Inox Wind Ltd
NSE:INOXWIND
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Inox Wind Ltd
Earnings Call Analysis
Summary
Q2-2025
Inox Wind reported impressive Q2 FY25 results, with revenues soaring 93% year-over-year to INR 742 crores. The EBITDA surged by 171% to INR 189 crores, leading to a profit of INR 90 crores, a significant turnaround from a loss last year. The company has transformed its balance sheet to net cash status. With a robust order book of 3.3 GW, management anticipates executing 1,200 MW in FY26, maintaining a 17% EBITDA margin, increased from a previous 15%. Additionally, the elimination of royalty payments post-FY25 should add further to profitability, indicating positive future cash flows.
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Ladies and gentlemen, good day, and welcome to Q2 FY '25 Earnings Conference Call of Inox Wind hosted by Motilal Oswal Financial Services. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Abhishek Nigam from Motilal Oswal Financial Services. Thank you, and over to you.
Yes. Thank you so much. Good evening, everyone, and welcome to the Q2 FY '25 Earnings Call of Inox Wind Limited. For today's call, we have with us Mr. Devansh Jain, Executive Director, Inox GFL Group; Mr. Kailash Tarachandani, Group CEO, Inox Wind Limited; Mr. Akhil Jindal, Group CFO, Inox GFL Group; Mr. Rahul Roongta, CFO, Inox Wind; and other senior members of the management.
I would now hand over to the management for their initial remarks, after which we will open the floor for the Q&A session. Thank you.
Management team, I believe you are on mute mode.
Audible?
Yes. Please go ahead.
Thanks a lot. Good evening, all. Thank you for joining today's conference call. I will take you through some of the key financials for the quarter. Inox Wind Limited announced it's results at its board meeting held today, Friday 25th October 2024. The results, along with the earnings presentation and press release are available on the stock exchanges as well as on our website.
For the quarter on consolidated basis, Inox Wind Limited has reported revenue of INR 742 crores in Q2 FY '25 versus INR 384 crores in Q2 FY '24, an increase of 93% Y-o-Y. EBITDA of INR 189 crores in Q2 FY '25 versus INR 70 crores in Q2 FY '24, an increase of 171% Y-o-Y. Profit after tax of INR 90 crores in Q2 FY '25 versus loss after tax of INR 27 crores in Q2 FY '24. Cash profit of INR 138 crores in Q2 FY '25 versus INR 1 crore in Q2 FY '24.
With Q2 financial performance being the highest in past 8 years, we are on course for achieving our financial targets for FY '25. Further, I'm pleased to inform you that Inox Wind Limited has turned net cash as of 30 September 2024. You can refer to Slide #22 of our investor presentation for the detailed breakup.
While the interest expense has been reducing continuously over the past few quarters, I expect it to reduce substantially going ahead since the fund raise money came in into Inox Wind in the middle of the quarter gone by. And there were a few onetime expenses related to consortium formation, et cetera.
Further, in H1 FY '25, Inox Wind Limited has delivered positive operational cash flows. In September, Inox Wind achieved another milestone as we signed a consortium agreement with banks for INR 2,200 crores, which are largely nonfunded limits with BG & LCs. These limits have been sanctioned on the financial expense of IWL's balance sheet and without the requirement of any corporate guarantees or any other support from Gujarat Fluorochemicals Limited.
I would now like to hand over the floor to our CEO, Mr. Kailash Tarachandani, for his remarks. Thanks.
Thanks, Rahul. The quarter goes -- gone by has been yet another where we have continued our upward growth trajectory. Our profits have zoomed to INR 90 crores for the quarter. I'm especially pleased that on the back of the tremendous effort put by our team, over the past 2 years, our balance sheet has now become net cash, and we have delivered positive operational cash flow in H1 FY 2025, which is bound to significantly increase going ahead.
We have been able to maintain our execution at 140 megawatts during this period despite the typical seasonal monsoon challenges faced during the quarter. On the back of our strong performance in the first half of FY '25, I believe we are on course to achieve our targets for the full financial year.
We are rapidly scaling up our execution backed by our largest ever order book of 3.3 gigawatt, having added around 1.2 gigawatts of orders till date in the current financial year. Our order pipeline is extremely strong as we continue to engage in active negotiation and builds across multiple IPPs, PSUs and C&I customers, both new and existing.
