Earnings Call Transcript - XNSE:SOFTTECH 2026-11-13

Operator

Good morning, ladies and gentlemen. I'm Akash, moderator for the conference call. Welcome to SoftTech Engineers Limited Q2 and H1FY27 earnings conference call. As a reminder, all participants will be in 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 a touch-tone telephone. Please note, this conference is being recorded. I would now like to hand over the floor to Ms. Priya Sin from Go India Advices. Thank you and over to you.

Priya Sindh, Head of Investor Relations

Thank you, Akash. Good morning, everyone. It's my pleasure to welcome you on behalf of SoftTech Engineers Limited. Thank you for joining us today for the Q2 and H1FI27 earnings call of SoftTech Engineers Limited. We have on the call Mr. Vijay Gupta, Founder, Chairman, and CEO, and Mr. Deepak Bang, Chief Financial Officer. Please note that today's discussion may include certain forward-looking statements and must, therefore, be viewed in conjunction with the risks that the company faces. I would now like to hand it over to Vijay sir for opening remarks. Thank you, and over to you, sir.

Vijay Gupta, Chairman

Thank you, Priya. Thank you, Akash. And good morning, everyone, ladies and gentlemen, and a warm welcome to SoftTech Engineers Q2 and H1 FY27 earning conference call. Thank you for taking the time to join us today. As we enter the next phase of our growth journey, I would like to take you and share our progress, the opportunities we have for significant growth in the subsequent years, which we are pursuing very hard, and how we see soft tech evolving over the coming years is what I would like to take you forward. Over the past three decades of journey in soft tech, we have built a very strong foundation in technology solutions, which are addressing the construction industry, the urban development departments, and the entire infrastructure ecosystem of the country. And we are proud to say that we have delivered path-breaking technologies in this space for the last three decades. Today, I would like to even highlight again that our permitting solutions are deployed in more than 1,500-plus cities across the country, It's created over 18 states, and which is helping the governments. Day and night, in terms of getting the approvals faster, because approvals, the building approvals, especially, are the backbone of the growth of the country, and it improves. Transparency, it improves accountability of the government in terms of serving the applications and, of course, the regulatory processes which are to be followed by the country as a whole for ease of doing business in the government environment. What differentiates us is not just the technology we build around the product. But we bring a very strong, deep domain knowledge, which actually is built over the three decades by our team. We very proudly say that we understand the regulatory compliance requirement very deeply. We have coded about 5000 plus building codes into our applications with AI at the core of it. We have very deep understanding and of implementation of this challenging area of building permit. And I would say that we have a huge amount of data. In fact, you would be very proud to see that about. 500,000, 5 lakhs of architects are on to our platform, and more than about 40,000-plus contractors are on to the platform, leveraging this application for the permits, and there are about 30 million, 3 billion square feet of permits which we have issued in the last about two decades in the country, This is one of the huge amount of data collected around with all the building ties into our system, and that is something which we have built over the time. We have a very strong customer base, which actually is accumulated over the years. Our relationship with institutions such as Mumbai Municipal Corporation, Maharashtra Industrial Development Corporation, Airport Authority of India, multiple development authorities, multiple infrastructure companies, and more recently today with Jawala Nehru Port Trust. It's actually reflecting the trust the customers put on our technology, and we are really proud to deliver this complex and mission-driven technology for the growth of the country as a whole. Building on this experience, we are now expanding our presence. Beyond what we say our core strength of building permission towards a broader and bigger digital infrastructure opportunities. Our focus is on leveraging our strength, our deep permitting understanding, our deep infrastructure management understanding into building a platform. This technology is with a very strong customer relations in which we have at the back of it for actually addressing the needs of cities as a whole and the addressing needs of force and infrastructure industry as a whole and of the industrial development authorities. I would like to say that we have very significant potential across these three connected areas. Interconnected because cities are connected to the infrastructures, the ports, the airports. The industrial development corporations are all connected to the city's infrastructure as well. So basically, what we are trying to do as a bigger solution is we are trying to automate and provide solutions around our CWIT