Key takeaways of the call

EPC OI in 9mFY22 was about Rs 600 crore and for Q3FY22 was about RS 350 crore.  Current EPC order backlog is Rs 1600 crore and in addition it also has a L1 order book of Rs 1800 crore [2 FGD order amounting Rs 14.5 billion and one 765 kv transmission order of Rs 2.5 billion]. The order backlog as end of Sep 2021 was Rs 1750 crore plus L1 order book of RS 250 crore.

Unexecuted order book does not include any order from Chennai Data Centre project. 

Order backlog plus L1 orders gives revenue visibility of about Rs 3500 crore.  Execution 50% of the carried over order backlog in next 12 months. 

EPC revenue for Q4FY22 is expected to be Rs 300 crore plus and the company is confident of sustaining RS 300 crore quarterly revenue momentum going forward for EPC. For FY23 the company expect the EPC revenue (not considering any revenue from Data Centre contract) to register a growth of 25% or a revenue of Rs 1250 crore. The Data Centre projects to add another Rs 200-300 crore.

Expect an order inflow of at-least Rs 2500 crore in FY23 coming largely from FGD, transmission, distribution and Data Centres. 

FGD segment continue to be in focus for next 5 years. There is considerable progress in CPSUs followed by SEBs and private sector.

Cash balance 1200 crore debtors outstanding is Rs 550 crore including Rs 150 crore for wind.

Transmissions segment it will be status quo with order pipeline limited to evacuation of renewable power.    On distribution side lot of activity is happening. The 3 lakh crore investment outlay in budget for power distribution will be good for demand in high end solution at SEB end.

Current order backlog include one FGD order (DVC Bokaro) of Rs 1.7 billion of unexecuted portion and export order of about USD 10 million.

The company will consider buyback some time in near future. 

About 80-85% of wind power generation of the company happen in H1 of a fiscal with annual revenue range at about Rs 95-100 crore. The interest cost, depreciation and other operating cost for wind segment for a quarter will range about Rs 15 crore. And thus on seasonal weak period as revenue could not cover the expenses the EBIT will be a loss. 

Data centre business update – The capex on Chennai Data Centre will be Rs 1200 crore across all phases. So far spent about Rs 50 crore. The company will get 60% of the total cost as EMC captive order.  The company is considering 2-3 partners for its Chennai Data Centre. Design Engineering of it started only in Aug 1, 2021 and it took 2-3 months as the DC project of the company is different from what is currently available in the industry.   Outstanding design engineering especially for hyper scale customers and it is rewarding.

Apart from Chennai the company considers setting up DC at Kolkata and Mumbai, which will come up latter. As each DC is of 25-30 mw of IT load and each IT load cost Rs 45crore/mw, the cost per DC will be in the range of Rs 1200 crore, which will spread over 4 years as the projects are coming up in four phases.     Always the capex in first phase will be higher due to upfront civil structure work and other ancillary works. DC once commissioned will generate a revenue of Rs 200 crore with a margin of 70-75% at peak occupancy.

Wind power segment sales was down for Q3Fy22  on account of 2 reasons – 1) the wind was poor in Q3FY22 compared to same period last year; 2) Revenue for Q3FY21 includes differential tariff charges of 0.975 per unit on units billed during the year 2019-2020 and 2020-2021 totalling to Rs 35.85 Crores vide APTEL impugned order dated January 28, 2021.

REC Certificates – The company recognises REC on prorate basis. Once REC trading started from Nov 2021, about 2.5 lakh REC certificate out of 4.5 lakh was liquidated and a cash of Rs 25 crore received. Currently the company have an inventory of about 2 lakh certificates which will be sold in next 2 months by March 2022 end. 

In Q4FY22 so far the generation was 5% more than last year at 215 million.

Q3FY22 is characterised by high commodity price cycle and container freight challenges and despite that it reported an EPC revenue of about Rs 300 crore and expect this sort of quarterly run rate is expects going forward.

Outstanding Wind segment dues upto Jun 2020 is received by the company and expect to get the claims shortly.

Long-term sustainable EPC margin will be around 15% for FY22 and going forward.

The company will be taking up only complex BOOT transmission project in the range of RS 700-1000 crore.