Hitachi Energy India Limited ($POWERINDIA)

Ladies and gentlemen, good day, and welcome to Hitachi Energy India Limited Q4 FY '26 Analyst Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Priyanka Bhagat, IR team, Hitachi Energy India Limited. Thank you, and over to you.

Good afternoon, everyone. A warm welcome to all participants joining us today's call. We are delighted to have you with us for the Quarter 4 Financial Year '26 Earnings Conference Call of Hitachi Energy India Limited. Before we proceed, I would like to remind everyone that certain statements made during this discussion may be forward-looking in nature. Actual results could differ materially due to various external factors. With that, I now invite Managing Director and CEO of Hitachi Energy India Limited, Mr. Venu, to take us through his insights on the results. Over to you, sir.

Thank you, Priyanka. Good morning, ladies and gentlemen. First of all, it's a pleasure to be here. And let me also once again introduce my colleague who recently joined Priyanka as Head of Investor Relations. So please get in touch with her at any time if you need any more information or anything else on our company. We are happy to do that, to support you on that. So once again, good afternoon, and thank you for joining us for the analyst conference call. I hope you're all doing well, taking care of yourselves. And as you have seen from our press release, we have announced our quarter 4 and full year FY '26 results yesterday. And over the next 20, 25 minutes I will walk you through our performance for the period ending March 31, 2026. As always, you may follow the presentation through the webcast or download it. We have just uploaded into the BSE and stock exchanges website. And I'll continue to refer to the slide numbers for ease of reference, if you are on the move, so that you can understand in that. Today, in addition to Priyanka, I also joined in the room by our CFO, Ajay Singh, and our General Counsel and Company Secretary, Poovanna Ammatanda. So as you know as well, at the start of this FY '26, our priority was clear, sustained the strong growth momentum from FY '25 while driving higher operational efficiency despite volatile geopolitical environment is still continuing. We remain disciplined in execution and focused on managing supply chain and cost pressures effectively. I am pleased to report that we have delivered another quarter and another year of strong performance, closing FY '26, well ahead of our previous year in all the KPIs. Our growth has been supported by consistent execution, a resilient business model and a strong go-to-market and sustained demand across segments. A key highlight is our record order backlog of INR 29,555 crores as of March 31, 2026, which provides a strong revenue visibility for several quarters going forward. This reflects continued customer confidence and our ability to win and execute large and complex projects. The successful commissioning of India's first city infeed project in Mumbai further demonstrates our execution capabilities and reinforces our position as a trusted partner in critical grid infrastructure. Together with all our Board members, we just visited the Mumbai City infeed project site this morning. I'm just coming straight from that. This is one of the most engineering model to deliver. And I see that the project is pumping the power. While India remains exposed to global energy price volatility, this also strengthens the structural investment case for transmission and grid infrastructure. Our performance in the last quarter reflects this dynamic. We have navigated a temporary industry slowdown while continuing to invest in long-term growth opportunities and margin resilience. Looking ahead, the demand outlook remains robust supported by energy transition, grid expansion and increasing electrification. At the same time, geopolitical development continue to highlight the urgency around energy security, energy transition and also domestic capability building. Hitachi Energy in our view, is well positioned to capture these opportunities, given our strong order book -- strong order backlog, our technology leadership are a proven execution track record and our customer intimacy. So starting with our presentation, I move to the Slide #3. As you all know, safety remains an integral part to our operations and we call it a license to operate. And we are committed to embedding best-in-class safety practices across our factories, and project sites and offices. We are proud to report 0 fatalities during the financial year just concluded, reflecting the effectiveness of our proactive safety culture and risk management measures. Further, reinforcing this commitment, we conducted several life-saving rules more than 1,700 life-saving rule inspections, ensuring continued vigilance and adherence to safety protocols. At Hitachi Energy, our employees, our subcontractors, well-being is deeply ingrained in our culture, annual health checkups, ongoing safety awareness sessions form core part of our approach, underscoring our belief that safety and health are nonnegotiable priorities. Our consistent efforts have been recognized and appreciated by leading third-party agencies and customers reaffirming our position as a trusted and responsible organization. As you can see from the slide, during the quarter, we have won several awards from our customers and partners in enhancing the safety culture at their project sites. If I move to the Slide #4. Sustainability remains central to our strategy with a strong focus on decarbonizing our operations. We are proud to have achieved 100% renewable energy in our operations through rooftop solar and various other means like engaging the long-term power purchase agreement with the solar developers and et cetera. During the year, we surpassed our water reduction targets, achieving an 11% reduction from the baseline of 2019 through recycling initiatives and the deployment of efficient fixtures. Notably, our Halol facility in Gujarat earned a Water Positive Index certificate, underscoring our commitment to responsible water stewardship. In addition, both our Halol and Mysore facilities have been certified platinum for zero waste to landfill, reflecting our continued progress in circular resource management and waste minimization. Beyond environmental stewardship, we have made a meaningful strides in governance and social impact. We increased gender diversity substantially reinforcing our commitment to building an inclusive workplace. At the same time, we continue to uphold an uncompromising commitment to integrity with a 0 incidents recorded during the year. Our efforts continue to be recognized externally, we are pleased to report that our Crisil sustainability ESG rating improved to 61, which is basically called a strong in FY '26 while our NSG ESG rating increased to 62, which is adequate, reflecting sustained progress across key ESG dimensions. I move to the Slide #5. And some of this information, you already know that. But let me put our performance in the context of broader dynamics. The current geopolitical situation