In fact, with our large current order book and the strong anticipated order inflows over the coming months, we expect our execution to be higher than our current guidance of 1,200 megawatt. However, we are currently maintaining our execution guidance. There are several aspects coming into play, factoring which we expect our margins to be higher than our guidance of 15% in FY '25.
Our royalty payments for our 3-megawatt wind turbine will stop after FY '25, resulting in immediate addition to our bottom line. Our backward integration activities, which includes in-house cranes and manufacturing of the critical components will further add to our margins. We are also working on the launch of our 4x megawatt turbine as well as larger blades on our 3-megawatt turbine. Factoring in all the gains, we expect our margins to improve by around 200 basis points from 15% to 17%.
Finally, a brief overview on the macro outlook, which continues to be highly favorable. In the current financial year, around 12 gigawatts of new wind, hybrid, FDRE tenders have been awarded. Tariff continues to be very competitive, ranging at around INR 3.3 per unit for wind solar hybrid, INR 3.6 to INR 3.68 per unit for plain vanilla wind and INR 4.37 per unit for FDRE project in the recent auction. Demand from the C&I segment, which is over and above these figures, has continued to gain pace.
I would now like to open up the floor for the question and answers.
[Operator Instructions] We'll take our first question from the line of Mohit Kumar from ICICI Securities.
Congratulations on a very good set of numbers. My first question is on the -- you just said the royalty you'll stop 3 megawatts. Can you please quantify the impact. And is it right to assume -- is it fair to resume that this will start contributing from F '26, right? That's what I think you alluded.
Is your question to royalty stop now? Sorry, Mohit, could you just be a little louder, clearer?
Sir, the royalty on each year will stop for 3-megawatt turbines. Is it possible to quantify the impact?
So I think it's going to be close to about -- should be about INR 600,000 a megawatt from the coming financial year.
INR 600,000, right?
Roughly INR 600,000 a megawatt from the coming financial year, increment to our profitability.
Understood, sir. My second question is on the -- of course, we have a large order book. How are you ramping up? How are you shaping up to execute a very largish order execution in H2? I think our targets to H2, given that we have done 280 megawatts, it's a very sizable number. So are we -- do we have the capability? Have we been able to ramp up build up the sites or worked on...
So, I think, Mohit, it's fundamental to five functions. I think we spoke about that. We focused the past 6 quarters on setting right the balance sheet, the capital, getting our banking lines in shape. As you know, over the quarter, we've become net cash. As you know, over the quarter, all corporate guarantees have fallen off after 7 years. The other two elements of supply chain. Our supply chain is currently ready for 1 gigawatt. We should be ready for 2 gigawatts by end of this year in terms of sites.
We have about 2 gigawatts of sites available on a plug-and-play basis. Naturally, in the monsoon period, we are not really going to be ramping up execution. In fact, it's a great job done by the team that we've done about 140 megawatts in peak monsoon when Gujarat has been really, really bad this year. So I think those are the four pieces.
As you rightly mentioned, our order book is huge, as Kailash already mentioned, there are so many discussions going on, frankly, that's the least of our worries. So I think if you look at it quarter-on-quarter, there's almost 25% growth in a peak monsoon quarter. Year-on-year, there's a 90% growth. I think our company is well geared for the mega ramp-up or the mega play which we have. In fact, not just this, we're gearing up for 2 gigawatts in FY '27.
My last question is on the -- can you help us with the time line for Resco business, when we can see a significant contribution? I'm talking mainly about new businesses, the cranes, [indiscernible].
I think that's going to play out over the course of the year. I will not share micro details at this point in time. I think we are sharing consolidated numbers at this point in time. I think that's more relevant. Even Resco is part of Inox. And at this point in time, it will get demerged subject to Board approval sometime next year.
So -- frankly speaking, at this point in time, we're simply guiding for consolidated margins. As Kailash already mentioned and as Rahul mentioned, we've upped guidances from 15% to 17% on this call with the caveat that there's further upside possible as we keep moving forward quarter-on-quarter.
We'll take our next question from the line of Shweta Dikshit from Systematix Group.
Congratulations on a good set of numbers. Could you throw some light on what has contributed to the EBITDA margins during the quarter? And what is -- like I understand the annual guidance increased by 200 basis points. That's for FY '26 or this year?
So firstly, on your question on the margins. So our expectation of the 200 bps increase in the overall annual margin is for FY '25, and it's slightly higher for FY '26. But at this point of time, we are maintaining at 17%.
