Borosil Renewables Limited (BORORENEW.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '26 Earnings Conference Call of Borosil Renewables Limited, hosted by Axis Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manan Mehta from Axis Capital. Thank you, and over to you, Mr. Mehta.

Thank you. Good evening. On behalf of Axis Capital, I'm pleased to welcome you all to the Q2 FY '26 Earnings Conference Call of Borosil Renewables Limited. We have with us the management represented by Mr. P.K. Kheruka, Executive Chairman; Mr. Ashok Jain, Non-Executive Director; Mr. Sunil Roongta, Whole-Time Director and Chief Financial Officer; Mr. Balesh Talapady, VP, Investor Relations. We will begin with the opening remarks from management, followed by an interactive Q&A session. Thank you, and over to you, sir.

Thank you very much. Good afternoon, and welcome to the Borosil Renewables Quarter 2 Financial Year '26 Investor Call. The stand-alone and consolidated financial results for the quarter ended 30th September were approved by the Board of Borosil Renewables on Tuesday, 11th November. Our results and an updated presentation have been sent to the stock exchanges and have also been uploaded on the company's website. 4We will now discuss the operations of company on a stand-alone basis as well as on a consolidated basis. The company received INR 371.49 crores from investors towards preferential issue of shares and the Board approved allotment of 69,43,691 equity shares to the respective investors on 17th October 2025. In respect of issue of warrants made earlier in February this year, the last date for payments by allottees is August 2026. However, some have fully paid up already and a sum of INR 282.52 crores remains to be received by the company from investors. Interfloat Corporation, a step-down subsidiary of the company, has faced significant challenges in retaining customers following the cessation of [indiscernible] glass production at GMB, Germany from 31st December 2024. Fierce competition compelled Interfloat customers to seek highly reduced prices for solar glass, which were unremunerative for Interfloat. This has left Interfloat with a highly reduced demand, which is insufficient to pay for its fixed operational costs. Following an independent review by the management of Interfloat, it is assessed that there are no clear indicators of demand recovery in the near term that would support a return to profitable operations. In view of this, the management of Lakshman AG, which is the company's wholly-owned subsidiary, has partially provided its exposure in Interfloat during the quarter ended 30th September 2025 and accordingly INR 33.87 crores have been considered as impaired out of total exposure of INR 57.59 crores and has been provided for in the books of account of the company and disclosed as an exceptional item in the above results. Coming now to the stand-alone performance. The company achieved sales of INR 378.44 crores versus INR 332.26 crores in the trailing quarter and INR 265.61 crores in the same quarter last year. The company registered EBITDA of 33.2%, showing a significant improvement over the 19.9% in the corresponding quarter. The absolute amount of EBITDA at INR 125.5 crores shows a quantum jump of 137% from INR 52.88 crores, 19.9% of sales in the corresponding quarter and 36% compared to an EBITDA of INR 92.53 crores, which was representing then 27.8% of sales in the preceding quarter. Sales rose by 42% during this period compared to the corresponding quarter and the major increase, which is 29% in sales value came from the selling prices as the average ex-factory selling prices during the quarter increased to INR 147.5 per millimeter as compared to INR 115 per millimeter in the corresponding quarter which was INR 138.12 in the preceding quarter, leading to improvement in the margins. Besides this, the production efficiencies improved, which enabled a higher sales volume and better margins. Exports amounted to INR 45.61 crores, accounting for 12.1% of the turnover compared to INR 34.62 crores in the preceding quarter when exports made up 10.4% of the turnover. The domestic demand continues to be robust. Manufacturing capacity for solar modules in the country has already reached 110 gigawatts and is expected to rise to 150 gigawatts by March 2027. We expect the solar installations in '25, '26 to reach 35 gigawatts, which means modules of large consumption of about 50 gigawatts as against 35 gigawatts during the previous year. ALMM mechanism for modules implemented from April 2024 has led to increased demand for modules as well as for all the components, including solar glass. Demand is expected to grow even higher. Present solar glass capacity in the country is 2,600 tonnes per day, which is to say 17 gigawatts. With the expected current demand of about 50 kilowatts for domestic -- 50 gigawatts for domestic installations, imports occupy about 70% of the consumption, leaving new scope for capacity addition for import substitution. Another 12 gigawatt of capacity primarily for captive by a new producer is getting commissioned by the end of financial year '26 and further capacity of another 16 gigawatts is to be commissioned by December 2026 [indiscernible], including 4 gigawatts by [indiscernible] company. The work on company's expansion plan project is in progress as per schedule. Finally, we see good prospects to the company over the next few years, looking at the growth in the sector, robust demand and stable selling prices of solar glass. This surge will come from both large-scale utility projects, PM-KUSUM scheme and rapidly rising rooftop installations under the PM Surya Ghar Yojana. The company is confident to continue to improve performance in both sales and EBITDA in the coming quarters, barring any unforeseen circumstances. Now I come to the consolidated results for the quarter, which includes the operations of the subsidiaries. The overseas subsidiaries, including the step-down subsidiaries has generated net revenue of INR 18.65 crores and negative EBITDA of INR 7.71 crores for the second quarter of the current financial year as against net revenue of INR 32.77 crores and negative EBITDA of INR 24.43 crores in the preceding quarter. Provisions have been made for amounts due by Interfloat from GMB, EUR 551,000 and customer claimed about [ EUR 754,000 ]. The results do not include any figures for GMB, which filed for insolvency on July 2025. We understand that the plant of GMB remains shut [indiscernible]. The consolidated net revenue for the quarter under review stands at INR 378.88 crores and EBITDA of INR 120.42 crores as compared to net revenue of INR 346.58 crores and EBITDA of INR 69.28 crores in the preceding quarter, which had the impact of losses of GMB operations. I'm happy to report that the company has been able to achieve a higher sales and much better EBITDA on the back of improved domestic operations despite shutdown of GMB, which was a drag on the profitability and performance. With that, I would now like to open the floor to questions that you may have.p id="-1" name="Operator" /> [Operator Instructions] The first question is from the line of Puneet Gulati from HSBC.

