Techno Electric & Engineering Company Ltd

NSE:TECHNOE

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Q2 FY '25 Earnings Conference Call of Techno Electric & Engineering Company Limited, 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 guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projection, et cetera whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks.

[Operator Instructions]

Please note that this conference has been recorded. I now hand the conference over to Mr. Suraj Sonulkar from Asian Market Securities. Thank you, and over to you, sir.

[Suraj Sonulkar, analyst]

Thank you, Jaibhav. Good afternoon, everyone. On behalf of Asian Market Securities, we welcome you all to Q2 FY '25 Earnings Conference Call of Techno Electric & Engineering Company Limited. We are pleased to have with us P.P. Gupta, Managing Director; and Mr. Ankit Saraiya, Director representing the company. Now I request Sri Gupta ji to take us through an overview for the company's quarterly results, and then we can shall begin with the Q&A session. Over to you, Gupta ji.

[Padam Gupta, executive]

Thank you, [ dear ]. Very good afternoon, and to all of you and I welcome everyone to discuss our financial results for the quarter, Q2 and half year ended 30th September 2024. [indiscernible] said, anything said on this call, which reflects our outlook for the future or that could be constitute as the forward-looking state be must be viewed in conjunction with the risk that the industry and the company [indiscernible].

Let me first highlight our performance. The results of the company are not comparable on a quarter-on-quarter basis due to the very nature of the business, and we have maintained this in our earlier calls also. As earlier discussed, that's what generally contributes 41% -- 40% of the full year and balance 60% is in H2. In this respect, we are short by around INR 100 crores in H1. That is about 40% of INR 2,500 crores, the target for this year. This is basically due to the delay in anyone [indiscernible] sites by various clients like Powergrid, ingrid [indiscernible] or Adani. But out of this now, we have already received 4 sites from Adani and [indiscernible], and we are confident to make it up in batch 2 as we have a robust order book and clear visibility of additional opportunities in the T&D sector.

We would like to highlight that the average order value now is almost double-digit in recent times. So though the total order value, they see [indiscernible] by number of sites are more or less same on this. At the same time, the speed of executing these projects is becoming a more and more requirement of most of our customers. They want to make up for the lost time in acquiring the land part and handing over to a buyback of solutions. The most interesting this experience in H1 is related to see [indiscernible] power where the site to send it over to us after a delay of almost 2 years. And we were [indiscernible] slow company project in 9 months as against aggregation times as per contract of 19 months. And I am happy to say that we are successful in doing it at par the technology business achievement first time in the country of [indiscernible] sale and size of project being deployed in such a coordinated and integrated manner. So Techno have a proven record and competent to do faster themes. So speed is going to be the way of deploying these solutions in future.

You are all aware, we are now -- we're [indiscernible] the 40-megawatt data center in Chennai, the phase 1 of these data center is maybe completion. And as [indiscernible] is still implementation stage, it has not achieved the revenue at critical, but is definitely actually will be a [indiscernible]. There is a good impression the foreign entities could be part of this project. In the consolidated results, we got on confidential of the SPV data -- SPV of the data center. So that is the difference between the standalone and consolidated results. We will be, of course, this was be a requirement once it becomes revenue activity. As I brief the first half of financial year '25, our revenue has been around INR 914 crores, the EBITDA is about INR 126.13 crores. The other income is that [indiscernible], the profit before tax at INR 180 crores said and profit after tax is at INR 145 crores, which implies compared to INR 125 crores of the previous year, it is 65%, up over the last year and EPS at 17.16%, which is up by about 50%.

Now coming to Q2 of financial year, our revenue is at INR 495 crores and EBITDA is at around INR 65 crores. The EBITDA margin is at 30.26%. The other income is at INR 28.3 crores, the profit before tax is up [ 4.28% ], and the company has successfully collected all the outstanding as per our books of 10 [indiscernible] go that's a major achievement in this H1. The PAT for the quarter is at INR 90 crores, about 27% up year-on-year and EPS is at 7.88 up by about 19% year-on-year.

The [indiscernible] investment and cash is at around INR INR 2,600 crores, which is about INR 2.25 per share. We have an extremely robust order book of around INR 9,725 crores as of September 2024. We have further booked business -- we have booked business worth INR 642 crore in Q2 and another business of around INR 1,100 crores post September till date. Thus, we can say that we have a current order book of around INR 10,800 crores plus unexecuted. We are L1 in another INR 622 crores order out of which both are very sure. Additionally, I would like to say that in Q1, which we [indiscernible] L1 all of the orders -- all opportunities and what stage as converted into orders successfully. We have various [indiscernible] in pipeline and are confident that additional orders are around INR 1,500 crores in the current financial year, which will take our total order talent to around INR 4,000 crores. This simply reflects post order execution for the current year. We will still have enough orders. It had to keep the growth momentum going.

