrastructure costs and everything is there. It's only now the orders that we've got in the last 2 quarters, it would be -- we have broken ground on some, but on a large number of those projects, we'll be breaking around now.
In terms of competitive intensities, and in fact, I know building segment, there are a handful of contractors who execute more than INR 300 crores or INR 400 crores project, single projects. I would say there'll be a handful of contractors, maybe 5 to 6 -- or maybe 5 to 10 maximum. While intensity still remains so high -- so we know there are a few contractors who are largely positioned towards Southern India, large order books, and there are a few in Western -- somewhere in north. So -- but still, we see that margin is much lower versus other [indiscernible] segments like growth and all where we see 13%, 14% margin and where there a lot of many large number of players present in those segments, why in building segment we continue to see most of the developers -- most of the players reporting only highly double-digit or high single-digit kind of margin? So if you can give some color on competitive intensity because what we understand that demand continues to be very robust. Private real estate is doing so strong, seems to be on an up cycle. All the factors seems to be falling in place, especially on the demand side.
As I said last time, except there is bound to be consolidation in the medium term here because of the fact that the competitive intensity is high, that is why we are being very, very conservative and careful.
As far as the road construction listing is concerned, EBITDA margins will be higher, but you see a lot of those players having cash flow issues, and they are now trying to move to the building segment [indiscernible] of this world or other infra players like [indiscernible]. You see a lot of them [indiscernible] and even picking up private sector jobs in the building segment. So while I don't know -- I'm not intimately involved with [indiscernible] sector, but this is a pointer that obviously, things are not hunky-dory there.
As far as we are concerned, to answer your question about single-digit margins or lower margins, I think to alleviate cash flow problems, people are bidding indiscriminately and trying to pick up more jobs to get at mobilization advances. We don't do that. In fact, if you heard the figure, that's [indiscernible]. But we have actually -- the mobilization advance is -- interest-bearing is only 41%. We have only aware interest bearing advance [ 40% ] of our jobs. Slowly but surely, we're building [indiscernible] to ensure that we don't -- in the next 3 years or so, our target is to absolutely stop availing the mobilization -- address mobilization advances from various clients. So that is how we are consolidating. And other things that we are doing is, today, we are present in 16 states. That's a question, which you asked me in the past also, why are we not going towards the southern part of the country. We are there now. We move to [indiscernible] also. So that we go into areas where the competitive intensity is less.
The projects -- 3 projects that we've started in [indiscernible], there, we feel our margins are going to be higher because proven and right construction companies, there are lesser. Similarly, we started -- we piggybacked on one of our existing clients, Amity. We started 2 campuses for them in southern parts of the country, one in Hyderabad, one in Bangalore. So that is why I say that in the coming quarters, our margins -- EBITDA margins especially is going to go up.
Okay. Sure, sir. Hope that we come back to our older margins of 12%, 13% range.
The next question is from the line of Mr. Sandip Sabharwal from asksandipsabarwal.com.
[indiscernible] the good part, obviously, about Ahluwalia [indiscernible] construction companies is your debt profile, you don't have any debt, whereas other companies are loaded on to debt. [indiscernible] from what the last participant asked -- because this was a specific question. I actually asked you in the last conference call, on the quarter 3 margins, you said that from quarter 3 onwards, it will be 12%.
So now the only question I want to ask is that when you say -- talk about margins, how do you -- is it suggesting it based on the projects you are doing -- you estimate that? Because in 3 months from what you said you will achieve, the actual margins are more than 1% lesser.
Yes. So Mr. Sabharwal, it's not an estimate per se, so there is a certain degree of guessing [indiscernible], but there are projections that are made on any project quarter-on-quarter, and they are reviewed. But as you know, if you're tracking this industry closely, as you know, there are a number of factors, which can be planned for. I'll give you an example.
In the last quarter, there was a strike -- raw material strike in Bangalore, which lasted for almost a month, right? So, a, not only did it impact our revenue, but it also impacted the pricing. When the crusher restarted again, the transporters hiked their prices by 20%, one.
Secondly, you must be aware of when the work starts during the -- stopped in Delhi or [ NCR ] by the entity, now while that happens every year, this year, it happened in [indiscernible], right? It was shut down for 7 days, and it started, shut down for 15 days, and it started, shut down for 7 days. So factors such as this can't really be planned. These do impact progress -- do impact margins. And that is why -- and it's not only that the impact Ahluwalia. They impact construction companies across the board.
Right. So I think all your points are very well taken. And in fact, it took in the initial commentary also -- tried to explain these issues. Then I think books would go away as such. But I think...