Congrats on good performance. My first question is with respect to the capacity utilization. What is the utilization you're experiencing right now?

Last month, the last quarter, we had pretty much full utilization of the capacity. Out of 1,000 tonnes per day, it was more than 960 or 980 tonnes per day.

Okay. And was it similar to Q1?

Q1 was a little less. It was above 900 tonnes per day in Q1 as well. Q1 was 942 and Q2 is 991. So, 942 tonnes per day in Q1, 992 tonnes in Q2.

Understood. That's helpful. And in terms of your realization for the quarter, you recorded 147.5. What is the run rate going in the current quarter? And how much more do you think you can stretch this realization to?

It seems to be about the same.

Okay. And lastly, on the other expenses side, they seem to have gone up a bit quarter-on-quarter. Anything to read into that INR 72 crores versus INR 62 crores?

So other expenses actually include some onetime expenses and some expenses which have been accounted in terms of the sales support services and some payments made with regard to overseas subsidiaries because we were not able to pay directly from there. So, some expenses have been paid to the auditors and all and some consultation fees to lawyers overseas for this resolution and all for restructuring of GMB or filing of the insolvency and all those things. So, there have been some expenses which have increased the other expenses.

How much would that be? And should that normalize into Q3?

Yes, we hope to normalize the expense. Some cut down will be there in those expenses.

Okay. And lastly, if you can talk a bit about what you're seeing in terms of new capacity coming in from competition or any pressures that you are seeing from the import side?

So, as we have given the details of the capacities coming up, the total capacities after adding our capacity and the competition capacity will still be shorter than the demand in the country. So, these capacities are now coming up because the antidumping has come into play and all. And since the demand is already at 50 gigawatt and capacity will not be more than 45 gigawatts in another 1, 1.5 years' time, so there will be still scope to.

Add further capacity. And anything more in terms of write-offs that you need to do for your European subsidiary?

No, there will not be any.

The next question is from the line of [ Akash Jain ] from [ Money Curves Analytics ].

Yes. Apologies for asking a very basic question. I just wanted to understand if I have to look at the glass or tonne per megawatt, how should I think of it in terms of module capacity in megawatt and how much glass goes into -- solar glass goes into the module on a per megawatt basis?

I think about 6,000 -- say, about [indiscernible] bifacial modules about 46 kilo glass goes in 1 module, which is about, say, 580-watt peak or something. So, from that, you can calculate the numbers, how many tonnes of glass will be required per gigawatt or say 100-gigawatt, 46 kilo per module of 580 watt peak.

Okay. Okay. And just one more quick question. On this Interfloat we have obviously taken an impairment. But at an ongoing level, will there be more losses over there because we have not stricken off or -- that company at an ongoing basis will continue to make some losses?

