Techno Electric & Engineering Company Ltd

NSE:TECHNOE

Earnings Call Analysis

Techno Electric Reports Strong Q1 FY '25 Growth with Optimistic Outlook

Techno Electric and Engineering Company Limited reported strong growth in Q1 FY '25, with total revenue increasing by 19.5% year-on-year to INR 413.74 crores and an EBITDA margin of 13.66%. The company created a 40MW data center in Chennai, expected to be revenue accretive soon. PAT surged by 95.78% to INR 100.43 crores. Looking forward, the company expects significant opportunities in AMI, transmission, and data centers, with a projected EPS of INR 75 by FY '27, supported by a robust order book of INR 9,100 crores and strategic projects in various segments.

Solid Revenue Growth in Q1 FY'25

Techno Electric & Engineering Company Limited reported total revenue from EPC at INR 413.74 crores for Q1 FY'25, marking a year-on-year increase of 19.5%. This growth trajectory indicates a robust performance, particularly when considering that Q1 typically accounts for only 15% of the annual turnover. The company's expansion strategy appears to be gaining traction, reflected in strong earnings before interest, taxes, depreciation, and amortization (EBITDA) of INR 56.53 crores, with a corresponding EBITDA margin of 13.66%.

Impressive Profit Growth

The profit before tax (PBT) grew by 5% year-on-year to INR 75.73 crores. Notably, the profit after tax (PAT), inclusive of discontinued operations, surged by an impressive 95.78% to INR 100.43 crores, which translates into earnings per share (EPS) of INR 9.34. This substantial growth in profitability, combined with effective financial management, underscores the company's favorable market position.

Strategic Developments and Future Outlook

Techno Electric is in the process of setting up a 40-megawatt data center in Chennai through a special purpose vehicle (SPV). While this is not currently revenue-generating, it is projected to add significant long-term value. By Q3 FY'25, the company anticipates that the data center will begin attracting customers and contributing to revenue, marking an important milestone in its diversification strategy.

Healthy Order Book and Future Revenue Streams

As of now, Techno Electric has a robust unexecuted order book of approximately INR 9,100 crores, alongside being the lowest bidder (L1) for orders worth INR 1,200 crores. The management is optimistic about securing additional contracts, estimating that they could capture around INR 3,000 crores from a current pipeline of potential orders exceeding INR 5,000 crores. This positions the company well for sustainable growth and consistent revenue streams in the upcoming years.

Capital Raisings and Financial Stability

In a significant move toward future growth, the company successfully raised INR 1,250 crores through a qualified institutional placement (QIP). The total current investment, including cash and equivalents, stands at about INR 2,500 crores, or about INR 215 per share, enhancing the company's financial stability and flexibility in execution of its growth plans.

Guidance for FY'25 and Beyond

Management has set an ambitious revenue target of INR 2,500 crores for FY'25, with expectations to further boost this to INR 3,500 crores in FY'26. This growth is expected to yield an EPS of INR 35 for FY'25 and INR 50 for FY'26, indicating confidence in delivering strong financial results. Looking even further out, the company anticipates an EPS of approximately INR 75 by FY'27, driven by expected order execution and increased project activity.

Sector Dynamics and Long-Term Demand Drivers

The energy sector currently faces an all-time high demand, with a projected peak load increase from 240 GW to 400 GW by 2030. This is accompanied by a shift towards renewable energy resources, which could surge from the current installed capacity of 43% to an estimated 64% by the same year. Techno Electric's focus on transmission, smart metering, data centers, and digitization aligns well with these evolving industry dynamics, suggesting substantial market opportunities ahead.

Challenges and Market Conditions

Despite the positive outlook, the company noted potential short-term challenges, especially related to the smart metering segment due to political sensitivities and other factors at the state level. However, Techno Electric is taking a conservative approach by managing its deployment targets, limiting itself to around 10 million meters over the next seven years, thus mitigating risks involved.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Techno Electric & Engineering Company Limited Q1 FY '25 Earnings Conference Call hosted by Asian Market Securities Limited.

This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to the statements and remarks.

[Operator Instructions]. Please note that this conference is being recorded.

I now hand the conference over to Mr. Suraj from Asian Market Securities Limited. Thank you, and over to you, sir.

[Suraj Sonulkar, analyst]

Thank you, Sidhant. Good afternoon, everyone. On behalf of Asian Market Securities, we welcome you all to Q1 FY '25 earnings conference call of Techno Electric and Engineering Company Limited. We have with us today, P.P. Gupta-ji, Chairman and Managing Director; and Mr. Ankit Saraiya, Director representing the company.

Now I request Mr. Ankit to take us through the overview of quarterly results and then we shall begin with the Q&A session. Over to you, Ankit sir.

[Ankit Saraiya, executive]

Thank you, Suraj. And thank you everyone, for taking your time to join us for this conference call, and good afternoon, and welcome to everyone to discuss financial for the quarter ended 30th June 2024. Anything said on this call, which reflects our outlook for the future or that could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the industry and company faces.