as a platform for cities' infrastructure management, for cities' permitting solutions, and for cities' Safety management as a whole. This is what we call, we are going to call it Civic City. Then, similarly, based on the success of this 1500 cities relationship, based on the success of what we have been doing for permitting, we want to take forward to providing the solutions around digital clean as a technology for the cities. We want to bring these technologies visible through command control centers, and in fact, very recently, you all may be probably knowing about the growth. We have come out with a platform called TDR. For the people who don't know what TDR is, I would like to briefly tell you, TDR is something that the government gives as a certificate in lieu of the land procured. You know, the government acquires land for the infrastructure developments. And since the government may not be able to pay the market rate for acquiring a land, they give you a certificate which is issued for use for additional FSI by the builders and developers. This is what is TDR. So we have created a eTDR exchange platform, which is first of its kind in the country. And this has actually been made live just four months back, and we have been seeing this traction all across the country today. Mumbai, as we have implemented very, very successfully, and we are negotiating with multiple cities to take it forward. So these opportunities will be moving us. ...into digitizing the individual approval processes to integrated city level management, where we can help the governments... Developing the city all around, developing city by way of providing platforms which can very transparently be managed for, for example, TDR, for example, infrastructure management, and, for example, safety management of the people, besides permitting as our core area. Second area of focus which we want to do in the subsequent years is force and infrastructure. Our recent engagement with JNPA demonstrates that our technology capabilities can be extended beyond our urban governance, beyond our city management, and can be taken to critical infrastructures like port. You know, the country is looking at one port, one country, this approach, and we see a very high growth after having got... Success into JNPA, which is one of the biggest port of the country today. We see this opportunity to build across various major ports and also airports, the highways, the logistics like National Highway Logistics Management Limited, etc., where we have been already working, and we really see the potential of Offering digital pin solution for these infrastructure companies very deeply in the subsequent years. The third area where I see a potential of our technology taken to the bigger scale is industrial corridors and parks. You know, we have been working with Maharashtra Industrial Development Corporations for the last eight years. We have been providing other solutions for infrastructure management, for permitting solutions to MIDC, and we are also working for their entire smart governance platform. Now, through this platform, we want to grow by way of providing integrated digital solutions across the cities and industrial parts being built by such kind of industrial development corporations. And a connected ecosystem where all the members of this industrial development paths can actually facilitate by way of using our technology. So, this is something where we can see industrial corridors like Delhi-Mumbai Industrial Corridors, MITL, Maharashtra Industrial Development Corporations, and CBIC kind of organizations, which are actually state development corporations. And all of these opportunities are going to be a big-ticket opportunity for soft-tech growth, and we can see the potential of getting into that arena. By way of putting our success into independent products, working there very significantly. While these opportunities span across the customer segments, which are managing the entire city, the states, and so, they are built on our common technology platform, which is Civit as a solution. There, our integrated team can work to offer the solutions very seamlessly. These are mostly onto the digital team, onto IoT, AI, ML kind of platforms with digital, I would say, command control centers where data is extracted from different sources and monitored with the help of AI as a capability. So, we really are looking into this kind of independent capabilities for every engagement. Equally important aspect for our transition in our business is our quality of revenue. You must have envisaged that we have been continuously focusing towards like transition-based model instead of a one-time revenue-oriented, And we have been continuously improving upon number of. Percentage of the revenue, which is classified as either a SaaS revenue or recurring revenues from our customers, and that has been a successful. But besides that, we have actually been moving towards a platform-based approach very significantly. TDR is one of them. We have recently launched an AI-based permitting solution, what we call a SIGIT-3, which actually can be offered to our architects. We are already on our platform, and that platform can really bring revolutionary quality of