in the Middle East has triggered pressure on the supply chains. However, we have put several mitigation measures to address the temporary challenges which not only we are paying, but -- not only we are facing it, but the whole industry is facing. Align with that, we are witnessing is a clear structural transformation in the energy landscape in India, driven by energy security priority policy support, localization and accelerating electrification across multiple sectors. India's electricity demand is poised for a strong sustained growth over the coming decade, supported by industrial expansion, renewable integration, EV adoption and the rapid scale of the new age load centers such as data centers. At the same time, the grid is becoming more complex with a higher load density, increasing reliability requirements and new demand drivers such as AI-led workloads, and this is leading to significant investments across the transmission, distribution and grid infrastructure. Across segments, the opportunity is compelling. Strong momentum in renewable, transmission investments to integrate nonfossil capacity, a visible industrial CapEx cycle, rising data center investments and early stage but accelerating EV penetration. In parallel, improving DISCOM health and fundamentally is enabling higher spending in distribution. Overall, these trends reinforce our confidence in a multiyear growth opportunity, and we believe we are well positioned to capture this throughout our strong market presence, execution capabilities and continue to focus on technology, capacity expansion, [ IMP ]. I move to Slide #6. Our operating momentum remained strong and firmly on track throughout the quarter ending March 31, 2026. During the quarter, we recorded orders of INR 2,422.5 crores and revenue of INR 2,751 (sic) [ 2,754 ] crores and which has a growth on a year-on-year basis, orders of 10.6% and revenue of 46.2% growth on a year-on-year basis. Similarly, and when it comes to the profit before tax is around INR 443.4 crores and profit after tax is INR 330.5 crores, reflecting a solid operational performance in that. Also this quarter is also ending -- this quarter ending is also our full year ending. For the full year period, as you can see here, we reported a strong orders as a second year in row with at the high base, we have a growth of 1.6% at INR 18,456.5 crores. And the revenue on a complete year INR 8,147.7 crores, a growth of 27.6%. And PBT INR 1,375.2 crores, a growth of 166.3% and PAT is INR 987.8 crores, a growth of 157.3% and EBITDA on an annualized basis is 15.4%. And look at our strong operating cash in this year is INR 1,746 crores and strong order backlog of INR 29,553 (sic) [ 29,555.3 ] crores increase on a year-on-year basis, 53.6%. During this -- if I go to the next slide, during this year, we have commissioned a very, very important project. I just talked about Mumbai City infeed project of 1,000 megawatt on a VSC-based technology in that. This includes entire design, engineering supply, erection and commissioning of HVDC converter station at Aarey and Kudus and supporting 1,000 megawatts of power into the Mumbai grids in that. Similarly, we have also commissioned several other projects in this year for example, the renewable substation at Barmer and renewal substation at Barmer and also transformer supply to leading utilities and then [ air ] substations in Rajasthan and several other things. These projects underscore our strong execution capabilities across diverse segments and geographies. Our comprehensive scope of work spans the entire value chain including design, engineering, manufacturing, supply, erection, testing and end-to-end commissioning, enabling us to deliver integrated high-quality solutions to our customers. I move to the next slide, that is Slide #8, and at Hitachi Energy, we are committed to leading purpose -- leading with the purpose and creating a positive impact on industry and society. We firmly believe in translating our strategies into meaningful action. In line with this commitment, we actively participated in India Energy Week in 2026, engaging with key stakeholders and fostering global partnerships that are shaping the next era of energy transition and progress. Artificial intelligence has become the new normal across industries and energy sector is at the forefront of this transformation. It is imperative for us to adapt to this evolving landscape, engaging at such industry forums and summits bring not only perspective to our businesses, but we're also leading actively in the dialogues. As part of the India's AI Impact Summit, we hosted a pre-event to explore the changing role of energy in the age of AI and industry leaders across Ministry of Power and Ministry of [ MeitY ] and IT has joined us at that platform. We showcased our portfolio of products and solutions at the Bharat Electricity Summit, one of the largest transmission energy events in the country. Our booth at the event was honored by the honorable Ministers of Power, Mister of the Renewable and critical members of the power industries to listen to us and to see our state-of-the-art technology products, which are on display. Move to Slide #9 to give you a little more additional context on our order intake for the full year FY '26. Order intake for FY '26 has demonstrated growth across the sectors, industry, data centers, railways and renewables. So you're seeing the small dip in the transmission is basically due to the large orders in -- mismatch of the large orders, but also some of the products have been delayed in that. On the right-hand side, the order mix is illustrated on the right, the chart highlights that the product segment has taken the lead. And while utilities and direct end customers emerge as a clear winners across their respective sectors and channels. I move to the next slide, which is very important and strategic slide for us. And let me also take the moment to highlight and importance of this development. During our quarter 4 FY '26 Board meeting, the Board approved an incremental investment -- incremental additional investment of INR 2,000 crores. This includes, among other initiatives, the establishment of state of the old greenfield large-type transform facility in place Karjan, Vadodara in Gujarat. This is an accelerated execution program, and we would like to complete this state-of-the-art greenfield transformer factory to produce our large power transformers and also HVDC converter transformer by last quarter of 2028 calendar year. This investment is over and above the capital expenditure program we had previously announced in October 2024. With this, our total cumulative CapEx commitment now stands close to INR 4,000 crores. We believe that this investment will significantly strengthen our manufacturing capabilities in India and position us well to capture the strong demand outlook in the sector, not only from the renewable transmission but also new sectors such as data centers. With that background, I'll now hand over to our CFO, Ajay Singh, who will walk you through our financial performance in the next 2 slides. Over to you, Ajay.