To begin with, let me quickly highlight our performance for the first quarter financial year '25. The results of the company are not comparable on a quarter-to-quarter basis due to the nature of the business. Quarter 1 generally 15% of the full year turnover, followed by 20% in quarter 2, 30% in quarter 3 and 35% in quarter 4.

Company has created an SPV to set up 40-megawatt data center at Chennai. The asset is under implementation stage. And currently, it is not revenue accretive, but as we've explained earlier, it's value accretive. In the consolidated results, we knock off the financials of this SPV as per the accounting standards. That is the major difference in the stand-alone and consolidated results. As and when this asset becomes revenue accretive, it will start showing its contribution in the results, and hence, it would be good to annualize, henceforth.

Total revenue for the company from EPC stands at INR 413.74 crores, up by 19.5% year-on-year. EBITDA for the company stands at [ INR 56.53 crores ], up by 19.05% year-on-year. EBITDA margin for the company stood at 13.66%. Other income for first quarter in the financial year '25 stood at INR 23.2 crores compared to INR 30.64 crores. Profit before tax for the quarter is INR 75.73 crores, up by 5% year-on-year.

The company has successfully collected all the outstanding from TANGEDCO and other DISCOMs. The company has outstanding receivables of INR 18.33 crores towards late/interest payment surcharge from sale of energy. During the quarter ended June 2024, the company had received an approval letter from TANGEDCO for delayed payment of interest on energy charges from 2009, '10 to 2020, '21, amounting to INR 78.24 crores, which will be received in 6 equal installments from May '24 to October '24. The company has received 2 installments of INR 26.08 crores for the month of May and June '24. The total receivables as on 30th June '24 is INR 52.16 crores. The company has recognized revenue from discontinued operations during this quarter amounting to INR 59.90 crores on account of recovery of interest on delayed payment on energy charges.

PAT for the quarter, including discontinued operations is INR 100.43 crores, up by 95.78% year-on-year. EPS for quarter 1 FY '25 stood at INR 9.34, up by 95.83% year-on-year. Current investment value, including cash and cash equivalents post-QIP proceeds stands around INR 2,500 crores. That is around INR 215 per share. Treasury income will continue to be recurring income for the company. Our unexecuted order book as on date stands at around INR 9,100 crores. We are L1 in orders worth INR 1,200 crores. This constitutes 2 [ PGCIL ] orders at [ Neelgarh ] and [indiscernible] worth INR 478 crores, 1 order from AGCL worth INR 522 crores and 1 order from Adani worth INR 135 crores.

Currently, the bids in pipeline are over INR 5,000 crores, for which the results are yet to be opened. We are hopeful of bagging at least INR 3,000 crores out of the same. The company has successfully raised capital an aggregate amount of INR 1,250 crores by way of QIP last month.

Just to take you through the outlook of various business segments, the company works in. We have been able to tide over the difficult times we witnessed in FY '23 and we expect the growth momentum, which began in FY '24 should continue for FY '25 and '26. We expect larger business out of AMI segment, transmission and data set.

In transmission, especially coming out of higher-end technological solutions, after a negligible or nil energy growth over the last 8 years, the energy demand is all-time high and the demand growth is in double digits. The present peak load demand of 240 gigawatt is expected to be 400 gigawatts by 2030. Thereby employing a per capita consumption to grow from 1,250 units to 1,750 units by 2030.

To meet this demand, the power plant capacity is planned to be enhanced by 80 gigawatt in the conventional part, coupled with energy transformation to achieve a renewable power penetration of 500 gigawatt to the existing grid by 2030. All this means the sector is now transforming by deploying high-end solution, namely supercritical power plant, 765-kV GIS Transmission Solutions, StatCom solutions, VSC solutions, HVDC solutions. Solutions bagged by best battery energy storage system, where your company has a larger presence than any other entity in the marketplace.

Your company is presently focused in following areas: transmission, smart metering, FGD, hyperscale/edge data centers and digitization of solution and power distribution. All these verticals are full of potential, and this implies a paradigm shift in the positioning of the company.

From the current mix of 43% of total installed capacity. Renewable energy is expected to be around 64% by 2030 due to the significantly higher growth rate or 16% CAGR of RE versus 4% CAGR of fossil fuels. India's aim to expand renewable energy capacity to 550 gigawatt -- 500 gigawatt by 2030 would require significant investment in transmission infrastructure. The CEA report on transmission system for integration of 500 gigawatt renewable energy capacity by 2030 identifies various transmission links aggregating 50,890 circuit kilometers and for INR 4,33,575 MPA.

Following the additions to the ISTS, the cumulative interregional transfer capacity is likely to be about 150 gigawatts in 2030. The integration of this transformation capacity at new/existing substation under ISTS, for wind and solar capacity by 2030, would entail a cost of INR 2.4 trillion. Thus, Power Grid sees a large addressable market and estimate is transmission CapEx at INR 1.71 lakh crores up to 2030 and expects CapEx revival to INR 15,000 crores, INR 25,000 crores, starting from financial year '24, '26. This makes us optimistic pickup in power bid CapEx/asset capitalization, which would bring sizable opportunity for Techno in next 2 to 3 years.