The company has successfully raised raised capital or completed QIP for INR 1,250 crores in the first half of the reproduction year. Now coming to the outlook. We have been able to tide over most of our difficulties as we can after the close of the financial year '22, '23, we saw growth momentum in the year '23, '24, and the same will continue for [indiscernible] years as we foresee. We expect larger bases out of transmission can be highest power solution deployment, data center, hyperscale events data center or distributed data center, AMI segment and also somewhat of our digitalization solutions in the power distribution space at RDSS and also our duty present in the AMI scheme.

The present -- after witnessing negligible on [indiscernible] growth on inventory mark for last 8 years, first time in last year, we actually have grown the energy by almost touching to double-digit. [indiscernible] peak low demand is about 240 gigawatts or more and which is likely to be 400 gigawatt by 2030 whereby employees at a [indiscernible] of no less than 1300 [indiscernible] by 2030 as against 12 of the units today.

To meet this demand being almost is concerned, and power plant capacity is planned to be enhance by 80 gigawatt in the conventional power space by deploying ultra supercritical power stations along with the newer energy deployed then to the extent of 500 gigawatt by 2030. All this means that the sector is transforming technologically and also deploying high-end power generation and power transmission solutions, all solutions like supercritical power plants, 765 grid [indiscernible] transmission solutions of gigawatt scale, Satcom solutions, VSC, HVDC solution solutions backed by BES or DSO facilities. Their [indiscernible] company has a larger presence than any other activity in the marketplace. You company and usually focused on by areas like transmission solutions, particularly high-end EHV solutions, including satcoms and VSCH and DC solutions.

We are also present in the hyperscale data sectors. We are present in [indiscernible]. We are doing big smart making implementation for 2.5 million meters. We are doing digitization of the power distribution networks of the dish comps in their command areas. All these verticals are of potential, and this implies the [indiscernible] is our position of the company.

So the current mix of 43% of the total installed capacity of renewable energy is expected to be around 64% by 2030 due to significant growth rate of around 15% to 20% CAGR as against 4% of post-fuel. India aims to expand its renewable energy portfolio beyond 500 gigawatt and the target of total is more or less in like [indiscernible] achieved [indiscernible]. And the matching transmission infrastructure will be required to be almost 4x against 1x of the conventional power. So this will continue to give boost to the renewable power.

As for CEO report, the transmission system required for 500 gigawatt [indiscernible] capacity will require more less than 50,000 circuit kilometer of line and another 435 GB of transforming capacity. With the implementation of these programs and the RDSS regions, the interregional transfer capacity will improve to 150 gigawatt. The national electricity plan has already estimated the investment opportunity of more than [ INR 9 lakh crore ] in this space by 2032. The power grid will be the largest beneficiary and we'll be there as one of the largest solution that [indiscernible] at the station level from last 35 years successfully in operation and with a flat CapEx of INR 1.75 lakh crores up to 2030. [indiscernible] Their annual CapEx will increase [ INR 200 crore ] by '26 [indiscernible] INR 50,000 crores a year.

These tests are optimistic pick up in target as well as we expect a larger inflow orders from private players at this stage, while we avail some opportunities in PVC to ourselves. Apart from this, we are doing a huge opportunity in Statcom projects to be deployed. There is already a [indiscernible] qualification, and we are now qualified as a [indiscernible] backed up by the sport for [indiscernible] suppliers. The data centers will also create -- use additional demand forward as we mentioned earlier to meet these increased demand.

We now mentioned already to a target like conventional power as well as renewable power. In the conventional power again, there will be a good score product on the balance of plant and partially of the power evacuation facilities, what we got step-up facilities and [indiscernible] deflation for the utilities. Vertically [indiscernible] will be one of the key medications other than other CPs in this space.

On the distribution side in RDSS plan, we see a lot of activities happening including the deployment of Smart metering. We are rather deploying now about 2.5 million smart meters per year. 2.5 million smart meters over the next 2 years. This year, we will deploy about 0.5 million and another 1 million each over the next 2 years. [indiscernible] part is a bit higher transmission, we are conservating in this space. We see a slowdown in the FGD segment, particularly unit [indiscernible] report, but the orders we had will continue to be executed at the given pace, but some business to go to the extent of 5 to 10 gigawatt per year from private players as well as SCBs will continue to be in this case.

