Servotech Renewable Power System Limited (SERVOTECH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Servotech Renewable Power System Limited Q3 and 9 months FY '25 earnings conference call, hosted by Ventura Securities Limited. [Operator Instructions] Please note that this conference is being recorded. Before we begin, I would like to point out that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements do not guarantee the future performance of the company and it may involve risks and uncertainties that are difficult to predict. I would now like to hand over the call to Tushar from Ventura Securities. Thank you, and over to you, Tushar.

Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities Limited, I welcome you all to Servotech Renewable Power System Limited Q3 and 9 months FY '25 Earnings Conference Call. The company today represented by Mr. Raman Bhatia, Founder and Managing Director; Mr. Vipin Kaushik, Finance Controller; and Ms. Pooja, Investor Relations of the company. I would now like to hand over the call to Mr. Bhatia for his opening remarks. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and a warm welcome. I'm delighted to have you join us today, as we discuss Servotech Renewable Power Systems Limited, which is formerly known as Servotech Power Systems Limited performance for Q3 FY '25. In Indian economy, robust growth continues to fuel expansion in the power and infrastructure sector, and Servotech has hoped to be playing a key role in this progress. We remain committed to contributing to India's sustainable developments. I'm pleased to report a strong performance in this quarter. Our team's dedication to innovation, sustainable growth strategies and effective execution of our outlook has delivered excellent results, demonstrating the strength of Servotech's strategic approach. Our Q3 FY '25, total revenue reached at INR 203 crores, a substantial increase of over 300%, compared to the -- more than 300%, compared to the same quarter last year. This growth has been significantly driven by the increasing demand for EV and robust charging infrastructure. Our EBITDA for the quarter reached more than INR 17 crores, representing a growth of over -- more than 400%. And net profit also performed strongly, increasing by over 700% to reach INR 9 crores. Looking at the 9 months ending Q3 FY '25, our total consolidated revenue reached INR 529 crores, reflecting growth of over 142% compared to the same period last year with profit after tax growing by 198% to INR 24.92 crores. I would like to highlight some key developments from the last quarter -- past quarter. We have partnered with LESSzwei GmbH to develop solar-powered EV charging infrastructure in Germany. Our collaboration with Ensmart Power will help us to meet the rising global demand for affordable EV charging solution in the U.K. and North American markets. Domestically, we have secured orders of approximately INR 61 crores only from the 2 departments of UPNEDA and UREDA for solar power water pump under the KUSUM scheme and solar rooftop for schools and government offices in Utter Pradesh and Uttarakhand. We have significantly expanded our distribution network by adding approximately 40 new distributors this quarter for our recent launched range of solar products, which aligning with government initiatives such as PM Surya Ghar Muft Bijli Yojana and PM. We are confident these products will play a significant role in advancing India's clean energy agenda and further expand our footprint in the renewable energy market. We are on track to onboard approximately 24 distributors per month, targeting a network of over 300 distributors and 6,000 retailers. To address increasing captive consumption and supply chain challenges, we are strategically entering solar PV manufacturing. This move will empower supply chain resilience and contribute to substantial future revenue growth. We are making significant investment in research and development to create innovative high-quality products that meet global standards. We are deeply committed to clean energy and are investing heavily in EV charging infrastructure and other green energy solutions for a sustainable future. Overall, we are extremely pleased with our Q3 FY '25 performance and remain optimistic about the future. Our focus on innovation, quality and sustainability will continue to drive our success. I would like to express my sincere gratitude to our dedicated team and valued customers, supporting shareholders and suppliers for their continued trust and partnership. I'm happy to take your questions.

[Operator Instructions] First question comes from Shivam from 3A Financial Services.

First of all, congratulations on a great set of results. However, we can see that the operating margins quarter-on-quarter have fallen. So is there any particular reason for that?

[Operator Instructions] I welcome back the management team.

Yes, I'm very sorry. Yes, please.

Hello, sir, do I repeat my question?

Yes sir. Please go ahead.

Yes. First, as I said, the operating margins quarter-on-quarter has been falling. So is there a reason for that?

A Sir, I'm a little bit -- sorry, I'm not able to find out quarter-on-quarter it is falling. According to me, quarter-to-quarter is possible. There should be -- there could be some differences, 1%, 2% [Foreign Language] last 9 months [Foreign Language] it was 19.7%. And currently, still, it is 19.71%. If we are talking about quarter-on-quarter, it was around 20%. And currently, it was -- it is around 19%. So there is a difference around 1%, 1.5%, which can be vary quarter-to-quarter. It is not able to maintain the quarter-to-quarter [Foreign Language] percent is not a big deal. [Foreign Language].

Okay. And regarding -- we are entering into solar PV manufacturing. So I would like to know -- I have a couple of questions on this. Don't you see the PV manufacturing segment or the sector as a whole to be a big overcrowded since almost a lot of players are entering into this [indiscernible] Yes. And that was my first question. My second question regarding this is what would be the CapEx for FY '26, FY '27, regarding as we are entering into this new segment as well. So the total CapEx of the company planned capital.