Data centers or digitization, widespread will also create additional demand for power. As mentioned earlier, to increase -- to meet the increased demand, the government mentioned the need to have 80 gigawatt of thermal capacity. This will bring a lot of opportunity in generation segment for balance of power plant, power evacuation facility deployment for Techno.

On the distribution side, RDSS, we see a lot of activity happening going forward, particularly in the case of smart metering, as government desires to contain losses of the DISCOMs. We are witnessing focus on strengthening power distribution network to make them smarter and intelligent. Around 22.22 crore meters are under various stages of award, totaling to around 2.22 lakh crores, out of which around 87.64% would be under RDSS scheme.

Out of the above, around bids for 11.76 crore meters have already been awarded and around 1.27 crore meters have already been installed. Apart from these, we will definitely need energy storage solution like battery, or pump storage of no less than 20% of this capacity. And this will also have to be additionally supported by many kind of captive, capacitive, reactive power management solution in the grid, and we see significant activities where Techno is fully qualified and competent to be part of.

Coming to FGD segment. The FGD segment is seeming to come back to momentum. We have got orders worth INR 1,450 crores for FGD and that is progressing as expected. This level of business will continue for the next 5 to 7 years, as 100 gigawatt is yet to be ordered out by CPSUs, SEBs and private cycling to a scope of INR 1 lakh crore.

Under transmission, TBCB bidding is happening for 50 to 100 gigawatts. And a lot of bidding is in progress at the moment, and we are finding that every month 4 to 5 concessions are being awarded to Power Grid or to the private sector. Total bids opened for transmission is about INR 40,000 crores, out of which Techno expects to book order worth INR 2,000 crores to INR 2,500 crores per year over the next 2 to 4 years. We currently have orders worth INR 4,900 crores for transmission, including TBCB orders. And we are currently L1 in orders worth INR 1,200 crores within this segment.

On the metering segment, we expect to get orders worth INR 1,500 crores to INR 2,000 crores out of this segment every year for deployment of 2 million meters. We have already got orders for around 3 million meters worth INR 3,500 crores. We have successfully backed to concessions in TBCB, Gogamukh and Bokajan with a total revenue of INR 2,800 crores over the concession period. Similarly, we have also one concession of deploying 3 million smart meters. We have also won concession of RailTel to build 100 plus edge data centers at prominent locations in all the Tier 1, Tier 2 and Tier 3 cities, under digitization plan.

To share an outlook on data centers, we believe that digitization and services on cloud is the most prominent reason that has led to growth of data center and demand of data centers apart from other reasons such as 5G and many more. The Indian data center market size is estimated to be 2 gigawatts in 2024 and by 2029 it is projected to reach 4.77 gigawatts, indicating substantial growth rate of 18.8%. In monetary terms, the market size is expected to be USD 2 billion in 2024 and USD 4.5 billion in 2029.

The growth drivers in data center segments are cloud adoption, data localization driven by the PDP bill 2023, policy incentives, digital transformation, technological developments due to roll out of 5G, AI, VR, virtual reality. We believe that AI and virtual reality will be revolutionary and would incrementally require larger and more befitting data centers. Apart from that, Internet of Things, big data and cloud computing will continue to remain growth drivers for the segment.

Techno is also in advanced stage of setting up a data center of 24-megawatt IT load of hyperdensity nature ultra-scalable at Chennai. We have achieved significant progress on construction. We have already spent around INR 305 crores on the project, and we are hopeful of commissioning the first phase of the project during the third quarter of financial year '25.

Overall, last 5 years, the company has successfully monetized all the assets created over the last decade or 15 years in the field of renewable power, transmission assets under PPP model, TBCB mode. This has resulted in a cash surplus of INR 1,500 crores in the book of the company and is available for next phase of growth.

During the last year, we had mentioned that morning has just begun and is only the first shine of the sun, which would keep the brightening with every passing year. We are confident to achieve a revenue of INR 2,500 crores for the current year and INR 3,500 crores for the next year, implying an EPS of INR 35 and INR 50, respectively.

This concludes the opening remarks, and we are happy to take further questions for discussions.

[Operator]

[Operator Instructions]. The first question is from the line of CA Garvit Goyal from Nvest Analytics Advisory LLP.

[CA Garvit Goyal, analyst]

Am I audible?

[Operator]

Yes, sir please go ahead.

[CA Garvit Goyal, analyst]

My first question is on the data center project. Like you mentioned, it is expected to be commissioned in Q3 FY '25. So my question is how much revenue do you expect in FY '26 out of this project, sir?

[Padam Gupta, executive]

Ankit, will you like to reply?

[Ankit Saraiya, executive]

It will take us at least -- we can expect 3 months to 6 months from the date we start commissioning, which will probably be somewhere around end of September to start finding our first plant and first customers. It is only after commissioning we will expect that we see serious interest, and we will be in a position to attract quality customers. Therefore, at this stage, it is a little too early for us to really say that what is the expected revenue until unless we've built our sales pipeline, which is probably, in my opinion, 6 to 7 months down the line.

