Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sterling and Wilson Renewable Energy Ltd (BOM:542760, Financial) reported a second consecutive quarter of positive EBITDA, PBT, and PAT.
- The company achieved a top-line growth of 78% year-on-year with operating revenue of INR915 crores in Q1 FY25.
- Strong order inflow with INR2,170 crores of new orders in Q1, including significant international wins in South Africa.
- The unexecuted order book stands at INR9,396 crores, providing strong revenue visibility.
- The company is confident of meeting its order inflow guidance of INR8,000 crores for the fiscal year.
Negative Points
- Sequential top-line declined by 22% due to tight liquidity conditions.
- The company's net debt stands at INR97 crores as of June 2024, indicating ongoing financial leverage.
- There are ongoing arbitration processes in the USA, which could pose legal and financial uncertainties.
- The company faces intense competition in the domestic market, particularly from smaller players bidding aggressively for PSU projects.
- The execution of the Nigeria project is expected to take six months to achieve financial closure, indicating potential delays in revenue realization.
Q & A Highlights
Q: Can you give some color on how different are the margins from your international business and domestic business based on the new orders that you are booking?
A: In the domestic market, margins remain from 10% to 11%, and we are replicating the same margins for the international market, where margins remain 10% to 12%. We are maintaining the same margin profile in both markets. - Amit Jain, Global Chief Executive Officer
Q: There was earlier a thought that you would do only the BoS part in the Indian market and not do modules. Does that still remain?
A: We are primarily focusing on BoS in the Indian market but have taken a couple of projects with modules, ensuring extreme caution by choosing reputed Indian manufacturers. For international projects, we are very choosy and pass on the risk to our customers, taking higher bank guarantees and using multiple manufacturers. - Amit Jain, Global Chief Executive Officer
Q: How big is the RIL's pilot project? And what are you hearing from them in terms of future opportunities?
A: It is a reasonable-size project with good value, expected to complete within this fiscal year. We are using multiple technologies, which will be handy for larger projects with RIL. - Amit Jain, Global Chief Executive Officer
Q: On the overhead side, assuming current business levels, have you reached a stable state of overhead? Or is there further room for overheads to go down?
A: We believe we have completed most of the optimization of our overheads. Except for small increments, they are now more or less stable. - Bahadur Dastoor, Chief Financial Officer
Q: Can you give the split of domestic orders other than Serentica? And for the international order in Europe, how long will it take to be executed?
A: The Plenitude project in Europe has an 18-month timeline and is on track. Domestic orders include Serentica, Reliance, and AMPYR. International orders this quarter are from South Africa: one from EMEA Group and another from the Energy Group. - Amit Jain, Global Chief Executive Officer
Q: What's the status of the arbitration process for the international order?
A: We are proceeding with the arbitrations in the USA. Significant developments will be communicated to the market as they occur. - Amit Jain, Global Chief Executive Officer
Q: What is the future outlook and opportunity size of the Reliance project segment?
A: The pilot project is important for testing multiple technologies and will be completed within this fiscal year. We are engaged in discussions for mega rollouts in multiple geographies across India. - Amit Jain, Global Chief Executive Officer
Q: We've seen a significant margin jump in our O&M portfolio. Is it a one-off?
A: There is a one-off income of INR3 crores due to backdated revenue receipts and provision reversals. Excluding this, O&M margins would be close to 24%, trending towards steady-state margins. - Bahadur Dastoor, Chief Financial Officer
Q: What are the product limits, non-funded limits, and funded limits? Are they unfrozen?
A: Some limits are unfrozen with the rating upgrade from D to BB+. Post these results, we will push for a higher upgrade into the investment grade, which should unfreeze the rest of the limits. - Bahadur Dastoor, Chief Financial Officer
Q: Can you guide how the revenue guidance for FY25 will be phased over the next three quarters?
A: Revenue execution pace will pick up from Q2, with the second half being very strong and Q4 being the strongest. We remain confident about meeting the INR8,000 crore revenue guidance. - Amit Jain, Global Chief Executive Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