Transmission segment, I have already highlighted that around 50 to 100 gigawatt of bidding is happening and I'll push the 4 to 5 concessions are being [indiscernible] months. And [indiscernible] almost to [indiscernible] player. This means that almost around 40,000 [indiscernible] the business and out of which we will be expecting [indiscernible] led to more than INR 500 crore per year over the next 3 to 4 years.

We currently have orders worth INR 6,500 crores in this stage, and we are in another INR 650 crore segment, which part has already got a concession. So this will materialize this quarter into the order. Our projects on TBCB and [indiscernible] with their total revenue visibility of INR 4,800 crores over the concession period are that the execution, and we are confident to achieve it ahead of the [indiscernible]. Similarly, our -- the smart meter deployment is going on for the program. In the smart metering space, we expect business about INR 1,000 crores per year or deploy about 1 million meter per year and I mentioned we have worth about [indiscernible] billion meters worth about INR 2,500 crores. Ankit, will you like to highlight data centers?

[Ankit Saraiya, executive]

Sure. So coming to data centers, I believe that digitization, adoption of cloud services and AI and implementation of 5G in Tier 2 cities apart from Tier 1 cities. The government's focus on data protection and ensuring that the data of the country resides in the country. All of these are leading to more and more demand for data centers. They are the warehouse, the data is stored. If today, the market size of data centers in 2024 is close to about, I would say, 1,300 to 1,400 megawatts. There we can expect a growth rate of 15% to 18% year-on-year, and we should have a total capacity of roughly about 4,000 megawatts or 5,000 megawatts by 2029.

Coming to our initiatives, as we've spoken earlier, we've already started our construction in Chennai, it is in very advanced stages, and we started commissioning activities on the ground. We are hopeful that in another couple of months' time, the data center would be ready for RFS or service. Apart from that, on hyperscale data center side, we've already been allotted land in Kolkata by the state of West Bengal through their body called Western [indiscernible], to 4-acre land parcel in prime location named as Bengal Silicon Valley. We should be coming up with the data center from next year onwards, we should begin the construction activity somewhere around mid next year or towards the second half of next year and possibly complete the construction by mid of 2027.

This would be roughly about 15 to 18-megawatt data center. Apart from that, we are executing edge data centers in strategic partnership with [indiscernible], now DSU. We've already started construction of our first location is at Gurgaon. It's a sector 44. We're expecting handing over of a second location from [indiscernible] in Mumbai, right across the very well-known San Regis hotel, Maha Laxmi. The size of these locations, the one in Gurgaon is a smaller project of INR 20 lakhs totaling to 200 kilowatts. And this would be expanded to close to about 1.5- to 2-megawatt over time. The 1 in [indiscernible] is starting at a capacity of 560-kilowatt with INR 56 lakhs, and that should also see a daylight of about 1.5 to 2 megawatts over a period of time. Being good traction of customers for edge data centers. In Gurgaon, we are close to finalizing a few customers, accommodating them within these INR 20 lakhs. We are seeing interest from hyperscalers as well to lease out these edge data centers and active cities and we are working closely with a couple of the hyperscalers to deliver through their environment. All in all, it looks exciting and I would say, spring time and pace for this industry. Yes. So that's on data center.

[Padam Gupta, executive]

Yes. Coming back now taking over from what Ankit has said, overall, in the last 5 years, the company has successfully monetized is all deployed assets over 10, 15 years, worth about INR 5,000 crores [indiscernible] model or TBCB mode. This should result in cash surplus, which is already difficult and [indiscernible] has further added to the cash balance. We have sufficient financial resources to see this growth in data center and in transmission space.

During the last year, as I had mentioned, I would again like to repeat that it is just the modeling at [indiscernible], and this is the first sunshine, which will keep brightening with every passing year. We are confident to achieve, as I have repeated it, to INR 500 crores plus-minus during the current year and similar growth over next year, maybe around INR 300 crores, INR 500 crores. We are confident to have EPS of 35 or more this year and 50 plus for the next year ending March '26. With this, we can take up the questions now.

[Operator]

[Operator Instructions]

The first question is from the line of Abhijit from ICICI Securities.