revenues for soft tech is what we are leading towards, and this offers... Quality revenue, recurring revenue, of course, and a better visibility and improved cash conversion is what we see from this kind of change into our aspect of delivering our customers in a better way. Alongside our domestic expansions, we have actually seen a good amount of success in the... Last quarter, and I think this quarter and the next quarter is going to be even much better in terms of expansions internationally, and especially in Germany. We have invested... Significantly for aligning our products to the German market, for bringing in their datasets onto our platform, their building codes, their entire GIS maps onto our platform, and this is what we have done in the last few quarters, and we recognize that building a new market, of course, needs investments. But I think the right type of investment with the right customer relationship is something which can harness a huge potential which we look forward from our technology. Our approach is, therefore, we are very careful. We are definitely a major in terms of... We are emphasizing on establishing a sustainable business rather than moving very fast and converting them into something which may not really be sustainable. So, I agree we have taken some time in terms of showing the results of each, but I think we have now been almost on the verge of getting success towards that very significant way. During the first half of FY27, our major breakthrough has been towards JNPA, which is 92.95 crores orders from Jawala Nehru Urban Port Trust, and AI Power Digital Twin Solution is what we are going to offer to them, where the port's operations, which are Sea-side, rail-side, road-side are all going to be connected and visible for a significant increase into the operational efficiency of the ports. And for managing the force digitally while actually keeping control onto the physical access very deeply in an integrated, active, digital twin way. And this is going to be the first of its kind in the country after we launch it successfully. So this is something we are proud of in terms of this order. And this order is going to be a path-breaking success for bringing in our technology CIVIT as a platform onto this particular initiative. It's very important for us to get significant engagement, strategically important engagement with this kind of success, and we are very confident we will be able to address a wider range of such infrastructure opportunities in the country today with the help of this success being made. In addition, we have a very strong order book of about 300 odd crores, while our sales pipeline is also very strong based on this kind of initiatives, plus also our Civit City, Civit Port, and Civit. Uh, industry-based, bigger ticket accounts. Uh, we have about 625 crores kind of, uh, sales pipeline. We believe this will provide a signature and opportunity to build our business over the coming years. In a very scaled manner, and I'm pretty confident that this will be converted very successfully in the subsequent quarters. In fact, on the international fronts, we have actually been making good success, I said, and we would like to, we are working with one of the very good opportunities in Middle East. Which is, we are almost on the verge of, I would say, signing onto the contract, and we will be able to share this with you very soon. I can see that this is going to be a path-breaking opportunity for us in this market. And this will open up bigger doors, especially in Middle East, Saudi Arabia kind of markets. And also, since it will expand the horizon of AI for building permits in a bigger way, we look forward to this opportunity helping us in, besides Middle East, into Asia-Pacific countries, into African countries, into Germany. Of course, we are already getting into very soon and also into the US market. From the German point of view, again, I would like to say that we have expanded our business development activities by way of introducing some powerful sales director there, and we look forward to a growth overall in this. So, our priority is, of course, to build the bigger business now with a strong foundation which we have created in the last three decades. So establish them, expand into adjacent markets, and strengthen our position as technology partner for broader built environment and infrastructure ecosystems. That's something where we see our future. That's something where we see that your confidence in software will grow significantly. We remain disciplined. We remain committed to making a focus on education of our orders, focused on customer satisfaction, and we always work for mid-to-long-term growth ambitions. That is something which I would like to say, and this is where we are implementing our technology for the wellness of our country, our goods. Our cities, our company as a whole, and our people, our investors, all associated to us will also have a growth path, ambitions, around this technology which we have built. With that, I would like to hand over this call to our CFO, Mr. Deepak Bang, who will take you to the financial performance of Quadrant II. And H1 FY27. Over to you, Deepak, and thank you very much for listening to this call.

