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BSE Communication • Date: August 12, 2024 • Subject: Listing of security (scrip code 540136, symbol HPL) • Directed to: Manager of the Listing Department, NSE, Mumbai
Q1 FY25 Earnings Conference Call (August 7, 2024) • Host: JM Financial • Key Highlights: • Revenue from operations: ₹393 crores (22.5% increase) • Smart Metering segment growth: 35% • Gross margin: 35.7% • EBITDA: ₹56.13 crores (40% increase) • Profit before tax: ₹23 crores (doubled) • Profit after tax: ₹17 crores (145% increase) • Strong performance attributed to cost management and robust order book (87% in smart metering)
Management Optimism • Order Volumes: • Anticipated increase in smart meter orders despite current lower volumes • Recent large order of ₹2,100 crores from a single AMISP • Production Efficiency: • Improvements through automation and new production lines • Current debt-to-equity ratio: 0.76 • Lighting Segment: • Stabilization in sales post-price erosion • Growth expected from construction and infrastructure projects
Technological Changes and Pricing • Pricing Trends: • Initial decline in rates despite volume growth; now stabilized • Future Outlook: • Q2FY25 expected to remain stable; growth anticipated in Q3FY25 • Projected revenue growth: minimum 35% for the year, especially in smart meters • Sustainable EBITDA margin: 15-16% • Stable raw material prices with potential geopolitical volatility
Smart Meter Penetration and Strategy • Adoption Timeline: • Estimated 3-5 years for substantial smart meter adoption in India • Backward Integration: • Focus on local manufacturing of critical components to reduce import dependency • Order Execution: • Active supply of meters; completion of ₹3,700 crores order book expected in 24-27 months • MoU with Guangxi Ramway: • Aims to enhance local sourcing and supply chain efficiency
Applications of Smart Meters • Emerging Sectors: • Data centers, solar energy, smart cities, and railway systems • Benefits: • Reduction of AT&C losses and improved cash flow for utilities • Positive initial results from smart meter implementations in states like Bihar • Commitment: • Confidence in growth and meeting market demands through data utilization and smart metering initiatives
HPL Electric & Power Limited Q4 FY '24 Earnings Conference Call Summary
Financial Performance • Q4 FY '24 Revenue: Increased by 17% to INR 424 crores. • Full Year Revenue: Rose by 16% to INR 1,461 crores. • Profit After Tax (Q4): Up by 22% to INR 14 crores. • Full Year Profit After Tax: Increased by 44% to INR 44 crores. • EBITDA: Grew by 24% in Q4 and 22% for the full year.
Growth Areas • Smart Meter Sector: Significant growth and strong order book exceeding INR 2,000 crores. • International Expansion: Focus on expanding market reach. • Cable and Wire Sector: Anticipated growth driven by infrastructure demands.
Operational Insights • Production Capacity: Currently utilizing 70-75% for smart metering; expected to reach 1.5 crore units annually in 1-2 years. • Manufacturing Flexibility: Production lines can produce both smart and regular meters. • Debt Management: Increased debt due to scaling operations, but confident in reducing debt relative to revenue growth.
Market Dynamics • Revenue Recognition: Recognized upon billing to AMISP with no deferment. • Competitive Landscape: Quality and reliability of products are key differentiators. • Consumer Segment: Lighting faced challenges, but potential growth expected in the second half of the year.
Future Projections • Revenue Guidance for FY '25: Projected increase to around INR 1,800 crores. • Margin Expectations: Anticipated improvement due to strong performance in meters and switch gears. • Capex and Capacity Expansion: Gradual increase in smart meter capacity over the next 2-3 years based on demand.
Conclusion • The company is well-positioned for growth in smart metering and cable sectors, with a strong focus on operational efficiency and market opportunities.
HPL Electric & Power Limited Q3 FY24 Earnings Conference Call Summary
Financial Performance • Revenue Growth: 15% year-on-year increase to ₹1,036 crores for the first nine months of FY24. • Segment Growth: 28% increase in Q3 revenue from metering and system segment. • EBITDA and PAT: 22% rise in EBITDA and 57% increase in PAT.
Strategic Focus • Innovation and Efficiency: Commitment to smart metering solutions and operational efficiency. • Brand Enhancement: Plans to diversify products and expand market presence. • Advertising Spending: Currently at 1.5% of overall revenue, with increased outreach efforts.
Financial Health • Debt Management: Debt-to-equity ratio of 0.77; focus on cautious growth opportunities. • Production Capacity: Improving capacity utilization across seven manufacturing plants.
Order Book and Market Outlook • Significant Orders: Execution period for a ₹2,400 crore order expected to span 2.5 to 3 years. • Future Revenue Growth: Projected revenue growth exceeding 20% in FY '25 due to increased demand.
Production and Market Share • Annual Production Capacity: Approximately 1 crore meters, currently operating at 70-75% capacity. • Market Share: Historical market share of 22-25% in smart meters, with expectations to maintain and grow this share.
Challenges and Opportunities • Lighting Segment: Facing value erosion but optimistic for stabilization and growth. • Rooftop Solar Initiative: Prepared to support government initiatives for solar installations.
Questions and Insights • Capacity Expansion: Addressing potential shortfall in smart meter demand over the next three years. • EBIT Margins: Currently around 15%, with potential for improvement as smart meter share increases. • Tax Rate: Currently around 35% due to old tax scheme; MAT credits may extend utilization timeline.
