HPL Electric & Power Limited (HPL) Earnings Call Transcript & Summary

Welcome to HPL Electric & Power Limited's Q4 and FY '25 earnings webinar hosted and produced by ElevEase. I am Shankhini Saha, Director of Investor Relations from Dickenson, and I'll be moderating our call today. So joining us from the HPL management team today is Mr. Gautam Seth, Joint Managing Director of HPL. Please note that this conference is being recorded and that some statements in this call may be forward-looking based on current expectations and subject to risks that could cause results to differ materially. You can download HPL's investor presentation and press release from the links in the community chat or directly from the company website or the NSE. I'll now hand the conference over to Gautam to make a few opening remarks. Over to you, Gautam.

Yes. Thank you, Shankhini. Good afternoon, everyone, and thank you for joining HPL's Q4 and FY '25 earnings call. I will spend the next few minutes walking you through what we achieved last year, how each of our businesses is shaping up and why we feel confident about the road ahead. A quick look at financial year '25. Last year was our best year so far. Revenue touched about INR 1,700 crores, up 16%; and EBITDA grew 1/3 to roughly INR 255 crores, lifting our margin to 15%. Profit after tax crossed INR 90 crores, more than double the year before, with PAT margin crossing 5%. The March quarter kept the momentum alive. We booked revenue of INR 493 crores and an EBITDA margin of 16.7%, both record highs for us, while PAT jumped to INR 37 crores. Now looking at how the businesses line stack up. Smart Meters is one of our key growth engines alongside Wires & Cables and Switchgears. Rollouts under the AMISP framework are moving quickly, and they now account for our entire INR 3,500 crore order book, giving us clear visibility for the future where our focus remains on execution. Wires & Cables have delivered 3 straight years of strong double-digit growth, helped us by a healthy real estate cycle, infrastructure spending and a retail network now spans more than 85,000 touch points. Domestic Switchgear posted mid-teen growth despite some slowdown in demand in Industrial Switchgear, but thanks to a richer mix of higher-rating products and tighter engagement with our distributors. I'm pleased to say that Lighting has turned the corner as sales went up 30% in Q4, bringing the full year back into positive territory. While looking at execution and balance sheet health, our margin gains comes from a better product mix, smarter sourcing and first benefits of plant automation. Debt levels remain manageable and enjoy comfortable EBITDA coverage. As we enter FY '26, our focus is to scale up smart meter production to stay ahead of the national rollout timetable, deepen the automation in all our factories to protect margins as volumes climb and ensure a more consistent and better product, speed up the product development so we remain first to market in advanced metering, lighting, industrial switchgear, wires and cables, et cetera. For instance, earlier this quarter, we teamed up with Wirepas to unveil India's first Wirepas-certified in-meter RF gateway, a dual-radio smart meter solution that removes stand-alone gateways and sharply lowers AMI rollout cost for utilities. We will also widen our distribution network by adding more channel partners and expanding our service footprint as execution on the ground remains integral as India's electrification story gathers pace. I would thank all of you for participating today. FY '25 reaffirms our focus on smart metering, wires, switchgear, lighting, where growth was followed by improved margins and balance sheet strength. With India's economy expanding and nationwide smart metering and electrification gathering pace, we have a clear runway ahead of us. Thank you for being part of HPL's journey as we enter a new chapter of growth into the next financial year. With that, I'll be happy to take your questions.

Thanks, Gautam.

[Operator Instructions] Our first question will be from the line of Viraj Mahadevia.

Gautam, congratulations. Absolutely breathtaking results. And hopefully, this is a start of a much longer journey ahead.

Yes. Thank you.

Our of your INR 3,500 crore order book, which is now largely smart meters, which has pivoted the mix in favor of smart meters as some higher-margin products, could you expect that half of that will be executed in the year ahead in FY '26?

Yes. So these -- each of the orders what we have are as per specific schedules of different AMISPs. Now each one is currently at their different levels of execution. But broadly, if you look at in the last 3 months or in the Q4, we have seen the pace of the implementation, that has increased and the overall pace is much better now. So we have all-around demand from each of the AMISPs for our smart meters right now. So I would say, probably we would be looking at a good growth again this year because we've done INR 1,075 crores, and we should be looking at a strong double-digit growth. But whether maybe half of them would go, but it is actually on specific schedules. So we may have some new orders coming in, which would be going in the current year and some of them like this. But broadly, yes, we -- the overall growth in the smart meter is good. We have said that earlier also, the execution is -- even the execution from our end and the implementation or at the AMISP end has improved. And I read somewhere, there was a news that they have crossed even 100,000 meters per day. So overall, I think...

Which is why my question. So the data point I read, Gautam, was for Feb '24, they were being installed at a rate of 11,000 a day. That stepped up to 80,000 in Q4. And in April, it was as high as [ 100 crores ] per day. So with that and your expanded capacities in place, whether now that the market opportunity is here and customers obviously are looking for your product, whether you can accelerate the execution and delivery.

Yes. So right now, if you see our execution, we are on schedule with each of the AMISPs. So as and when the demand comes in or the demand is there, there's no doubt on that, so we are there to supply that, yes, for sure. So...

But out of this INR 3,500 crores, how much is scheduled to be delivered in FY '26, if I may ask that?

Probably I can -- yes, I can probably get back on the specific number. And -- but yes, because each of the orders what we have, initially, they were -- there was a lag of, let's say, about 6 months before the first supplies would begin and then 2.5 years for the execution. So definitely, I would say maybe well over INR 1,000 crores in this would be scheduled for the current one, yes.

Understood. Your employee expenses have moved up, obviously, as you've hired some labor and employees. Do you expect it to move up further from here in terms of headcount? Or now is it just in line with inflation?

I think it's in -- because if you see Q4, our numbers are, in fact, lower than -- or almost equivalent to the last year, if you see even quarter-on-quarter or this one. So I think we've -- because we had invested earlier. If you recall in the earlier calls also, we discussed that we were putting in people for R&D, fresh people for a lot of material plannings or even on the production side. But I think that is pretty much stabilized, I would say. But still, with employee expenses, you have to account for the inflation, and everyone is looking for growth. So that's what it would be.

Understood. Sorry, just a last question, and then I'll come back. Can you guide us towards the CapEx spend for FY '26, given that now most of your CapEx, I'm assuming, is already done? Give a split maybe of maintenance and new build-out CapEx for maybe FY '26 and then the following year, '27.

Yes. So if you see in the last year, we've probably done a little more than INR 70 crores overall. And I would say, normally, our maintenance CapExes are anywhere around INR 30 crores, INR 30 crores, INR 35 crores is our maintenance CapEx. But we did build specific capacities for the smart metering, and that is what remained. Now going ahead, we will see certain CapEx on automations happening on the smart metering side. But broadly, I would say our capacities are there in place now in the smart metering. We are also now -- we would be putting in certain CapEx now for the switchgear part on the industrial and the domestic side and on the wire and cable. Now wire and cable, we are quite upbeat on that. We've had 3 straight years of growth. I think this year also, we would see again a high -- very good growth, I can say, on the wire and cable. The demand is there. Our own figures have drastically improved in the last 2, 3 years. So we would be going for certain CapEx as the -- we would, in fact, also be coming into a lot of new products and new categories within the wire and cable. So as and when those are finalized, so the same would be communicated. So that will be there. So...

Understood. Can you give your best guess?

Yes, I'll just give you the figure, yes. So if you look at -- we would be looking at almost INR 100 crores of CapEx where there would be a mix, obviously, of the maintenance CapEx, which happens because entire of our product range of switchgears, meters and all have the tools and dies and all, which are replenishable over a period of time, although they are capital items. And then the CapEx would be divided between the 3 verticals, mainly metering, switchgear and wire and cable.

And then does it peter out after FY '27?

I think with the others, yes, I think that should be there. Then thereafter, it should be more on the maintenance CapEx. We need to see the growth opportunities thereafter. Like wire and cable, probably if you ask me this -- had you asked me maybe a year back also, there was probably no idea of doing any CapEx. But now with the state growth, what we are having, we are seeing a lot of new products emerging, new categories are emerging in the market. So that is something which -- and these opportunities are there for the next 7 to 10 years, especially if you look at wire and cable. Metering is again a 5-, 7-, 10-year opportunity. So once the opportunities are there, then thereafter, we are accordingly putting in our CapEx to make sure that we have sufficient capacities to cater to the demand what we can get.

Our next question will be from the line of Sahil Patani.

Congratulations, Gautam, on a great set of numbers and a great year.

Yes. Thank you.

So 2 questions. One is, I think this quarter, our margin picked up a lot, right, I think record high margins. So do you see these margins being sustainable? Or do you see them -- or is there room for more improvement? Or do you see them like -- is there something like we normalize, we reduce by about 14%, 15%? So just thoughts on that.

Yes. So we would -- our effort will be definitely to maintain and then grow the margins. But if you see the specific quarter, the volumes have been good. The commodities have been fairly stable. And we have seen good growth even within the consumer and industrial part also, whether it's in wire and cable, lighting or smart meter, obviously, has seen one of the best quarters what it has. So if you look at the EBIT margins, the EBITDA margins, the meter is around 18% in the Q4. And so those are, I would say, on an immediate basis, sustainable, no doubt on that. I don't see them -- they may grow depending on the product mix. But broadly, I would say we will look to maintain those maybe or if there are some fluctuations, it may come down, this thing. But overall, if you see 17%, we maintained in the whole year for metering. The other one also, the consumer and industrial, we are about 11.5% throughout the year. The Q4 was good because the wire and cable saw a very, I would say, positive commodity cycle that helped the overall margin to improve. But then those are -- since the copper prices are changing, so they may go a little up and down. So broadly, as a guidance, if you ask me, I could be like maybe the consumer and industrial would be somewhere around 11.5%, maybe we look to move it up a little bit, maybe up to 12% or something. But the meter right now for the next some time, it appears that it would be at the 17%, 18%. That's how we look at it.

Got it. My second question is basically on the CapEx front. So this CapEx that you will be doing, will this be through, let's say, you'll be raising debt? Or will it be through internal accruals? Will you be doing, let's say, a dilution, equity dilution? Any thoughts around that? How will you be funding the CapEx?

Yes, so mainly through internal accruals and certain term debt, long-term debt.

Okay. Okay, cool. And then finally, my last question is, last year, I think we introduced fans, right, the HPL electric fans. So how has the traction been for that? Obviously, given this summer, right, have you seen like a pickup in sales? How has the traction been for the fan sector?

Yes. So we have -- and sir, I'll just go a little back to the earlier year. We launched the fans actually in the international market first. So we've been -- we've almost supplied to almost 10, 12 countries. And so we got a good response there. We launched them during the current year, and we are currently in a few regions right now. And -- but our -- whatever regions we are there, we are putting in a concentrated effort, and we have seen a good pickup from the demand point of view. We've come out with a fairly good range of fans. By the end of the year, I would say we would cover almost, you can say, 75% of the market. So we are launching it region-wise, state-wise because we have the time, we feel it requires a much more concentrated effort. And by next summer, we would be a pan-India player for sure, yes. So overall, that's a -- but here, the pickup is going to be much faster. That's what we feel by the initial result. Our channels are also -- I think a majority of our channels, if I have to just put a figure, maybe it's about 80% of our channels are already doing fans of some other competitor brands or they are already there. So we definitely see a good leveraging our own existing channel, plus the focus is also building up a new channel for the fans because we need to broaden our base anyway. So overall, I would say it's a good product because with this, we complete a lot of our consumer products. Now we have 5 of them, whether it is MCBs, modular switches, wires, lighting and now fans. So any type of residential, commercial, condos, anywhere you look at it, we have now 5 product basket to push, and it's a huge range. So that should help us, yes.