There is a minor amount of losses which we are trying to curtail further. As you can see in the Q2, the losses have come down sharply as compared to the Q1 in terms of the overseas subsidiary, which also includes certain provision because of the claims from the customers of past business which we have transacted. But going forward, that is not existing now. So, the expenses will be much lower. So, loss will be quite minimum.

And this company primarily only in a way, buys or trades modules and sells it to customers. So that is the primary -- because there was also a manufacturing company in Germany. So, what was this company primarily doing?

So the manufacturing company has been shut, as you know, from 4th of July as it has gone to insolvency and all. This company was all along been selling the goods manufactured by the manufacturing company. And prior to that also, it was importing and selling the goods into European Union. So, this was a selling company or marketing company from that perspective. So, it buys the goods, or it acts on a commission basis and unfixed income.

Now that we have closed the German company, this will not -- what is the thought process behind curtailing this and not shutting this down also? Because I would assume that, that company typically will not do much business now given that we have filed for bankruptcy of the German manufacturing company. So, I'm just trying to understand on an -- is there a plan to complete shut this down also going forward? Can you also please tell a little bit in terms of that also?

You're right, that option also will come for discussion actually. We are trying to first see whether there are any improvement possible or not in terms of its profitability. And by next quarter also, we would have taken a decision regarding this. For this quarter, we'll just try whether this can still be got into a positive position.

We take the next question from the line of [ Ronak Jain ] from [ Sanghi Family Office ].

I have one question that this EBITDA margins of 33%, is it sustainable for future? What are your guidance on this?

I think we are fairly confident to sustain this margin at this level.

We'll take the next question from the line of Rikin Shah from The Boring AMC.

Great results. Just wanted to ask that across the ecosystem in solar modules, there's a lot of price correction that is happening, whereas we have a ADD, which is flooring our price in dollar terms. So how is the end customer absorbing this in a time where his -- perhaps his module prices are correcting?

So you have been seeing the results of the module manufacturing companies who are our customers. And their margins have been quite robust in that sense and their ROCE is quite robust. It's almost 60% to 80% in many cases, return on capital employed. So obviously, this is not a normal margin on a sustainable basis. So, there may be some contraction in the margins for the module industry because of the, say, overcapacity or whatever the challenges may be there. At our level, I think currently or so far, we have not experienced any pushback from the customers with regard to the selling prices. So, this antidumping duty in the form of MIP has been helping us a lot. And as of now, we are not finding any reduction or any kind of pushback in the prices.

The next question is from the line of Prateek Giri from Subh Labh Research.

Mr. Kheruka Good set of numbers. So, Mr. Kheruka, I just wanted to understand the demand supply dynamics at this point of time because if I look at the industry demand versus the supply which we can do at this point of time, probably with 1,000 TPD capacity, so, should we assume flattish performance every quarter from this point onwards because probably we are running at 100% capacity utilization? Or is there a scope of debottlenecking in the existing capacity? That's the question number one, Mr. Kheruka.

To answer that question, I'd say that you see there is always a spur that you spurred on to higher attempts, better performance. So, the higher demand for the glass is spurring us -- the manufacturing team to do even better, achieve better efficiencies. And we are trying for that. And hopefully, we can expect some improvement, not very significant perhaps, but improvement nonetheless. In terms of quantities, we are already getting prices which are aligned with the MIP for the import prices. So, I do not see much change there. And I would expect that we may expect a little improvement in the working efficiency going forward based on constant effort made by the team. But generally, in this ballpark. Yes. Besides this, there will be -- as you mentioned about efficiencies, there is also effort to reduce the cost in terms of the, say, power cost, we will be achieving some savings because our captive -- group captive power plant will get commissioned by end of this month likely. So, we will have certain savings arising out of that. And also, some operational improvements or some work which we have done in raw materials or coating materials will help us to achieve some efficiencies. So, there will be a certain amount of uptick in -- due to these efficiencies. And of course, the production efficiencies will also be -- our attempt will be to increase there as well.

Understood, Mr. Kheruka. So should we assume -- I mean, just trying to numerically understand it, debottlenecking should have a scope of only 5%, 10% is what you're saying. I mean, immaterial.

I think 5%, 10% is regional, maybe 3% something what we are targeting, about 3%.

Understood. Understood. Okay. Got it. My second question is on -- pardon my ignorance, Mr. Kheruka, but I just wanted to understand the mix of our probably proprietary 2mm glass, which only we have in the industry, if I'm not wrong. So the entire revenues from that glass only or there's another product mix here?