Now on your question on the higher EBITDA margins during the first half specifically is because it's been more of supplies of the turbines rather than the EPC work, which is -- which was a bit hampered due to the monsoon season being there in the second quarter.
From second half onwards, you will see the margins being a bit moderated because we'll be doing a much larger EPC and the revenues from that also will grow, which will be a lesser margin business compared to our supplies of the turbine.
Overall, our realizations can be better in the next 2 quarters, but margins will moderately fall down. But still, I mean...
I think for the full year, we've upgraded guidance for margins. In any case, for the full year, we guided for about 15% -- so we are upgrading guidance to 17% for the full financial year.
And our execution guidance is maintained at 800 megawatts?
It will be at 800 megawatts with the caveat that there's a further upside to the next year's guidance.
All right. Another question was on the management briefly spoke about adding larger wind -- a larger turbine blades to the 3-megawatt WP. Could you please elaborate on that?
We are working on that 4x turbine, which we talked about. The engineering part is done. We have actually ordered some components of the prototype also. So we will be going ahead with all the certification, et cetera, early next year and possibly starting the commercial production in the later part of -- later half of FY '25, '26 or beginning of calendar '26.
Okay. If I would squeeze in one more last question that would be around what's the composition of 2-megawatt turbines in the order book right now? Or is there any residual execution? Or are we completely...
It's largely right now, all the order books is nearly 3 megawatts and a very small portion of 2 megawatts, that would be 7%, 8% hardly. So rest is all 3 megawatts.
Next question is from the line of Aniket Nikumb from AFL Capital.
Yes. Congratulations on a great set of numbers, sir. I just had one quick question. Can you give us an update on the merger between IWEL and Inox Wind. I believe there was a final hearing or something scheduled today. If you can share.
Yes. So for today, actually, the meeting has been scheduled for the next 1 week. So maybe by 8th or 9th, again, the hearing will happen and we'll be able to know the outcome of it. But we feel that within 1 month, we should be able to get some good news.
Next question from the line of Prit Nagersheth from Wealth Finvisor.
Congratulations. Wonderful numbers and fantastic execution. Just one question -- a couple of questions, Devansh. One is on the order book. When do you see the PSU side of order flows that would start kicking in?
Thank you for your comments. It's interesting you ask when we see more of the PSUs kicking in. The last year, the questions we were facing was we have only PSUs. We went out and diversified across C&I. Having said that, Kailash will give more insight. But yes -- frankly, we're working with -- there's so many PSU tenders out there, which we are participating, will be participating. There are lots of C&I deals and larger IPC deals going on. Frankly speaking, we are now no longer fixated to any one category of customers. And I think there are at least 10 or 12 very large discussions going on. So I think as we keep moving forward, we'll keep announcing this across the spectrum.
Right. Okay. So Devansh, what kind of order book addition do you anticipate from here to the end of the year? Is it possible to give any kind of guidance on that?
No, I don't think we should get into that. I think the way that we've guided for is that FY '27, we are targeting a 2 gigawatt play. And as I've said multiple times, what happens in the industry is the peak order book you could have which is executable. And I'm not talking of paper LOIs unlike some of our peers who have multi-gigawatt owners with less than 10% executed on the ground.
We believe in firm orders and credible companies and parties with whom you can Google, you can check up, you can look at the Board of Directors, their financial capabilities. And to that extent, I think 24 months would be peak. So I would expect that at that point in time, if we're going with a 2-gigawatt way, a 4-gigawatt order book would be very large. We already sit on a 3.3-gigawatt order book. So I think we're very, very solidly placed on the order side.
Great. One other question, Devansh was that one of your other peers, the international one is coming up with a 5-megawatt platform for next year. What are your thoughts on that? And are you also planning to have a 5-megawatt follow-up followed after the 4 one?
No, what's important for us is cost of energy. We are not driven by nomenclature of turbines or 6-megawatt or 8-megawatt or 20-megawatt and 30-megawatt turbines. India is a Class 3 side, a low wind site. And to that extent, if we can launch larger blades on our 2-megawatt product or our 3-megawatt product, that would be far more cost efficient than any other larger turbine.
Having said that, the product which we have, which is 4x, which is virtually 4.5, 5-megawatt turbine, it's got one of the largest rotor diameters in the industry with the potential to add larger rotor diameters.