Thank you, Venu, and very good afternoon, everyone. Hope you are doing well. So let me run through the financial performance for this quarter as well as the year-end. So Venu has already touched upon a few parameters, but I will go a little bit deep into that. So orders, if you see, we have clicked INR 2,422 crores in this particular quarter, which is 10.6% growth Y-o-Y. Revenues from operations were very, very good in this quarter. We had INR 2,754 crores, which was a 46% growth compared to the Y-on-Y. And profit before exceptional item is INR 443 crores, that is 16.1% compared to earlier Y-on-Y 13.1%. PAT, if you see, PAT grew by roughly 80%, INR 330.5 crores. And then the margin, we closed at 12% PAT margin. Operational EBITDA for this particular quarter was INR 452 crores, which is 16.4%. So overall, I will say, in my view, this quarter was good for us. And again, if you compare from the sequential quarter also, if you see the revenues grew by 32% and PBT also grew by 10% PBT after exceptional items grew by 27%. PAT grew by 26% and also operational EBITDA grew by 33.7%. So the margin in this particular quarter was majorly contributed from the very good revenues that we got and also through the operating discipline that we could get translated in this particular quarter. If I see year-on-year. Year-on-year, we had order booking of INR 18,456 crores, which is -- we are able to maintain this good order book at 1.6% compared to the last year. Revenues, we crossed INR 8,000 crores of INR 8,147 crores, which is roughly 27.6% growth compared to the previous year. PBT before exceptional items, 16.9% and PBT after exceptional items is 16.2% compared to 8% in the last year. And PAT grew, basically more than 150% PAT is we clicked INR 987 crores, that is 12.1% vis-a-vis 6% in the last year. Operational EBITDA, if you see at INR 1,252 crores, that is 15.4% compared to 9.3% what we achieved in the last year. If I dwell a little bit more in details, if you come to the next slide, where I'll talk about more in details. If you see in the particular quarter, a little bit on the cost structure, if you see our basically, the personnel expenses for this particular quarter was 6.3%. Other expenses, we were able to pull down 14.3%. In this particular quarter, we had an exchange loss of INR 31.5 crores. This is an unrealized loss, so notional loss for us. Depreciation, 1%, finance cost negligible. And with this, we are able to closed this particular quarter with 16.1% PBT and profit after tax was 12%. Similarly, if I see for the year-end overall year-end also, as I discussed, we clicked a revenue of INR 8,147 crores and if you see, we were able to improve on the gross margins compared to the last year by a minimum 2%. Personnel expenses, we closed by 7.9%. Other expenses, again, last year, it was 20%. This year, we closed at 16.9%. And all other expenses are under control. And that is how, if you see, we were able to close this particular year with profit before tax of 16.2% compared to the last year, 8.1%, and also profit after tax basically reached to 12.1% compared to 6%. So overall, a very good development on the profitability vis-a-vis when I compare with the last year. With this, I hand over to Venu.