Deepak Bang, CFO

Thank you, Vijay, sir. And I will take you through the financial performance for the quarters and first half of FY27. Covering both our stand-alone and consolidated results, along with the key factors that have influenced our performance. So, let me begin with the stand-alone performance. For H1 FY27, the revenue from operations stood at Rs. 64.92 crores, registering a growth of 26.1% over the corresponding period last year. EBITDA increased by 37.9% to Rs.21.07 crores, while EBITDA margin improved to 32.5% from 29.7% in H1-FI26. Profit after tax grew 69.5% to Rs.5.55 crores. The growth in revenue was supported by the contribution from new verticals, including ETDR, along with continued tractions in our existing businesses. We are also seeing a positive shift in our revenue composition, with recurring revenue growing at a faster pace than the overall business. So, during H1FI27, recutting revenue increased 46.2% to Rs. 28.21 crore, compared with Rs. 19.29 crore in the corresponding period last year. Its contribution to total sale improved to 43.5% against 37.5% in the previous year. Our SaaS or transaction-based revenue also grew 32.7% to Rs.18 crore, reflecting increasing traction in our platform lead offerings. This improvement in the revenue mix is particularly encouraging as it supports better revenue visibility and provides a stronger foundation for scaling the business. Coming to profitability, the improvement in EBITDA margin was largely supported by the contribution from TDR-related business, which has also had a positive impact on EBITDA and FED. Employee costs remained broadly stable at 13.01 crore during the half. Other expenses increased to 19.92 crore during H1. Thank you very much. Due to higher technical fees incurred towards hiring professionals to deliver the projects and towards scaling our products. At the same time, finance costs declined to Rs. 1.89 crores from 2.16 crores, supported by better fund utilizations. These factors collectively contributed to the stronger growth in operating profitability and improvement in fact. On a quarterly basis, stand-alone revenue grew 27.2% to 32.70 crores. EBITDA increased 50.8% to Rs. 11.47 crores, with EBITDA margin expanding to 35.1% from 29.6% in Q2 FY26. Pat grew 120.8% to Rs.3.63 crores. The quarter reflects the continued benefits of our improving business mix and the contribution from ETDR-related activities or platform-based business model. Moving to the consolidated performance, revenue from operations from H-127 stood at 64.82 crore. Registering growth of 20.4% year-on-year, EBITDA grew 18.6% to 17.04 crore, while PAITS 2-day-Rupees 1.37 crore, marginally lower than 1.44 crores in the corresponding period last year. The consolidated performance was impacted by the development of Middle East order and investment of German market. This affected the revenue contribution during the period. On the cost front, employee expenses remained broadly stable at 15.44 crores compared with 15.53 crores in H-126. Other expenses increased to 21.43 crores, preliminary due to a standalone margin, due to standalone, of course, one of the reasons, Thank you. Our higher go-to market investments in Germany as we continue to build our presence in that market. Our consolidated EBITDA margins stood at 26.3% compared to 26.7% in the previous year. Finance costs, however, declined to 1.89 crore from 2.16 crore. At the quarterly level, Consolidate Revenue grew 17.6% to 31.53 crore, while EBITDA increased 14.4% to 7.99 crore. EBITDA margins stood at 25.3% compared to 26% in Q2 FY26. Pat for the quarter was 0.21 crore against 0.33 crore corresponding period last year. The lower PAT despite growth in EBITDA was preliminary influenced by higher depreciation and amortization, which increased to 6.85 crore from 5.65 crore in Q2 to FY26, along with lower other income. Consequently, the impact was more pronounced at the PVT and PAT level. However, There are investments. I can say the higher amortization or depreciation is nothing but the investments which we are making in our product for the growth path for the futuristic year. Going forward, we will see the impact of these amortization and depreciation. I would also like to highlight the progress in our revenue mix. Our recurring revenue contribution continues to improve. And the growth in transaction-based offerings reflects the increasing adoption of our platforms. We believe this transition towards a higher recurring revenue base will be important in improving the predictability and quality of our earnings over time. To summarize, F-127 has been a period of healthy growth in our standalone business, supported by new verticals, improving recurring revenue. And better operating profitability. At the consolidated level, with the Middle East order deferment and investments in Germany market have influenced the reported numbers. We continue to invest in building capabilities and expanding our addressable market. With our existing order book encouraging sales pipeline. And increasing focus on platform lead solutions, we remain focused on strengthening our business and improving the quality of our financial performance. With this, I will hand the call back to Akash for the question and answer session. Over to you, Akash.