[Unknown Analyst]

Sir, my first question is on the revenue. So in the first half, you've done about INR 913 crores, and we are guiding for about INR 2,500 crores for the full year. So that means we'll have to grow at about 2x of last year's second half in FY '25 to meet that kind of revenue and which also would mean about INR 800 crores of run rate from INR 500 crores in this quarter. So what will drive this kind of execution jump in the next 2 quarters? That is my first question.

[Padam Gupta, executive]

May I answer it or you would like to put your question two also?

[Unknown Analyst]

Sir, second question is on the order book. So we have about INR 9,700 crores or orders. Is there some slow moving orders in this order book? And if yes, what is the quantum of those orders?

[Padam Gupta, executive]

Firstly, you see -- I said in H1, we suffered because that [indiscernible] was not available from the customers who placed orders of our smarter payment of stations. We have received our in [indiscernible] parcels, 3 from [indiscernible] and 1 from Adani. We are still awaiting 2 more land parcels from Aparguay and [indiscernible], which is expected shortly. But now with the land parcels being available, the execution pace will be much faster. And as I shared with you that, that is the requirement of the customer also that they want us to complete the job we go more in 6 to 9 months, which earlier used to have an over 12 to 18 months ago by and large.

So with this, we are confident that this weather is good, generally as to either better weather to work in this country from the field problem from the factory point of view. And Q4 is always larger than the Q3. So generally, our take is that Q3 is about 22% to 25% and Q3 -- Q4 is always about 30%, 35%.

So we are very sure, given the margin of 5%, we should be able to [indiscernible] the guide, number one. Number two, out of the order book, there is no slow moving order books as of today with us. Because all these ECP projects have a COD date with the customer and whatever delay effort is giving us typos or net parent alginate want us to squeeze back.

[Unknown Analyst]

Sir, lastly on the margin. So this quarter, on a Y-o-Y basis, there is about 160 bps compression on the EBITDA level. And we have seen an increase in the cost of services and raw materials. So if you could particularly highlight what is causing to this kind of cost inflation, which is faster than the revenue growth. And what kind of margin do we expect in the second half?

[Padam Gupta, executive]

You see the problem -- as I mentioned earlier also, I repeat again, [indiscernible] margins quarter-on-quarter in construction or project business is extremely difficult. This depends on how you book your revenue, how you do your costs. You are bit conservative, realistic, optimistic. Many a time, we wish to book the revenue because bill will have not happen or work has not been measured on materials have not been cleared, that's why it's supplied.

So we also know over the year, you always have a time to catch up. So you will find that overall margin, as I stated, will be almost around 13% to 14% over the year. In some quarters, it may be 1% more, in another quarter, it may be 1% lower. But at the end of the year, you will see that it is all utilized.

[Unknown Analyst]

All right. Sir, lastly, what is the status of any data center? And when do we expect commercial completion for the same?

[Padam Gupta, executive]

Ankit, would you like to answer?

[Ankit Saraiya, executive]

Yes. As I mentioned from the remarks in the opening remarks that we have already started the commissioning activities for the data center. And we should be able to achieve which is the -- just the [indiscernible] when the customers, we can begin start handing over the location customers for moving it should be somewhere around January.

[Operator]

The next question is from the line of Anurag Agarwal from [indiscernible] well.

[Unknown Analyst]

Sir, I wanted to ask more about the smart meter deployment. How do you see that faring up? Are there any execution risks which are playing out?

[Padam Gupta, executive]

I'm sure [indiscernible] ago there is no basic, but nothing new is happening, I can say that, Anurag. It was no -- while booking the builders and today also because the counterparty is DISCOMs. So some interruption is naturally of doing this work, but Techno is very experienced in deploying these solutions. So this year, that's why -- and we have a kind of, I'd say, muted ranges also the segment against other players.

We don't want to do that year near meter a year, as I shared with you, with 0.5 million this year as GDF created by the utilities were delayed, which happened only in Q2 with us at Sepra or at Jharkhand or even J&K. So by and large, we will not like to be very, very aggressive and optimistic like other players in this space. But our major [indiscernible] space will always be transmission, ISTS, CPS power generation, I will say, our data centers is now very, very exciting and [indiscernible] phase of, but yes, smart meter will have our brand with our own customers, we bought one to be out of it.

And secondly, let me tell you, you see that smart meters are yet not declared an infra business by the government. So maybe we shut off part of it. If you cannot part of your [indiscernible] or similarly to any government funds, this status is not to displace like transmission or power generation. We are not like on the [indiscernible]. So some issues are there in this space, but still some companies are more optimistic than us, we have not.

[Operator]

The next question is from the line of Nisha Shah from ICICI Securities.

