Release Date: January 17, 2025
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) achieved its second highest quarterly revenue since listing, with a 115% year-on-year growth.
- The company secured significant new orders, including a 400 MW project in Rajasthan and a 625 MW project in Gujarat, enhancing its domestic order book.
- The unexecuted order value stands at over INR10,167 crore, providing strong P&L visibility for future quarters.
- The company has made progress in easing non-fund based limits and achieving higher open credit terms with key suppliers.
- There is a strong project pipeline in India, with over 21 GW of projects likely to be awarded in the next 6 to 9 months, indicating robust future growth potential.
Negative Points
- The company revised its revenue guidance down from INR8,000 crore to between INR6,000 to 6,500 crore due to customer realignment and banking limit constraints.
- Execution timelines have been delayed by 1 to 2 quarters for some projects due to customer requirements and land acquisition issues.
- The international EPC gross margins were impacted by a one-time cost incurred to achieve project closure in a legacy project.
- Progress on easing non-fund based limits has been slower than anticipated, affecting the company's ability to scale up execution.
- There is a consistent pattern of over-promising and under-delivering on revenue guidance, leading to potential investor disappointment.
Q & A Highlights
Q: Congratulations on the strong quarterly results. However, you previously guided for an 8,000 crore revenue for the year, but current projections suggest a shortfall. Can you explain the reasons behind this?
A: Interim CFO Sandeep Thomas Matthew explained that the shortfall is primarily due to customer realignment and project delays, which are beyond the company's control. The revised revenue target is now between 6,000 to 6,500 crore.
Q: Can you elaborate on the customer realignment issues affecting project timelines?
A: CEO Chandra Kso Tako (CKP) clarified that some projects have been delayed due to land acquisition challenges and alignment with customer requirements, which have necessitated adjustments in project timelines.
Q: What is the status of the Reliance pilot project and the Nigerian project?
A: CKP confirmed that the Reliance pilot projects are on track for completion within the financial year. Regarding Nigeria, the company is awaiting final order signing, with positive procedural progress noted.
Q: How does the company plan to manage overheads and profitability amidst competitive pressures?
A: CKP stated that the company remains selective in project bidding to maintain profitability. The recurring overheads are expected to remain stable, with any increases aligned with inflation rates.
Q: What are the expectations for order inflow and execution in FY26, excluding potential contributions from Reliance and Nigeria?
A: The company targets an order inflow of 10,000 crore for FY26, with execution capabilities aligned to achieve this target. The focus remains on domestic projects, with international opportunities pursued selectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