Operator

Thank you. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and 1 on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and 1 again. Ladies and gentlemen, if you have a question, please press star and 1 on your telephone keypad. The first question comes from the line of Mr. Harshal Sharma from AS Advisors. Please go ahead.

Harshal Sharma, Analyst — AS Advisors

Hello. Hi, sir. I'm audible.

Vijay Gupta, Chairman

Yes. Yes, please. Yes, Harshal.

Harshal Sharma, Analyst — AS Advisors

So, my first question was, standalone revenue grew 27.2% in Q2 and 26% in H1, while consolidated revenue grew 17.6% and 20.4%. So, what explains the gap and how much of this is due to the deferred MEA order?

Deepak Bang, CFO

Yeah. So, yeah, maybe I can just brief and then maybe details can be given better. So, basically, this is because there are two regions for that. Like, one is, of course, Standalone has done pretty good in the quarters, and there's two quarters of this year, and especially Q2 as well. But consolidated-wise, one thing is we have been continuously investing on the developments of our products for the German market, and that is where there's some impact is there. And secondly, there was one order which we received from Dubai. And this order was actually deferred because of geopolitical situation, and we had invoiced earlier, but the client wanted that because of geopolitical situation, we'd like to continue this after some time. And hence, our auditor suggested that it's better to take a... Like, take the cognizance of that and then defer this for the time being, and that's what we have taken a call in the quarter two, and that has an impact here.

Harshal Sharma, Analyst — AS Advisors

And so could you share more details on the MEA order, I mean the order size, scope, original execution timeline, and the revenue and margin impact in BH1?

Deepak Bang, CFO

Revenue and margin impact in H14. New order you are talking about? This one only. Okay. So, the order size was somewhere around 1.7 or 1.8 crores in INR terms. Okay, but the impact during the quarter was not that. It was somewhere around 1 crore, the amount reversed during this quarter. So, and this is purely So, revenue is impacted by almost one crore because of this. The execution timeline for this order was almost 10 to 12 months to deployment and to implement the product to the customer's place. So, we are in the, you know, we are in touch with the customer to understand the further futuristic timelines, when we can, you know, again, start this order and deliver the product to the customer.

Harshal Sharma, Analyst — AS Advisors

Okay, so understood. And is there any risk of the order being cancelled rather than deferred?

Deepak Bang, CFO

As of now, there is more risk of cancellation of this order. This is because of the geopolitical situation in those, that particular area, the order is deferred. And we are, as I also mentioned, that we are in touch with the customer to understand their situation and Whenever and wherever the situation, you know, comes smoothly, we will again deliver this product.

Harshal Sharma, Analyst — AS Advisors

All right. And my last question being, the management has attributed the sharp increase in EBITDA and PAID to TDR. So could you explain the Civit eTDR business model? Okay.

Vijay Gupta, Chairman

Is it ETDR business model? So what we do in ETDR business is, like I said, there are buyers and sellers on the platform, and there is an authority which is actually regularizing the TDR transition. So, and we charge on the basis of... So, on the exchange, we have available TDRs who are actually the owners of the TDR, and they fill this TDR to the buyers. They exchange the transition, and based on the transition value onto the platform, we charge 0.5% of the fees. This is, and the revenue basically is directly onto our books. There is a bank in between, and this is connected. This is SBI bank's transition through ESPRO account, and automatically the money is transferred to the respective parties. The buyer puts the money, seller gets the money, seller puts the TDR, and buyer gets the TDR. And in between, our transition facilitation piece is transferred to SoftTech. And there is a transition phase to the authority as well. So this is the model on which it works.

Harshal Sharma, Analyst — AS Advisors

Yeah, yeah, sir. Totally understood. Sir, that's it from my side. Thank you so much for taking up my questions.

Vijay Gupta, Chairman

Thank you, Ashut. Thank you.