Thank you, Ajay, and I come to the last slide. As you all know, this is a famous slide for me. And as we close the financial year, we are pleased with the progress we have delivered, especially against the backdrop of an evolving geopolitical environment. And our focus continues to be on 2 clear priorities: sustaining our growth momentum and improving efficiency across all areas of our operations. We remain proud of our leadership in core segment such as utilities, HVDC, industries, data centers, et cetera, while actively expanding into high-growth areas, energy storage where we see strong and sustainable demand trends. At the same time, we are sharpening our strategy to capture opportunities across services, exports and digital innovation, strengthening the service business in India remains a key pillar for us. As it plays a critical role in ensuring continuity and resilience of energy systems. We are also driving productivity and operational excellence with a strong emphasis on quality and scalability. In parallel, we are focused on executing our strong order backlog efficiently to support revenue growth and optimize capital deployment. And we kick started AI acceleration with AI Nexus program, harnessing data analytics and AI to drive smarter decisions and faster and better outcome. On the function standpoint, safety continues to be our nonnegotiable and our license to operate, we deeply embedded in our culture, and we remain committed to maintaining a robust safety first environment across all of our locations. Looking ahead, we will continue to invest in our capabilities through people, technology and capacity expansions to support sustainable growth. we are confident of creating long-term value while contributing to a more resilient and sustainable energy future. Ladies and gentlemen, with that, now the floor is open for the questions. Thank you very much.

[Operator Instructions] We'll take a first question from the line of Parikshit Kandpal from HDFC Securities.

So my first question is on exports. So we have seen a very robust order inflow from exports, if I do the numbers for some adjustments for HVDC, about INR 3,000 crores plus for this year. So just wanted to understand, I mean, without any related party major orders in this year. So how are we able to get these orders? How do you generate inquiries there? Do we compete with the parent entities in these geographies. So how does the allocation come? How do you get the inquiries because it's widespread across U.S., Europe and APAC? So just wanted some more color on this.

Yes. Thank you, Parikshit. First of all, thank you for your question, and it's very interesting, and we have been consistently saying that our export strategy is a 3-prong strategy. So the number one is we have certain allocated markets. And in the allocated markets, we developed the allocated markets on a long-term basis, together with the local sales and marketing organizations, and we start selling the products in that. At no point in time, no 2 Hitachi Energy companies will compete in any markets. It's always the markets, we develop the market on a long-term basis. That's the first strategy. And the second one is, we do manufacture certain products only in India in the whole Hitachi Energy ecosystem. That's what we call as a global feeder factory. That's -- let's give an example of the 66 kV high circuit breakers, and then our COMBIFLEX relays just to give you a couple of examples on that. Those relays -- those components, products we manufacture here, we sell it across the world, some directly to customers, some directly, sometimes through our Hitachi Energy offices. So that will become a related party. Third one is we manufacture as part of that is the component, which is required for the full products, what we call is the feeder factories. This feeder factory manufactured components. We sell it to other Hitachi Energy factories around the world. It could be U.S., it could be Germany, it could be Sweden and Switzerland, et cetera, like that. So these are the components and where we have -- we sell it over things. So a combination of these 3 things will add to our exports thing.

Okay. Sir, my second question is on the HVDC mix. I mean we have seen some softness in the margins, for the year as a whole. I mean we are somewhere around 14%, 15% EBITDA, but our peers are now in the range of 25% plus. So our GTM is also low and other expenses are high because of royalty, which is like we have higher royalty there. Just wanted to understand what was HVDC a significant portion of this year's revenue, so if you can quantify across all the 3 HVDCs and then you had Marinus, you had [ DENA ], you had the Power Grid and the Mumbai entry. So was be a significant part of your order book? And given that now 2/3 of our order book is HVDC. So is there any scope for further margins to improve from here on?

No. I think as I said, the HVDC is -- in our view, is only margin-accretive and it was not very substantial in this quarter, in this year. I mean, if you take the whole of this year, our HVDC revenues out of INR 8,000 crores is around INR 1,100 crores or something like that, Ajay?

Yes, roughly. You can say 15%.

Yes, that's INR 1,100 crores, INR 1,200 crores in that. So I just said, we -- our focus has been our base business our service business, our export business and in addition to other things. HVDC is one of our levers, and that's what we are doing it.

Okay. Just the last question, sir, on the order breakup for this quarter, I mean exports has been very high. So just wanted to check the services, which has also been very high in this quarter. So if the service order from India, HVDC upgrade or it was a global order? And is it part of the export order book?

No. The service upgrade is from India. It is for our customer in MSETCL [indiscernible] upgrade of control and protection.

Because adjusted for that, the base orders look very weak for this year as a whole. I mean, we have not really seen if I remove services and the export, the base ordering looks to be very weak for FY '26. In fact, there could be maybe a decline Y-o-Y. So what is your commentary on the base ordering?

Yes, we have seen our base orders also had the strong growth in the base orders for the whole of financial year.