[CA Garvit Goyal, analyst]

Understood, sir. Secondly, in opening remarks you mentioned about the BESS project. We heard from one of our listed peer about the upcoming tender of INR 15,000 cr to INR 20,000 cr in next 1 year. So how much of it do you expect will come to Techno Electric, sir?

[Padam Gupta, executive]

We are currently actively participating in BESS. And we do believe that there is a various opportunity in the industry to participate in BESS. We are still figuring out the right mode and mechanism in which Techno would like to participate in the industry, whether as a developer and EPC or weather somewhere in the middle, I think, yes, the BESS market is to open. There is hardly 1 or 2 projects which have been installed and 2 are largely more of a POC, more of a proof of concept. Given that I think we are yet to figure out our own journey in this segment. But nevertheless, there is a huge opportunity for the entire industry.

[CA Garvit Goyal, analyst]

Got it, sir. Just last question on the order book side, like you mentioned you are expecting INR 1,500 cr orders in smart meter side. And I think it means that like INR 3,000 cr also you are expecting somewhere. So greater than INR 5,000 cr, you are expecting somewhere, right? What is the time line for these order inflows?

[Padam Gupta, executive]

These will flow in over a year we guess. But as we said, we are already L1 in 1,200 cr so that will happen in Q2. And balance are in pipeline. We have submitted tenders we are yet to be opened and evaluated properly worth about INR 5,000 cr. So it's the ongoing exercise, we are talking of a yearly target, including '24, '25, we have the order book of additionally INR 4,000 cr to INR 5,000 cr into transmission, smart meters, distributions, FGD all put together.

[CA Garvit Goyal, analyst]

So out of INR 9,100 cr order book, you will execute INR 25,000 cr and then additionally, you will get INR 5,000 cr. Is that understanding correct, sir?

[Padam Gupta, executive]

To be conservative INR 4,000 crores may have the INR 5,000 crores or INR 6,000 crores also as the markets are down. So I trust we are in a good order book region and growth is ensured for the next 2, 3 years.

[Operator]

[Operator Instructions]. The next question is from the line of [ Rohit Singh ] from Nvest Analytics Advisory LLP.

[Unknown Analyst]

Sir, my questions are already answered.

[Operator]

The next question is from the line of Subhadip Mitra from Nuvama.

[Subhadip Mitra, analyst]

I think I've heard in the opening remarks that you have already awarded a couple of transition concession projects. I'm not sure if I heard it correctly. So just wanted to clarify that, are you independently also bidding for any TBCB transmission projects, which you have recently won?

[Padam Gupta, executive]

Absolutely. You are right, Subhadip, we have on 2 concessions in TBCB. We want to be in a CapEx range of INR 500 crs to INR 700 crs. The total concession period revenue is INR 2,800 crores, and this relates to Gogamukh and Bokajan at the moment. And the total CapEx involved in these 2 concessions put together is about INR 750 cr. We touched on the -- with so much of opportunity of the high end CapEx. The major players are quite busy now and their hands are full. But on the lower CapEx solutions, the competition is relatively low, and we are able to find better rewards relatively. So we thought to capitalize build on this opportunity where station contact is about 70%, 75% and line is no more than 20%, 25%.

[Subhadip Mitra, analyst]

Understood. Sir, what kind of return ratios or ROEs are you looking at for these kind of projects ballpark range?

[Padam Gupta, executive]

You can say about 14% plus/minus.

[Subhadip Mitra, analyst]

14%, right? Understood. And you would be looking at deploying debt to the tune of 70% and 30% equity, something of that, sir?

[Padam Gupta, executive]

Right. You see, at the moment, we should be able to execute the project in COD out of our own resources as we do past any other developers to begin with in the spot of the industry. And definitely, we don't need that to hold to the life cycle of the asset. So it will definitely be partner with something which during the course of implementation of the project we are short. But if needs to be for the entry period, we may take some debt, sir, which can be 70% or plus/minus.

[Subhadip Mitra, analyst]

Understood. Are you already -- I mean, just asking that is there already an arrangement or a period of mind arrangement in place with, let's say, an InvIT or someone else to whom you can flip the project once it's mature?

[Padam Gupta, executive]

Yes, discussions are on, but not concluding so much.

[Subhadip Mitra, analyst]

Understood. And sir, lastly, in terms of your guidance, you did -- you have given us the guidance for FY '25 and '26. But if I will have to -- as the guesstimate for the FY '27 EPS, what kind of ballpark range would you be looking at?

[Padam Gupta, executive]

At least about INR 75.

[Subhadip Mitra, analyst]

Okay. Okay. Got it. Understood. And with the current level of margins, that would sustain? Or you're looking at margin expansion, sir?

[Padam Gupta, executive]

Yes. Because at least '27 is well taken care of our orders in hand already, which is about INR 10,000 cr with us as of now. So putting all together, including the top line of INR 4,500 cr to INR 5,000 cr of '27, this INR 10,000 cr will stand fully executed by that believing no order efforts over the full year.

[Subhadip Mitra, analyst]

I read you. And this would include, I mean, this INR 10,000 cr -- sorry, the INR 4,000 cr of sales, including any potential revenue from the data center piece or this is only the core EPC business, whatever comes from data center is over and above?