Okay. Got it. And just one last thing. Have you seen the momentum for smart meters continue in Q1 of FY '26 as well? Obviously, as you mentioned, Q4 was one of the best quarters for smart meters. So have you seen that momentum continue in this quarter as well, in the current Q1 quarter?

Yes. So yes, I would say, broadly, I cannot give a quarter-to-quarter guidance. But overall, if you see, the smart meter rollout is not dependent upon -- let's say, it's not cyclical, like in the sense like Q1 or Q4 would not bother an execution of -- or implementation of the smart meters. But broadly, the overall momentum in the first half and the second half this year is going to be -- would continue, I would say, and would grow even further than last year as a whole. You have to keep in mind that during the maybe the June, July, pre-monsoon and monsoon, that is a time where the implementation of smart meters may get -- there may be a slowdown, a little bit slowdown that can happen. So the AMISPs being smart private players, so they would definitely look at their inventories accordingly. But other than that, I don't see any way of slowing down. In fact, the overall momentum -- because every state is now pretty much active, all the AMISPs are demanding that, so I think the graph is going to move up, but there could be a month or 2 where some slowdowns or some things could happen. But overall, it's going to be good.

Our next line of questions will be from Chandresh Malpani.

Congratulations on the quarter. Sir, my first question is with respect to our ratings getting improved. So how will that result into interest cost saving? Or -- and on the similar lines, I would like to know on the working capital side as well because our -- what we understand like we are supplying to the AMI space. So this could result into lower working capital cycle. So when should we see that translating into our lower borrowings and comparatively lower interest cost?

Yes. So during the year, we've had a rating upgrade from CRISIL. We were A- and then that went up to A. So definitely, the performance and the balance sheet parameters have improved during the year. And in fact, if you look at the revenues, we have doubled in the last 4 years, and each of the balance sheet parameter has seen an improvement. So we've had a rating upgrade. Additionally, another rating agency, India Ratings, they have also assigned us an A+ rating with a stable outlook. So from a rating perspective, that has been good. That has helped us, of course, to get better. We've negotiated with the banks for much better rates. And I think if you see even in our Q4, despite the growth and even certain increase in borrowing, the overall finance cost is lower than last year on a year-on-year basis. So I think somewhere even almost in the complete year also in the financial year, there's no growth on the finance cost. So something -- this is something which we are -- I think there's still further scope for us to negotiate and come forward. And going forward, the way the business outlook is and the way our performances are, we would even look at a better rating in the future. So we are working on that. We also see that the macroeconomic, the way the -- we would -- we hope that even the interest softening would happen from the RBI because that is where the global trend is. So that would further help us to reduce our borrowing costs, yes. So this is one thing. Looking at the working capital cycle, here, in number of days, definitely, there are some improvements, although the absolute numbers have gone up. But when we look at the way the business has panned out, going forward, we would see certain improvements in the working capital cycle. Like when in the current year, our -- we don't anticipate our working capital borrowings to go up despite the revenue increase anticipated. And only the term borrowing would go up, which would be used more for the CapEx, yes. Of course, the internal accruals would also help finance that, but that is the way we look at it. The -- right now, the AMISP, their payment terms are about 90 to 120 days. And -- but being very strong private players, so I would say the quality of our collections or even the -- they are much more on the firm dates. So that will -- that also helps the company in a good manner.

With respect to the opportunity size, if we can...

Can you be louder? Chandresh, can you be louder, please?

Just a second, sir. Hello? Am I audible?

Yes.

Yes. Sir, second question is with respect to the opportunity size available, so what I'm trying to ask is like as of date, 14 crore-odd meters have been awarded to the AMISPs. So how much of that would be ordered to those meter suppliers?

No, so I will -- I'll just -- if you look at the figure on the website, I think it is 16 crores are nearly awarded to the AMISPs. But how many are awarded is probably there's no public figure in it, but my estimation would be maybe about maybe 4 crores meters could have been awarded, maybe 4 crores to 5 crores, maybe it could be like that. So still a long way to go and -- for the AMISPs to release those orders to the meter manufacturers. But they are -- one thing is sure, and I've said it earlier many times in previous calls also, that the government is mandated to give these -- through the tenders, they are giving out these meters to the AMISPs. Now they are giving -- they also know that they have a 2.5, 3 years' time to install and make the entire system up and running. Now -- so they are not mandated to give the orders immediately. So how it is, the way I personally see the way industry is that they are giving in parts. Of course, they are doing their evaluation, they are doing whatever, but they are giving the orders in parts to the meter manufacturers based on their performance, the way the supplies are happening, the way the integrations are happening, that is how. And that is how any business, even if you look at a private business of switchgear or wire and cable or lighting, that is how it runs. The companies evaluate and then they give out the requirements as and when they want it. But only thing in this, the difference is that we know the total requirements. We know that there's a huge opportunity, and that is flowing based on the demands coming in.

[Operator Instructions] Our next question will be from the line of Reet Ranawat.

So can you give the share of the products under consumer and industrial services segment, like which one has the highest share and which one has the highest growth?

Yes. So in -- so here, the -- if you look at the industrial and the consumer segment, this is made up of wire and cable; we have switchgears, which is the industrial and domestic switchgear; then we have the lighting where we have professional lighting, we have the consumer commercial lighting; then we have fans in that; there are solar products in that. So it's a very broad range. So mainly, if you see, the growth in the current year has been led by the cables. The wire and cables have been almost 24% growth. We have seen the domestic switchgear grow around 16%. Lighting has grown about 6.6%. But looking at the background of lighting, where we have seen a huge amount of value erosion happening in cost and selling price, that also seems to be pretty good in the sense that at least it's come to a positive number because 2 years before that, the entire industry was facing the issue of the prices falling down almost quarter-on-quarter. And so broadly, these are all the segments. So specific figures, we don't give out because this being a single segment. But overall, I think lighting seems to be coming back. In the industrial switchgear, we have seen certain slowdown in the demand from the industrial switchgear side. But I think it's pretty temporary and that should come back within maybe the first quarter or the second quarter, that also should come back.

