Key takeaways of conference call

For FY15 expects a manufacturing revenue of Rs 380-400 crore (of which 50% exports) and EBITDA margin at 15-16%. Similarly the company expects revenue of Rs 140 crore and Rs 100 crore for EPC and TG Island (or project) business.

Order book as end of Sep 2014 stands at Rs 605 crore and of which exports is 28%. Of the total order book the share of manufacturing order book is Rs 386.6 crore, projects Rs 146.2 crore and EPC is Rs 72.3 crore. While the entire EPC & project order book is domestic, the share of domestic orders in manufacturing order book is 57% and balance is exports.

Manufacturing order inflow at Rs 264 crore was strong in H1FY15 compared to Rs 171 crore in the corresponding previous period. Q2FY15 manufacturing order inflow was at Rs 118 crore and of which export orders are about Rs 66 crore.

Expect strong H1FY15 manufacturing order inflow momentum to sustain in H2FY15 as well.

Export order are more profitable to the extent of about 100-150 bps than domestic orders.

Manufacturing order book is at an all-time high, scheduled to be executed over the next 6-9 months. Demand is coming mainly from exports markets driven by hydro, gas engines and steam turbine segments.

In domestic market there are some pockets of revival but the intense competition still persists. Though more negotiations are happening there is not much of finalization.

Owing to low visibility of enquiries, EPC business operations will be aligned to the extent of executing pending orders, and subsequently ramp up on market revival and fair visibility of order book.

Expect US and Japan subsidiaries to break-even during the current fiscal year.

Next year the company will have at least 4-5 machines of higher rating for execution as it is expecting order for 2 higher rating machines.

Orders from Wind segment accounts just 5% of the order book and is insignificant. The company will continue to cater to the existing 3 OEMs and a new one. The traction is linked to the performance of these 4 OEMs. The largest players in Indian Wind market are having their own generator units.

Following all expansions, the company still has a strong cash position and will remain debt free and net cash surplus.

Standalone total income in Q2FY15 was up by 19% to Rs 127.95 crore but the EBITDA was down by 1% to Rs 21.05 crore and net profit was down by 6% to Rs 11.16 crore. Lower standalone PAT was due to steep decline in other income, higher depreciation provision and increased capitalization of assets and amortization of technology for large generators. However the consolidated income in Q2FY15 up by 61% to Rs 180.33 crore and the EBITDA was up by 49% to Rs 18.75 crore and net profit was up by 178% to Rs 7.98 crore.

Manufacturing revenues in Q2FY15 were up 30% with contribution of 40% from exports and 65% from deemed exports. During Q2FY15, we have shipped two large generators of 67.5MW from the new facility. Under absorption of overheads has affected manufacturing profitability. TG Island revenues declined due to transition of Japan branch to a subsidiary. EPC business revenues have expanded but see weak visibility for further increase from this level in the immediate term.