Techno Electric & Engineering Company  (“TECHNO”)  hosted a conference call on Feb 15, 2023. In the conference call the company was represented by P. P. Gupta, Managing Director.

Key takeaways of the call

OI for 9mFY23 was Rs 3000 crore (Q3FY23 OI was about Rs 500 crore) and the unexecuted order book as end of Dec 2022 stood at Rs 4000 crore.

Bids in pipeline is worth about Rs 5000 crore (which are yet to be opened) and out of the same the company expect to bag orders worth Rs 2000 crore at least.

Decline in revenue of EPC in Q3FY23 is purely incidental and largely due to delay in handover of new site land by PGCIL, Sterlite and Goa. Supply Chain remains disrupted due to non availability of semiconductors and electronic components particularly 756kv GIS modules from North Chinese Manufacturers.  Loss of revenue on account of this is about Rs 100 crore in Q3FY23, which will be largely made up in Q4FY23. This is one time blip, results do not reflect the outlook for future quarters, which remains robust. 

Have sold/disposed of all wind assets in the state of TN aggregating around 111.90 MW. Of the total 111.90 MW  of total wind assets in TN, the company have already sold 37.5 MW for a consideration of RS 158.93 crore and transferred assets in this case is completed. Already realized 50% of the money against assets transferred. Further it has entered into MOUS for the sale of another 71.40 MW. Against this MoUs the company has already received 25% of consideration as advance.

Disposal of Wind Assets increased the cash surplus by about Rs 450 crore, which will be used to fund high growth business such as Data Centre, Smart Meter projects under DBFOT and Contracts etc. 

Major orders received in Q3FY23 are Rs 338 crore order for installation of 2.5 lakh smart meters from REC Power Distribution under both DBFOT and contract basis. Other major orders received are T&D orders from Sterlite Power and GOA SEB aggregating Rs 130 crore.  To achieve smart meter business the company has set up an WoS i.e. Techno AMI Solutions pvt ltd.

FGD order execution have just picked up which will get reflected in performance of coming quarters.

Operating profit of EPC at Rs 23 crore witnessed some pressure in EBIT margin in Q3FY23 due to high commodity prices which are correcting and higher fright cost in case of export orders.

Expect growth momentum of business and execution to continue for next 3 years i.e. FY24, FY25 and FY26.  Larger opportunities are coming from AMI/smart metering/power distribution and data centre. The company expects status quo in power transmission business.

Revenue guidance – For FY23 the company expected to clock an EPC revenue of Rs 1000-1100 crore and Wind power revenue of Rs 100 crore. And for FY24, the company is expected to clock a revenue of Rs  1600 crore. 

Expect an EBITDA margin of 14% margin for Fy23. This confidence comes as the company has tied up all equipment/component supplies.

In Q3FY23,   the company has booked Rs 175 crore out of total field progress revenue of Rs 250 crore. The company   could not book Rs 50 crore due to delay in equipment supply, which is outsourced. So there is not let up in the execution part as far as the segment/work which is in the control of the company. The company has sufficient resources as far as field progress work. So it won’t be a problem in clocking Rs 1000-1000 crore EPC revenue for FY23.

FGD –   Now see strong traction in FGD ordering from private and SEBs as all coal fired thermal plants are to compulsorily meet sulphur/nitrogen emission norms by deadline. Already got orders worth Rs 1400-1500 crore and see this level of business in next 3-4 years. 

Evacuation of transmission network for 60GW by 2023 to be completed for renewable with no extension expected and things in this regard are  going at faster pace. Interstate evacuation  project from Ladakh for which the company is already involved.

AMI – apart from RDSS major element of power sector reforms is installation of smart meters. Budget 2023 provides for incentives to SEBs/ discoms toward distribution network more intelligent and smart. Got one order for installation of smart meter in J&k for 2.5 lakh meters funded by REC. 

Data Centre – multiple growth opportunity in next 5-7 years. Techno is in advanced stage of execution of its DC at Chennai. Already crossed slab construction upto second floor. Long lead orders were placed to the tune of 50%, hope full of commissioning phase I by Sep 2023. Now approached by other DC developers to take up EPC contracts for their DC projects.