Point taken.
It's a very good company, and I hope you do well in the future.
Thank you. Thank you, Mr. Sabharwal, and your point is well taken. We will -- based on our projections or guidance, when we start off the call, we will bring all of you up-to-date on where we've been found lacking or where we've achieved our guidance. Thank you. Thank you so much.
The next question is from the line of Ms. Deepika from Philip Capital.
Congratulations on [indiscernible] performance and strong order inflow in this quarter. Sir, my first question is regarding the order book. Obviously, most of the new orders are, as you said, are designed and built. And the designing is going to take [ most ] 3 to 4 months. So what percentage of order book is executable in quarter [ 4 ]?
Sorry, Deepika, can you repeat that? You said what percentage of the order book is executable in quarter 4? Is that what you ask?
Yes. In terms of revenue. Because while the designing is going on, it will contribute in revenue and margins, right?
Yes, not much. The revenue is -- and margins are miniscule for designing, though we do get some payments when we submit our [indiscernible], but it's not a large amount. So as I said, a large part of this [indiscernible] order inflow happened in the last quarter, we should like to give you an example. We won the redevelopment at [indiscernible] railway station. So the designing has been happening for 2 months, 2.5 months. We should break ground in this quarter on that project.
Similarly, the Central University project in Baramsala and Dara in [indiscernible], that also design and environmental approval through, we should be breaking ground in the month of March there. So I think [ barring ] about INR 700 crores to INR 800 crores worth of project, where designing will happen in the last quarter, and breaking ground will happen in the first quarter of the next financial year. We are good to go on all the other jobs.
Sir, these new projects, again, on margins, at what margin -- at what margins have you taken these new projects?
So as I mentioned in response to one of the earlier questions, in some of the new states that we [indiscernible], say, Bangalore, where we are piggybacking on an existing client, and [indiscernible], the margins should be higher. But in other states or in Delhi, the margins are roughly on the lines that we're declaring now.
Very well, sir. Now most of the fixed price contracts, shall we getting over in the coming quarters? And the new projects will start. So where do we see margins for FY '24, and that's excluding other income?
So I did mention about 12%.
12%. Sorry, sir. You said 12%, right?
EBITDA, yes. Yes.
Okay. Just lastly, the status on NIIT factor and any [indiscernible] data center project [indiscernible]
NIIT [indiscernible], yes, as I said, this is one of the projects, which we won in the last quarter. Designing -- design has been approved. We've broken ground. In fact, we've started to work on the structural package on -- there are total about 32 buildings. We have started work on 11 buildings. And the other one -- which was the other projects you asked about?
[indiscernible] data center.
[indiscernible] data center is happening. And there, this is not a design-built project. This is just a [indiscernible] project with some finishing items. This has been going on. And total value of our job here is about INR 210-odd crores, and we have done a billing of about INR [ 60 ] crores here -- INR 50 crores, INR 55 crores here. Yes.
We shall complete this project by this year-end?
Yes. The target is this year, and it's proceeding fine. There is no -- We've seen no -- this thing from [ Adani ] side to slow down the project. All payments are coming in.
[Operator Instructions] The next question is from the line of Mr. Vishal Periwal from IDBI Capital.
One question is on management profile and the work allocation between you, sir, I mean, Mr. Shobit and Mr. Vikas. So how exactly the work is divided between you, sir?
So the management functions are handled jointly in terms of reviewing of the administrative functions and functions such as supply chain control and audits. All the digitization and such functions are controlled by Mr. Vikas Ahluwalia. As far as regional allocation or controls are concerned, Mr. Vikas Ahluwalia is handling Maharashtra. He's handling [indiscernible]. And he's handling all railway infrastructure projects. We have won one, and we are bidding for a few others. As far as south is concerned, as far as east is concerned and as far as [ NCR ] is concerned, that I intently.
Okay. Sure, sir. And next is on -- I think there was initial commentary. It was mentioned fixed price contractor are 20% of the order book. Was that right now?
Satbeer, can you comment on that?
I say 20% profit price [indiscernible]. 20%, that is coming out around [indiscernible].
Okay. And sir, will you have this number for -- I mean like in maybe 2, 3 quarters -- just trying to understand like how exactly the new order win has been if the number is available.
[indiscernible] At the end of last quarter also, [indiscernible] 20%. And quarter 1, this is [indiscernible].