Operator

Thank you, sir. The next question comes from the line of Proline Nandu from Adelweiss Public Alternatives. Please go ahead.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

Yeah, am I audible?

Vijay Gupta, Chairman

Yes, yes, yes.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

Yeah, hi, Mr. Gupta. So, a few questions from my page. Yeah, hello?

Vijay Gupta, Chairman

Yes, please go ahead. I can hear you well.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

Yes, yes. So, I was saying that few questions from my side. One is on the ETDR revenue, right, that we are reporting. Now, if you look at the overall ETDR volumes, which has happened in Q1 and Q2, they are trending at a much lower rate than what was the case last year, right? So, if I'm not wrong, last year, there was an 8,000-odd crores of ETDR, the volume that happened, right? So, this year, the rate has been on a much lower side, right? I mean, if I calculate, it's somewhere close to, you know, for a quarter, it's somewhere close to 400 to 450-odd crores. So, why is the season where, you know, the revenues have, the overall volumes on TDR in Mumbai have come down, and when do you think this will again increase going forward? So, and now that we have successfully executed this or this platform is live, are we getting interest from some other cities as well on this product?

Vijay Gupta, Chairman

Yeah, so I'll answer your first question. So basically, yes, the volume which was expected in the last quarter is lower. But if you look at the kind of real situation of the real estate market as a whole, actually, unfortunately, the market last quarter was very, very slow in the real estate sector totally. In fact, you must have read the news like permits also issued in the quarter were very low, probably because of, of course, again, the geopolitical situation, the dollar rates went up, foreign investments into the real estate went down, and also there were certain more regulatory frameworks which are being built, and based on that, the permits were slower. But, yes, in fact, we look, now it has started turning down, and in this particular month, we see the better results, and 8000 was actually the... Total year's transaction, you know, last year. And we started only in May, and it takes time for the people to sit to exchange and all. So we expect good growth in next quarters based on the real estate sectors, of course. It all depends on how many permits are being issued in the city. It all depends on, because when the permits are issued, the buyers buy the TDRs from the market. And that's where they buy it from the TDR exchange now. So, yes, the question is, yes, it is lower, but we expect that in next quarters, the growth should come much better.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

Thank you. On your second question. Yeah, sorry, go on.

Vijay Gupta, Chairman

Yeah, second question is about other cities. So, yes, we have been seeing a very good traction, and I hope at least some more cities will be added in this quarter and the next quarter of this year. And we have been very, we are working very... Very strongly in terms of converting a few more cities, you would not be able to disclose the names at the moment, but yes, there is a very, very significant positive turn towards growing business of TDR in other cities and other states also, yeah.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

That's encouraging to hear. My second question would be on the Middle East, right, where on one side we are seeing a different right in the order and you are still hopeful that that order will materialize, but you have also made a comment that you are in an advanced stage of a, you know, permitting solution engagement in Middle East. So, just on this geography, right, I mean, you know, how long we have been targeting this geography, and what sort of an engagement do we have, what sort of a presence we have, and this, the advanced stage permitting solution engagement, has this materialized by our own sales effort, or are some of the partners involved here? Just some more qualitative color on Middle East as a geography, right? And, you know, how long we have been working towards it. And why is this, you know, at one side there is a delay, at other side there is a very healthy engagement as well. So, why this, you know, slight dichotomy in, you know, for the Middle East geography per se.