Conclusion • Future Prospects: Confidence in meeting demand and enhancing production capabilities, with ongoing efforts to manage debt and improve financial metrics.
HPL Electric & Power Limited Q2 and H1 FY'24 Earnings Conference Call Summary
Conference Call Details • Date: November 9, 2023 • Moderator: Mudit Kabra (Elara Securities) • Key Speaker: Mr. Gautam Seth (Joint Managing Director and CFO)
Company Performance Highlights • Strong performance in energy-efficient products. • Focus on smart metering, switchgear, and wire & cable segments. • Partnership with Wirepas for smart meter communication. • Ongoing capacity expansions to meet demand.
Market Strategy • Targeting 25-30% market share in smart meter rollout. • Focus on manufacturing for Advanced Metering Infrastructure Service Providers (AMISPs).
Q&A Session Insights • Smart Meter Rollout Allocation: Majority of INR 25 crores for single-phase meters. • Export Exhibitions: Positive impact on customer outreach. • Revenue Growth: 23% growth in metering; steady growth in switchgears and wire & cable. • LED Lighting: Facing value erosion due to technological changes. • International Growth: Steady growth in Africa and the Middle East; pursuing international certifications.
Capacity and Technology • Current capacity utilization at 70-75%. • Anticipated improvements in working capital cycle and margins. • Future advancements in smart meter technology expected over 7-10 years.
Operational Insights • Pan-India operations with AMISPs; lag in orders from utilities to manufacturers. • Lead time for orders from AMISPs is typically 6-9 months. • Growth potential in switchgear and wire & cable segments due to infrastructure upgrades.
Installation Targets • Goal of over one million smart meters per month for FY'24, dependent on installation pace.
Conclusion • Call concluded with gratitude to participants and well wishes for Diwali.
HPL Electric & Power Limited Q1 FY '24 Earnings Conference Call Summary
Key Highlights • Date of Call: August 11, 2023 • Revenue Growth: • 9% year-on-year increase to INR 321 crores • EBITDA up by 6.3% to INR 40 crores • Segment Performance: • Metering & Systems segment grew by 20% • Significant project: INR 417 crore AMISP project supported by the World Bank
Order Book and Future Outlook • Current Order Book: Exceeds INR 2,000 crores • Growth Areas: • Switchgear, Wire & Cables, Smart Metering • Anticipated doubling of order book by FY '24
Smart Metering Focus • AMISP Initiative: • Focus on supplying smart meters • Hybrid payment model for better cash flow • Production Capacity: • Annual capacity of 1.1 crore meters • Potential for enhancements through automation
Financial Management • Cash Cycle: • Longer receivable cycles (5-6 months) in Metering & Systems • Improved cash flow expected with AMISP • Short-term Borrowings: • May rise temporarily but no additional funds needed for growth
Market Position • Market Share: • Consistent 20-25% share in smart meter supplies • Established relationships with multiple AMISPs • Pricing Pressures: • No intense pricing pressure despite competition
Revenue Projections • Metering Segment Revenue: • Expected increase from INR 600 crores to INR 850 crores this year • Potential growth to INR 1,100-1,200 crores in subsequent years • Return on Capital Employed (ROCE): • Improvement from 5% to around 9%, aiming for double digits
Performance Guarantees • Failure Rates: • Very low, around 1-2% • Performance guarantees last five years
Future Opportunities • Technology Compatibility: • Smart meters compatible with 4G and 5G • Export Opportunities: • Recognition of potential future exports
Government Initiatives • RDSS Scheme: • Anticipated smart meter orders under this scheme • Improved working capital cycle through secured payments
Conclusion • Optimism for Growth: • Encouragement for investor inquiries • Call Moderator's Closing: • Thanks to participants and management
Earnings Highlights • Date of Call: May 30, 2023 • Revenue Growth: 25% increase to ₹1,262 crores • Profit After Tax: 287% growth to ₹30 crores • Order Book: ₹1,550 crores, with over 80% in smart metering
Future Growth Opportunities • Focus on Smart Metering: Optimism about demand and growth in this sector • EBITDA Margins: Expected to maintain current levels with potential improvements in EBIT margins
Export and Competitive Positioning • Export Growth: Steady growth, particularly in the Middle East and Africa • Supply Delays: Experienced due to various factors • Market Position: Strong in metering and systems, driven by technology and R&D
Manufacturing Capacity • Sufficient Capacity: No major capital expenditures planned, routine maintenance investments will continue • Growth Expectation: Anticipates similar growth to the previous fiscal year
Consumer and Industrial Segments • Revenue Breakdown: 70% from consumer products, 30% from industrial products • Product Launches: Contributed to revenue growth across various verticals • Future Target: Double-digit growth for the Consumer and Industrial segment
5G Infrastructure and Orders • Projected Revenues: 100 to 150 crores over the next 18 months from 5G orders • Order Book: Executable order book of ₹1,500 crores for the next two years
Margin and Revenue Projections • Metering Segment Growth: 30% growth, with margins stabilizing around 14-15% • Revenue Mix Shift: Anticipated 55% from metering and 45% from consumer and industrial segments • Overall Revenue Increase: Expected growth of about 20% this year
HPL Electric & Power Limited Q3 FY '23 Earnings Conference Call Summary
Financial Performance • Revenue Growth: 31% year-on-year for the first nine months, totaling INR 900 crores. • Q3 Revenue: Increased by 8% to INR 302 crores. • EBITDA: Rose by 41.26% to INR 112 crores, with an EBITDA margin of 12.48%. • Segment Growth: • