Orient Green Power Company Limited (GREENPOWER.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 H1 FY '26 Results Conference Call of Orient Green Power Company Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sakhi Panjiyara from Kirin Advisors. Thank you, and over to you, ma'am.

Thank you. A very good morning to everyone. On behalf of Kirin Advisors, I welcome you all to the conference call of Orient Green Power Company Limited. From management team, we have Mr. T. Shivaraman, Managing Director and CEO; Ms. J. Kotteswari, Chief Financial Officer. Now I hand over the call to Mr. T. Shivaraman for the opening remarks. Over to you, sir.

Good morning, all. Thank you for joining us on the call. This -- basically, we are covering the second quarter and the first half of FY '26. Thank you for your continued support on the journey of OGPL. The first half of '26 has been steady in a positive period for us. We have maintained good operations, significantly improved profitability and achieved some key financial milestones. Let me quickly run through the performance highlights. For Q2 FY '26, our total income was INR 135.45 crores, about 10% higher year-on-year. EBITDA came in at about INR 104.31 crores, slightly higher than last year. And net profit for the quarter was INR 80.94 crores, about up 22% year-on-year. Basically, the wind has been quite stable compared to the same quarter of last year, and this has resulted in a fairly strong Q2. For the first half, total income increased by almost 20% to INR 228.62 crores and EBITDA improved to INR 170.23 crores, up 16% year-on-year. Net profit was up 38% year-on-year to INR 109.56 crores, which is the highest half yearly net profit that we've generated in recent past. The strong performance for the half year has been due to two or three factors. One, good generation during the wind season. The first quarter was better than the previous year, and the second quarter has been more or less in line with the previous year. We also had completed the capital maintenance of many of our wind assets. So we had almost all our fleet fully in operation during the season, which helped in generation. We've also been able to -- due to the better generation and good financial management, we've been able to lower finance costs, which have been -- which have declined by over 20% due to better credit ratings and timely repayments. We also received during the quarter a INR 16 crore refund from lenders towards excess interest charged during earlier periods, which definitely improves our profitability and our cash flow positions. On the growth front, the 7-megawatt solar project is under progress, which is expected to be commissioned by December of this year. And the balance 18 megawatts is planned for completion before June of 2026. This basically will help us to diversify our operating portfolio away from wind and help us better serve our customers who look for both wind and solar as part of their supply portfolio. So we currently have about 382 megawatts of operating wind assets and about 25 megawatts of solar assets coming underway. And we will continue to focus on operational excellence, good capital allocation and maintaining a good balance sheet. As we look forward -- as we move forward, we will continue to focus on strengthening this renewable portfolio and creating long-term value. We are looking at certain expansion possibilities, but that I think we will cover during the Q&A. Thank you. I now open the floor to questions.

[Operator Instructions] The first question comes from the line of [ Dhanraj Tolani ], an individual investor.

Couple of questions on the result part. So first of all, congratulation on the good result. I just wanted to know the breakdown, like what drove the 20% growth?

So it's a combination of better wind and better machine availability. I think about, I would say -- about 60% of this thing is because of better wind generation and the balance 40% is because of better machine availability. We had in the earlier quarters done a major maintenance upgrade of our turbines mainly in Andhra Pradesh, and that is more or less fully in operation this year.

Okay. And also EBITDA is modest too compared to -- like in Q2 compared to H1. So could you explain like the factors behind that?

Come again, I didn't get your question.

EBITDA looks better in Q2 like in comparable of H1. So could you please explain that?

So typically, Q2 is the maximum wind period for -- I mean, the entire industry. So wind starts in halfway through Q1 and continues throughout Q2. So historically, if you go back year-on-year, you will find Q2 is the strongest quarter. It's a weather-related thing. I mean nothing we can do about it.

Okay. And also, if you check -- I'm just checking the finance cost has been dropped by 20%. Is this sustainable going forward? Or we can expect further reduction or this is a sustainable we are planning to decrease our cash cost out of that?

In terms of percentage of interest, it will go down. But as we are looking forward for some expansions -- go up and similarly, our top line may go up. So interest in absolute terms, it may go higher in the next year because we are looking for some expansions, wherein we will have to borrow for putting up the additional facility. But in terms of interest rate, the average rate has kept on coming down. And we foresee next year also, the rate of interest will be coming down. Already for the second half, we have -- one of the major loan IREDA has come down from 9.4% to 9.15% and rest of the loans have also come down. So overall interest rates will come down. But in absolute terms, next year, the interest will be slightly higher.

Okay. So if we check the profitability improvement, so can you say this is mainly due to the interest refund or this inflation is due to the interest refund or are we being operational balance?

No, no. See, if you see the interest refund is there as an extraordinary item below the line. Even before the interest refund, the performance has been better. The interest refund is there as an extraordinary income, which is about INR 16 crores.

The next question comes from the line of [ Vinod Shah ], an individual investor.

Sir, we are planning to expand our capacity to 1,000 megawatts. So what is the timeline for that? And how are we working on it?

Yes. So there are two or three things. One is the organic growth that we are planning, which initially will be the repowering of our existing assets and adding some new assets within our -- around our existing portfolio. We were waiting for certain policy clarity from the state of Tamil Nadu to begin our repowering journey. That clarity is more or less in place. We are -- we have been assured that we will have the updated policy in the next 2 to 3 weeks. So pending that, we have actually made an application to start one of our repowering projects kind of in advance of the formal policy announcement. so that we had the assets up and running before the season. We are also looking to do certain organic growth in -- within the wind sector. So that's what Ms. Kotteswari is talking about. We are looking to borrow money to do that. So that's as far as the organic growth is concerned. As far as inorganic growth is concerned, there are a couple of conversations, fairly serious conversations that are happening, but we are not yet at a stage where we can get into the details of what happens because these things never happen until they actually happen. So once we have better clarity on where we are on those conversations, we will definitely be informing the shareholding public, but we are on track for growth.

