Waaree Renewable Technologies Limited (534618) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Waaree Renewable Technologies Limited Q1 FY '27 Conference Call hosted by MUFG Intime India Private Limited. [Operator Instructions] I now hand the conference over to Mr. Nikunj Jain from MUFG Intime India Private Limited. Thank you, and over to you, sir.

Thank you, Sania. Good afternoon, ladies and gentlemen. I welcome you all to the Q1 FY '27 Earnings Conference Call of Waaree Renewable Technologies Limited. Today on the call, we have from the management, Mr. Manmohan Sharma, Chief Financial Officer, along with the other management team. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more details, kindly refer to the investor presentation and other filings that can be found on company's website. Now without further ado, I would like to hand over the call to Mr. Manmohan Sharma for his opening remarks, and then we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Nikunj. Good afternoon, everyone, and a warm welcome to all of you joining the earnings conference call of Waaree Renewable Technologies Limited to discuss our performance for Q1 FY '27. I hope you all had the opportunity to go through our financial results and investor presentations, which have been already made available on the stock exchange as well as on the company's website. Before I begin, I would like to sincerely thank all our stakeholders for their unwavering confidence and the trust in the company. Your support for our business, our execution and our long-term strategy has been a strong source of encouragement for us. We are committed to building on this trust through disciplined execution, steady growth and a clear focus on long-term value creation. We want to bring your attention on the recent transaction concluded by the company before we get into the quarterly highlights and industry overview. During the current quarter, we have successfully completed the acquisition of a 55% equity stake in Associated Power Structures Private Limited based out of Vadodara, Gujarat, which is an integrated EPC solution provider for substation and transmission line, having manufacturing capacity of 108,000 metric tons per annum that provides fabrication and canbalization. For transmission tower, wind turbine Lattice tower, Telecom tower, solar panel structure. APSPL has been in the T&D business for over 2 decades and its in-house manufacturing capability directly supports its project execution. We see this acquisition as a step that brings us closer to the grid and power evacuation requirement that go alongside renewable energy capacity addition in the country. And I will share more detail on this, along with the broader transmission and distribution opportunity a little later on this call. We are pleased to report a strong start for FY 2027. In this quarter, our revenue from operations stood at INR 924.25 crores, reflecting a healthy growth of 53.23% over the same quarter of last year. EBITDA for the quarter comes at INR 173.48 crores, while profit after tax stood at INR 118.97 crores, registering a growth of 37.7% on a year-on-year basis. These results reflect not only the strength of our project execution capabilities, but also the quality of our order book and the operating discipline we have maintained. We believe this gives us a good foundation of growth as we move through the rest of the year. On the operational front, the quarter has also been encouraging for us. During Q1 FY '27, we executed 888.81 megawatt peak of projects and our consolidated unexecuted order book stood at INR 5,300 crores, including T&D, which provides healthy visibility for the coming quarter to us. Our O&M portfolio stood at 1.15 gigawatt peak. This strengthened our recurring revenue base and also establish our relationship with the customer over the long period of time. Overall, we focused on timely execution, operational efficiency and consistency while expanding the scale of business. Let me now turn to the broader industry environment, where momentum across India's renewable energy sector remains strong. As of 30th June 2026, India's total installed renewable energy capacity stood at around 288 gigawatts, while cumulative solar capacity crossed 162 gigawatts within solar, ground-mounted projects accounted for around 121 gigawatt, grid-connected rooftop solar around 30 gigawatts, hybrid and off-grid solar together contributing the remaining capacity around 11 gigawatts. These numbers clearly shows the scale at which solar industry is growing in India and reflects the broader opportunity across utility scale and C&I segments. At the same time, the sector is also moving into the next phase of growth where storage and grid readiness will become even more important. India's battery energy storage requirement is projected is around 208 gigawatt hours by 2030. These trends gives us confidence that the renewable energy opportunity in India stay diversified, structurally attractive and full of long-term potential. Apart from solar capacity addition, India's Power Transmission Distribution segment is also seeing significant investment. As per the NEP published by Central Electricity Authority, the plan includes addition 76,787 circuit kilometers of transmission lines, 497,855 MVA of substation and 32,250 megawatts of HVDC during 2027 to 2032 with an estimated investment of INR 4,90,920 crores. A significant portion of this expansion is driven by the need to evacuate and integrate growing renewable energy capacity into the national grid. We see this as a segment that will continue to offer strong opportunity in the coming years, supported by the renewable energy build-out already underway. As I mentioned earlier, our acquisition of a 55% equity stake in Associated Power Structure marks a specific step into the transmission and distribution segment, enabling us to address the growing demand for grid and the power evacuation infrastructure alongside renewable energy capacity additions. APSPL has a strong track record in power transmission distribution, including overhead transmission line, substation and grid infrastructure. The company has executed over 10,461-plus circuit kilometers of transmission line and supplies tower and structure across India as well as international market. We believe its capabilities complement our existing renewable EPC business well, and we look forward to sharing more on the progress and contribution of this business in the coming quarters. Looking ahead, we are confident about the opportunity in front of us. The sector continued to benefit from strong policy support, increasing clear energy demand, growing storage requirements and a clear long-term push towards energy transition. In this environment, we believe Waaree Renewable Technologies is well positioned with its execution track record, healthy pipeline, growing O&M portfolio and expanding capabilities into the other EPC opportunity. Q1 FY '27 has given us a strong and encouraging start for the year. We stay focused on executing well, growing responsibility and creating long-term value for all our stakeholders. Thank you once again for your continued support. We will now be happy to take your questions.