Okay. Got it. And could you tell me like approximate number that how many meters are sold in a month and also the utilization levels currently?

So we don't -- the numbers, we are not giving out because -- just because of the competitive reasons and others. So we are holding orders of INR 3,500 crores right now. The numbers are obviously huge in that. But just for -- from a competitive perspective, I'm not giving out too much details. So I think at least this year and next year, we don't see ourselves giving any number-based or value quantity-based data. So that we cannot give out. But the capacity utilizations have gone up pretty much. Also, the change in our -- we are a traditional meter infrastructure, which, of course, also was very good, no doubt. But now most of the manufacturing has been changed to the smart meter manufacturing. And we have also put in a lot of semi-automated lines, sometimes you probably can see on our social media whenever we are unveiling a new line in different factory areas. So a lot of investment has gone in the last 2 years in terms of building specific capacities for electronic manufacturing. So that is, I would say, pretty much a world-class facility what we have today. Looking at the injection molding machines, almost the company today has practically, I would say, over 100 molding machines. We have tool rooms now. So in a way, a lot of capacity expansion for the smart meter boom, what we are seeing has been already done like that, yes. So I think -- but the utilizations also, if you look at what we started 2 years back and if you look at the first quarter and even by ending on the fourth quarter, definitely, the capacity utilizations have gone up. And still there, we still have a good upside, which we hope would happen in probably the Q2, Q3 this year.

Okay. Got it. And the last question is that the production capacity increase, like do you intend to increase the production capacity from 1.1 crores to 1.5 crores? And if yes, then what's the time frame of it?

No, I think that would happen more gradually because when we are like -- technically, if you look at the electronic manufacturing, what we have recently put up, and we've -- only last month, we opened a lot of new machines. So maybe certain capacities or certain interim capacities are probably already higher than the 1.1 crore meter from that perspective. But overall, as we are filling up the capacity, we would do that. So we are not in a hurry just to build up capacities. They are all scalable within a lag of 3 to 4 months. So right now, we have sufficient capacity looking at the growth over the next 3 to 4 quarters. But as we are seeing the -- let's see how the demand pans out, how the implementation is happening. And if that is -- if need be, we can do that. But right now, I would say we have forecasted the demand, and we have already taken preemptive actions well in hand.

Our next line of question will be from the line of Aayush Didwania.

One, I wanted to know, I understood that the interest cost will be stable, I mean, and that's a good sign. Your sales have gone up at least, I think, 25% quarter-on-quarter. You think this run rate of INR 500 crores is somewhat sustainable? Or is there some kind of seasonality in this?

Yes. So in terms of -- it depends on both the divisions. So when we look at the consumer and industrial, there are some part of seasonality which is there because the Q4 is the strongest quarter. And if you look at last 5 years...

That I'm noticing across all electronic manufacturers. Q4 is...

Yes, that is it because these are trade businesses, and trade normally works like this. So Q1 could be a little lesser, it would start, Q2 then picks up and then Q4 is the strongest quarter. So that part of business would see certain cyclical things. Metering, as I said earlier also, there are not much these type of factors in terms of seasons or anything because the demand is very clear. The orders have been given out to AMISPs, and they have a specific schedule to fix these. But that may change because of some monsoons coming in or some things -- some kind of specific issues we have seen in some states. But broadly, there is no cyclical thing. So overall, I would say, for us, on an average to look at, let's say, INR 500 crores over the next 4 quarters and reach that figure, that is possible. I think that is somewhere we are aiming to be. But it may -- quarter-on-quarter, it may change or it may...

But not as drastically you don't expect to go back to INR 400 crores?

No, it can, depends again on schedules because, of course, going back would mainly mean the smart meters having this thing. But many times, you have to realize that although the AMISPs are ordering them, but there is a full proper process of once the materials are ready, so there are inspections done at the site, then there are dispatch clearances happening at various sites, the implementations are there. And implementations, also in the past, if you look at only the last 2 years, there are various factors which can implement -- which can affect the implementation. So you have to keep in mind, of course, they are not in our control and nor we are in that. But yes, if our customers face some issues, then it can always...

One question regarding the fan business. How much have you scaled it up? And I mean, how much -- what is the groundwork? How much do you expect to scale up there?

I think right now, we have not been giving specific numbers on fans. Hopefully, from next year, we would start having it. But yes, we would be looking at...

No, no, I'm not asking for a specific number. The impression we were given in previous con calls was that there is some groundwork going on, on sales and marketing, on customer reach. So is that in place? And can we look at growth this year?

Yes. So no, this year will -- yes, so there will be growth, but then since there is no previous year figure, so whatever we do is growth anyway. But this year, the focus is on building new channels. So we are internally looking at, let's say, building up 70, 100 new dealer distributors across India who are specifically focused on the fan business. So that is something what we are doing. A lot of our existing channel or, let's say, a good part of existing channel, we will leverage wherever we feel that they can accommodate 2 or 3 different products of ours. So these things are happening. I think we have already probably crossed the 100,000 mark of the first fans going out in the market. So I think overall, the things are good. We've got a good feedback. We are also setting up the service network in each of the areas where we are launching. And post June, July, post the summer season in north because north is -- of course, summer season is everywhere, but like post this, then we will be going into the southern markets because they have a much more uniform weather, and we feel the next -- our launches would be...

Can you come again? When will you go into the southern markets?

Probably, yes, just post June, July. Yes.

Post June, July, okay.