[Padam Gupta, executive]

Pure EPC. No data center revenue is entered there, because this we are talking of the parent company basically. Data center is in SPV, that will be an add-on to this company. That was generate its own EPS of INR 25, INR 30 for years.

[Operator]

[Operator Instructions]. The next question is from the line of Chirag, who is an Individual Investor.

We will move to the next question, sir?

The next question is from the line of [ Evan Soni ], who is an Individual Investor.

[Unknown Attendee]

Just wanted to confirm the number which you gave just now for FY '27 APM. Is it 75%? Did I hear it correct?

[Padam Gupta, executive]

Yes.

[Unknown Attendee]

And sir, the order book number as on date, can you please highlight, I missed it?

[Padam Gupta, executive]

It was INR 9,100 crores in hand.

[Unknown Attendee]

[indiscernible]?

[Padam Gupta, executive]

We have another INR 12,00 cr.

[Unknown Attendee]

Another INR 12,00 cr available. Okay, sir. And I just wanted to confirm. I just wanted to confirm one more thing. Like we had an aspiration of reaching INR 5,000 crores of revenue over the next 4 to 5 years. I think in the last call, it was revised to INR 10,000 crores. Okay. So does it stand still?

[Padam Gupta, executive]

INR 5,000 cr no later than '26.

[Unknown Attendee]

Hello?

[Padam Gupta, executive]

I think there's some disturbance, I don't know. This INR 5,000 cr figure may be visible as early as '28, if not '27.

[Operator]

The next question is from the line of Mahesh from LIC Mutual Fund.

[Mahesh Bendre, analyst]

Sir, over next 2 to 3 years, what kind of capital expenditure we are anticipating both on EPC business and the asset heavy business where we want to develop?

[Padam Gupta, executive]

Yes, we have programmed to spend about almost INR 8,000 crs to 10,000 crs, comprising our smart meters, TBCB as well as data centers. Both in hyperscale as well as in edge data centers. So the CapEx will be around INR 8,000 crs to INR 10,000 crs, but which may be monetized also simultaneously as going forward.

[Mahesh Bendre, analyst]

And CapEx from the EPC business?

[Padam Gupta, executive]

EPC business, so far, we have -- we don't need any CapEx as far as is concerned for TBCB. yes, that will be about INR 750 cr out of our total concessions sales which we have so far won. And for EPC, our general working capital needs will always be there.

[Operator]

[Operator Instructions]. The next is a follow question from the line of CA Garvit Goyal from Nvest Analytics Advisory LLP. Please go ahead.

[CA Garvit Goyal, analyst]

Just to confirm, like you mentioned INR 75 for FY '27. Is data center projections included in it? Or we are -- it will be over and above to this?

[Padam Gupta, executive]

It will be over and above this. It is -- data center is not part of this. The EPS will be part of the SPV of data centers.

[Operator]

The next question is from the line of [ Deepam Gala ], who is an Individual Investor.

[Unknown Attendee]

Congrats on the good set of numbers. Sir I wanted to ask what has been the [indiscernible] can you quantify it?

[Padam Gupta, executive]

Can you repeat your question, sir?

[Unknown Attendee]

So what has been the pull down in the steel prices year-on-year, can you quantify it?

[Padam Gupta, executive]

Quantify what type of [indiscernible]?

[Unknown Attendee]

Steel prices.

[Padam Gupta, executive]

Marginally better now, but in our solution, the content of steel is no more than 20% per se. But there is a rise in copper prices also. So something or the other keeps overall balancing to it, but let's see how it goes forward. At the moment [indiscernible] PV is around 5% over last 3 months, whereas steel you may be having a PV of 2%, 3%. You are right.

[Unknown Attendee]

Okay. So is there any change in the business mix that has led to the change in the GP margin?

[Padam Gupta, executive]

No. We -- overall, we attempt these to keep the same GP margin, depending on the status of execution of each contract given the mix of the contracts we are doing, we are hopeful to retain this kind of margins as EBITDA of 13% to 14% or 15% going forward also.

[Operator]

The next question is from the line of Faisal Hawa from H.G Hawa and Company.

[Faisal Hawa, analyst]

Sir, just data center the opportunity. Will it be rejected for us in West Bengal, I don't know or will try to get to other states also? And who is our ultimate customer in this [indiscernible] person who is having the data of the various corporates who want to also set up their remote recession? And sir, any plans to include cash surplus that we are having towards any kind of buyback or large dividend?

[Padam Gupta, executive]

Question 2, I will answer after Ankit has answered you on the data center. Ankit, will you address data center query?

[Ankit Saraiya, executive]

Yes, sure. So the first data center that we are commissioning is in Chennai. It's in Tamil Nadu. I probably heard you mentioning West Bengal, but that's not the case, if I've heard you correctly. The first project is in Tamil Nadu. And apart from that, our second large data centers planned in West Bengal where we have very recently been allotted a rank that is state of West Bengal. But that project will come into picture of -- as a commission project by only 2026, end of 2026 or maybe mid-'27.