Next question is from the line of Mohit Kumar from ICICI Securities.

Congratulations on an excellent quarter and a very, very good year. My first question is on the domestic order inflow ex HVDC. Let's say, domestic order inflow plus exports, HVDC, it seems that we are at 90 billion last year, 90 billion this year, right? Is it -- how do you see this developing for FY '27? How is the inquiry pipeline ex HVDC in domestic market, especially?

Yes. I think -- thank you very much. As you know that we don't give any forward-looking numbers going forward. But let me give a little bit of color to that, so that you understand that. So leave -- actually, as I said, HVDC is only one of our growth levers, not the only one, but you leave HVDC out. What we see our pipeline is very strong in the renewable. Our pipeline is very strong in the data center. It's really good. And that pipeline is also equally strong on our transmission and other projects in that. because industries are -- it's kind of intermittency is there, but it's coming up in that. Overall, if you talk about the entire pipeline, leave HVDC, I think -- and our pipeline for the transformers for our various segments is also very, very strong in that. So if you add all of those things, I think pipeline compared to the year ago compared to the quarter ago, is very good.

Understood. My second question is the new transformer capacity, which announced. Does it mean that it will produce HVDC transformer internally?

No. What do you mean by internally means?

In a sense, in the other package or the 2 HVDC packages, we are ties up with BHEL for supplying the transformers. Does it mean that as this capacity is up, we will take the entire project...

Whatever the projects we have won and those commitment that will stay there. There's no change in those particular existing orders. So considering the new capacities is required, considering demand, and we are setting up that. And we have seen complete 360 view on and before putting up this capacity, and we believe that we have a very strong business case for this kind of thing. And in this new facility, we not only manufacture the large power transformer. We also manufacture the various converted transform, whether it is for VSC technology, whether it's LCC technology or et cetera. And also some of the large power transformers required for the data center.

Mohit, I request you to join back the queue, please, as we have participants waiting for their turn. Thank you. [Operator Instructions] Next question is from the line of Sumit Kishore from Axis Capital.

My sincere compliments on creating an Investor Relations cell, and welcome to Priyanka in the Hitachi Energy India family. My 2 questions, the first one is the gross margins contracted on a sequential quarter-on-quarter basis. by a significant amount. What was the mix change or factors that drove this outcome? The second question is that overall, your order inflows for the fiscal grew by 1.6%, but excluding HVDC orders from the base for both the years, the non HVDC order inflow, at least the domestic non-HVDC order inflow was set it in FY '26 over FY '25. What led to this outcome and what is the outlook going forward?

Maybe on the gross margins, I'll ask Ajay, our CFO to talk on that.

Thank you for the question. So if you see the gross margin, you are talking about sequential quarter -- it is only because of the product mix that is where you see a contraction. But if you see overall basis at the end of the year, we have improved on the gross margin by 2 basis points. So if you see around last year, our gross margins were around 38%. But this year, we closed the year with the 40%. So as we are discussing, we are working on the margin accretion piece and only because of the product mix is where sometimes in the sequential quarters, we see some change.

Yes, so Sumit, what was your second question on the orders?

Yes. The non-HVDC order inflow in FY '26 versus the comparable number for FY '25. If I exclude exports, there seems to be sort of some weakness in the domestic non-HVDC order inflow. Given the outlook is so strong around multiple growth drivers, what is actually the underlying dynamics here?

I think when we looked into that, it is not the case with us. But we need to also understand that some of the capacities which are required for that probably will fill in with the HVDC portfolio. And that's also the reason why some orders, which are required at the same time may not be possible for us to do that. But otherwise, even if you remove the non HVDC order, there has been a growth in the domestic as well for us.

Okay. Just one follow-up on this, your INR 20 billion CapEx. What kind of physical capacity for power transformers in GVA terms is this...

We are going to create almost anywhere between 30 GVA to 40 GVA, exactly close to our ever existing factory. Similar to what...

Next question is from the line of Amit Anwani from PL Capital.

Just a clarification on 30, 40 GVA, you said after adding the capacity, this will become 30, 40 GVA?

This is additional capacity. 30 GVA, depending upon the products mix can go to 40, but baseline would be in the range of 30 GVA. [indiscernible]

Just kind of doubling the capacity, yes. So sir, a question on the minimum local content. So the 2 projects which we already have, just wanted to understand, there was recent notifications from the government with respect to minimum local content. So the status on the 2 projects, how much is the MLC there? And is your CapEx driven by also the localization drive for the -- probably for the upcoming 2, 3 years, there is a minimum 30% and then this will go up over the next 5 to 7 years in terms of localization requirement for each project? And second, will this also lead to reduction in royalty? Because you'll be localizing more. So I just wanted to understand on these aspects.

