Suyog Telematics Limited (537259) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Capi Consulting Investor Relations team, I welcome you to the Q1 FY '27 Post Earnings Conference Call of Suyog Telematics Limited. Today on the call from the management team, we have with us Mr. Shivshankar Lature, Managing Director; Mr. Tushar Shah, Business Head India; Mr. Ajay Sharma, Chief Financial Officer; and Ms. [indiscernible]. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. And this is a reminder that this call is being recorded. I would now request the management to detail us about the business and performance highlights for the quarter ended June 2026, the growth perspective and the vision for the coming year, post which we'll open the queue for Q&A. Over to the management team.

Hi, everyone. Started mid of June, somewhere around 16 [indiscernible] of which we converted 5 towers, which is equal to [indiscernible] were able to convert the biggest achieve the tenancies [indiscernible] this quarter we are trying our best to 0, which we are having right now. So if you see [indiscernible] which came in this quarter was [indiscernible]. I also earlier mentioned that we are working on a backup battery background you are aware lithium prices of battery has gone almost doubled in last 2.5 months. [indiscernible] again, our share of revenue kind of factor has grown by 1%. So to my actrevenue is around 1% followed by VI, which has grown around 2%. I said 27% now for by [indiscernible] 22.6% and 2.3%. And although we operate pending the across all these trades and in a territory, we have 6,000-plus sets and so fruitless tenancies. So key highlight for this quarter is we started actually receiving order in mid of June, somewhere around 15, 16 June from Vodafone Idea. We had declared on an exchange also that we got around 600-plus orders from Vodafone, out of which we converted 95 towers, which is equal to 150 tenancies in month of June itself because this is a quarter end statement, we have updated numbers only up to 30th June. So in span of 30 to 15 days' time, we were able to convert 95 sites and 150 tenancies, which is one of the biggest achievement, and we are one of the fastest IP company to reserve such numbers to Vodafone Idea. -- basis on a performance we are getting now loading from Vodafone Idea on a monthly basis, we currently have -- after converting 150 tenants, we have another 700 tenancies from Vodafone on which we are working, and we are trying to convert maximum in Q2. But obviously, there will be some rain effect in this quarter, but we are trying our best to convert maximum from 700, which we are having right now in our hand. So if you see as of Q1 exit, we have 6,103 towers with 7,4 tenancies. And most of the tenancies which came in this quarter was on macro site. So our macro site number has grown much higher. And we did a few kilometers of fiber network in the quarter. So I had also earlier mentioned that we are working on a backup for batteries where we will be the first IP company to launch zinc battery. So just give a brief background. If you are aware, lithium prices of batteries has gone almost doubled in the last 2.5 months. The battery which was purchasing at the rate of INR 33,500 for grid went up to -- current price is INR 48,000, so which is almost 50% increase in the last couple of months. And China -- entire all lithium batteries are imported from China. All sites are imported from China. So China has removed subsidies, rupee falling against dollar. So we are having major impact on lithium battery, which is increasing our cost. So we have fast tracked our zinc battery. Zinc battery is ready. It's under production right now, and we should get first beds for around 10, 15 sites by mid of September. And pricing of zinc battery is similar to old prices of lithium battery. And since it's 100% made in India will not have any dependency of import or subsidies from other country. So it will ensure that CapEx remains within our budget because zinc battery prices are same as we are or you can say same as old lithium prices. It's one of the much bigger savings, which we will have in coming years when we do our CapEx. We will be the first IP company to launch zinc battery on a site in the month of September. As of now, no one has even started trials, while we are in a phase of launching zinc battery on site. So this will be one of the biggest CapEx saving item for us in current quarter, and it's one of the biggest take for -- in terms of way forward, you guys must have seen the results of Vodafone and BSL. We are focused on Vodafone and BSL because they are the one who are giving us new business for next coming years. Right now, Airtel is not doing any major rollout. Jio is not doing any major rollout. Vodafone has already declared close to 45,000 site rollout plan in the next 18 to 24 months. They are targeting to do 3,000, 3,500 sites every month, which they have already started. And that's why we are having such a huge rollout from Vodafone Idea. In terms of funding from Vodafone Ida, you are aware that they have already secured INR 6,400 crores of funding and they're in a very advanced stage from SBI and Cos to another funding of INR 25,000 crores, INR 30,000 crores, which will be happening in phase-wise manner. So Vodafone is growing very aggressively. We are getting a bulk business from Vodafone, and we are very sure we should be able to do another -- we should be able to do 3,000 additional tenancies from Vodafone Idea in current financial year. BSL has done a big announcement before a few days. They are doing INR 77,000 crores CapEx with 2 lakh sites, which will convert to 2 lakh sites in next 5 years. But as of now, I don't want to really go deep into BSL because we all know that BSL will do declaration, but the rollout will start very slow, then there will be billing issues and everything. So we have kept our stand very clear on BSL. Once they confirm me my billing sted, will start rollout for BSNL. So obviously, you can expect big numbers from BSNL. But as of now, unless we get some confirmation from BSNL, we are not giving any projections of BSNL right now. But yes, there is a huge workload for IP company, close to 2.5 lakh plus 50,000 from other 2 operators, close to 3 lakh towers are planned in the next 5 years. So there will be no dirt of work for any IP company in India. It's whoever performs better, whoever the proper funding can do a huge number of rollouts and can double their sites every year. So now we are coming to financials. Revenue for Q1 consolidated revenue, Q1 FY '27 is INR 710 million. We have maintained an EBITDA of 59.3%. So when we say EBITDA, now this EBITDA is a revised EBITDA with TB. As you all are aware from 1st April, we have changed the accounting policies, and we have added electricity in our top line. So earlier EBITDA, which you see was around 70% has come down to 59.3% because of addition of electricity in the top line. I'll also show a comparison of last quarter and last year in next slide. In terms of PBT, we have INR 195 million. Net profit is again INR 145 million, which we have maintained -- probably there's not much growth since our orders started coming from mid-June. So all the growth you'll see from coming quarters and next year where we do a lot of rollout from Q2 onwards. We have EPS of INR 12.7 -- so revenue per tower, we have maintained even after a stagnant quarter, we are able to maintain our revenue per tower where again, we are above INR 31,000, which is one of the high revenue. Now this revenue per tower is excluding EV. We're not adding electricity revenue per town, otherwise, it will be misleading. So revenue per tower has been constant at INR 31,000, INR 1,500 for us from last 4 quarters. This is a comparison. So we have -- what we have done is we have added electricity charges in FY '26, Q4 and Q1 FY '26. So there is an apple-to-apple comparison. So you can see revenues grown by 6.1% in current quarter. If you see Y-o-Y, we have reached INR 70.9 crores revenue compared to INR 68.5 crores in previous quarter and INR 66.8 same quarter last financial year. Our total expenditure has increased because obviously, the April quarter we have and there was a CapEx and everything. In terms of EBITDA, we have INR 420 million EBITDA, which was INR 418 million last financial year and INR 411 million before -- sorry, INR 418 million last quarter and INR 411 million in last financial year. EBIT again remained strong at 74%. PAT is again -- PBT is INR 195 million and our net profit margin is constant at 20% with the electricity cost in picture. So if you see PAT has been 20%, between 20% to 25% constantly in last year. So I already shared you change of accounting policy effective from 1st April, reimbursement has been added to top line. Electricity reimbursement has been added to top line because that was a requirement from GSP department. And this is a comparison sheet for you guys for app-to-app comparison. FY '25 FY '26 since it was quarter 1, there's no change in balance sheet. It's what we have shown you last quarter. That's it from my side. We can now open for Q&A.