But apart from that, we won a project from [indiscernible] Corporation, which is arm of Indian Railways to set up 102 data centers across the country, which is almost like 4 data centers in each state, which is giving us a countrywide presence. So we are not only looking to be a state player, but rather a national player when it comes to data centers with the widest footprints of data center by any operator. So that's the journey for the company.

And as far as the customer is concerned, it will be a mix. It will be a ratio of -- it will be some kind of a mix hyperscale and enterprise customers, which might be 50-50, 60-40, something of that nature. So that's the kind of mix we're looking for our large data center in Chennai. While edge data centers might have a very right kind of customer base, right from few locations being occupied by hyperscalers, a few other locations being occupied by enterprises that may have some level of retail presence as well. So that's the range of customers that we are targeting. I hope I've been able to answer your question.

[Faisal Hawa, analyst]

And most of the electricity will be generated by renewable sources?

[Ankit Saraiya, executive]

We attempt to make all our projects, it's part of the DNA in ESCs and the mindset that we will always like to be carbon neutral in our operations and it's not carbon-neutral carbon period. So we try to ensure that maximum energy that is consumed in any of our projects is renewable energy.

[Faisal Hawa, analyst]

So is it a good assumption to make that we will get at least 2 to 3 data center in every financial year new orders and -- or it's [indiscernible]?

[Ankit Saraiya, executive]

No. So as I mentioned that Chennai, what we are developing is going to develop in phases as I've explained earlier. So this year, we are commissioning the first phase out of 4 phases. And going forward, consecutively every year, we will be executing on 1 phase of that project. Similarly, in Kolkata, it will start first phase will be commissioned in '27 and going forward, consecutively, we've commissioned each phase ahead. And for edge data centers, we plan to roll out 20 data centers every year and complete the 100 data centers by 2029.

[Operator]

[Operator Instructions] The next question is from the line of Rahil Shah from [ Crown Capital ].

[Unknown Analyst]

Can you hear me?

[Padam Gupta, executive]

Yes, Shah.

[Unknown Analyst]

Just 2, 3 questions ago, you were mentioning that you're only in CapEx for EPC, right? Just the working capital. Then you mentioned you will just need some INR 750 crores of CapEx, but I missed what was that for? Can you please repeat it?

[Padam Gupta, executive]

See, we have 2 TBCB concessions, one like Power Grid or any other private developers like Adani or Sterlite, which would involve a CapEx of INR 750 cr. So that is an investment from our side because that is a concession of 35 years, which we are entitled for almost INR 80 cr per year. So we have to invest our own capital. As far as EPC is concerned, you have always thumbs up payment with the customer. I hope you are carrying out the project like Power Grid or Adani or Sterlite, they pay you month on month. So that's a normal working capital requirement, which we call EPC business.

[Unknown Analyst]

Okay. Okay. And just secondly, along with this revenue guidance, you also expect to maintain the margins between 13% to 15%, correct?

[Padam Gupta, executive]

Absolutely right.

[Operator]

The next question is from the line of Nandan, who is an Individual Investor.

[Unknown Attendee]

My question is on the data center part. Now I mean, we are in -- we are already delayed in this first phase of data center. And the delay has been about now, say, a year. So what is the reason for such a delay? And do we expect such more delays seen in the future as well in the data center?

[Padam Gupta, executive]

Let me first set the call right, sir. We are not delayed by a year. It is only a delay of about 3 months. And that basically happened because of the floods that rained in Tamil Nadu, in the month of May, dislocating many logistics issues. And also, there is some delay of the power intake from TANGEDCO in the data center. So there is no delay of a year, first, I would say. We wanted it to be completed in the second quarter, Q2, which is now being delayed early Q3, you can say.

[Unknown Attendee]

Okay, sir. So it will be -- it will -- the first phase will be commissioned in Q3?

[Padam Gupta, executive]

Yes, yes, absolutely.

[Unknown Attendee]

Okay, sir. And I mean, are we getting the employees or the engineers, I mean all the staff for the data centers, because what we hear is that in the data center industry, there is not sufficient employees available in the market. So are we getting the recruitments?

[Padam Gupta, executive]

No, there are challenges in this space. Because suddenly, there is more demand than supply of the professionals available. But we are able to mix and match. When we started 2 years back, we was a small team of 10 people. Today, we are a strong team of 55 people already. And I'm sure it will be more than 100 by another year end. So people are being blended with the existing setup of the Techno also who is competent to execute the same type of jobs and also people are being recruited to augment our marketing and O&M groups, which are specialized data centers. So availability is a bit difficult but it is not -- they are not there. Ankit, will you like to add something to it?

[Ankit Saraiya, executive]

I think you've covered most of it. You see building any team from scratch is very, very difficult. And especially in this sector where there is scarcity if you do the age of the sector, which is only about 5, 6 years old technically speaking with great growth potential and almost number of players participating. So there's always a shortage of quality manpower, let me say that. But ultimately, we all have to be part of the industry, and we all are citing to find a place.

