Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue from EPC increased by 19.55% year on year to INR413.74 crores.
- EBITDA for the company rose by 19.05% year on year to INR56.53 crores.
- Profit before tax for the quarter increased by 5% year on year to INR75.73 crores.
- The company successfully collected all outstanding receivables from TANGEDCO and other DISCOMs.
- The company has a strong unexecuted order book of around INR9,100 crores and is L1 in orders worth INR1,200 crores.
Negative Points
- Other income for the first quarter decreased to INR23.2 crores compared to INR30.64 crores last year.
- The data center project in Chennai is not yet revenue accretive and is still under implementation.
- Outstanding receivables towards late/interest payment surcharge from the sale of energy stand at INR18.33 crores.
- The company faces challenges in the availability of skilled manpower for its data center projects.
- There are potential delays and political risks associated with the deployment of smart meters in certain states.
Q & A Highlights
Q: Congrats for a good set of numbers. My first question is on the data center project. Like you mentioned, it is expected to be commissioned in Q3 FY25. So my question is, how much revenue do you expect in FY26 out of this project, sir?
A: See, it will take us at least three to six months from the date we start commissioning, which will probably be somewhere around the end of September. We can start finding our first clients and first customers. It is only after commissioning do we expect that we see serious interest, and we will be in a position to attract quality customers. Therefore, at this stage, it is a little too early for us to really say what is the expected revenue until and unless we build a sales pipeline, which is probably, in my opinion, six to seven months down the line.
Q: In opening remarks, you mentioned about the BESS projects. We heard from one of our listed peers about the upcoming tender of 15,000 to 20,000 here in next one year. So how much of it do you expect will come to Techno Electric, sir?
A: We are currently actively participating in BESS. And we do believe that there's a brilliant opportunity in the industry to participate in BESS. We are still figuring out the right mode and mechanism in which Techno would like to participate in the industry, whether as a developer and EPC or whether somewhere in the middle. I think, yes, the BESS market is to open. There is hardly one or two projects which have been installed. Two are largely more of a POC, more of a proof of concept, given that I think we are yet to figure out our own journey in this segment. But nevertheless, there is a huge opportunity for the entire industry.
Q: On the order book side, like you mentioned, you are expecting INR1,500 crores orders in smart meter side. And I think I missed that INR3,000 crores also you are expecting somewhere. So greater than [INR5,000 crores], you are expecting somewhere, right? So what is the timeline for these order inflows, sir?
A: This will flow in over year on year. But as we said, we are already L1 in INR1,200 crores, so that will happen in Q2. And balance are in pipeline. We have submitted tenders, we are yet to be opened and evaluated properly about above INR5,000 crores. So it's an ongoing exercise. We are talking of a yearly target. During 2024, 2025, we'll have the order book of additionally INR4,000 crores to INR5,000 crores into transmission, smart meters, distributions, FGD all put together.
Q: I think I heard in the opening remarks that you have already gotten awarded a couple of transmission concession projects. I'm not sure if I heard this correctly. So I just wanted to clarify that. Are you independently also bidding for any TBCB transmission projects which you have recently won?
A: Absolutely. You are right, Subhadip, we have one, two concessions in TBCB. We want to be in a CapEx range of INR500 crores to INR700 crores. The total concession period revenue is INR2,800 crores, and this relates to Gogamukh and Bokajan at the moment. And the total CapEx involved in these two concessions put together is about INR750 crores. We touched on the -- with so much opportunity of the high-end CapEx, the major players are quite busy now, and their hands are full. But on the lower CapEx solutions, the competition is relatively low, and we are able to find better rewards relatively. So we thought to capitalize build on this opportunity, where station contact is about 70%, 75% and line is no more than 20%, 35%.
Q: What kind of return ratios or ROEs are you looking at for these kind of projects, ballpark range?
A: You can say about 14% plus, minus.
Q: In terms of your guidance, you did -- you have given us the guidance for FY25 and FY26. But if I were to -- as the guesstimate for the FY27 EPS, what kind of ballpark range would you be looking at?
A: At least about INR75.
Q: Just to confirm, like you mentioned, 75% EPS for FY27. Is data center projections included in it, or we are -- it will be over and above?
A: It will be over and above this year. It is -- data center is not part of this. The EPS will be part of the SPV of data centers.
Q: What has been the pull down in the steel prices year on year? Can you quantify it?
A: Quantify what type of -- steel prices? Marginally better now, but in our solution, the content of steel is no more than 20% per se. But there is a rise in copper prices also. So something or the other keeps overall balancing to it, but let's see how it goes forward. At the moment, transformer PV is around 5% over last six months, whereas steel, you may be having a PV of 2%, 3%. You are right.
Q: Is there any gain in business mix that has led to the change in the GP margin?
A: No. We -- overall, we -- the attempt is to keep the same GP margin, depending on the status of execution of each contract and given the mix of the contracts we are doing, we are hopeful to retain this kind of margins as EBITDA of 13% to 14% or 15% going forward also.
Q: Just data center opportunity, will it be restricted for us in West Bengal alone, or we will try to get other states also? And who is our ultimate customer in this -- customer who is having the data of the various corporates who want to also set up their remote location. And sir, any plans to utilize this cash surplus that we are having to buy back or large dividend?
A: The first data center that we are commissioning is in Chennai. It's in Tamil Nadu. I probably heard you mentioning West Bengal, but that's not the case, if I've heard you correctly. The first project is in Tamil Nadu. Apart from that, our second large data centers planned in West Bengal, where we have very recently been allotted a land by the state of West Bengal. But that project will come into picture of -- as a commission project by only
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