[Unknown Analyst]

Could you break up of the order book either now or at the end of Q2 between generation transmission distribution and data center.

[Padam Gupta, executive]

Yes, ma'am, it is mostly out of the transmission. I can say. And the total order book breakup, if you want to note, you can, the transmission is about INR 4,671 crores out of our own TBCB assets, it is about INR 687 crores. FGD is about INR 1,200 crores. Digitization of distribution network for [indiscernible] is about INR 290 crores, and smart meter is INR 2,500 crores. And another data center you can [indiscernible] about another INR 100 crores level.

[Operator]

The next question is from the line of CA Garvit Goyal from Invest Analytics Advisors, LP.

[CA Garvit Goyal, analyst]

Sir, my question is on the guidance part only. But firstly, I want to understand why there is the difference between the standalone numbers and the consolidated numbers, like consolidated numbers are less than a standalone numbers. So can you please put some color on it? What is the reason for the thing.

[Padam Gupta, executive]

We already made in our statement that we are company at the parent level, deploying these data center in China. So when you consolidate those numbers get utilized in EPC space, but that will appear as a market progress on the asset in data center subsidiary, when you consolate -- only nomenclature change happens. I hope you have understood. [indiscernible] aggregated for your own subsidiary gets utilized and reclassified as a working or toast or whatever nomenclature [indiscernible] depending on billing.

[CA Garvit Goyal, analyst]

So sir, while giving the guidance of like '25. So is it for some consolidated numbers or the standalone number?

[Padam Gupta, executive]

Stand-alone number.

[CA Garvit Goyal, analyst]

Okay. And if we compare it with the consolidated number, so what would be that number for the full year?

[Padam Gupta, executive]

You take it [ 2 to 5 ]years.

[CA Garvit Goyal, analyst]

2 to 5 years, yes. And we are still guiding the same number for this year, right, despite the challenges that we are facing?

[Padam Gupta, executive]

Absolutely.

[CA Garvit Goyal, analyst]

Okay. And sir, secondly, like in our results also there is a significant overly receivables and the older also highlighted the same, including those from a long-standing project rating issues and the unresolved arbitration that is having a cumulative value of around INR 130 crores, so could you provide a clear update on specific challenges that are that we are facing while recovering these amounts and the expected timeline for the resolution and the potential financial impact that if these amounts are not get collected.

[Padam Gupta, executive]

No. Firstly, it is not INR 130 crores, I don't know. It is a number which we have -- issues are too on due. One is retention money receivable from a private player for [indiscernible] a captive power plant and about all is INR 11 crores only. And secondly, the receivable from Afghanistan where projects were suspended due to the political change. The contract is funded by ADB.

Now the ADB has already come forward and agreed to pay the use of cash, [indiscernible] and whoever was involved in that [indiscernible] was called [indiscernible] in Afghanistan. So these are at the process and we expect all this money to be received, it is about $7 million. So we hope to get it by -- before that close of this year now. So there is no other issue in our books at all.

[CA Garvit Goyal, analyst]

You're saying this amount will be here by the end of this financial year, right?

[Padam Gupta, executive]

Yes, absolutely. Compared to total receivables, it is not even 10%, so it is not a material effect.

[CA Garvit Goyal, analyst]

10% of what, sir. I missed that.

[Padam Gupta, executive]

I could not get you, total means?

[CA Garvit Goyal, analyst]

No, no, 10% is what, I'm asking?

[Padam Gupta, executive]

Of the receivables, reaching about INR 550 crores, INR 600 crores.

[CA Garvit Goyal, analyst]

And sir, lastly, you mentioned like 2 land parcels we are still waiting for that, right? So is it like Q3 is also going to be in the same line or we are going to outperform significantly because in order to we [indiscernible] have to outperform significantly as compared to what we did in Q1 and Q2.

[Padam Gupta, executive]

No. I also mentioned we have got 4 land parcels as against 2 not received, so 4 is good enough to make up the loss of the car. These 2 anyway were planned as a distributed way, you can change. It was for '26-- '25, '26 only.

[Operator]

[Operator Instructions]

The next question is from the line of Palak from MIV Investment Management.

[Unknown Analyst]

Sir, my question is regarding our SGD business, so recently, we have come acrossed an article where we mentioned that based on the study, there were finding that the [indiscernible] mission from the coal-based power plant is not harmful to the environment means that are impacting the air quality. So there has been a suggestive [indiscernible] that the Government of India may stop the SGD tenders, and from my understanding that currently, our order book is about INR 1,000 crores. So can you help me understand the impact of what do you think about the norms?