So to that extent, I see -- I don't see a product above that, which we need to launch in the near future. But yes, we have access to enough technologies. As we feel it's appropriate, we will bring them to the market.
Great. And any insights or updates on the Siemens business? Any color on that, that Inox may be going for it or something like that?
No, I don't think I would like to talk about that publicly. What I've read in the news is there are some people looking at it. Yes, we have evaluated that. But we have a very, very prudent capital allocation policy. No matter how much cash we have -- ability to raise, no matter how much cash we raise, we are not going to stretch ourselves. We're going to be very, very cautious. I think organically, we can build this business out phenomenally on the manufacturing side.
On the O&M side, we have created tremendous value in I-Fox. We've made a strategic investment in another potential acquisition. I think that's more important for us. We -- our financial metrics typically remains 4 to 6x. We are not competing with people to buy companies at 30x, 40x, 50x. That's not something which is the ethos of the Inox GFL Group. And I think we are on a very, very strong growth [indiscernible], both in wind and green. And I think we should be able to create enough value across that.
We'll take our next question from the line of Raj Kumar from Finvestors.
Sir, congratulations on a good set of numbers. Sir, my question is, in one of the interviews I followed you on media and in your last con call also, you said that FY '26 guidance of 1,200 megawatts will have an upside risk. So do you want to quantify that upside potential?
No, we will not be quantifying that. We've just said that we have an upside risk. What we've done at this point in time is we've upgraded guidance for this year from 15% to 17%.
Sure. And sir, next, sir, this year, what could be the realization per megawatt? I think INR 6 crores per megawatt was what was said in the last some con calls. So what I'm seeing in last 2 quarter results that the realization per megawatt is slightly lower.
Yes. So as we had explained in the previous participant's question as well that in the first half, there was more of supplies of the turbines rather than the EPC. So the realization of EPC did not happen, which will happen in the second half. So you will see our overall per megawatt realization moving closer to the INR 6 crores per megawatt figure which you have.
Okay, sir. And do you see any risk in achieving what we have guided for, for this year or next year? Any risk?
No, we don't see as such any risk. The way wind factor right now is going on is very positive. I think lots of customers are also getting ready with their own development. We are ready with our own development pickup pipeline, as Devansh also highlighted earlier. So don't see per se any risk and with respect to demand or with respect to execution.
We have our next question from the line of Nidhi Shah from ICICI Securities.
I just had one on the lower interest that we're seeing this quarter. So is this something that we would see for the rest of the year as well?
Can you please repeat the question, Nidhi?
So we're seeing a much lower interest payment this quarter as compared to the previous one. Is this something that we could expect for the year going forward as well for the remaining 2 quarters?
Yes. Thank you. You have already -- like we mentioned that we have become a net cash company now. So going forward, we'll have like only BG issuance charges also LC issuance charges kind of expenses in our profit and loss. And per se, there will be finance cost, but not the interest expenses. And that also will be offset by our earnings on the investment and our surplus cash.
The interest cost will drastically reduce every quarter. [indiscernible].
We'll take our next question from the line of Abhishek Nigam from Motilal Oswal.
Just wanted to check how are you thinking for beyond FY '27? And now that you are net cash, [indiscernible]. So what is the plan for excess cash? So that is my first question.
Abhishek, lets get that. As I've said publicly, what I've said in many of the investor meetings, we will be very cautious. We are growing massively. So while it's caution, but we're growing massively. So we've gone from 400 to 800 to 1,200 to say 2 gigawatt. Let's see how the market plays out? If it's going to be a 10-gigawatt market, we're going to be far larger than 2 gigawatts. So we're not holding back on 2 gigawatts. Number one.
Number two, we would carry cash at all points in time equivalent to at least 1/4 of outflows for us. So let's create that. Let's be there. Once we have that, we would have a dividend policy in place. We have that across most of our group companies. And I'm sure the Board of Inox will do also at the appropriate time, decide a dividend policy.
As you may notice, we are also strategically backward integrating into low-hanging fruits, high-margin businesses, we've gone into cranes. We're doing value addition through [indiscernible] and other similar measures. But we are very prudent in capital allocation.
So some of the new plants we're building out are on lease. It's cheaper to lease them than this than the interest saving is more than just using them. So we would like to be in a position where there's a lot of cash on the balance sheet. I think that's what we're looking forward to. And then we'll see what needs to be done there after.