Okay, sir. And like how are we planning to fund this growth? Is it through internally?

We will figure this out. See the current organic growth will be internal accruals and debt. The inorganic, we will have to see. There will probably be some kind of issue of capital, but we'll find the -- we'll have to figure out the structure as we go.

How much dilution...

We have now -- we can't -- until the deals happen, we can't -- it depends because there are multiple conversations happening. So once something kind of matures to a stage of conversation with the public, we will definitely let you know.

The next question comes from the line of [ Rohan Gupta ], an individual investor.

Congratulations on a good set of numbers, sir. Sir, I'm fairly new to tracking this company. Can you give me a little overview of how we plan to build our solar assets to supplement our wind assets? And also the outlook going forward, like broad-based, our focus would be more on wind or solar?

We are fundamentally C&I generator. The bulk of our current assets are where we sell power to commercial and industrial establishments and not to the electricity board. So -- to that extent, our direction in terms of what assets we build out depends on what assets or what my customer wants rather than anything else. So if my customer wants a better mix of solar in the portfolio of power that he buys, then I have to go out and do solar, which we find that we need to have a certain amount of solar in our portfolio because there are periods, especially in April, May, where there is no wind and there is a significant demand of power. So we need to cover that with solar. Having said that, the regulatory environment today for wind is better than it is for solar, especially in the E&S space. So we will definitely continue to be more wind focused. We will add more solar as we go forward once battery prices come down a little more, where solar with battery starts becoming viable. Today, it's kind of -- it still needs some kind of a government subsidy, but we foresee that in the next maybe even a year or so, batteries will become competitive. And then we will probably move towards a solar plus battery supplemented by wind as the kind of long-term business model. This is for our C&I space. We are looking to expand our PPA-based projects also, but that will take a little longer and that may be in the form of some kind of an acquisition rather than greenfield.

Okay, sir. And sir, also going forward, how is the wind outlook for like half of -- second half of the year? Because generally...

Second half is generally lower than the first half. So if you see historically, you will find Q3 and Q4 will be significantly lower than Q1 and Q2. Typically, we get about 70% of our generation in Q1, Q2, and 25%, 30% in Q3, Q4. [indiscernible].

[Operator Instructions] The next question comes from the line of [ Mahesh Sheth ], an individual investor.

So my first question is like our net profit margins have improved significantly. So like how should we look at margins in coming quarters? Are these sustainable or...

Yes. See, basically, our interest costs have been coming down. And so from the EBITDA, interest and -- depreciation is more or less flat. So as the interest costs come down, net profit margins definitely will look better. So Q3, Q4, as I said, the top line will be lower. So you should not look at it kind of sequential quarters. You have to look at it compared to the same quarter last year. So from that point of view, it will definitely -- the margins will still be better.

Okay. Got it. And can you also provide clarity on cash flow generation and current debt levels post repayment?

Current debt level is around INR 525 crores in the overall company. The cash flows are quite comfortable to the debt and as well as we are planning, as we were saying, we are looking at internal generation to fund some of our expansion. For that also, we are having comfortable cash flows. It is -- this year, there will be surplus of at least INR 25 crores to INR 30 crores, which we will be looking at investing in the new additional capacity [ compensating ] all our debt and CapEx.

Okay. And like how much of the profitability improvement is due to better wind conditions like versus operational efficiency?

See, 60% is around wind increase and 40% will be because of operational efficiency.

Okay. 60% is due to wind, okay.

Correct.

Okay. Got it. And like what was the PLF during Q2 and H1? Like how does it compare with last year?

Yes. So if you take Q2, let me go with the major asset that we have, which is in beta. So Q2 FY '26, we had a PLF of about 28% compared to about 24.5% for the same quarter last year. The other subsidiaries more or less have a similar kind of pattern.

The next question comes from the line of [ Ishita Nader ] from Orient Green Power.

Sir, my question is that in your last earnings releases, you have mentioned that 7-megawatt solar project should be ready by December 2024 -- '25, sorry. So is it still on track or...

It is on track.

So will you be planning to more buying solar projects to make more power?

Yes. So we are -- the another 18 megawatts is -- we will just -- we'll be starting construction in the next couple of weeks. So that is scheduled for completion by June of next year. That's the greenfield assets. Brownfield, we will be looking at certain other possibilities.

The next question is from the line of [ Amit Kumar ], an individual investor.

Okay. My question is about the company's progress. I mean what is the company doing for its increasing its market other than that maybe the recognition, particularly in expanding new markets or among potential institutional investors, those kind of stuff?

Sorry, some echo is coming.

Okay. My question is, what are you doing for the visibility of your company in terms of, let's say, marketing strategy and brand recognition so that investors may be more keen to invest in your company?

Frankly, for the last year or so, we have been more focused on internal kind of -- straightening out things internally and improving our performance. We have honestly not really spent enough time on investor engagement and talking to the larger FIs. I think that's the process that we have started in the last couple of few weeks, and we will be doing that more going forward. I think initially, our focus was ensuring that the performance is good so that when we go to the large FIs, we have a very robust story to talk about. I think we have that now. So this is something that we will be doing going forward.