[Operator Instructions] The first question is from the line of Ninad Sarpotdar from InCred Research.

Sir, my first question is on the -- in the line of the order book. Sir, when we say we executed around 888 megawatts during the quarter and our closing order book of around 2.4 gigawatts, does this include our 1,500 megawatt hour of BESS?

No, it is not really because around a small portion of BESS we have executed. This -- whatever the order book which we are showing is purely from the EPC, solar EPC.

Correct. So my understanding is this INR 2,600 crore number on a stand-alone basis of our order book will be higher, right, be higher because if we include BESS, that number will go beyond INR 2,600 crores?

No, it is BESS EPC is already included in the entire order book of...

Okay.

Just let me clarify. Let me clarify. This INR 2,400 crores is the pure solar EPC and remaining INR 200 crores is from the BESS EPC.

The remaining? Sorry, I didn't get your -- okay. INR 200 crores. Okay. Okay. Got it. And sir, my second question is regarding the stand-alone results. If we only look at our stand-alone performance, our margins have been intact. In fact, they have improved by 20 bps. And so on the consolidated level, when we see a dip in margin, that's purely because of consolidation of a lower margin business in our financials. Is my understanding correct?

Yes. To some extent, it is right actually because if you rightly observed that our stand-alone EPC business margin has improved from the last quarter as well as we have maintained the line with last 2 years, in fact. But while consolidating this T&D business, is slightly -- there is a slightly drop in the margin that is purely because of that.

Right. And sir, lastly, my only concern about the performance is the visibility. Like INR 5,300 crores of order book gives us a visibility of only beyond a year. So any insights or any color on how the market is looking, what kind of order flows or any guidance that how much orders we can see coming in during the year, both for Waaree and for APSPL?

So I'll just clarify about the margin because the margin also, if you see the -- in monetary term, it has improved significantly. But in percentage terms, there is a slight drop. And yes, with respect to your question with respect to order execution of order book and coming up. So these are the order book which we are carrying as of now. And we have already executed INR 925 crores out of this. And remaining INR 5,300 crores is to be executed over the next few quarters, maybe 12 to 15 months or 18 months. So during the year, entire year is still -- the 9 months is there, we are likely to receive some orders during this upcoming quarters also, and that will also get executed along with this existing order book.