Fair enough. And how should we factor in the interest expense going forward?
I think that's going to come down drastically. It's come down drastically every quarter. Q3 should be sharply down from even Q2. And I would assume by Q4, it should be virtually zero net earnings.
Fair enough. Just one last one for me. So you talked about the consortium. So how does that help in terms of working capital and other charges? So any color on that will be really helpful.
Ladies and gentlemen, we've lost the management connection. Please stay connected while we reconnect them. Ladies and gentlemen, we have the management team back on call.
Yes, I think the question was with respect to the consortium formation. So as you have -- you must have noted in our press release, the consortium is all they are without any corporate guarantee, without any collateral from any of our group companies. And to that extent, it means that the company has been well accepted in the banking community now. And as and when the -- as KT mentioned, there would be more and more business coming up. We'll keep on adding more and more limits and more and more banks in this relationship.
So to that extent, the need of the company for efficient working capital management will be always maintained. And to that extent, we'll, of course, bring down the working capital cycle as efficiently as possible. And naturally, it will also help us in interest -- banking charges reduction.
We'll take our next question from the line of Harshil Shethia from [indiscernible] Investment.
Sir, what kind of CapEx are you planning in FY '25 and '26.
So the CapEx will primarily be on the molds, which we are purchasing for our larger blades, that's around INR 50 crores to INR 75 crores for both the years.
Both the years included INR 75 crores?
No, per annum, per year.
Per annum. And maintenance CapEx?
That's roughly around INR 10-odd crores. It's included in this number.
Okay, included in this number.
We have our next question from the line of Chandan Mishra from Finvestors.
First of all, I want to congratulate you on your good set of numbers, sir. And my most of -- my all questions have answered, sir.
We'll take our next question from the line of Utkarsh Somaiya from India.
I just wanted to ask you about your tax rate. So I think you mentioned earlier that it's going to be nil for FY '25 and '26. Can you please confirm that?
Yes, it would be nil for FY '25 and FY '26 broadly.
Sorry, sir, you're not clearly audible. Can you repeat, please.
That's correct. Your understanding is correct.
And for FY '27?
The tax rate would be 25%.
For FY '27. Okay. And just to confirm, sorry, to be repetitive, that for FY '26, you plan to execute 1,200 megawatt at INR 6 crores per megawatt, with a 17% EBITDA margin, is that right?
Roughly, that's right. INR 6 crores approximately, that's right.
And net of other income and interest will have zero outflow, right?
Yes.
On the tax side, yes.
[Operator Instructions] Next question is from the line of Alisha Mahawla from Envision Capital.
I hope this is audible. And congratulations on a great set of numbers. Just would like some color on the competitive intensity because we -- what we're reading is that some Chinese players are becoming competitive again and maybe setting up more capacity while we do understand that there is ample demand and work for everybody, very soon it can turn into maybe aggressive pricing and impact on margins. So your thoughts on that would be helpful.
Look, let's try and understand, first and foremost, there is space for at least 5 large players. Currently, we're down to 2 or 3 players in the Indian market. Having said that, more than 50% of the Indian market requires turnkey. The Europeans, the Chinese are not party to that. They don't have the execution capability. They don't have access to sites. They don't have land banks. They don't have connectivity. So they're effectively out of that.
That's really a duopoly in that market, 50% of the Indian market. The remaining 50% is equipment supply. And equipment supply, effectively, currently, we've had umpteen Chinese coming so far less than 1% of market share. We've had a new player come up 2, 3, 4 years ago who's taking -- who's executed about 1,200 on the ground to date, which will be about 3% of the market. I mean, from what we understand in terms of pricing, whereas competitive, probably more competitive than in.
People may announce newer products, newer plants, doesn't matter. We are bringing out the right products, which are relevant for the Indian market where the cost of energy is the lowest. There's no point taking out a 5-megawatt turbine with a 160 rotor, when on a 4 megawatt, you can take out a 180 rotor. That's going to be lower in terms of cost of energy. Number one.
Number two, setting up new capacities is the least of issues. We have a 2.5-gigawatt pipeline -- manufacturing capacity, I apologize. We are setting up new plants to gear up for more growth for nonuniform growth. We're locating plants strategically to reduce our cost of logistics. And I think to that extent, we are very solidly placed.