[Padam Gupta, executive]

Ma'am, I also mentioned you there is a slowdown in this space post study of [indiscernible] and controversy at the political level, that has our AQI will include suffer or is it harmful or not. Ramesh [indiscernible] otherwise, who was earlier environment. He has questioned the present decision of the industry of our -- but besides that, we were never -- we have existing order of INR 1,200 crores. That will continue to be executed as for the program, which is under execution. And we are also not expecting larger business out of it, as I told you earlier also, because we don't want to take more than 1 project in here. But maybe now we can say 1 project in 2 years maybe out of private or SEBs. Certain critical pockets closer to urban areas or semiurban areas, they will still have to deploy as per the [indiscernible] report. It's not a total [indiscernible], but yes, it will be project specifically with now. But simultaneously report also confirms the projects which are already in execution or others, they will be implemented as it is without any interruption. So that is the present status in this space.

[Unknown Analyst]

Okay. So we are not expecting any significant inflows from [indiscernible]?

[Padam Gupta, executive]

Absolutely, from this verticals, you are right. But this vertical is capable to do balance of [indiscernible] for us in generating plants, which we earlier used to do before migrating to LGDs. So we will do a mechanical [indiscernible] and the balance of [indiscernible] found. The capacity of the company will be redeployed in the critical super -- ultra supercritical power parts of 80 gigawatts to deployed by FGD, by other state utilities or CPHUs, it is a huge business now [indiscernible] ports.

[Operator]

The next question is from the line of Shreyas Gatani from SG Securities.

[Unknown Analyst]

I had a couple of questions on the data center side. So the first is, what would be the cost per megawatt for these edge data centers? I know in the last call, you mentioned that it's higher than the data centers that you would have at Chennai and Kolkata, so just wanted to understand that.

[Padam Gupta, executive]

Yes. Ankit, will you like to answer?

[Ankit Saraiya, executive]

Yes. So you can say it will be roughly anywhere between 1.75 to 2x the cost of hyperscale data center, so one can estimate plus/minus INR 50 lakhs, but about INR 8 crores per megawatt.

[Unknown Analyst]

Got it. Okay. And for the Chennai project, what is the balanced investment that we still have to do? And what have we already invested -- how much we already invested?

[Padam Gupta, executive]

Invested but yes, it is -- we have invested about INR 400 crores as of today. So for Phase 1, we have left to spend only about INR 50 crores plus [indiscernible].

[Unknown Analyst]

Okay. So Phase 1 is the 5-megawatt.

[Padam Gupta, executive]

Yes, 6 megawatts.

[Unknown Analyst]

6. Okay.

[Padam Gupta, executive]

But [indiscernible] load, in grid load, it will be 10 megawatt like for like.

[Unknown Analyst]

Got it. So by when do we expect the full operational capacity of this center?

[Padam Gupta, executive]

By March '26.

[Unknown Analyst]

Okay. Okay. And how far are we in terms of like finalizing on customers for this data center?

[Padam Gupta, executive]

Ankit?

[Ankit Saraiya, executive]

So we are in discussion with potentially, I would say, a couple of customers. Today, we are still under final construction phase and then the commissioning phase. Therefore, most of these customers want to see it completed, which we had mentioned in the last call as well. Unless we have achieved completion, it doesn't give confidence to our customer to plan his movement because there can always be a delay in commissioning due to unforeseen circumstances.

Therefore, I would say that the real month for customers would begin post the project is commissioned. But having said that, in meanwhile, we are in discussion with a couple of good customers and meanwhile, we are also in discussion with a couple of strategic partners who may potentially show interest in this project. But having -- but today, our focus is largely to build our in-house sales, marketing and operations team because Chennai is not the end of life for us. We would like to continue being a part of this industry through edge data centers and our upcoming data center in Canada. Therefore, it's not that we are really routing for a strategic partner anymore. But building a team which can sustain the business for us for long term.

[Unknown Analyst]

Got it. Just a couple of questions if I can put in. So these edge data centers by what's the lead time for this, like construction time? And when do we expect to operationalize them from T0 for example.