The next question is from the line of Paras Kulkarni from Ignite Capital.

I had a few of them. First, on the ALMM-II Regulatory -- Regulations, now they have been sort of extended until the December quarter. So any impact that it would have on our order inflows or the execution time lines? Or would it impact our margins as such? That's my first question.

So, with respect to the extension of this time line which you have mentioned, as far as we -- Waaree Renewable Technologies is concerned, we are the EPC player, EPC doing the EPC execution work of those solar projects. So more and more projects is likely to come before we go nearer to these deadlines.

Okay. So does that mean sort of now that our order inflows have bottomed out, I mean, the 1Q order inflows are up 20% Q-o-Q over 4Q '26. Now do you see that accelerating for a stand-alone business on the solar EPC part?

Yes. So as of now, we are already chasing this order pipeline maybe 27 gigawatt of around domestically plus around 10 gigawatt international order pipeline which we are chasing. So these are the order pipeline which are likely to get converted into firm order in the upcoming quarters. So that is also executed during this financial year.

Okay. So any firm guidance as to how much would be sort of converted into firm orders?

So as it is -- whatever -- our endeavor is to get maximum out of it because some of the existing customers, which we are discussing, negotiating, so that also likely to get converted during the next upcoming quarters.

Okay. Understood. Sir, second question pertains to the Associated Power acquisition. Now that we have acquired a 55% stake, could you sort of give -- throw some color on the debt equity mix on the financing because it is a cash acquisition.

Yes. So this acquisition is through self-funding or plus debt component is there. So we have taken around 75% debt for the entire acquisition.

Okay. Understood. So now given that the consolidated PAT margins have sort of contracted on a year-on-year basis, I see that the interest cost has sort of played a role in sort of compressing the margins. Is it on account of the higher debt and only the 12-day consolidation of associated power? Is that understanding correct?

So definitely, this all -- the interest portion will also come in the coming quarters, et cetera. But why this acquisition is more important for us to have this revenue stream for this company. So as of now, we are doing solar EPC, but we'll mix it with the T&D also. It will give complete value chain for the transmission. So that is the part where we have an opportunity to get orders for transmission line as well as in this subsidiary or vice versa. Whenever they are going for the transmission line, there is an opportunity for us to go for the EPC, et cetera.

Understood. And now on Associated Power, now it is essentially a low margin and low ROIC business. So what are the steps that we are taking to improve the EBITDA margins from here, given that your stand-alone minimum threshold is 15% on the EBITDA side. So could you throw some light on that? And secondly, whether through Associated Power, we are executing any HVDC project?

Definitely, this margin improvement will be an ongoing exercise for the entire company for renewable technology and our subsidiaries. So it will be a continuous exercise where we will be -- you will see the continuous improvements on the margin, et cetera, in the coming quarter.

Okay. And any outlook on HVDC on that part?

So this company -- transmission company is doing all kind of projects, which are -- which I mentioned in my opening remarks.

[Operator Instructions] The next question is from the line of Shivam Gupta from [indiscernible] Asset Managers.

As you're seeing more competitor is entering into solar EPC space now...

Sir, your voice is not coming clear.

Am I audible?

Sir, your voice is not coming clear.

Is it clear now?

Yes, sir. You may go ahead.

Yes. I am telling like -- yes, as you're seeing more competitors is entering into solar EPC space now, and is that affecting how aggressively you have to bid to gain orders?

No. Actually, there are -- competition is always good for the industry. But as far as we are concerned, we are only taking those projects which are really profitable and suits our risk/reward metrics.

Okay. [indiscernible] revenue or EBITDA guidance for FY '27?

Sir, can you please use handsets while asking a question?