Vijay Gupta, Chairman

Yeah, so I'll talk. I've already explained that, but there is a difference between private and government there. So this engagement of permitting is going to go from the government side. And we are at a very, very advanced stage, I would say. It's almost like we can sign the contract anytime now is what we are expecting very soon. And we will be able to declare it, I would say, definitely in a very near timeline, very, very near timeline. So, this permitting solution, we have been working, you know, like for the government, every engagement takes a long time for converting them. But once converted, once we are in the new country. We try to convince them with the solutions. We try to tell them the values. We try to tell them that in spite of we being from the other country, we'll be able to make it work for your country year well and all. And besides this, the other side is government always works on a slower pace as far as conversions are concerned. So, the time taken for... So establishing this kind of business is something, yes, we would say that, yes, we have taken time. But now we are at a stage where we are almost confident that we will sign the contract very soon. So this will not be just one contract, I would say. This will build the confidence in the region. This will open up opportunities for the other cities, other governments, for Trusting on to our solutions the way we have done in our country here in India today, and that will actually scale up or speed up, I would say, more in terms of closure of other orders also where we have put in our efforts but have not yet been able to convert them into business. So, we really are very keenly looking forward to this opportunity, which will be one of the biggest opportunities for overseas markets conversion. I will not be able to disclose the details at the moment, but I would hope you... Here from us.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

No, that's very simple. That's why I understand that. One last question before I drop into the queue. On your depreciation and amortization line item, right, now, if we see there has been a steady rise year on year, and obviously we have been investing, right, in a lot of our products. And this year, maybe we will do somewhere close to 25 to 30 crores based on the run rate of first half. So, from when do we see this number staying stable or coming down, right? Because we have been investing in a lot of the products and a lot of the platform. So, are most of the product development costs already in the balance sheet, and now it's the case of this line item coming down and the cost also subsequently coming down? Is that a right way to think about it, Or you think this cost will continue to stay elevated at a similar level to what we have seen this year in particular.

Vijay Gupta, Chairman

I think the cost will continue like this, but I would say the percentage of the cost will significantly go down. Currently, because of... Our investments on development for the overseas market, aligning the products to the overseas market, development for platforms like TDR, developments of applications like CivicFin, which will give the results in this year or next year, is something which is, of course, going to be continued. When we talk about technology companies, when we talk about product companies, the absolute number which we have invested into development of the products is not very high. But this absolute number looks higher from the percentage of overall sales numbers which we have. Okay, so once we start scaling up in terms of sales, overseas market sales, like we are going to add Middle East good opportunity soon, and we are going to have German market also converted, and there are overseas markets which are going to come up. Besides, of course, as I said, the GMPA opportunity, we have TDR opportunities which will be converted in subsequent years, quarters, and years. So, all of that will scale up the size of the business as a overall, but if you look at absolute numbers, absolute numbers, I think, would not go down, and they will almost remain this, or maybe slightly more also. Thank you so much. But, in terms of the growth, could be something which I can see in the future, definitely. We are at a very, very matured stage of... Development now, and the platform, our transition of business models from the one-time to certified and platform-based approach also has taken up development efforts which have to be amortized and appreciated subsequently.

Prolin Nandu, Analyst — Adelweiss Public Alternatives

Thank you so much, Gupta, for answering these questions and all the very best. Thank you very much.

Operator

Thank you, sir. Ladies and gentlemen, if you have any questions, please press star and one on the telephone keypad. The next question comes from the line of Seema Bajaj from RK Consultancy. Please go ahead.

Seema Bajaj, Analyst — RK Consultancy

Firstly, thank you so much for giving me this opportunity. Sir, a few questions. So my first one is that orders in hand stand at around roughly 300 crores, if I'm not wrong, and the sales pipeline is at roughly 625 crores. So, how much of the order book is executable over the next 12 months, and how does the pipeline break up by stage and segment? Also, what is the typical win rate, if you could specify?

Vijay Gupta, Chairman

Yeah, before you would like to answer this.

Deepak Bang, CFO

Yeah, so, hi, Sima. Oh, good. So, currently, as you mentioned, we are having orders in hand of approximately 300 crores. So, in the next 12 months, we would be able to deliver around 100-125 crores out of this order book. And from the sales pipeline, the 625 crores of pipeline, we are... We are expecting 40% achievement in this pipeline, and out of that 40%, in the next one year, more or less 50% or 75 to 50%, sorry, 50 to 75% we are going to deliver in the next 12 months.

Seema Bajaj, Analyst — RK Consultancy

Okay. Okay. Oh, thank you.