[Operator Instructions] So we'll take the first question from the line of Mr. Gunit Singh.

Am I audible?

Yes.

So firstly, I want to understand more about the zinc battery project. Are we doing our own CapEx? If so, how much? Or is it contract manufacturing from someone else? And what kind of revenue projections we have from this from Q2, Q3, Q4 onwards, what kind of EBITDA margins?

So, first about zinc battery, we are not manufacturing ourselves. We have done tie-up with one of the manufacturer, which is GPB batteries, who has land in Kerala and the promoter of zinc battery is based from U.S. He was one of the ex battery head for Apple. So product has come out very good with him. And we are going to -- like we are buying lithium metal some, we are going to buy zinc battery from GPV. So it's not that we are manufacturing ourselves. We are going to just buy from manufacturer. But yes, you will be the first one in telecom industry to use zinc battery in next month. on sites. In terms of revenue projects and I'm sharing you that we are planning to do 3,000 sites for Vodafone Idea in current financial year. You know our average is around INR 30,000, INR 31,000 per tower per month, excluding EV. So that would be -- and if you take EV, EV would come to average INR 20,000, INR 25,000 per site per month. You can calculate top line also, it's not right for me to comment on financial numbers because it's a listed entity and we cannot guide a financial number. But as you can derive yourself, we are planning 33,000 sites for Vodafone Iya with an average revenue of INR 31,000 without EV, around 50,000 with EV.