[indiscernible]

Sir, your voice is not coming through. Okay. We'll move on to the next question. The next question is from the line of Siddharth S from [ NAFA. ]

Congrats on a great set of numbers. So my question is a bit unrelated to the business specifically. There's a lot of -- if you look at the -- from a macro lens on the industry, there's been a lot of fuss around the overcapacity fears. There is one set of addression saying that the most backward integrated player will effectively be shrinking the supply and the supply is still going to be constrained, but that seems to have a bit of a toll on the whole solar space at the moment. I'd just like to know your light and some view on that.

So if I take question, the way completion is increasing a lot of supply, et cetera, is there a lot of completion is there. So as far as we are concerned, we are doing the EPC best possible manner. And at the same time, as you rightly said that there's a lot of things, a lot of players are entering. So therefore, we also like entered into another area that is transmission and distribution. So to make and consolidate this company, we have taken this step. And by doing so, we have -- now we have ability to not only execute the solar EPC. Now we can do the transmission EPC also where supply is also involved. So these are the things which we have done. And I think it will be -- demand will be there going forward for this entire energy because of the government push is there for renewable or otherwise also, there is power requirement in the country. So by combining these 2 solar EPC plus transmission, it will give the demand for a longer or many -- maybe multiple years.

The next question is from the line of Umang Aditya, an individual investor.

Sir, first of all, congrats on a great set of numbers. I have a question on cash flow side. Historically, I have viewed or rather value Waaree Renewable for its asset-light cash generating model. After APSPL acquisition, should I expect operating cash flow conversion to structurally decline?

No, operational cash flow will definitely will be there because of our business, the way we are doing the business, not only in our Waaree Renewable but also associates. But the allied cost with respect to the fund raise for this thing, that will come. But basically, because the business will also expand. So all these are the possible where we can improve the margin, combine these 2 areas together and focus on the business so that these all costs will go away slightly.

Sir, but considering T&D business, as we know that in T&D business, there is a question about operating cash flow. So I was asking you about that.

No, that will also -- there is -- this company is -- what we have taken stake is the company which is there from last 3 decades actually. So they have a good revenue stream over a period of like few -- last past few years, this company has grown significantly. So now by this time, this is a mature, the people who are driving this company. So definitely, this fall by synchronizing both the entity, definitely, there is a lot of opportunity for us to improve margin and enter into bigger market. All this will be there in the future.

Okay, sir. Sir, since you mentioned about margins, I want to ask one last question. What concrete structural advantages allow you to avoid the economics typically associated with T&D industry? Because if I consider this Q1 result also, there we can see that the T&D margins can push your overall margins on a downside. So can you just comment on that?

So that is what I mentioned actually because of the improvement in the process or maybe wherever that we can bring down the overall cost for the company, that will be resulted in the upcoming quarters.

Sir, but what my question is in future -- in upcoming quarters also, can we see a meaningful downside in EBITDA margins due to T&D business?

So these are the -- things will evolve over a period of time, maybe in the coming quarter, et cetera, we will be able to tell you more precisely. But as of now, there is always scope of improvement in any of the businesses what we -- the way we are doing it. So probably we'll see all these parameters, and we'll come back in the next quarter.

The next question is from the line of Sahil Sheth from Anand Rathi Institutional Equities.

Congratulations on the great set of numbers. Sir, my first question would be on the 1.5 gigawatt hour BESS order you had received. So sir, for that, can you specify what is the value of the order, the execution time line? And how would EPC margin for BESS EPC be different than the [indiscernible].

Sorry to interrupt Sir, your voice is not coming clear.

Am I audible now?

Yes, please.

Yes. So sir, my question was on the 1.5 gigawatt hour of BESS order. What is the value of that order, the execution time line? And how does BESS EPC margin would be in comparison to the solar EPC margin?

So this BESS order, which we have mentioned is not one single order, is part of one of the order. So around -- we have around INR 200 crores of the BESS order [indiscernible]. And going forward, also the margin, which you have mentioned that margin is likely to be -- I will keep in the same range with the overall margin of the company, which we decide when we take the order. So it will be in line with our expectations and whatever we are doing existing, it will be in line with that only.