Deepak Bang, CFO

Yeah. So in this initial year, we are targeting that out of 300, we book about 55 hours. Okay. This initial year. And out of the order book, we expect that very high probability orders are about 40%, but all others, whatever we have taken is very average or more than average probability. Okay. So, we are very confident that minimum level 40% will be converted, and out of that 40%, what we assume is 25% of that 40% will be booked in the first year of the order.

Seema Bajaj, Analyst — RK Consultancy

Okay. Okay. Noted. Thank you, sir. My next question is that... How should we think about the downside to FY27 guidance if, you know, MEA order remains deferred through the year, and also if you could specify the upside, if the Middle East permitting engagement is signed in the next couple of months?

Vijay Gupta, Chairman

Sorry, can you come to the first part question again? How do you?

Seema Bajaj, Analyst — RK Consultancy

So, how do you think about the downside to FY27 guidance?

Deepak Bang, CFO

So, we don't see any downside in FY27. The stand-alone anyway is very strong, and as we are very confident of almost like winning this Middle East opportunity, it will be much bigger amount-wise, and it will actually kind of adjust all the kind of downsides which we can see in this. But at the same time, the deferment is... Also, I expect it to be reversed WAC soon because the situations are becoming better. It is a deferment which actually we have taken into consideration because of. Accounting policies and because of our strong discipline in terms of accounting and all, but this deferment is going to be again going to go add back in some way or other soon. Yeah, and one more thing I would like to add, Seema, that... The order which we are discussing for the deferment is almost 1.8 crores. It's not a huge order, which directly impact on my FY27 guidelines or FY27 targets. So, not at all. Yeah, it's not that bigger order which, you know, impact my top line. So, it's hardly a 1% of my top line.

Seema Bajaj, Analyst — RK Consultancy

Okay. And my last question would be that Softech has framed its growth around three engines, basically, that cities, ports, and infrastructure, and industrial corridors. So how do you expect that the revenue mix across these three pillars to basically evolve around the next three years?

Vijay Gupta, Chairman

Yeah, so these three pillars are actually interconnected to each other, first of all. They are not different pillars, basically. They are very well connected to each other. Cities are connected to ports because ports are addressing the needs of the city. And industrial development is again connected to the ports for infrastructure needs. So, basically, and our CWIT... As a core platform, it is addressing all the street needs very well. Now, again, we are well positioned because we have been working with 1,500 plus cities. We are well positioned because our CWIT as its product. Our solution has been fitting well into the port industry for connecting the seaside, railside, and roadside kind of infrastructure needs. And industrial development again. So basically, if I answer your precise question, these three engines will scale up the size of each opportunity we address to the business. Now, 92 is something which we have bought from JNPA. Similar such 10-15 opportunities is what we are going to work in the next three years. And this is going to size up the business significantly.

Seema Bajaj, Analyst — RK Consultancy

Okay. Thank you. Thank you so much, sir. I'll come back in the queue if I have any more questions. Thank you and all the best.

Vijay Gupta, Chairman

Yes. Thanks.

Operator

Thank you, sir. Ladies and gentlemen, if you have any questions, please press star and one on the telephone keypad.

Vijay Gupta, Chairman

Thank you.

Operator

There are no further questions, sir. Now I hand over the floor to the management for closing comments.

Vijay Gupta, Chairman

Okay. So, thank you very much. I would like to thank all our investors and analysts for joining us today on this call and for their continued trust and support which they give to the company. We remain committed to discipline. Execution, pursuing new growth opportunities, and delivering sustainable long-term value for our all stakeholders, our investors, our customers, our employees, and, of course, our entire citizen of the country. So, this is, again, I thank you very much, everybody, for the call, and look forward to... Keep interacting with you in the future. Thank you very much. And I will admit over again to Priya Akas from Rosal.

Operator

Thank you so much, sir. Ladies and gentlemen, this concludes your conference for today. On behalf of Go India Advices, we thank you for your participation and for using DoSaba's conference call service. You may disconnect your lines now. Thank you and have a pleasant day.