Yes. So overall, by end of the year, as I said, we will cover 75% of the markets across the country. And by next summer, we will be a pan-India player, yes. And that is when you can expect some good numbers from us being declared.

Yes. And are these EBITDA margins kind of sustainable?

Yes. I think, yes, because metering...

Because they have also seen a major jump. I mean, I don't know, they have gone from like close to 10% a year ago, they have now stabilized in the range of 13%, 14%, and I've seen a sequential uptick this month, this quarter. Do you expect it to stabilize here?

No, Aayush, I'll take it that last year, we have done 17% EBITDA on meters.

Sorry, I'm talking -- okay.

Yes. So I would say that is sustainable, no doubt on that, looking at the pricing, looking at the way markets are right now. So that looks sustainable like that. But on a quarter-on-quarter, because based on the product mix, based on which customer or which orders are going on, they may fluctuate a little bit up and down. But broadly, they would remain in there. Looking at the consumer and industrial, that is around 11.5%. That's remained at those levels for the last 2 years. The commodity prices also wherever they have gone up, whether in switchgear or other than wire and cable, they have been passed on. Wire and cable, of course, gets passed on a month-to-month basis. So broadly, I would say, for consumer and industrial, maybe 11.5% or maybe -- of course, we strive to better it, but 11.5% to 12% is sustainable. Meter, around 17% or even going up to 18% may be possible in the short term, for sure.

[Operator Instructions] Our next line of question will be from the line of Ranjith Kumar.

So I have a few questions pertaining to the Smart Meter business. How has your average realization and gross margin for per meter? Like I mean, has it grown over the last 3 years, if you can give any sense on that?

No, so regarding -- if you see the average realization, we'll probably not disclose those figures. But from the traditional meter to the smart meters, if you look at those realizations are 2.5, 3x. So I think that fundamental remains. But our average realizations of what we have, probably that's a figure we will not be disclosing more for competitive reasons. If you look at the -- what we can talk on is on the EBIT margins that we have as and when more smart meter implementation has happened in the last 3 years within our own setup of entire metering. And today, almost 99% of our metering orders are all smart meters. So I think the evolution to move to the smart meter is practically complete from that perspective. So we have always seen the smart -- the EBIT margins improve. Sometimes on a quarter-to-quarter basis or even year-to-year, if you see on the fourth quarter, the EBIT margins on metering are about 18.74%. Earlier, they were 14% last year. But overall, broadly around 17% for the entire year as an average. So there has been an improvement for sure.

Sure. How has your inventory and receivable days been in the Smart Metering business?

No, in -- so if you see in number of days, number of days, there is an improvement. On receivables, yes, certainly, there's an improvement overall as a company also and within the meters also on this. The inventory days are more or less pretty much same, I would say, around -- if you look at the last 2 years, maybe a slight improvement here and there. But right now, because we have been seeing quarter-on-quarter, like -- so if you see the inventories, what we probably already have ordered in or have in stock in Q4 will actively be used in Q1 because the order cycles are high and our daily productions are high. So while we are improving on that, so we are also working to bring down the number of days. So this time, on the receivable part, the number of days we have brought down by almost, you can say, 20 days. So hopefully, going forward also, we look to bring those down further.

Okay. But would you be able to give any absolute number of receivable days or inventory days?

No, as a company, if you see, including the GST figure, so I think we are around 129 days on the debtor days.

Okay. But just for the Smart Meter business...

So -- but that's an improvement from where we used to be at 150, 160 earlier. So -- but I think that will come down even further as we go forward.

Right. Right, right. And what would be your new order wins for this year?

Sorry, can you repeat the question?

The quantum of -- yes, the quantum of new order wins for FY '25, what would be that?

So we would expect -- because we are already supplying to most of the AMISPs, I think we expect another 2 or 3 new AMISPs to join us very shortly. So as we are increasing our footprint, so there would be a lot of repeat orders. So the idea is now -- it's now more of like any private business where we have -- like even in our other part, we have customers for last 10 years, 20 years. We have same customers, but they don't give their annual requirements in one shot. They give us orders as and when the new requirements are coming up. So similarly, you will find a lot of repeat orders coming in, in smart meters. And so -- but yes, we do expect -- we are currently also talking. So a good amount of orders should come in. And the execution is also strong. So we should see the order book also reduce at one point and then new orders coming in. So even if you look at last 2 quarters, although the execution has been strong, the -- we have maintained the order book around those levels of INR 3,500 crores.

Right, right. And typical execution time line for any order you mentioned, I think, 1 year, right, 6 months for you to procure your raw materials and components and another 6 months to actually make and deliver the products.

No. So normally, the 6 months is not for us to procure because we can do it faster. It is for the AMISP to get ready on the preparation, what needs to happen at the site to receive the meters. So because they have to -- there's a mapping involved, there is a lot of things which they need to do before they receive the meters. So meters is just one part of the entire system, which needs to come in and then it's more of a plug-and-play of the meter. So that is the average time, normally 3 to 6 months. But as we go forward, my guess is that, that time will get shortened because they are already working on the field, a lot of learning experience must have -- they must have already gained those experience. So the future orders, what will come will probably have a lower -- the lag time will be lower so that they can receive the meters and then they plug and play, yes.

Our next line of questions will be from the line of Smita.

So just a few bookkeeping questions. Say, in your presentation, you have given that you have got 20% market share in your Smart Meters business. So as you were saying, you see a good opportunity for FY '26 in this business as well. So going ahead, do you think you would be able to increase your market share?

Yes. So I think those -- the figure of 20%, that was by Frost & Sullivan. So it's a little dated number. But my guess right now, although there's no formal study, but I think we should be probably there or a little higher maybe. But we don't have an actual data by any third-party agency, but it's just a -- but that's an older one. Now coming to your question, like this year, we are expecting definitely a good execution by our AMISPs. And since we are fully ready with our capacity, we've already been rolling out a lot of meters, so definitely, we see this year as a very good year for us in terms of smart meter supplies. In terms of market share, yes, there are 2, 3 companies which are pretty dominant, and we are -- HPL Electric is one of them. So if there is, let's say, by end of the year, if there's a formal study, if anybody were to undertake, we would definitely would have increased our market share. But right now, for me, just to comment on that would not be backed up by any actual data.