Okay. And sir, in our investor presentation, you had mentioned that we are setting up about 190 megawatt...

Sorry to interrupt, Sahil sir, your voice is not coming through.

[indiscernible].

No, sir, it's still not clear.

So I understood. Let me clarify. What he asked is about setting up 198.6 megawatt plant. So, Sahil, what we are doing actually, whenever there is an opportunity, we are setting up not one size, maybe around a few plants, like maybe 25 megawatt, maybe 10 megawatt kind of a plant, wherever there is opportunities there to keep our revenue stream continuously flowing like we have IPP income also in our financials. So by addition of these plants, which there is opportunity, we are adding small capacity to the balance sheet.

[indiscernible].

Sorry to interrupt Mr. Sahil sir, your voice is not coming through. Please join the queue. The next question is from the line of Diya Jain from Sapphire Capital.

Hopefully, I'm audible...

Yes.

Sir, how much can we execute this year on a stand-alone basis and also the associated power structures combined?

So we have capability, as you have seen from our last financial that we have capability to execute this megawatt. So therefore, our revenue for the last financial year was INR 3,300 crores. So we have similar line of capability. We can enhance it further also because there is no capacity concerns as far as we are concerned in the industry. And now we have the order -- executed order book of around INR 5,300 crores for both the T&D and EPC business considered together. So by this order from among this -- from this order book, along with the order which we are likely to receive in the next 9 months, we will be executing this financial year.

So this INR 5,300 crores will be executable in 9 months?

Not 9 months. It will range from 12 to 15 months.

Okay, sir. And can you also provide FY '27 guidance in terms of margins?

So margin, any -- we are not giving any kind of guidance. But however, we have -- you have seen in the past for the EPC business, which we are doing as of now. Last year, we have maintained around 19% of the EBITDA margin. And by considering this associate power, that also will maybe not in the same line. But definitely, there is a -- we'll try to maintain around 15% of the margin for the financial year. But these -- all these things will come up with the next quarter when we are presenting the financial results.

The next question is from the line of Ashray Sheth from Ventura Securities.

Congratulations for the wonderful set of results. Sir, only one question from my side would be what sort of margins are we envisaging with the T&D business that we are getting into? And how is the order book pipeline look like in T&D business? And what is the usual execution time line for the order book?

So for the T&D, as I mentioned, for the solar EPC, we are following around 27 gigawatt domestically plus around 10, 11 gigawatts internationally. And similarly, for the T&D also, we are following around INR 20,000 crores of the order pipeline, which are actively we are following and negotiations are -- in some of the cases, negotiations are there with the customers. So these are the pipeline which I mentioned to you. And what about [indiscernible].

And sir, what would be the execution time line? That typical execution time line looks like in T&D business?

So T&D business, I think it is relatively a little higher, but maybe around 18 months to 24 months is there.

About 18 to 24 months.

Depends -- see, again, it depends upon the -- how much line I have to create. Maybe it's a smaller distance, it can be a little less, maybe around 9 to 12 months also. But it depends upon the construction of the line, area, terrain, et cetera, all these are the factors when we are -- we need to consider before we give any kind of time line.

And sir, lastly, given the T&D business is a capital-intensive business, how does our working capital cycle look like on a consol basis?

So that also, whatever the EPC, maybe with the T&D or otherwise, we are doing, we are getting certain percentage advance. And based on the project progress, all payments we are receiving.

Sir, so can you give any guidance on net working capital days?

So the working capital is maybe around from maybe 60 to 90 days actually when we receive because all these are the progressive payments. It's not the completion at the time of completion of the project. There is a certain percentage. But whenever this progressive bill which we are raising, and we are getting the payment based on the progress of the projects.

The next question is from the line of Rajesh, an individual investor.

Congrats for the wonderful set of numbers. And just I wanted to understand the BESS order pipeline and any strategies related to data centers for the power supply?