See, what has happened is even though we were able to successfully manufacture fully tempered 2-millimeter glass, the Chinese could not do it. When the Chinese could not do it and the Chinese control the market in the sense they are the overwhelmingly largest manufacturers in the world. so, they are supplying something called heat strengthened glass, which is a safety glass and you manufacture that by running it through the tempering line. But at the end of it, you don't get a fully tempered glass, you get a heat strengthened glass, which is a strong glass. It acts as a cover plate for the solar modules. So, in that sense, we still have not got anybody who is interested in a fully tempered 2 mm glass. If we find somebody, then of course, we'll be very happy to sell them. And we are in discussions with some module makers to get them to try to buy this and make a product which is differentiated. So, if they do that, then we will be having something better on our side. But as it stands, we are easily making all the 2-millimeter heat strengthened glass that we need to, and it's going quite well.

Understood. So the current revenue is primarily from non- 2-millimeter glass, but the best which you can produce at this point of time?

No, we are making 2-millimeter heat strengthened glass. See, the product is same as what is being available in the market. So, 2 millimeter is almost 2/3 or 70% of our production and rest is 3.2 millimeter. So, 2-millimeter market is growing very rapidly, and we are pretty much there to supply 2-millimeter glass to the customers. It is significantly high portion of our sales now.

Understood. Mr. 2-millimeter glass has better realization than 3-millimeter glass. Is it right?

Realization is roughly the same, roughly the same, maybe some difference, marginal.

Got it. Mr. Kheruka may I put one last question, if you don't mind?

Go ahead.

Yes. So, I was just wondering that our CapEx, which we have already put a lot of effort for is anyway going to come at least next year, probably at least a gap of 1 year. Is there a possibility of acquiring any other mid, small-sized glass manufacturer in the country so that we can beef up our production a little faster -- because ultimately, the [indiscernible] is for 5 years. So I was just wondering if you can -- is there a scope of faster execution of capital expenditure or other capacity expansion?

To answer that question, actually, as of now, we are fully aware of all the manufacturers of glass, and we don't know that anybody is interested in selling. So, the question is a little bit rhetorical, but we cannot say anything at this stage. We have bought a number of companies in the past, successfully turned them around. So, I mean, if an opportunity presents itself, we would always consider such an opportunity.

Understood. Understood, Mr. Kheruka, Is there any Chinese inventory left into the ecosystem or the module manufacturer has overimported in anticipation of [ LED ]? Or is the inventory...

No, the imports of glass from China are continuing every month in very huge volumes they are paying. The module manufacturers are paying the duty and importing the glass. So, I would say that more than 70% of the modules which are today being made in the country are using imported glass. So, despite the fact that we have been growing in the Indian industry, the demand has been growing even faster. So, we do hope that with the new [Audio Gap] have been made and which are under production -- under construction and erection, we will be having a lot more glass in the country. And we would then be able to supply that requirement from within India rather than importing. But as of now, the demand is very robust.

I think from the module angle, there may be some kind of inventory buildup which has happened say, towards the middle of September to now because of 2 reasons. One was earlier was because of the GST reduction implementation. Since the module duty was being reduced or the GST was being reduced, there were some holdbacks from the buyers. And off late due to monsoon, there have been delays in terms of installation. So, at the module level, there has been some buildup in the inventory. But typically, what we have seen is that last 4 months of the financial year, that is December to March, the installations are very quick and very high. So, we assume that the inventory will get cleared during these 4 months and the module -- inventory at the module level will moderate to normal levels.

Good set of numbers, congratulations.

We take the next question from the line of Daksh Malhotra from Aadriv Global.

Congratulations on the good set of numbers, especially on achieving the margins that we had anticipated and even surpassing them. So well done. And if we happen to continue this pace of more than 30% on the EBITDA level, that will definitely considered to be better. So sir, actually, I missed your point on the initial notes where you were mentioning that there are -- there is some other company which is planning to set up the solar glass manufacturing in India to start with 12 gigawatt of production and then there's an additional 15 gigawatt coming, sir. Can you please repeat what you were saying then?

See, 12 gigawatts is Reliance. They have sort of -- not that there's a formal announcement, but within industry circles, they have been saying that they should be in production by March of '26, right? Though again, industry circles feel this might be delayed till June. But at the end of the day, it's coming, whether it's March or June, whenever it is, it's coming. So, we expect that to definitely happen. And there are other companies which are coming up, Vishakha is coming up with 1,200 tonnes. Then Emerge is coming up with 300 tonnes. Avaada is coming up with 1,200 tonnes and there's another company in Hyderabad, I think, we're hearing about.

They've not yet started.