Let me also -- and we will -- if you reach out to Satbeer separately, we'd like to clarify this further. Now fixed price contracts in a government or a public sector order means, like, say, NIIT partner, which has just started, right? This is a fixed price contract where there is no escalation. So typically, fixed price in a government order means that there is 0 escalation. But in a private sector, fixed price -- like, for instance, we're doing a project with [indiscernible] City in Delhi. It's a fixed price contract. But for key materials, there are base prices. Do you understand? So for cement and steel, where the prices are very volatile, either like in [indiscernible] case, steel is being supplied by them free of cost, right? So [indiscernible] the inflation. Cement, there is a base price. So any upward or downward movement of pricing [ is a pass-through ]. So this happens typically with a lot of private clients. Say, for Amity, for instance, it's not only these 2 materials, but a host of other materials, such as tiles, marble, where the escalation in the pass-through.
Okay. Sure, sir. Maybe I'll connect with Mr. Singh. But when we say 20% of the order book, so this will have both private and public.
Yes, it would have both. That's why I clarified.
Okay, okay. Right, sir. And this is -- one more clarification, sorry, for harping on the same thing. I think the EBITDA margin is bearing in the range of 9.5, 10. we are saying it will be the same number, 9.5, 10, for the full next year, 12%.
Yes. And we are aiming or hoping to close this year at about 11%.
The next question is from the line of [indiscernible] from HDFC Securities Limited.
[indiscernible] A little better now?
No, sir. It's still the same.
Hello.
Yes, sir. You can go ahead now.
Sir, just wanted a few -- like there was [indiscernible] some numbers. Just wanted to know what is the order book and order in growth.
The order book is INR 8,113 crores, and the order inflow is INR 4,017 crores.
Sir, can you repeat the order inflow?
INR 4,017 crores for 9 months ended.
What is the commodity guidance for the fourth quarter for order inflow?
About INR 500 crores.
Okay, INR 500 crores.
Yes.
[Operator Instructions] The next question is from the line of Mr. Shravan Shah from Dolat Capital.
Shobhit, sir, just wanted to clarify, sir, what you are mentioning in terms of the EBITDA margin. I think you need to mention that it is including the other income.
Yes, it is.
Yes, because the previous participant who has asked, they were looking it without the other income because that's the number normally as the analysts will look at without other income. So that's what even the -- even I think the Parikshit was also mentioning the same number, 9.6%. And you said that we, this quarter, had double-digit. So whatever that we are paying at 12% for next year for '24, that is including the other income.
Yes, it is. Satbeer, we need to clarify this. And whenever any investor reaches out to us, we should be clear. We should mention those actually. [indiscernible] Correct. Thank you. Thank you.
Or maybe from the next quarter, you can talk about the margin without the other income and other income -- whatever if you want to separately want to mention you can mention.
I think we should because [indiscernible]
Also, our other income is also from our operations or related to operations, let me put it back. We don't have any other business. But anyway, I think your point is well taken, Parikshit. We will mention both separately. We will clarify this.
The next question is from the line of an [indiscernible] Securities Limited.
Sir, my question pertains to [indiscernible] project that transfer. So how is [indiscernible] shaping [indiscernible]?
Vikas, you want to answer that?
Kota. Sorry. [indiscernible] I heard something [indiscernible]. Can you just repeat? I could not hear you properly.
Yes. This is about Kota project, how that has been shaping up currently? .
Kota is now -- we have a nearly [ 85% ] occupancy, and the rentals are now coming better. In fact, both covered the sales at the stores have been much better. And it's picking up. I mean we -- for example, in December, January, we brought the IS [indiscernible] at around 3, 3.5 lakh people. And even on 26th January, it was something similar, and the sales have been good.
In fact, we are now -- operationally, we have property removed the [indiscernible]. We are operationally profit. What do you -- if you -- it's operationally profit. [indiscernible] that word. Depreciation, yes, if you remove the depreciation from there, then yes, there is an operating profit. And the mall is not sustaining now, in fact.
Okay. Okay. And one question, Satbeer, [indiscernible] presentation last time also, I requested for the earnings presentation. This time also, we have not got the earning presentation on your side.
We have uploaded already. You can see that.
The next question is from the line of Ashish Shah from Centrum Broking Limited.
Sir, my question is that while we have given some indication of the margins, in terms of the capital intensity of our business -- so we have a fairly light capital business. Our asset gross are probably exceeding 6x. And so even at a margin of where we are, we do like 16% to 17% ROE. The question is that as we get into newer segments or newer states, is this a character of the business that will maintain or we'll tend to invest more in CapEx and probably become a little more, I think, heavy than what we have been in the past? [Technical Difficulty] Yes. Please. I'm sorry. The call dropped, so I have to join in again.