Don't forget, we also have domestic content requirement kicking in, in the wind industry, thanks to the guidance from NITI Aayog. So effectively, what's happening is we're going to be competing on A-grade quality, then we are on par or far better than anybody else. We are not really looking at competing for C-grade quality orders for C-grade customers. And to that extent, certain players are more than welcome to pick those orders up.
And are we seeing in large corporates may be thinking of setting up own capacity just to -- and then just outsourcing the turnkey working in that case...
I don't think so. Barring one or two corporates, I don't think anybody is doing that. We are in discussions with most of the large corporates. It's a very complex business. This is not a solar module manufacturing business, where you can set it up in 6 months. We're doing that in the group as well for our captive requirements. Wind is complex. The supply chain is rocket science, if I may say so. Certification processes are 2, 2 years.
So -- it sounds very easy. One of the large guys in India did announce this in 2019. They, in fact, launched the turbine in 2023. Another guy announced -- supposedly announced a very large wind [indiscernible] in '18, did not move until '23. It's probably going to be 2 years out before they move and the product they plan to launch is outdated by the time they launch that. So effectively, I think we've built a very, very strong moat in the wind business. It's not something which you can replace this with money.
Understood. And is it right to assume that 100% of our supply chain is domestic?
No, we don't have 100% of our supply chain. We've never assumed that. We've never said that. We have a global mix between India, China, Europe, Korea. We're in compliance with all the laws. I will not disclose the exact percentage at this point in time. But given whatever guidances has come in from NITI Aayog, we are fully in compliance with that, capable of doing much more. But we leverage our global supply chain to take advantage of the lowest cost products as and when we need them at the right quality.
Understood. And just one last question on your balance sheet. In your opening comments, it was mentioned that you just spent last 6 quarters in strengthening the balance sheet and repaying debt and strengthening the cash flows. Where should we see the cash conversion cycle going from here? Is there scope for any improvement? Is there an ideal target that we want in terms of inventory or debtors? Is there -- what would be the road map for that?
I mean you've been seeing this for the past 6 quarters. Our cycle is only improving quarter-on-quarter-on-quarter. We've turned net cash positive from operations itself. We've turned cash positive. And I think we've done this after 7.5 years. I would give kudos to the team for doing a phenomenal job. We are walking the talk.
We are, in fact, beating every guidance we're giving out in the market for the past 6 quarters. So I'm surprised you asked when we see cash flow. Having said that, we've also stated we expect significant free cash flows to increase as we get into quarter 3 and quarter 4.
Sorry. My question was not on cash flows on the cash conversion cycle, your working capital cycle.
Our working capital cycle has continuously come down. So if you look at 2 years ago, we're probably at 1,000 days. We're now down to sub 200 days. We publicly guided for 90 days of working capital at the end of the financial year once we get a full financial year. And we are very well on track to do that. I think, in fact, we're ahead of the curve in getting to that target.
We have our next question from the line of Ketan Panchal, an individual investor.
My name is Ketan Panchal. I have invested all my money in Inox Wind. I'm very happy with your execution and hoping to [indiscernible] soon on the investment. I just want to say thank you.
Thank you. God willing, we'll create more value for you.
We have our next question from the line of Anuj Upadhyay from Investec.
Congrats on a good set of numbers. My question is basically relates to the restructuring across the Resco. When would the asset would get transferred to the Resco, that is the substations. And when do we plan to procure the cranes and put to the commercial use?
So based upon the Board approval, that will be get transferred within the next 1 year or so. And the crane business, we have already get started, the ordering has been done, and now that crane business will start soon in this entity.
Okay. Any broad number which you can share? How much would that -- how much crane we plan to procure and how much contribution would it have at the top line and at a margin or EBITDA level at the consol entity?
Broadly, we cannot give you specific details, but that will add the margins, which is made by many of the crane vendors. We are taking the crane from various vendors, some of them are listed as well. So that is available in a public domain. We will be able to say that much cost in our -- and that will immediately add in our EBITDA margin.
Got it. And this could be used for the third party as well, right? It's not purely for a captive product?
Broadly it is for the captive consumption, but the spare had capacity, which we will develop, will be used for the third party as well.
We'll take our next question from the line of Prateek Giri from Subh Labh Research.
So my question is to Kailash. Kailash, I just wanted to understand regarding our top line profile and margin profile. So what I can see is in H1 FY '25, we have done around INR 1,370 crores of revenue with 23% EBITDA margin. Now when we say that in next 2 quarters, we'll be increasing the EPC revenue, which is actually high margin than turbine supply business -- turbine supply revenue. So I'm...