So thank you very much. As far as our local content is concerned, we are far ahead of the requirements set out by the thing. Even the recent government circular, we are -- by far, we are exceeding that. And we have been consistently saying that we have -- over a period of time, we have increased our local content. And our new capacity is nothing to do with the local requirements of that. The new capacity is basically is based on the demand coming in from renewable, transmission, data centers in a big way in that. When it comes to the royalty, your question is that, as I said, we manufacture locally, but we continue to get technology from our principals, right? And I've been saying that we need to pay the royalty because we will come out of new technologies, new products, et cetera, in that. So if you are maybe attending today's evening investors meet we would like to explain to you that what are the new products, technology we are launching for some of the new segments, growth drivers, for example, data centers, energy storage and those technologies, we are able to source from our parent company and we need that royalty to ensure that the technologies are available at the same time it is available around the world.

And I'll like to top up what Venu were telling, locally, if you see, we are not spending anything on the R&D. Our R&D spend is all managed centrally. So that is how we will need the technology for our products.

Next question is from the line of Puneet Gulati from HSBC.

So we look forward to your evening presentation. But primarily, can you talk about any big gaps that you currently have in your portfolio that you would want to address with these INR 2,000 crores of CapEx?

No, INR 2,000 crores is not about the gaps. For example, what -- the major of INR 2,000 crores is going into our existing product. One is that we're going to set up a new greenfield large power transformer. We're already manufacturing those things in another facility in Baroda, Maneja. And this is additional capacity because we need to produce more number of transformers in the same time, and that's what is the thing. And similarly, we are also setting up 2 additional lines in our Bangalore factory for a power quality and that is also -- this is up to 6 lines we have. We are now adding a 7th and 8th line because we see a lot of demand coming in for the power quality products. And it's not any of the product gaps. It is more of doing what we are doing it.

Understood. That's very helpful. And how should one think about phasing of this capacity over the next 2, 3 years?

Our view that -- that's what I said, we will talk about more in the evening. But what we are talking about is that the demand required for the electrification, right? More and more sectors are getting electrification. So electrification means you need a more transmission, you need a more generation and for that, you need a more transformer. So we have looked into quite a longer period. And we believe that it's not 1- or 2-year, 3-year story we are talking about. We are talking about a multiyear growth story. It's structurally we need to have. It's not any more spikes that it is coming up and down but we need that structurally, for a couple of long years, the growth of the demand for these products and solutions is going to be there in our view. And that's why we are investing it.

Understood. No, I meant your capacity in the INR 4,000 crores, when should we expect different phases of capitalization? Will it...

No, as we speak, out of the INR 4,000 crores, out of that INR 2,000 crores we announced in October 2024. And many of those projects are, as we speak, they are on the ground. So they are taking anywhere between 3 to 4 years to complete that. But this additional INR 2,000 crores, which we announced, and we are doing the groundbreaking ceremony on 12th of June. And this is an accelerated manufacturing thing as I said, we're going to manufacture the transformer out of the new facility end of fourth -- last quarter of the calendar year of 2028.

Next question is from the line of Subhadip Mitra from Nuvama.

As you've mentioned on this call as well that the focus areas and the growth triggers seem to be coming more from the renewables and the data center side over and above let's say, HVDC and exports. Just wanted to get an understanding of, let's say, how much of the renewables and the data center piece would be, let's say, part of current revenues and order book? And how do you see the growth trajectory going ahead?

Well, I think all of them are part of our order book. And by far, the transmission is highest in our order book followed by the renewable and then industry service exports. Data centers is coming up in India. As you know, India is -- you have just less than 2 gigawatt of our data center in India. And this is going to be multifold in going forward. In the next 4, 5 years, we are talking about in that. So that is -- even though it's just a small base, but the rate of growth, our growth rate -- growth percentage is much higher in those things. And the next one is the energy storage, the battery energy storage, especially you're talking about almost 80 gigawatt of battery storage for the next 5, 6 years, that as you can see from the CII report, and that needs a lot of technologies, and we're going to also look at those segments in that.

Understood. Just as a follow-up, would most of these products that go into, let's say, the data center and the battery energy piece, are these products that you're already manufacturing in India? These solutions already exist within the Indian subsidiary or these would be products that need to be imported from the parent and then supplied?

Some of the products are already we are manufacturing, and we're going to expand our product basket. Some of the products is already available in our parent company. We're going to bring the technology and localize those things. As you know, it's very important to meet up the price point required by our customers in India. So if we import from there, we will not be able to manage the sustainable growth in that. We need to do that, and that's why we are looking into that. It's a combination of all of that.

Next question is from the line of Jason Soans from IDBI Capital.

Sir, my first question just pertains to the...

Can you please come close to the mic, please? It's very feeble.

Yes, look, [indiscernible] also?

Can you use your handset mode, please?

