Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Schneider Electric Infrastructure Ltd (BOM:534139, Financial) reported a 19.7% increase in sales for Q1 FY25, reaching INR 593 crores.
- The company achieved a significant 63% growth in EBITDA, reflecting improved profitability.
- Order intake momentum remains strong, with a backlog of about INR 1,300 crores, up 15.5% to 16% from the previous year.
- The company has successfully launched new products, including powertrain modules and compact 11 kV distribution primary AIS, which have been well-received in the market.
- Schneider Electric Infrastructure Ltd (BOM:534139) is expanding its digital offerings, including EcoStruxure Power Operation and advanced reporting dashboards, enhancing its competitive edge.
Negative Points
- Other expenses have grown by 27%, outpacing the 20% sales growth, raising concerns about cost management.
- The company faces challenges in maintaining consistent growth across all segments due to the cyclic nature of its project business.
- There is uncertainty regarding the sustainability of the current gross margin levels, which are around 40%.
- The company has not provided specific guidance on revenue growth for the data center business, leading to some ambiguity for investors.
- Employee count has increased from 1,267 in June '23 to 1,292, which may impact operational efficiency and cost structure.
Q & A Highlights
Q: Can you highlight if you have a portfolio in the GIS segment and how differentiated it is?
A: We do have a GIS portfolio up to 36 kilovolt. The demand for GIS is picking up due to its maintenance-free nature and optimal footprint, especially with increasing urbanization. (Udai Singh, CEO)
Q: What led to the 20% year-on-year growth in Q1 FY25, and are these numbers sustainable?
A: The growth is driven by a strong order book and backlog. While growth can be cyclic across segments, we are hopeful of maintaining similar performance. (Udai Singh, CEO)
Q: Is the powertrain module technology developed locally or from the parent company?
A: The powertrain module is developed with a focus on India for India, supported by technology from our parent company. (Udai Singh, CEO)
Q: What proportion of sales comes from the data center segment?
A: While exact numbers are not readily available, data centers are a significant driver of our business. (Udai Singh, CEO)
Q: Are there any new products planned for launch?
A: We are focusing on augmenting and upgrading existing products, making them more efficient and digitized. (Udai Singh, CEO)
Q: Why have other expenses increased by 27%?
A: The increase is due to one-off reasons, operational decisions to improve long-term efficiency, and warranty provisions. (Suparna Bhattacharyya, CFO)
Q: Can you provide a breakup of sales between equipment, services, and projects?
A: For Q1, transactional sales were 19%, services 13%, equipment 39%, projects 8%, and inter-company sales 22%. (Suparna Bhattacharyya, CFO)
Q: What is the outlook for the data center market and our addressable market?
A: The data center market is expected to grow significantly, but exact numbers are difficult to predict due to varying requirements and designs. (Udai Singh, CEO)
Q: Are there any expansion plans for transformer capacity?
A: Currently, there are no expansion plans. We are focusing on serving customers who appreciate quality and digitalized products. (Udai Singh, CEO)
Q: How does AI benefit Schneider Electric in India?
A: AI helps in manufacturing consistent, high-quality products and drives demand in the data center space by increasing server capacities. (Udai Singh, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