[Unknown Attendee]

Just one more last question. On this data center front, now we are planning to build, say, 250 megawatts of data center by 2030, I think. Sir, what is our plan, sir? I mean, in terms of building our own data centers and building the EPC part of the data center, what will be the place that we can expect going forward until 2030 in the data center space?

[Padam Gupta, executive]

It will be mostly deploying our own data centers, both in the edge category as well as in the hyperscale category. And maybe in between, we get the opportunity to develop AI-based data center, like we have MOU with Keppel of Singapore who are strongly and seriously evaluating setting up a AI-based data center in India with the undersea cable connectivity reaching a portion.

So this sector is evolving and so are the opportunities around it. But given the present visibility until 2030, we'll be only deploying our own data centers and not [indiscernible] or others. And secondly, focus will be equally balanced between edge data center and hyperscale data centers.

[Operator]

[Operator Instructions]. Our next question is from the line of [ Sunil Bhojwani from VK Family Office ].

[Unknown Analyst]

This is with regards to the reference, the guidance given for FY '25, which is INR 2,500 crores. Do we -- are we capable of bringing a run rate of INR 600 crores to INR 700 crores per quarter in the coming -- having monsoons coming in the next quarter? Do you see that we can manage the run rate of INR 600 crores to INR 700 crores in a quarter?

[Padam Gupta, executive]

Sir, firstly, in our -- this sector, that is what we said in the beginning quarters are not comparable and equivalent to 25% each. Generally, first quarter and second quarters are weak, which are around 15%, and Q2 is about 20%. But Q3 and Q4 are very strong in our industry. They generally are almost about 30% and 35% in terms of the annual output. And you can see historically, it is a shape. So that is why to address this confusion, we stated in the beginning of the submission that quarter-on-quarter the results are not going to be equivalent and adequately distributed.

[Unknown Analyst]

Okay. Noted, sir. And just 1 bookkeeping question, sir, what kind of tax rate would we have for the FY '25?

[Padam Gupta, executive]

It will be about you can take overall 20%.

[Unknown Analyst]

Around 20%. Okay. Okay. That's all from my side.

[Operator]

The next question is from the line of Ashish Soni from [ Family Office ].

[Unknown Analyst]

Sir, in terms of the data center business, are our hands full in terms of whatever you're talking about Phase 1, Phase 2, Phase 4 in Chennai and Kolkata and data center for RailTel? Or are we planning to take up more orders in future?

[Padam Gupta, executive]

Timing, you can say our hands are nearly full for next 6 to 12 months. Definitely, we'll be more busy in executing only. But if any good opportunity comes by, we won't be shy of, because generally, a data center gives us 3 years should apply by and large as a way of life. Whereas the edge data centers, you have to make ready within 9 to 12 months on each location. So definitely, company will be now more busy in developing edge data centers, because we are committed to RailTel to do 20 edge data centers per year in 20 pockets.

[Unknown Analyst]

And in terms of transmission, there is a lot of pipeline being planned. So are we going to bid aggressively for that in next 1 or 2 years, because that's mandate across the state government and central government?

[Padam Gupta, executive]

See this word aggressive makes me worry. We have definitely most experience and lead organization as far as station building is concerned. And most -- and that to a high-end applications like 765-kV AIS or GIS. So we will always have our position there. We already have business worth about INR 5,000 cr in this space, building around 8 to 10 stations for different developers, including Power Grid.

We are also mechanizing and shrinking the time lines. We are executing a very first [ TGS ] assignment of Power Grid at Sikar now, where they were delayed by 2 years in acquiring the land. And now we are building a station in 9 months, and we are almost there. So given the ability of 30, 40 years of background, having built [ 450 ] stations successfully countrywide. We are very confident of matching anybody's any kind of deliveries and specs as long as they are rewarding to us.

[Operator]

[Operator Instructions]. The next question is from the line of Sarvesh Gupta from Maximal Capital.

[Sarvesh Gupta, analyst]

Sir, on the edge data centers, so this year, we would be implementing 20 of those. So next year, what kind of revenue accretion or bottom line can we expect from this?

[Padam Gupta, executive]

You can look on edge data center, we are still not sure on the size of each deployment. It can range from 100 kVA to as big as maybe 0.5 MVA to 1 MVA each and revenue will be around INR 18 cr to INR 20 cr this year. So we need to experience it. Maybe we'll be more handy to be precise by that of the year. But we do trust that each data center on an average should give us INR 5 crores revenue 1 year, say, 20 means INR 100 cr, you can say.

[Sarvesh Gupta, analyst]

And against that, sir, what would be our expenses like what sort of margins we will be getting in this business? Very rough figure would be okay.

[Padam Gupta, executive]

You can take EBITDA of around 70% in this market, but CapEx is also a bit high. That is roughly around INR 18 cr INR 20 cr per megawatt as against -- not INR 60 cr per megawatt as against INR 40 cr in case of hyperscale data centers. So all put together, you can still say that IRR will be 20-plus only. But how it will pan out, we are yet to configure. It can be a good rewarding business going forward because scalability is available here over the concession period. That is a big advantage in this concession. That 100 kV again to borrow become 1 megawatt over the period, is that local pocket. So that is a big advantage here, scalability.