Yes, sure.

That's clear, yes.

Sir, my first question just pertains to just wanted the entire year number FY '26, the exports order intake and as well as the exports revenue post.

I think -- yes, Ajay, you'd like to?

Yes. So export revenue, if you see year-end is around 25%, you can take -- and orders also will be basically in the similar line. Currently, if we look a little bit lower because we have booked the large domestic orders, but our average export is around 25% to 30%.

Yes. Whenever we're talking about the percentage, please remember, we'll always take out the large lump like HVDC order. When you're talking about that, it is excluding of that.

Sure sir. So would it be possible to give an exact number, sir, for this?

No, we were not able to share exact numbers in that. We have been saying as a ballpark percentage.

Sure. And sir, my next question just pertains to the near-term HVDC pipeline for the next 2 years. Just wanted some color on the pipeline. How was it more of LCC projects or VSC projects coming on stream? And also one linked question, since you've already won 2 mega 6 gigawatt projects already, do we have the capacity to take on more for the next couple of years?

No, I think -- thank you very much. The pipeline is, in our view, is very robust. One has already come up for bidding for the TBCB customers, and we are working on that. And similarly, there are many other projects, what I understand is also is in the pipeline, at least in the next 2 years, we are talking about -- we are talking about anywhere between 3 projects, if not, 4. So our capacity will be consistent and this is a combination of both LCC and VSC. And for us, It doesn't matter. LCC, VSC. And absolutely is fine because we are, by far, the leadership position in both LCC and VSC technology globally in that we just commissioned Adani in Mumbai 1,000 megawatt is a VSC technology. So and your next question was on whether do we have a capacity or not in that. We have also consistently saying that we have been building the capacity. We don't have any limitation as of now to take more HVDC projects now and the next year or year after and we are creating that capacities. As you see, we have been saying this from 2022, where there's no pipeline was there, we started our HVDC and control production factory in Chennai. And we are also set up additional now transformer factory where we are going to manufacture the converter transformer in anticipation of the demand, not only HVDC, but also including HVDC.

Request you to join back the queue, please, as we have participants waiting for their turn. Next question is from the line of Shirom Kapur from Jefferies.

Just had a question on your exports. So I understand your 3-pronged strategy. Just wondering maybe if you could give some qualitative commentary on what kind of markets where you're getting this export demand? And is it largely third party? Or is it more driven by orders from the parent? And specifically, which segments? Is it data center, are you catering to the data center market in U.S. or other parts globally. If you could just give some color on that?

Thank you. So as I said, some of the allocated markets where we have one of our growth export strategy, there, we develop those markets in a long-term sustainable basis. It could be Indian subcontinent, Bangladesh, Sri Lanka, Nepal, Bhutan. It's also some of the Southeast Asian countries and so on and so forth. And there, we sell our products directly to the third-party customers. And for example, our GIS, et cetera, we sell not only in the Southeast Asian countries, but also some of the European customers in that. So in some cases, we said we have a global feeder factories there. Again, we have a combination of that. We sell to sometimes directly to customers, sometimes to our organization in that. So that comes from our -- not our parent, but our Hitachi Energy offices around the world. And the third one is where we have the feeder factory, where we make the components in India. It's like more of a kind of contract manufacturing for our, Hitachi Energy factories around the world. So that will be through our parent organizations in with that. So that's how we can do that.

Understood, sir. And secondly, if you could comment a little bit on -- you mentioned that there was a temporary industry slowdown in the fourth quarter that you navigated. And during your commentary, you also highlighted some maybe delays in some transmission projects, and that's why FY '26, we saw a small dip in the growth in transmission orders. So if you could comment a little bit on what are these delays? How long do you anticipate them to go on for? When would it get resolved? Or is it already behind us now?

I think in my view, it's behind us. On the transmission projects is behind us, it's now coming up the pipeline. Maybe the industrial CapEx, when I said it's not consistent with all the things. So there is a good momentum on the CapEx on some of the steel and other industries but across the thing. But if you really look at where the investments are coming in, using the transmission, renewable for sure and also some of the fossil power plants are also coming up. And the data center and semiconductor industry -- batteries to industries, they're all really firing on that. And we also see some expansions in the automobile industry, some of those things.

Next question is from the line of Rahul [ Gajare ] from Macquarie Capital.

Just continuing on the export bit. Is it fair ,I mean you did say that you are catering to the SAARC region and Southeast Asia. So all of this is necessarily with you all only. Is that how one can interpret this?

Sorry, all of this is necessarily?

It's necessarily catered by Hitachi India itself.

Yes. Some of the allocated market, it will be catered by Hitachi energy India only.

And that is SAARC is the totally allocated market. And you will compete with other Hitachi entities for Southeast Asia?