I'll just cut you out there. You're incorrect on that. The EPC business is a much lower margin business compared to our equipment supply business.
Got it. Got it. And in terms of top line, it's bulky -- bulkier than turbine supply, is it?
No, no, no. So broadly out of the INR 6 crores per megawatt, INR 1 crore to INR 1.5 crores is related to EPC.
So around 20% to 25% maximum.
So in next -- I mean, in next half, we'll be executing around 500 megawatts of business. And as per the [indiscernible] INR 6 crores per megawatt, we will be getting around INR 4,500 crores, INR 4,800 crores of revenue. Is that understanding correct?
Broadly, yes. Because based upon our guidance, 800 megawatts of execution. You can consider INR 6 crores per megawatt. So -- but there might be some timing difference for the commissioning. So plus/minus 10%, 15%, your understanding is correct.
Okay. So going ahead, realization per megawatt would increase and margins should also -- realization per megawatt would increase and margins should decrease, correct?
Yes. Yes. We have already given the guidance for the full year, which is around 17%. So that will fall in place accordingly. So might be that in some quarter, it would be higher, in some quarter, it would be compared to in line with 15%, 16%. So we need to see the whole year guidance of 17%.
Which we've updated to 17%. It was 15%, which we've updated now to 17%.
Understandable, understandable. I have one request to make. Devansh ji, if you can share the order pipeline.
I'm sorry, we will not be able to share that. We appreciate. But for competitive reasons, that's not possible to share. We are talking to the largest PSUs. We're talking to the largest IPPs. I think you need to leave certain things to the management. We can't put everything out in the public domain.
We'll take our next question from the line of Krupa Desai from Electrum Capital.
Firstly, congratulations on a good set of numbers. Sir, my question was -- so currently, India is lagging behind the power evacuation infrastructure because of mainly transmission delays. I know we have a very good order book. But do you think because of this issue, newer capacity executions could delay or impacted.
No. Currently, the moment we are talking about, as we said, we have a project development pipeline. And we know that where we have our own connectivities or where customers have their own connectivities. Most of these guidance which we have given for next 1 or 2 years, we already have our own substation and infra ready, where it is mostly plug-and-play. So don't see that becoming as an obstacle or hinderance in terms of execution. But as we go for -- even for the future, we continue to develop our pipeline ahead of time.
I think that's very important. And just to add to call Kailash, unlike you could have a quarter here or there. But unlike some of our competitors, we are building the pipeline ahead of schedule. So you're not taking an order and then suddenly saying oh, we are 1 year behind, oh the connectivity doesn't exist. We are seeing what we believe we will do where connectivity exists or whether it's in final stages of happening. It's not something which could be 1 year away. It could be a quarter here or there. So I think to that extent, we have a very strong project pipeline and a good mix of turnkey and equipment supply.
We'll take our next question from the line of Pavan from Geojit PMS.
Congratulations from my side as well. Just one question. So all the orders that we are discussing as of now, they are for FY '27 and beyond in terms of deliveries? Or are we discussing something for FY '26 as well as of now?
Sorry, we could not hear you. Can you repeat, please?
I'm saying all the order -- new order flow discussion that we are having with our clients now, they are for FY '27 deliveries -- FY '27 and beyond in terms of deliveries? Or are we discussing anything for FY '26 as well?
Primarily, FY '27 and beyond, but it depends. We have the flexibility to play for 200, 300 megawatts for -- depends. It's something, frankly relevant. But yes, we are really looking at FY '27 onwards.
Currently, we -- the kind of orders we have, it's a mix in terms of execution. Some of them to be executed in less than 1 year, some of them to be executed 2 years. So we have some flexibility available in quarters. So depending upon customer relationship, client requirement, we are mixing it up well, and some of them could be execution in less than 18 months, but mostly could go beyond 18 months as such.
So essentially what I'm trying to understand is that when we say 1,200 megawatt of guidance for next financial year and possibly upside is to that. Are those orders already in the bag or we are still out there to...
No. We already have an order book of 3.3 gigawatts. So to that extent, if we're doing 1,200 this year -- 800 this year and if you're doing broadly 1,200 next year, we already have the entire order pipeline visible for FY '26.
Ladies and gentlemen, we'll take that as the last question for today. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.