Right. Please go ahead, Ashish.
So sir, my question was that while you have indicated the level of margins to expect at the EBITDA level, but also on the capital intensity of the business, so we have a fairly high asset term. And despite the margin [indiscernible] of 10%, we still manage probably 16%, 17% ROE thereabouts. So do we -- as we diversify, as we get into newer states, as we get into newer segments, do we maintain this kind of capital intensity, a very light capital intensity business? Or incrementally, we'll have to invest more in terms of CapEx, more in terms of working capital as well? So even though our margins may go up, but the capital intensity in the business will actually increase. I mean how to look at it from a 2- to 3-year horizon?
So yes, I did mention that the last quarter [indiscernible] we've invested close to about INR 40-odd crores because we forayed into newer geographical locations. And -- but I think this will slow down now. We will -- in the last quarter, it will be about -- in this Q4 that is I'm talking about [indiscernible] INR 8 crores. And I think our geographical footprint will not increase as much.
Now going forward, we are already in [ 16 ] states. So you know we want to tread cautiously. So in the following year, to be specific, in FY '24, the CapEx will be lower than what we've done this year or what we're going to do this year.
[Operator Instructions] The next question is from the line of Mr. Rajat Setiya from ithought PMS.
Sir, with regards to the Kota project, any thoughts about selling that project at whatever that you need and deploy at the same capital in our own business where we can generate return on capital, so 15%, 20%.
So we are not investing in Kota anymore. Again, like I said, depreciation is something that you consider, but now the mall is a self-sufficient. In fact, I would also like to state that we are probably the first mall in Kota where we are running all the common area electricity on solar. So our electricity bill, which is one of the highest consumptions of capital or bill or whatever it is, is coming down significantly. So that is also adding to the margin profit.
Sir, I mean, economics is certainly improving, and you are doing your [indiscernible] there, but we are -- at the end of day, we are not in the business of running the mall. So how do you look at that aspect? I mean it's an asset in our books, which is completely noncore from the point of view.
Yes. That part, I agree. So sometimes back, we tried to -- we did try to operate off our balance sheet, but it could not happen. So probably, when the revenues start getting better, if there is [indiscernible] interest from somebody, then we will look at the transaction.
Sure. Understood. And the second question is about the investment property are worth around INR 110 crore. I think some of that would be Kota project as well, right?
Yes, yes. [indiscernible] in Kota.
It's only Kota?
Yes.
[Operator Instructions] Now we go to the last question from the line of Mr. Shravan Shah from Dolat Capital.
Satbeer, sir, wanted to know any progress in terms of the land monetization of 4.7 acres that we have in Kolkata. So we were looking at previously either force priority was to sell or then last was to develop. So any progress, anything we want to set?
At the moment, it's status quo. But once we get clearances, that something that moves at its own pace in this state of [indiscernible]. We will, in all probabilities, develop it because the upside is going to be better that way. It's very strategically located now. You have a metro station. You have a mall, and you have a couple of large residential complexes along side. So at the moment, it's status quo.
But now we will look to develop ourselves and not to sell the land. So just trying to understand, so whenever...
So we did not [indiscernible] policy. We are -- we have started looking at how to get various approvals. But our initial -- this thing -- research shows that the margins are going to be much higher. Our returns are going to be much higher if we develop it ourselves. But it's not from the [indiscernible]. The land is there. [indiscernible]. Okay.
Yes. True. But if -- even if -- whenever we form up our decision to develop, then in terms of what broad -- in terms of the equity that we are looking at to invest...
We've not talked about it. There can be various models. As and when we firm up our cost purchases, when we can tie up to the developers, outright sale as we stand now because we don't really need those funds, I don't see outright sale attractive to us.
Okay. No, no. My concern was if we will go into that asset heavy model in terms of going from the pure construction to the developer also model, will it...
No, no. That is -- that we don't -- it's not that we will grow and become a developer and start developing projects. Since this is a land, which has appreciated significantly in value, we may, as a one-off, develop it either on our own or in partnerships with local development.
Thank you. That was the last question. I now hand the conference over to Mr. Prem Khurana for the closing comments.
Yes. Thank you. Thank you very much for giving us an opportunity to host you all. Shobhit, any closing remarks that you would like to make?
No, no. Thank you so much, everybody, for joining in and look forward to connecting with all of you again after the last quarter of this financial year. Thank you. Thank you so much.
Thank you. Thanks a lot. Have a great day.
Thank you very much. On behalf of Anand Rathi Share and Stock Brokers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.