Release Date: October 15, 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 strong order inflow of INR 4,214 crores in the first half of the fiscal year, with a target to reach INR 8,000 crores by year-end.
- The company secured its largest unexecuted order value in history, standing at over INR 10,500 crores, indicating strong future revenue potential.
- A significant project win includes India's largest battery energy storage project, showcasing the company's capabilities in energy storage system engineering.
- The company achieved a credit rating upgrade to investment grade, which is expected to facilitate better execution and financial terms.
- Sterling and Wilson Renewable Energy Ltd (BOM:542760) reported a third consecutive quarter of positive EBITDA, PBT, and PAT, with a 36% year-on-year revenue growth in Q2 FY '25.
Negative Points
- The company's domestic gross margins were lower at 9% due to some projects not reaching the POCM threshold, impacting overall profitability.
- Execution in the first half was constrained by nonfund-based limits, although improvements are expected following the credit rating upgrade.
- The Nigeria project is still pending final order signing, with potential delays in financial closure impacting future revenue recognition.
- The company faces increased competitive intensity in the renewable energy market, which could pressure margins.
- There are ongoing challenges related to indemnity-backed legacy projects, with full crystallization expected over the next 24 to 36 months.
Q & A Highlights
Q: Can you elaborate on the LOIs for the BESS project? Are these firm orders, and what is their scope?
A: Yes, all announced orders are firm, either with signed contracts or firm LOAs. The BESS project in Rajasthan by JSW is a 200 MW AC, 1,000 MWh plant, with the client supplying the batteries. (Amit Jain, Global CEO)
Q: What has changed regarding nonfund-based limits, and how does the credit rating upgrade impact this?
A: We have been operating with existing limits, but the INR500 crore loan from IREDA and the credit rating upgrade will allow us to secure additional limits and execute at the required pace to meet our guidance. (Amit Jain, Global CEO)
Q: Can you outline the execution pipeline for the next six months?
A: We aim to achieve INR8,000 crores in revenue this fiscal year, with INR6,000 crores in H2. Execution teams are in place, and we are well-positioned to meet this target. (Amit Jain, Global CEO)
Q: How are you addressing employee retention amid sector growth?
A: We have multiple execution teams and strong engineering support. We focus on employee retention through appraisals, ESOPs, and other motivational measures. (Amit Jain, Global CEO)
Q: What is the status of the Nigeria project, and are there any risks of cancellation?
A: The Nigeria project is on track, with no risk of cancellation. We expect finalization soon, supported by US government initiatives. (Amit Jain, Global CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