[Foreign Language] we're just going to save our cost and smooth our supply chain. That's the main concern. We are not planning [Foreign Language] and what is our strategy. That is very important. [Foreign Language] if you are talking about the investment, then total investment we are planning in next 3 years, it could be more than INR 300 crores again. And it is consolidated. It is not only for our PV manufacturing. It is consolidated.

Next question comes from [ Agastya Dev ] from CAO Capital.

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[Foreign Language] Hope you understand.

I understood sir. [Foreign Language].

[Foreign Language] in total, we have a space, which we have bought including [Foreign Language].

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[Foreign Language] so over the above the INR 300 crores, which you are doing CapEx, you will also require some working capital. So I was drawing in that -- I was moving in that direction.

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Sir, basically next year [Foreign Language] you have your plate full in terms of both the divisions, solar and [Foreign Language].

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[Foreign Language]. Yes, ma'am, just I'm finishing. Just same question -- just finishing ma'am. [Foreign Language].

[Foreign Language] I just want to add 1 more thing. We are so much passionate about where we want to reach and [Foreign Language].

[Operator Instructions] Next question comes from Atmiya Boricha, an individual investor.

Congrats for your stellar results year-on-year on the 9th month, sir. Sir, I would like to ask you a question regarding about the work in progress. So sir, changes in the inventories are more than INR 8 crores to INR 9 crores, which are reflecting in the balance -- in the income statement. So sir, can you please throw some light on it that how it has been accumulated and how we are recognizing it?

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It is not a storage [Foreign Language].

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[Foreign Language] including all pipeline, it is less than 28 days or 25 days, and better size is less than 78 to 80 days. And our target is to reduce it up to 60 days.

Okay. Got it. Got it. And sir, 1 more question. [Foreign Language].

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[Foreign Language] panel manufacturing will contribute more than INR 1,000 crores revenue. And if we are talking about the capital consumption, then you can calculate how big the revenue we are thinking.

Okay, sir. And sir, one more like -- one more thing I would like to ask...

[Operator Instructions] Next question comes from Rushabh, an individual investor.

Sorry, actually, I'm relatively new tracking this particular company. So wanted a broad understanding in terms of our plans if there are any hydrogen sector.

[Foreign Language] our SRI team, strategic research and insights team, already working on hydrogen. And we are searching where we can contribute. [Foreign Language] so it is taking time, but definitely we're working on that.

The next question comes from Amit Kumar, an individual investor.

Congrats on a good set of numbers. Sir, my question [Foreign Language] and he is focusing on oil and gas sectors, and we are directly involved in EV batteries. So just wanted to know how it can impact negatively not to the company, but to India in the electric vehicle sector?

Sir, Donald Trump [Foreign Language]. So don't worry about that and please look at in another perspective so [Foreign Language].

And then, sir, if you could provide the revenue guidance for next 3 years, like FY '26, '27, '28?

[Foreign Language] We are passionate, and we are innovative and we are very serious about the business, about the community, about India, and we are working on that. So you rest assured [Foreign Language].

[Operator Instructions] Question comes from Vasu Thamarbi, an individual investor.

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[Foreign Language] We are not focused on the oil marketing companies. We are focused on the orders [Foreign Language].

[Operator Instructions] We have a follow-up question from Atmiya Boricha, an individual investor.

Sir, right now [Foreign Language] we are setting up an EV plant, will generate additionally INR 1,000 crores [Foreign Language].

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Yes, yes. Sorry, sorry, PV model. Yes, correct. Correct. Sir...

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[Foreign Language] final question...

I'm not committing. I'm telling you [Foreign Language].

Yes, yes. Sir, last question. Sir, we are targeting for 300 distributors and 6,000 retailers. [Foreign Language] in the near-term, approximation, sir?

[Foreign Language].

Okay. Okay. 21 distributors per month?

24.

24 distributors per month? Okay. Okay. Sir, got it. Got it, sir. And sir, any other revenue projections, which we can give right now on the lower side for the next financial year?

[Foreign Language].

[Operator Instructions] We have a follow-up question from Atmiya Boricha, an individual investor.

Sir, one more question that we have allocated INR 300 crores CapEx. So by what time, we continue contribute this INR 300 crores CapEx into our working capital, yes?

I think working capital -- Sir, it is not working, it is CapEx.

Sorry?

Sir, it is CapEx [Foreign Language].

[Foreign Language] what is the projected timeline to get...

[Foreign Language].

[Operator Instructions] There are no further questions. Now I hand over the floor to Mr. Bhatia for closing comments.

Thank you all for joining the call and for your insightful questions. Our discussion today has been valuable. We look forward to updating you again next quarter. Before we conclude on behalf of the entire Servotech team, I wish you all a very Happy Republic Day, stay safe and Jai Hind. Thank you.

Thank you, sir. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. You may now disconnect your lines. Thank you, and have a good day.