[Ankit Saraiya, executive]

So construction time literally depends on the basis of many things. When we added over a land from realtor, some of them are partially constructed, some of them are completely constructed where we are fitting out the electromechanical work, so depending on the status of that particular location, the construction period changes can range from anywhere between 3 months to 12 months. While we are already constructing one in Gurgaon and I should -- as I mentioned, we should commission it by mid-December, end of this month or mid-December. That will be our first is data center going live. We should be beginning the second best data center in Mumbai sometime around the month of January. We should be handed over that location in January because they're still clearing out the area where they're handing over [indiscernible] plot. So -- and we have already made an acquisition of another 15 locations to bring the work.

We have started to visit those locations. We are scouting for land along with Delta, the one which is more suitable. So I would say, as per the contract, we are supposed to deliver 20 locations every year. But on practical terms, I get, we'll see real action and execution of these projects from next year onwards, while this year, we should see our first one going live in Gurgaon.

[Unknown Analyst]

Sir, just last question for the Kolkata data centers, do we expect same amount of investment per megawatt as the Chennai center or is it going to be more optimized given our learnings from Chennai?

[Padam Gupta, executive]

I think it will be similar. Maximum of 5% to 10% savings.

[Operator]

[Operator Instructions]

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

[Unknown Analyst]

Sir, what are your sense in terms of ground situation in terms of transmission project because we see a lot of government saying that they need to come up with a lot of schemes and IBC. But apart from this land thing, what are the other challenges you are seeing on the ground currently?

[Padam Gupta, executive]

So basically the land parcel that acquiring right away, which is often a problem. Some people object to be putting our foundation. Although we are not in a line building for us. It is all the station, which is [indiscernible] and bound once land parcel is acquired at only [indiscernible], but the ownership is in India is so fragmented in these rural places that acquiring 150 acre or 100 acre, you have to buy out from no less than under landholders doing documentation, involving the traditional level people, and revenue departments, checking their record of authenticity.

So legal processes as well as inflation on the ownership with thinness of the orders to part with the land parcels. All these are still a bit arbitrary and challenging as to why 164 approval of Government of India [indiscernible], all legal apartments are there. But our courts do not function or bureaucratic machinery is not all that efficient. But still, I will say, in the world, we are doing the best.

[Unknown Analyst]

But we have seen in terms of delay execution because of all these factors? Or do you think government is coming or you guys are working with government to improve soon because we keep on hearing a 2 to 3 years, at least, there is a lot of transmission being planned. So do you see any improvement in this area in terms of government policy statement, something of that sort?

[Padam Gupta, executive]

Well, firstly, I think we should talk when it comes to stay if we ran a state but coming to ISDS region which is [indiscernible]. The willingness is larger than the reality, I would say. We are all willing to improve, but there are so many government department or government own ministries are involved that they are not sure of what may slip out where you know at times, but nevertheless, I will say there is a lot better than a year back or 2 years back. In factories like Europe or U.S., unless the whole [indiscernible] parts or right of way are in [indiscernible]. So the tender itself happens almost 2 years late. But in India, we are not bidding for all these approvals in place before tendering or carrying out the product. So it's a kind of a hybrid situation. We have a agency a lot with government [indiscernible] today challenges.

[Operator]

Next question is from the line of Shekhar Singh from Wellpark.

[Unknown Analyst]

So my question is, any guidance for fiscal year '26 and any scope of margin improvement there?

[Padam Gupta, executive]

No. You see, generally, these margins because there is a lot of competition today in tariff bidding and post tariff bidding, there is not enough space with the deployer to give you a higher price to the solution. But still, I will say, the EBITDA achieved by Techno is one of the best in the industry.

[Unknown Analyst]

Also, sir, like, could be so [indiscernible] state government implementing in smart meters against a target of INR 1,000 crore revenue in coming years because we have been like pretty slow in implementing these smart meters in their respective states.

[Padam Gupta, executive]

So the smart meter, I don't think we are slow. They have a delay in creating [indiscernible], direct debit facility is a part of orders, which they have to do the secure documentation before implementation can be taken up because otherwise you have the commitment of the state format to a the banking channels from the very account [indiscernible] having with a on revenue collection. The scheme is not achieved till zero date. The zero date is that DDM is created. So thereafter, it is going all right, to my point, the bit of injunction here or there. So it is so good.

[Unknown Analyst]

Okay, sure. So basically, so we are in our right track to achieve the revenue target for 2028 of around INR 10,000 crores approximately?

[Padam Gupta, executive]

Yes, absolutely.

[Operator]

The next question is from the line of Mohit Kumar from ICC Securities.

[Mohit Kumar, analyst]

The only question I have is given the fact that there is a huge amount of bidding, which has happened in the last fiscal and this first half, right? So are you seeing a lot of inquiries, opportunities? And do you think there's a fair chance that we'll bid this guidance of INR 1,500 crore additional order inflow in H2.

