Release Date: January 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hitachi Energy India Ltd (BOM:543187, Financial) reported a year-on-year revenue growth of 23% for Q3 FY24, driven by solid order execution and easing supply chain constraints.
- The company achieved a significant profit recovery, with profit before tax increasing by 152% year-on-year and profit after tax rising by 400% year-on-year.
- Order backlog stood at INR 7,552 crore as of December 31, 2023, providing revenue visibility for almost 22 months.
- Export orders saw a 61% year-on-year increase, driven by demand from Europe, Africa, South and Central America, and the US.
- Service orders grew by 70% year-on-year, indicating strong performance in the utilities and industry sectors.
Negative Points
- Order inflow remained flat year-on-year at INR 1,235 crore for Q3 FY24, indicating a need for higher momentum in new orders.
- There was a slight decline in orders from the rail segment, reflecting variability in customer orders.
- The company faced a foreign exchange loss of INR 9.8 crore in the current quarter, impacting overall profitability.
- Operational EBITDA margin, although improving, stood at 6.3%, which is still below the company's target of achieving double-digit margins by FY25.
- The company continues to face challenges related to geopolitical issues and logistics, which could impact future performance.
Q & A Highlights
Q: Order inflow is yet to see a healthy momentum. Can we expect a higher order inflow as we enter calendar year 2024?
A: We have a very strong, robust pipeline across the sectors we operate in, including transmission. There are many database bidding projects, STATCOM projects, and HVDC projects in the pipeline, indicating a very strong order inflow in the coming quarters. - Nuguri Venu, CEO
Q: Have you completed the study and submitted the report for Leh-Ladakh for technical feasibility to Power Grids?
A: We are on track to complete the study by March 31. We have already submitted a couple of reports and believe that technical solutions are available. - Nuguri Venu, CEO
Q: What is the opportunity size for Hitachi Energy in the bullet train or high-speed project?
A: We have submitted our bids to EPCs, including the winning bidder. The size of the project depends on various factors, but we expect the award of these electrical equipment projects within one to two quarters. - Nuguri Venu, CEO
Q: Given the domestic market's bounce back, when can we expect better margin orders to reflect in our execution and numbers?
A: Our portfolio is robust, and we are seeing sequential improvement in operational EBITDA. We aim to achieve double-digit operational EBITDA by the end of the financial year, driven by exports, services, and better order execution. - Nuguri Venu, CEO
Q: What is the status of the Mumbai HVDC project?
A: The project is on track for completion between March 2025 and June 2025. We are progressing well both on the execution on the ground and the manufacturing of various components. - Nuguri Venu, CEO
Q: How do you plan to achieve the target of 10% operational EBITDA by FY25?
A: Our strategy includes improving revenue attrition, leveraging exports and services, and maximizing efficiencies in our operations. We are also focusing on pricing excellence and quality orders. - Nuguri Venu, CEO
Q: What is the current utilization level of your facilities?
A: Utilization varies by factory, ranging from 75% to 90%. New factories have lower utilization but are filling up faster. - Nuguri Venu, CEO
Q: What is the nature of the FX loss reported in the current quarter?
A: The FX loss of INR9.8 crores is mainly due to restatement of payments and accounting entries. - Ajay Singh, CFO
Q: What is the timeline for the execution of the STATCOM order received last quarter?
A: The STATCOM project is to be completed within 24 months. The first two quarters involve engineering approvals, followed by revenue recognition as the project progresses. - Nuguri Venu, CEO
Q: Can you provide a breakup of the current order book?
A: Approximately 25% of the order book is exports, and close to 9-10% is service orders. We do not provide a detailed industry-wise split. - Nuguri Venu, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