Okay. One more question. Out of your 5 products that you are saying you have launched, can you just identify that which of the products makes up major margin accretive for you?

No, you're talking about the consumer and industrial products?

Yes.

Yes. So here, in terms of margin, I think switchgear has a relatively higher margin. Traditionally, also, if you see the margins what we enjoyed in metering over the last, let's say, 5, 10 years, even the switchgear also always had very strong margins. And it's a much more stable product. For us, we have also seen certain margin improvements in the Wire & Cable segment because we have seen the volume really go up almost 20% to 25% growth in the last 3 years. We have seen that. So consistently, as the volumes are going up as -- so somehow we have seen a much better margins in those also.

Our next line of questions will be from the line of Lavish Ramrakhani.

Congratulations on a good set of numbers. My question is around the jump in EBITDA margins this quarter. So over the last, say, 5, 6 quarters, your employee expenses as a percentage of revenue was between 12% to 12.5%. But this quarter, it was around 10.3%. And then your other expenses, those as a percentage of revenue was around 8% to 9%, but this quarter, it's been around 7.5%. So can you just maybe comment on why these -- why the other expenses and employee expenses have been stable just on a quarter-to-quarter basis?

Yes. So it's mainly if you see the improvement, like there's a jump in the volume in the revenue. So we've done almost INR 493 crores, which has been the highest revenue. So obviously, a lot of costs in these when we look at the employee cost or even the other expenses are fixed in nature. So they are not exactly variable. So that has helped us to have a better ratio in terms of the manpower costs or this. So the ratios have improved mainly because of that. Now also in one of the earlier ones, I just talked on that, that we were at one time last year and the year before, we did a lot of investments on getting in new manpower because we were seeing the smart meters change. So if you look at the expense on our R&D manpower, that has been pretty strong. I could just say that in smart meter today, we have one of the best R&Ds in place in the country. So there are some things which we had invested at that time. So now we don't continuously need to do that. So those type of -- so we would see certain stabilization on the other expenses, even the manpower, although inflation will always take it up. But -- so certain optimization is happening in that. Also, there is a drive in each of our factories to get the automation -- the production automation to be done to move to Industry 4.0. So a lot of work is going on in those also. So the CapEx would go up on an initial basis, but the manpower would come down. And like even in certain of our switchgear factories, a single machine what we have put in, we don't -- we replace about 20 workers and only 1 worker is required sometimes. So those kind of automation, either there for smaller processes or for the entire production line, so those type of things are happening in most of our factories. So those will give results. And plus, we have a better product coming out, much more consistent product coming out, so those type of investments and activities. So you would find -- so we do hope that -- so it's a conscious effort, what has been happening, what you see here. Of course, a lot more needs to be done in all the areas what we are talking about. And I'm sure in the coming year, further improvement of margin because it's a dynamic field, what we are talking about. So a lot of work would continue to happen in the next year as well.

Our next line of questions will be from Pranjal Mukhija.

Sir, congratulations on a great set of numbers. The performance is really nice. So the question -- I have 3 questions, sir. So the first question is on automation. Like you mentioned that we're spending some money on automation in FY '26. So I just wanted to understand, sir, how many semi-automated and automated lines do we have currently? And like how many additional lines are we thinking of adding?

No, you're talking for a specific product or because it's...

For meters. For meters, sir, sorry.

No, so we have -- no, so I won't give the exact number, but we are shifting our entire production of smart meters is and will be through the automated lines only because we feel that's the best way to make it and the best product comes out from those lines. So we've already shifted to all of them. But yes, there are a few more to be done. So I will not be going into the numbers, as I said earlier also that into any kind of numbers of -- for the metering, we will not like to divulge. But yes, the entire...

Will percentage be okay, like how much percentage increase? Can you give that at least?

We can do it like we've done the higher -- like from 2 years, we have almost doubled up in our meter sales. So all that is mainly smart meter and through our semi-automatic lines. From here also, if we are to, let's say, in the next 2, 3 years, if we have to double up, I think that would all happen through that. So we are a little ahead of the curve, no doubt. On the production part, whatever our AMISPs, the existing and the new customers who are joining in, whatever they want, I don't see that as an issue. So for the year FY '25, if there is a, let's say, surprisingly a big upside on the demand, HPL Electric is capable of supplying that, yes. But by shifting to automation, there are 2 benefits we get, one, that we replace a lot of manual work happening. At every stage, the data gets captured, which is useful for us because we have a lot of online testings happening. We know at each stage, so a lot of rework cost comes down. The output is much more timed and much better like that. So those things are there, plus whatever capacity expansions, what we had to do because our plants were -- like many of the machines were 15, 20 years old because we've been making electronic meters since 1996. So those have got replaced with these now new lines. So anyway, I think it's a double benefit what we get with this CapEx, what we have done. Plus, automatically, there is a lot of data what we get, which can be used during production and also for after sales, which will emerge out in the next 7 to 10 years.

Sure, sir. So the second question I had was on the pricing part. Given, I mean, execution has picked up brilliantly in the industry and, I mean, there are a lot of new players also emerging, so what kind of like pricing pressure are we penciling in our realization estimations? Like on an average, what kind of like pressure would we see in the industry in FY '26?