Okay. And what are the benefits of the zinc battery? Will our EBITDA margins improve? Currently, what price are we buying the battery at...

Zinc. 2, 3 major advantage of zinc battery. One is in terms of pricing. lithium prices have gone very high. So for 100, lithium pricing is right now costing INR 48,000 and which is expecting to rise in future also. And zinc battery will cost me around INR 33,000 for 100. We normally use 3 batteries on every site, 300, then it will vary up to 600, 900 also. In terms of efficiency, it will be same benefit of lithium battery, where it will be small in size and it has a fast charging and more backup. A major benefit compared to lithium is it's a fire resistant. Lithium battery still have a chance of getting fire. Zinc battery will not have any fire, it's a fire resistant battery. And that's the benefit of lithium battery.

So this is for 3,000 and currently, how much are we procuring batteries?

Right now, the latest cost of lithium battery is INR 48,000...

So basically, this will reduce our CapEx. Is that correct?

Right. And it will reduce the CapEx and we also do some operations cost. It will also reduce the operational cost, but yes, major benefit would be on CapEx.

Got it. So this -- for this current financial year, we only have about 3,000 extra tenancies from Vodafone or extra towers?

No, it's not from the Vodafone. 3,000 is tenancy. Now this is what we are targeting right now because Vodafone has as of now declared a rollout of 12,000 up to September, and they may add another 18,000. So they are planning around close to 30,000 sites in current financial year, out of which we are targeting 10%, which is 3,000 based on our financial capability and the visibility what we see in current financial year. There is much more -- many more business BSL we hope that will open soon after IPO. So opportunities are many huge. But as of now, on a conservative basis, we are saying we do 3,000 sites for Vodafone.

Got it. So in the current quarter, we just added about, you said 150 sites. 150...

Right.

And can you give a breakdown for Q2, Q3, Q4?

So see, right now, we are planning -- you can take another 3,000 you consider 2,800 sites. Q2 would be lower. Q3, Q4 are always high for me. So exact numbers, I can't give. But yes, totally almost 35%, 40% happens in H1 and 60% in H2.

Got it. So out of 3,000, if we say 35% happens in H1, that is about 00 to 1,200 tenancies. So we are targeting...

So only change that rollout started from June. So let's see how much we can cover up in Q2 because it's also rainy season. So we will try our best to achieve the best numbers in Q2. So whatever spillover is there, we can easily get covered in Q3 and Q4.

Got it. And this 3,000 -- I mean, these are tenancies or...

Tenancies.

Okay. So out of this 3,000, how many would be on our existing towers and how many new towers do we plan?

It's very difficult to plan it because we keep getting loading on a monthly basis. It's not that we get loading for entire year. So based on Vodafone planning, but normally, it should be 80-20 ratio where 80% would be anchor and 20% will be shared.

Okay. So 80% of 3,000 would be new towers that we will erect?

Yes.

Got it. And this INR 3,000 crores, you're saying it's a conservative figure for this year, right?

Yes.

And we don't already have the letter of intent or orders for INR 3,000 crores. That's what we are expecting.

We have master service agreement with all operators, right? But they see their planning happens as per their budget. So Vodafone has done right now planned rollout only for INR 6,000 crores, which they have received from SBI. So as and when they receive fund, they will start losing the nominal. They're not the nominal because even they need to arrange their funds right back to back. Right now, they would reach nominal only for around 7,000, 8,000 sites or close to 10,000 sites, out of which we are targeting 3,000. So as and when SBI approves the next set of months or next phase of rollout will start to get more sites.

Got it. Got it. All right. So basically, I mean, the jump in revenue should come only from FY '28 considering that.

Because the time line we will get the full year benefit of the revenue of VI. You'll see margin -- you will see a jump even in Q3 and Q4, but full year benefit will get it in FY '28.

Got it. So basically, INR 30,000 plus INR 25,000, INR 5,000 into around INR 750...

50,000 into the number...

Yes. That should be the incremental we should expect Q3 onwards, right?

Right.

Got it. All right, sir. And in terms of EBITDA margins, we will be maintaining the same? Or have we seen any cost escalations or...

We will have the same EBITDA margin with TP what we have shown right now, which is around 59%. We'll maintain the same EBITDA margin for coming quarters also.

Gunit, Gunit, Gunit, [Foreign Language]

We'll take the next question from the line of [indiscernible].

