Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Suzlon Energy Ltd (BOM:532667, Financial) reported its best quarterly performance in seven years, driven by strategic and transformative steps taken over the past 3-4 years.
- The company has a robust order book of 3.8 gigawatts as of June 2024, the largest in its history.
- Suzlon Energy Ltd (BOM:532667) delivered 274 megawatts in Q1 FY25, which is double the 135 megawatts delivered in Q1 FY24.
- The company achieved a consolidated EBITDA of INR 370 crores, up by more than 86%, with an EBITDA margin of 18.4%.
- PAT for Q1 FY25 increased by 200% to about INR 302 crores, marking the highest quarterly EBITDA and PAT in almost seven years.
Negative Points
- The WTG contribution margin of 23% in Q1 may not be sustainable due to lower project execution activity.
- The Indian wind sector's commissioning of 770 megawatts in Q1 FY25 was below expectations, with many turbines in the pre-commissioning phase.
- The company faces execution challenges on the ground, including land acquisition issues and delays in substation readiness.
- A penalty notice of $20 million was received, which is currently a contingent liability and not yet recognized in the income statement.
- Revenue from operation and maintenance declined by INR 50-70 crores in Q1 FY25 compared to Q4 FY24 due to onetime billings and contract renewals in the previous quarter.
Q & A Highlights
Highlights of Suzlon Energy Ltd (BOM:532667) Q1 FY25 Earnings Call
Q: Could you spell out the reasons for improvement in the WTG contribution margin in Q1? Is the pricing better in the captive C&I retail segment versus state or central bids?
A: The margin improvement is due to lower project execution activity this quarter. While 230 MW of turbines were ready, only 70 MW were commissioned, affecting revenue and costs. The mix between C&I and IPP customers shows no significant pricing differentiation. (Himanshu Mody, Group CFO)
Q: For S 144, how many WTG sets have been delivered or installed so far?
A: We have commissioned close to 100 MW so far, and everything is performing as expected or better. (JP Chalasani, CEO)
Q: With your plan to change the timing of your merger, is the calibration to NTPC getting affected?
A: We qualify and participate in NTPC bids and will continue to do so. The merger timing does not affect our eligibility. (JP Chalasani, CEO)
Q: Can you help us understand how your deliveries would shape up given the increase in captive and IPPs?
A: Deliveries depend on project readiness. The supply is not an issue; the readiness of the project is crucial. (JP Chalasani, CEO)
Q: What is the reason for the decline in revenue for operation and maintenance?
A: The decline is due to onetime billing in Q4 FY24. The steady-state revenue should be taken from Q1 FY25 and similar quarters. (Himanshu Mody, Group CFO)
Q: What are the current challenges in execution?
A: Major challenges include land availability, connectivity issues, and BoP capacity building. These factors are being addressed gradually. (JP Chalasani, CEO)
Q: What is the current pipeline looking at in terms of bids submitted?
A: We don't participate in government-run bids directly but supply to IPPs. We are participating in public sector bids like NTPC. (JP Chalasani, CEO)
Q: What is the executable capacity now, and how much can we deliver if demand picks up?
A: Our current supply capacity is 3.5 to 4 GW per year, which will expand further in FY26 and FY27. (JP Chalasani, CEO)
Q: Are there any plans to list the OMS business separately?
A: No, there are no such plans. (Himanshu Mody, Group CFO)
Q: What are the installed deliveries that are pending for commissioning?
A: Approximately 700 MW is pending for commissioning, with different stages of readiness. (JP Chalasani, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
