Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Triveni Turbine Ltd (BOM:533655, Financial) reported a 23% year-over-year revenue growth, reaching INR4.63 billion for Q1 FY25.
- EBITDA and PBT grew by 36% and 37% year-over-year, respectively, with a margin expansion of 240 basis points.
- The company achieved its highest-ever quarterly order book of INR6.36 billion, a 40% year-over-year increase.
- Export sales increased by 19% to INR2.16 billion, contributing 47% of total sales.
- The Aftermarket segment showed strong performance, with a 21% year-over-year growth in turnover, reaching INR1.56 billion.
Negative Points
- Domestic order booking was muted, growing only by 2% to INR2.16 billion in Q1 FY25.
- The domestic outstanding order book decreased by 9% year-over-year to INR7.21 billion.
- Despite the overall growth, the company noted that the order booking in the domestic market was affected by election-related uncertainties.
- The company faces challenges in maintaining margins due to the volatility in commodity prices, although predictability has improved.
- Investments in the newly commissioned US facility in Houston, Texas, are expected to incur a loss of around INR20 crores in the current year.
Q & A Highlights
Q: Congratulations for the great set. So first question, in the opening remarks, you did highlighted about the products for 120-megawatt range. So I wanted to understand more with respect to which areas you're going to cater, which industries and what is the addressable market. And have we started selling this product or still this is slightly away with respect to the commercial sale and production?
A: No, you're right. This is a segment that is again for industrial. We do not make utility turbines, and the turbines that we make for independent power generation is in the renewable sector. So this, as you would imagine, is not for the -- for renewable requirements. This would be for industrial requirements for a variety of industries that have high power requirement. They would also require -- also industries that require processed steam or high processed steam. These are sizes of turbines that are typically not used in India and industry. Indian industry industrial capacity is far more decentralized than what would be required apart from our metals and steel sectors. But I'll have our CEO, Mr. S.N. Prasad, talk a little bit about this. It's a segment that we've developed, and we are hopeful of sales in the near future. But I have to tell you that all our technologies are scalable. So these are developments that are something that we're quite confident on, but Prasad, would you like to provide some visibility?
S Prasad: Yes. As our VCMD mentioned, these technologies are scalable, as we are focusing in the industrial steam turbine space because wherever the requirement crosses 100 megawatts, what we have seen in the industrial range, we are seeing the range up to around 110, 120 megawatts. So that is basically the product line what we are having can cater up to 120 megawatts, which we are seeing a traction in large integrated steel plants as a large oil and gas size plants or pulp and paper mill, so we have a product line. As going forward, we have to see how these inquiries queue up and take us to that level.
Nikhil Sawhney: But in general, the market is the same industrial market. So we do not distinguish between the sizes of particular markets. So suffice to say that it fits into the larger industrial market that we do cater to. And this is just a product extension, which allows us to cater more comprehensively to that market.
Q: Export, we did very well. You did highlighted that there was large order, lumpy orders, which had come. So I just wanted to understand the current quarter, did we saw any large order and which, in the area, if you could highlight more with respect to exports and large order? And what is the typical timeline for these large orders? Is there any additional risk, payment terms, which are different than the base orders?
A: No. See, the risk is something that we do not compromise on. The fact is that we operate in a space where we get our payment on dispatch, and our commercial terms are quite consistent on that. As a responsible customer, we, of course, take -- ensure that the customer is happy with our product for an extended period of time. So that is the confidence that we need to have in our technology. The lumpiness of orders, as you did point out, is we did have some larger orders in this current quarter, which were from the -- which I'll ask Prasad to speak about again, but these are things that I think are -- present no exceptional risk than what we normally do. Prasad?
S Prasad: Yes. These lumpy orders are basically from oil and gas segment from Middle East region from some of the prestigious refineries. And here also our payment terms and all these things, as our VCMD mentioned, these are all as per our standard payment terms. There are no risks envisaged. Whatever our current risk profile is more or less it is maintained in the framing.
Q: Slightly long-term question, Nikhil, for you would be that if I -- as I see things, our company's performance in the last two quarters is a testament to Triveni is very resilient business model, as despite the slowdown in domestic market, you have reported very early numbers. So Nikhil, if I -- if you can recap the last five years' journey, like say, where we were pre-COVID, where, if I'm not wrong, we were highly dependent on a single demand driver, which is the captive power for industries. And as we stand today, there have been multiple growth drivers that we have been benefited from. So if you can let us know what has been the key two, three factors that led us to where we are -- a very strong position where we are and if we were to look forward for the next three to five years, we have reached a scale and ask rate for the company to now outperform on such a high base is much more steeper, much more difficult, but you have been highlighting your commitment to getting Triveni to new heights globally. So if you can help us understand like what -- because from, let's say, where we were in 2020 to where we are right now, will we be having a similar kind of a game plan or template or there would be some changes required? And if you can add some more texture to your comment on investment in people, R&D, innovation and this ever-expanding opportunity size for us. So a slightly long question, but it will help us understand your next five years -- how your next five years will look like.
A: I think you gave the answer in your question itself, which is the investment in technology and people. We are not an asset-intensive company. And so very frankly, we are people-dependent, the quality of people, the quality of research and the focus of our research and priority on that has been something that has got us to where we are. This is not a development. This is not something that has happened over two, three years. It's happened over 10, 15 years, both in terms of a culture to be able to put technology first. We have a long way to go in terms of being able to achieve a global aspiration of being a technology company and to be even more derisked than on this particular market or product. Right now, we are product-dependent on obviously steam turbines, a variety of different applications. And we think over the long term, we would have to be a multiproduct company on similar principles. But that is not something that I think will happen immediately. So if you're looking at a time frame of five, seven years, that is eventually what we'll have to get to. But as we currently sit, it's obviously a people strategy. When we look at, for example, and I'll ask Sachin to contribute a little bit here, our investments into the United States, for example, the strategy has been to be close to people. But it's an investment-heavy strategy where we're going to probably incur a loss of maybe INR20-odd crores
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