Yes. So I think I've said this earlier in the last 2 years also. So that whenever any industry, the volumes pick up, the industry gets stabilized, the consumers are also become -- they are much more wiser. They have a lot of choice, and nobody can stop people from coming in the industry. So there is always the pricing would come down. And -- but what we have been doing and what we tell our staff as well that whenever we look at, let's say, the next 3 years, so we always factor in that the prices would come down. And accordingly, we need to make ourselves much more leaner and smarter to ensure that the margins are retained. So we need to work on the cost. We need to work on the design aspect to make sure that the margins are this thing. So yes, you are right, the -- as new players come in, as the things stabilize and as there is a huge growth coming in, the prices are going to -- they are set to come down. So whatever prices are prevailing now, they will be lower the next year and the year after until the entire industry stabilizes and like the way we have in switchgear where those are stable divisions what we have. So that is always there. So I think we have seen that in most of our -- even in the meters in the earlier part. And now also, we are seeing it. So there's no surprise in that. In fact, we are already -- our teams are working on that, anticipating that the prices would come down and the -- but the volumes would go up. So that is how the industry, I see that happening.

Our next line of questions will be from Keshav Kumar.

Sir, the credit terms with AMISPs, do you think that once the scale comes in, the payment terms will hold? Because on the -- on their end, the ROI is a multiyear story where the cost of smart meters in the project can be very high of the overall cost. And the counterparty to them are DISCOMs, where we've seen an instance of delays last year also. So what are your thoughts on the sustainability of the credit terms we have right now?

No, I think it's -- the credit terms of the AMISPs are 90 to 120 days, many of them also on LCs. So I think that would remain because you have to understand, Keshav, one thing that this -- the supply is going to happen in about 2 to 2.5 years. The total cycle of the maintenance and the warranty, what they have to do is 10 years. So obviously, they are going to get their money within the 2.5, 3 years and then probably something on keeping the system up and running. So they cannot expect the suppliers to pay for that financing for 8 to 10 years. So that's not going to happen anyway, and neither that is structured nor discussed. The way we look at it that these are all AMISPs were all preapproved and they are all, to the best of our knowledge, that they are all very big companies, financially strong in this thing. So we have also -- already, we have seen almost 2 years of this happening. So I don't see the credit period increasing because they have their -- and whatever credits they are giving over a period of 10 years and whatever, they have a huge financing to be done for the system, I think they are well paid for that financing, which is built in, in the entire cost of the system. There is meter, then there is the IT infrastructure and then there is the financing cost. And they are already paid for that. So I think they probably have factored in all that. And asking the meter manufacturers or any other suppliers to pay for that, I don't think anybody has that in mind. And then they have a direct debit facility from the utilities. So that again works in their favor. So I think the way the system is designed, I would say the 90 to 120 days would probably continue with firm payments. And that is pretty important for the industry and for us as well.

Sure, sir. And secondly, sir, where in the cycle are we with the AMISPs for regular supplies to come in? And how much of the ecosystem is still in the testing phase where the scale-up has not happened?

No, I would say the -- I mean I don't have any actual data of -- like we are also dependent on the data what you see on the websites of how much is implemented and how much is this. But one thing is sure that if the government is talking about 100,000 meters being implemented on a daily basis, that's a huge number, believe me. I personally would agree on that number because we are seeing that kind of movement. So once the pace has picked up -- so I think already the initial testing and that phase is already left behind. And now we are probably in the second or the third stage. So I think the overall industry is now set to move in a big way. So the next 1, 2 years, 3 years, we probably will see a very strong phase of implementation happening. And then as the implementation gathers pace, much more pace because already the pace is there, the next level of orders would subsequently get released. And this is how we are also seeing with our existing AMISPs that as the implementation is reaching one level, the discussion on releasing the next level of orders is going to happen. So I think that's pretty natural in the way the business moves.

[Operator Instructions] Our next line of question will be from [ Kishore Jasotani ].

Sir, congratulations on a great set of numbers.

Yes, thank you.

Sir, can you please provide the revenue guidance for FY '26?

No, so I will probably not give a specific revenue guidance. Maybe we can give that end of the first quarter. But one thing for sure that we would see the growth in Smart Meters to be in, I would say, in a strong double-digit growth. Wire & Cable is set to grow at a very good pace, no doubt. Switchgears also, I would hope to see a turnaround in the industrial part also. The domestic would continue to grow. So internally, our plans are pretty strong. We would see a growth across all the segments, across all the areas. But to give a specific number right now, maybe a little too early. But maybe end of first quarter, when we see the movement happening and some more things, we can start giving specific numbers.

Our next line of questions will be a follow-up from Viraj Mahadevia.

Gautam, apologies, just to push you a bit on the revenue execution for '26. Just did some quick math at 1 lakh per tonne per day installation of smart meters at roughly 300 to 350 days in the year at an indicative pricing and at a 20% market share, you should essentially be able to deliver about INR 1,500 crores of smart meters in FY '26. On top of that, you have your retail wires, cables, switchgear, export business to 40 countries, which is another INR 700 crores on top. So do you think that's in the realm of possibility of what you can do in '26?

Yes. I think, Viraj, the math you have done, yes, I think that is a possibility. But on a lighter side, the governments don't work for 350 days in a year. So when you -- typically, when you recalculate, you typically calculate 25 days and it works for 200, 300 days...

Right. So I actually did the math on 300 days, to be honest.

Okay. So yes, so if, let's say, the ask by our AMISP and our eventual customers is for INR 1,500 crores, yes, we can do that on this thing. We've already done nearly INR 1,100 crores. So for us to scale up and still a lot of our capacity has been created even on the Q4, there is still an upside on utilizations. Still some areas in the manufacturing are working on 2 shifts that can be done on 3 shifts. So for us to give INR 1,500 crores of smart meter in the current year, if the ask is there, 100%, we can give it. So there's -- I think you're bang on, on that. I think looking at the other where we have done about INR 625 crores in the consumer and industrial, for us to do INR 700 crores or INR 750 crores is also very much a possibility. The last 2, 3 years, we have -- there have been some segments in wire and cable, switchgear, which grew very well, higher of 20% plus. But because the lighting revenues went down, so overall, it looked a little muted. So yes, I think reaching those figures is a strong possibility. But as I just said in the previous question by Keshav that we just wait for the first quarter, we see the movement and then we can start giving specific numbers here.

