Release Date: May 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solex Energy Ltd (NSE:SOLEX, Financial) reported a significant revenue increase of 81% year-over-year, reaching INR 665 crore.
- The company's EBITDA margin improved by 157%, reflecting strong operational performance.
- Solex Energy Ltd (NSE:SOLEX) plans to expand its production capacity to 4 gigawatts by October 2025, with further expansion to 15 gigawatts of module and 5 gigawatts of cell manufacturing by 2030.
- The company has a strong focus on technological advancements, ensuring high-efficiency module production for both Indian and overseas markets.
- Solex Energy Ltd (NSE:SOLEX) has secured firm orders for its existing and new production lines, indicating strong demand and a robust order book.
Negative Points
- The company faced delays in starting its second production line, which impacted its ability to achieve the targeted turnover for FY'25.
- Solex Energy Ltd (NSE:SOLEX) reported a lower margin compared to some competitors, with a current margin of around 10% versus competitors' 15-16%.
- There is a high concentration of orders from a single client, which poses a risk if the client reduces or cancels orders.
- The company's cash flow from operations is negative, attributed to increased receivables and inventory levels.
- Solex Energy Ltd (NSE:SOLEX) is planning significant capital expenditure, which will increase debt levels and may require equity raising, potentially leading to dilution.
Q & A Highlights
Q: Considering the shortfall in FY25 performance due to some delays, would you like to revise or reaffirm the revenue guidance for this year?
A: Vipul Shah, Director, stated that despite the shortfall in FY25, they are targeting a turnover between 2,200 to 2,400 crore for the current year, including the EPC business. They are confident in achieving these projections given the production capacity of 1.5 gigawatts for the full year and additional capacity for six months.
Q: Why are the company's margins lower compared to competitors?
A: Chetan Shah, Chairman and Managing Director, explained that their current EBITDA margin is around 11.5%, which is within their estimated range of 9 to 11%. They believe their margins are competitive and sustainable, considering market dynamics and industry standards.
Q: How will the company manage sourcing cells once the ALM list is implemented, and will there be a threat to margins?
A: Chetan Shah assured that market dynamics allow for price adjustments if suppliers increase prices. Contracts include clauses for changes in government laws and price fluctuations, ensuring that any cost increases can be passed on to customers.
Q: What is the company's strategy regarding its high concentration on a single client?
A: Vipul Shah mentioned that while there is a significant order from a single client, they have other smaller orders and master sales agreements in place. They expect the dependency on this single order to decrease as new orders are finalized.
Q: Can you provide details on the company's expansion plans and funding strategy?
A: The company plans to set up a 2 gigawatt cell line and additional module lines, with a total CapEx of approximately 1,500 crore. They aim to fund this through a mix of 1,000 crore in debt and 500 crore in equity. The expansion is expected to be completed within 18 months from the start date.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
