Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hitachi Energy India Ltd (BOM:543187, Financial) achieved a record order backlog of INR 8,539.5 crores in Q1 FY25.
- The company received a Prestigious International Safety Award from the Royal Society for the Prevention of Accidents for its Mumbai HVDC project.
- Revenue for the quarter was INR 1,347 crores, up 27% year-on-year.
- The company has been proactive in sustainability initiatives, including projects to reduce emissions and manage water and waste.
- Hitachi Energy India Ltd (BOM:543187) has a strong focus on employee wellbeing, organizing multiple awareness sessions and health camps.
Negative Points
- Quarter-on-quarter revenue declined by 21.9%, indicating potential cyclical or operational challenges.
- Profit before tax and profit after tax showed a decline on a quarter-on-quarter basis.
- Other expenses increased significantly, partly due to higher IT charges and ForEx hedging impacts.
- The company did not provide specific guidance on full-year EBITDA margins, creating some uncertainty for investors.
- There was a delay in the finalization of significant transmission orders in India, which could impact future revenue growth.
Q & A Highlights
Q: What caused the other expenses to increase almost by INR50 crores year-on-year? And what's the full-year EBITDA margin expectation for this year?
A: (Nuguri Venu, CEO) We don't give full-year guidance, but we aim to achieve double-digit EBITDA by the end of FY25. (Ajay Singh, CFO) The increase in other expenses is due to a ForEx hedging impact of INR20 crores, higher IT charges from migrating to a new ERP system, and higher royalty expenses based on previous quarter revenues.
Q: Can you provide clarity on the capital expenditure related to the 6 billion CapEx allocated to energy transition by the parent company?
A: (Nuguri Venu, CEO) We will reserve detailed announcements for a later quarter, but the regular run rate of CapEx is around INR100 crores per year.
Q: What do you mean by achieving double-digit margins by year-end when you already achieved it in Q4 FY24?
A: (Nuguri Venu, CEO) We aim to achieve double-digit margins in a sustainable manner, not just as a one-off occurrence.
Q: Any updates on the HVDC and STATCOM projects you bid for?
A: (Nuguri Venu, CEO) We have submitted our bids and are engaging with customers, but no official information is available yet.
Q: Why was there a delay in finalizing transmission orders in Q1, and do you expect this to pick up in Q2 and Q3?
A: (Nuguri Venu, CEO) The delay may be due to the election period, but with new government and ministries in place, we expect decision-making to accelerate.
Q: Given the global shortage of transmission and distribution equipment, will Hitachi Energy India play a more significant role globally?
A: (Nuguri Venu, CEO) Our primary aim is to serve the domestic market, but we are also expanding our factories to cater to international demand. We aim to maintain exports in the range of 25-30%.
Q: What is the status of the Mumbai HVDC project?
A: (Nuguri Venu, CEO) The project is around 30-40% complete.
Q: Can you provide a rough differential in gross margins between product orders and project orders?
A: (Nuguri Venu, CEO) Margins vary based on risk and reward. Projects today are more focused on our products and their installation, unlike complete EPC projects which have higher risk profiles.
Q: What is the status of the next two large HVDC projects expected in the next 12-18 months?
A: (Nuguri Venu, CEO) There are three major HVDC projects: a 6,000 MW project in the final bidding stage, another 6,000 MW Khavda project, and a 2,000 MW VSC project expected to come up for bidding by the end of this financial year. We are fully qualified to bid for these projects.
Q: What is the share of services and exports in revenues?
A: (Nuguri Venu, CEO) Exports are trending upwards of 25%, and services are in the high single digits. We aim to increase services to double digits.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