No, no, makes sense, Gautam. We really appreciate your conservatism, but at the same point, trying to see what is the realm of possibilities.

Yes, sure.

Gautam, my next question is to an earlier question picking up. In an overall AMISP contract for a DISCOM of, let's say, INR 100, what would be the smart meter component of that INR 100 contract? What is the significance of your smart meter product for an overall AMISP project execution size?

Yes. So I think this has been discussed in the last 2, 3 years and even on -- I mean I can just quote on certain whatever the public forums or the thumb rule, what people used to take, that whenever we look at the total cost of a, let's say, the AMISP contract, about 30% to 40% used to be the meter cost, okay? So let's say, about a little more than 1/3, 1/3 was the cost of the system. So when we are looking at -- or let's put it the other way, about 1/3 was the meter cost, 1/3 was the financing cost. And the 1/3 was the system cost where we are looking at the infrastructure, the head and softwares and other things and the margin. So that is how it is. So this is -- I'm quoting something what I've been probably hearing from the AMISPs. But certain cost structures, as we go ahead or as already we've moved almost 1.5, 2 years from where we started and next we go, so there will be certain optimizations would happen even on the meter cost because when they're doing repeatedly, there are new entrants coming in, the -- even for us, as we are looking at huge volumes, the costs start going down. And when those go down, even meter manufacturers would probably pass on certain benefits to the AMISPs. They in turn also -- so that is how the system would work probably. But it is 1/3 in each of the 3 buckets.

[Operator Instructions] Our next follow-up question will be from the line of Ranjith Kumar.

Sir, I'm just wondering like if you are planning to add more product lines to your Smart Meter business. For example, 0.2s meter or EMS, right, energy management system or things like that to your existing line of products. Is there any plans on doing that?

No, so we are already doing 0.2 accuracy grid meters. The -- so we are already doing that. We were also doing that in the earlier on since last 10, 15 years. Those -- and we have also supplied the smart meter versions of these. Even on the software front, we -- for certain of our customers, we have already done certain complete software like in AMISP. We have also done certain of the installations successfully already on that. So there are a lot of added services or added things what one can do along with the smart meters. So we've been doing it. But as I said earlier, being a company where we feel focus is very important, so our focus has been and for the next 2, 3 years would remain on supply of smart meters because that is where we see the biggest opportunity. And with a legacy of last 30 years, what we already have for the -- in the metering business, we have a strong R&D, manufacturing base is there, capacity is new, fresh where we can really scale up. So I think that is where the large focus would be and that would remain there.

Right. Any idea of starting power quality measurement instruments as well...

We already have it. We have a complete range of meters, which are known as panel meters. So we have energy management systems already in place. We've been selling them from '96 to almost 2000, we've launched that. So we have a huge range. If you go up the website, you will find -- but those are normally consumed by a lot of panel builders, a lot of industries. So we have been supplying them for the last 25 years. And so we have a huge range. Only thing the -- since the utilities, they have also been buying the single-phase, 3-phase and the trivector meters and then the grid meters. So right now, the smart meter is pretty much dominant because the sheer volumes are very high. Earlier, for last 25 years, we've been only catering to the additional demand that there were new connections, there were certain natural replacements of metering, what would happen. Right now, the government is talking about en masse replacing the entire system, and that's what makes the opportunity very large.

Okay. Which type of meter would be a bigger proportion of your smart meter orders? Will it be what, single-phase or 3-phase?

No. So in terms of value and volume, single phase, yes, because that goes to every household. Yes. But if you go up their website, just for this thing, if you go up the website, I don't know which one, but the government -- so they have the complete details of the single-phase meters, they intend to put in the 3-phase. So obviously, by that, you will understand the numbers and the value-volume ratios.

And last follow-up for the day will be from Pranjal Mukhija.

So sir, I have one small follow-up. It's actually regarding our competitors. So apart from the listed competitor that we have, like who according to you, like, would be the 2, 3 peers in the unlisted space basis like capabilities, scale of operations and like order book?

No, so probably -- although we do see our competition and study them, but very difficult to answer on this because we are not evaluating them from that point of view. We know the quality of the products the companies have and the pricing they are quoting. So that is the maximum data we have about them. But what they are doing, so it's very difficult to answer that. I guess you are evaluating it. So you probably may have a better picture than us, but I don't think I'm the right person to answer that.

But any, sir, a few players like that you feel like are doing some good work in the industry?

No, so again, very difficult to name. I would say, generally, the industry is doing well. And so I think I guess everybody who is in the space should be doing well, but that's -- I'm just assuming and being very positive for everyone. But again, very difficult to answer. For me to name 1 or 2, it may be difficult for me.

Thanks to you, Gautam, for answering all the questions so meticulously. That concludes our Q&A session for this earnings webinar. So I'll hand over to you, Gautam, to make some closing remarks.

Yes. So let me close by thanking our employees for their efforts, our customers, partners for the trust they have in us and the shareholders where we have the continued support. And we definitely are looking at a good year ahead. A lot of challenges are going to come in and a lot of efforts are required. We need to continuously work on that. So I'm sure the teams are there, and we will definitely look to work hard on this. So thank you once again, and have a great afternoon.

Thanks, Gautam. To everybody attending, I'd ask you to just take a few minutes to answer a dedicated survey for your feedback that you'll receive after this call. I really appreciate your participation today and to be on board for HPL's growth journey. So on behalf of HPL, thank you to everybody. This now concludes our earnings webinar for Q4 and FY '25. If you have any remaining follow-up questions, you can write to us at Dickenson, and we'll ensure to get it answered to your satisfaction. Thank you, everybody, and have a very good afternoon and evening.