I don't know how we defined. As I said, our Indian subcontinent is what we defined that is Bangladesh, Sri Lanka, Nepal, Bhutan and Southeast Asian countries. In Southeast Asian countries, India's subcontinent is the entire portfolio in Southeast Asian countries is part of the portfolio.

Got it. Second thing is, you did talk about how India is catering to being a feeder factory for some of the products and certain products are completely only manufactured locally. On an average, every year, how much of these products are there? How much of these things make up make up your revenue, these feeder factory and certain products which are manufactured only in India because this is going to be a continuous weather export happened or not, this is something which will continue.

Yes. I think since this is what we -- it's like more of a contracting to our companies. It's -- and it has -- everything is a pass-through to our company. So it's like a low risk and stable margin kind of thing in that. And it is growing. It is -- right now, if you take our a whole of exports, it's in the range of 30%, 30%, 30% or something like that.

That's interesting. The last question that I have is with respect to the time line of supply of transformers, the export market, what is the kind of time line that you are able to supply a transformer and whether it is different for a 765 or 400 kV.

Our role of transformer because we have so much of demand from a domestic thing. Our focus is continue to maintain our domestic thing in there. Our pipeline is quite robust, quite big in that. And one of the reasons why we are increasing our capacity by adding a new factory is also not only to cater to the domestic demand but also cater to the new segments arising out of this thing -- like a data center like et cetera, like in that.

So you are able to deliver a transformer in what, 15 months, 10 months?

It's not a ballpark since like this is evolving it. It's highly dynamic, and that's why we are always tell our customers to look at and ordering as early as they can, so that we can plan better in that. Some we can deliver in 15 months, some we could do in the 12 months. That's not the issue. Issue is what kind of capacities is customers are looking at it. So that we can plug those capacities.

We'll take our next question from the line of Randy Lau from Goldman Sachs.

Sorry, am I audible?

Can you use your handset more, please. Audio is not clear.

Am I audible now?

Yes, please go ahead.

Okay. So for my first question, how should we think about this data center opportunity attributable to Hitachi, particularly with respect to domestic and global competitors over the next 5 years?

Sorry, it was not very clear. How big is the opportunity in data center?

Next 5 years?

Yes. It's 5 years...

Yes, how should we think about the data center opportunity for Hitachi over the next 5 years?

Look at the data center market in India, and that's where we are primarily catering to is now -- in India is less than 2 gigawatt of the data center capacity existing. And the projections is anywhere between 13 to 18 gigawatt depending upon which data you will take. And what we are talking about anywhere between 6 to 9x of the capacities in that. So every data center -- hyperscaler data center, every data center, 15% of data center CapEx is Hitachi Energy and addressable market. And if you look at the addressable market is expanding by anywhere 6 to 8x depending upon the data from the various officials, et cetera. So it's quite substantial.

Sorry, just a follow-up, you mentioned 13 to 18 gigawatts and you mentioned a certain CapEx. For Hitachi, what percentage of this total CapEx is attributable?

No, we don't take that because for us, every data center is a 15% of our addressable data center, addressable market for us.

I have a second question. So in the current inflationary commodity price environment, how effective has the price escalation process been in protecting the margins of your HVDC and transformer contracts?

Yes. So thank you very much. I think this is a very interesting question. I was expecting this question. I think you all know that the geopolitical challenges being faced across the -- across India and also many other geographies and which is also having elevated inflation, elevated metal prices, et cetera. And on top of that elevated transport charges because of the state of home was getting affected, et cetera, in that. So we are navigating it. It's not easy, it's challenging. But some of our -- I would say most of our portfolio, we have -- our commodity price is a pass-through. Our -- we have a price variation clauses built in, in the contracts, and we very openly and transparently, we do that. But some other things where we cannot pass on those things like inflated freight, et cetera, we are just looking at how to manage it. And then we have several initiatives to ensure that we mitigate many of those risks in that. But we are very looking actively on that.

Ladies and gentlemen, we'll take that as the last question for today. I now hand over the call to the MD and CEO, Mr. N. Venu, for closing comments. Over to you, sir.

Thank you very much, and thank you very much, ladies and gentlemen, for listening to us. And I know that some of you still have a question. So please reach out to Priyanka, and we will be happy to connect with you offline or online, and to provide all the necessary things in that. Thank you for showing interest in our thing. And we are looking at very exciting times for Hitachi Energy. And the electrification has arrived and everything is getting electrified whether it is transport sector, industry sector, data centers, energy storage and also the industrial and the domestic and we are super excited about our role and supporting our customers, our industries and also working very closely with all of you. Thank you very much and looking forward to. Thank you. Have a nice day.

Thank you, sir. On behalf of Hitachi Energy India Limited, I would like to conclude this conference. Thank you for joining us. You may now disconnect your lines.