[Padam Gupta, executive]

Yes. Actually, more than that, I will say, in reality, like I shared out of 1,500, we are already L1 in [indiscernible]. And those concessions are already won by [indiscernible]. So I think before the summer and those orders will be competed. So do we can beat this number also.

[Mohit Kumar, analyst]

But we think B2B by a wide margin, given that target has run roughly around INR 80,000 crore in the first half, INR 80,000 crores YTD. That's a very large amount right?

[Padam Gupta, executive]

No, we do only station work and there's no other work maybe out of INR 80,000 crores, the station work is no more than INR 4,000 crores.

[Mohit Kumar, analyst]

Okay.

[Padam Gupta, executive]

Yes. We don't supply transformers, reactors. They procure directly. They are in -- they have our HDC packages. So all those are different types of solutions.

[Mohit Kumar, analyst]

There also start there are many Satcom packages, right?

[Padam Gupta, executive]

[indiscernible]. They have qualified us now. So we had qualified in our own [indiscernible]. So it's a bit now, KPS 1, KPS 2.

[Mohit Kumar, analyst]

Those bids are under evaluation. Is that right, sir?

[Padam Gupta, executive]

Yet to be bidded sir. We have issued a inquiring for those after qualification [indiscernible].

[Mohit Kumar, analyst]

Okay. And how many bidders are there in statcom, 3, 4?

[Padam Gupta, executive]

There should be no more than 4.

[Mohit Kumar, analyst]

My second question is on the -- given that, of course, the large amount of bidding is happening, right, which also means that we also have a fair amount of winning the new opportunities in TBCB, right? So how are you thinking about this opportunity? Are you seeing a lot of smaller opportunity where you can participate? Or do you think it's only larger percentage are coming and we are not interested in the larger opportunities?

[Padam Gupta, executive]

No, larger, we are definitely not interesting. We don't want to be part of this aggressive tariff bidding and [indiscernible], but up to INR 750 crores or maybe their [indiscernible] station work is larger than life, we may go up to INR 1,000 crores. So that is our appetite, sir. As far as standalone, we are concerned, but definitely now many other companies are approaching us to be part of that like Ingrid [indiscernible]. So we don't mind to be part of that risk sharing. The question is what kind of risk or appetite you have a in all the asset ownership because asset ownership is not a business of Techno. Our business is EPC.

[Mohit Kumar, analyst]

Is it possible to take a smaller, smaller share, smaller, smaller shareholding in these SPVs and get the EPC contract, that will be beneficial for us, right?

[Padam Gupta, executive]

Yes, we have done that. We did it now in [indiscernible]. [indiscernible] At concessions, the one, we have taken 20% stake in [indiscernible] SPV. And we are actually deploying the solutions worth about INR 1,000 crores.

[Mohit Kumar, analyst]

Sir, any new opportunity, any new tender pipeline in the smart meter? Are you seeing that? Is it very slow right now and most of them will get shifted to the next fiscal.

[Padam Gupta, executive]

You see in smart meter, we are not active. Let me put it. If there is a good opportunity, we can get at our price and terms. It's okay. Otherwise, we believe counterparty risk is high and with DISCOMs, earlier in the power agreements, renewable power, we first [indiscernible] when we [indiscernible] megawatt and have got through use litigations with [indiscernible] utilize all our deals.

[Mohit Kumar, analyst]

The last question on interest. Sir, are you seeing some movement are you seeing some opportunities which are coming up where you might be interested? Or is this very slow?

[Padam Gupta, executive]

There is no perfect answer to your question. But if there is any future opportunity, no, we won't miss out if it is multilaterally funded, bilaterally funded, we are always there. But if any DISCOMs wants to do or any entity of state wants to do a project out of its own resources, we will definitely not be there.

[Operator]

[Operator Instructions]

As there are no further questions from the participants, I now hand the conference over to Mr. P.P. Gupta Ji. Thank you, and over to you, sir.

[Padam Gupta, executive]

Yes. Thank you to all of you are very active and healthy participation and for joining the conference call with us. In case you still have any query related to our performance, please drop out a mail to us to do visit us whenever you are in this part of the country. We have equally large office in Gurgaon now. So at Motorola Excellence Center in central [indiscernible] of Gurgaon. You are welcome to dropping and to see us actually see us on the work, and I thank once again everybody on joining the conference. Thank you.

[Operator]

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