Sir, 300 towers which we are targeting from VI, what is your confidence level that we will be getting these orders and we would be executing this year itself?

Mahit, about 3,000 sites from, right?

Yes.

We are very confident we'll achieve it because right now, flow is very good. We have been getting loading on a daily basis, numbers are getting added to our team. And based on our performance, we had a meeting with Jagiring, who is their national CTO. We met planning team and even Vodafone central team is very happy with our performance. So as of now, we don't see -- we don't have any reason to say we will not achieve. Yes, we are very confident. Team down the line is actually ready. They have been executing site daily. Even in rainy season, we have been doing 100 sites, you can see 150 tenancy in mid-June, which was rainy from some parts of the India. We are very confident. We have execution capacity. We have enough funds. So 3,000 should not be a challenge for us.

Okay. And what is the current order book from 700 tenancies or 1,100...

70 plus 70 more. We have already done 150. Another 700 is my tourist. My KT keeps increasing every day because they keep putting me sites day on, day out. So as of date, when I'm sitting there, it's 700 plus other than 150, which we have done.

Okay. And sir, this BSNL order, we have been targeting for the past like 7, 8 months. Now all of a sudden, we are saying that we don't want to comment more on the growth perspective of BSL because of the delay. Can you clarify more on this? What's the reason? When are we expecting any orders this year or by next 1 to 2 years? Anything on that side over there?

So, we are very optimistic about BSN as a company. But when I speak on a public platform where investors are there, what happens when we -- see, we also commit basis on the numbers which we receive from operator. But when I quote some numbers to you guys and then we are not able to achieve because of operator issue, it comes back to us that why you are declaring numbers and you're not achieving. BSN numbers are very high. We already have some orders in our hand, which we are not executing because of the issues with the equipment. So obviously, we're optimistic about BSL. We are expecting some numbers in current year. So BSNL has a clear path of 2 lakhs tower in the next 5 years, which they have declared on public platform 2 days back. So obviously, when a CMD of BSL declares something, it will be after a lot of -- but come on ground, then give me a confirmed date by when they want to start the rollout, when will my billing start, then we'll share numbers with you. It's not that we don't want BSL. We are very happy to BSNL. We will be as aggressive as we have for BSNL also once we have confirmation from BSNL, then the Tejas equipment issues are resolved and they are ready to launch or ready to launch the new rollout phase.

Okay. And so basically, this FY '27, we will be ending with roughly 10,500 tenants. Is that the correct assumption?

Right. So we already have 7,000 plus we'll add another 3,000. It would be 10,000 plus tenancy while FY '27.

And what would be the funding requirement for this? And how are we funding...

So as of now, we have enough funds from our internal accruals. We are not seeing any major fundraise right now. But it depends if I get more orders than expected, then we may decide on fundraise. As of now, we have not taken any call on it. So whenever right time comes, we'll come back to you if there is any plan on fundraising or anything.

Okay. And we are expecting 20% PAT margin would sustain this year, right? -- number?

Yes.

So why there isn't a fall in a PAT margin from 25% to 20%...

So when you see year-on-year, there was a VI reversal in last quarter -- last financial year same quarter, we were having a VI reversal of bad debt provision. That's why 20% to 25%. Otherwise, it will always be around 20%, 21% with...

We'll take the next question from the line of Divyansh Thakur.

Sir, congratulations on the great set of numbers. Also, I wanted to ask that you are talking about 3,000 tenancies. How much have we done this quarter? And how much are we going to do? And how much is the confirmed tenancies that we have?

So first thing out of 3,000 tenants, we've already done 150 in Q1, which I have already shown in my numbers in our presentation slides. 150 tenancy. We are already working on 700-plus tenancy other than 150. So while sitting today on a call, I have around close to 850 already in my hand, and there is exact 9 months which are remaining ahead 3,000 is not a challenging number. We should be able to achieve it. We have execution capacity. We have finances funds in our place. And the way Vodafone is going aggressively, only challenge is right now, Vodafone has got INR 6,400 something from SBI and warrants. Now they are awaiting another set of financing funds to be released from SBI and consortium. So if they are able to secure funding, then obviously, INR 3,000 crores is 100% doable, which is right now very possibility because Adindaaimself is on a board right now, and he has declared a number. So we don't see any challenge in achieving INR 3,000 crores going forward.

So we are pretty confident that we'll be able to do INR 3,000 crores this year?

Yes.

Okay, sir. And also just want a clarification on that what is this INR 31,000 without EV and INR 50,000 with EV?