[Operator]

There's a follow-up question from the line of Subhadip Mitra from Nuvama.

[Subhadip Mitra, analyst]

Just as a follow-up to my earlier question, if you have to get through the ballpark EPS of INR 75 by FY '27. My estimate is you would be looking at a PAT number, which is north of INR 850-odd crores. With a top line of, let's say, INR 5,000 crores, INR 5,500 crores by '27, would we be looking at EBITDA margins crossing 20%. Is that the estimate?

[Padam Gupta, executive]

No, Subhadip. It's a bit complex, dear, not so simple. You see we have a good amount of treasury income. We have a good amount of TBCB income, capital gain income out of hiving off of the asset deployed, so all put together, we are talking at the parent level, this will be the kind of reward visible in '27. So if you will look on a simple mathematics of only EPC being as it may not match thereof, because if you compute the tax element on it, it may come out on treasury income, which is happening year-on-year in Techno as it is. So it is a blended income we are talking, sir.

[Subhadip Mitra, analyst]

I read you. So only the operational EPC income without, let's say, the treasury gains or without the other income or capital gains on asset sales, et cetera. If I'm looking at your operational income, then we should roughly take that INR 5,000 crores, INR 5,500 crores top line and take maybe a 15%, 16% EBITDA margin and then do that as below?

[Padam Gupta, executive]

Right, right, you can say it. You're not very wrong, I will say -- you are allowed that number, yes.

[Subhadip Mitra, analyst]

Understood. Understood. And given that you have such heavy CapEx coming up across various segments, whether it's on the data center, on the TBCB transmission projects that you have won, wouldn't that kind of dense your cash balance and treasury income as well, the other income part of it?

[Padam Gupta, executive]

Sir, look, these economics are always a double-edge solutions. On one hand, we have a cash, which can be generate treasury income or it can become IBC income to buy own projects, which we are deploying as a CapEx going forward, like you take a case of smart meter, sir, say it is a concession of 10 years. Now when we bid a concession, I'm obviously building a time value in the solution provided, which is no less than INR 2,000 per meter on an average. So if I deploy my capital on capital, that I won INR 2,000 out of that deployment. So either I had treasury income or I say INR 2,000 to be paid to third party over the period.

So the income that this INR 2,000 is over and above EPC margin. It is not a part of EPC, sir, because that is the time value of the CapEx deployed you even built in the cost or in the very concession doing bid year-on-year. That is what becomes IRR ultimately at the end of the year. So these kind of calculations are a bit simple, but may look a bit complex.

[Operator]

Next question is from the line of Ashish Soni from [ Family Office ].

[Unknown Analyst]

Sir, in smart meter, are we seeing any challenges on the ground, because we hear multiple reports across states? Some states have some challenges. So what's your view on that?

[Padam Gupta, executive]

You see, power is a seed of power in our country and definitely embraces the consumer and vote banks. So there may be temporary interruptions between you and me. But ultimately, power reforms have to happen. Our BESS scheme has to be successful for the government. Government wants to make sure all these comps are financially viable entities after 20 years of electricity and also, we are not able to do that yet. So this is a necessity, not a requirement, I will say, convenience anymore. But some interruption of 3 months during the voting period, they are may be there, but it cannot be long run. But as far as DT metering and feeder metering is concerned, it is going strongly. There is no issue on that side.

Secondly, being concerned what you have raised, we are part of relatively smaller stakes like Tripura or Jharkhand or the J&K, you can say, where these issues maybe there, sir, but will not be of as magnitude as you may experience in not [indiscernible] states like Maharashtra. I know Maharashtra set a little long signal in the country. But that is the political compulsion possibly.

[Unknown Analyst]

But there is some -- is there a chance there might be some impact on our business because of this for 6 months, 1-year period sort of thing, that's the message I take coming from this?

[Padam Gupta, executive]

Yes. You have -- you take 2 messages, sir. Firstly, Techno has always been conservative in this space, we are not the -- we are the smallest of the deployer where our aim is not to do more than 5%. I will again repeat over next 7 years, my share of total meter deployment will be less than 10 million. So because we had deployed static meter as BPL, APL category over last 10 years, so we know we have the games. We know the art of deploying the meters. We understand the concession. We understand the challenges of counterparty risk under electricity act.

So all the launch put together, we did not want it to be out of the space. But we are also not trying to be the largest or the best like we may like to be in transmission or in ISTS. So that we are conservative, we have contained risk and impact is not -- which cannot be absorbed by the company.

[Operator]

Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.

[Padam Gupta, executive]

Yes. Ankit, you have done that. Why don't you close also?

[Ankit Saraiya, executive]

Just the moment. Yes. Let me do that. I will only say, thank you very much once again for all of you to be part of this call. And we trust we have tried to address the issues to the best of the market conditions and situations. And I can assure you, you are a company in a given space, we'll always like to outperform. Still, if you have any queries related to our performance, please drop a mail to us. And if you happen to be on this side of India in Kolkata now we have equally large data visibility, you're welcome to visit us. And I, once again, thank everybody for joining the call.

[Operator]

Thank you. On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.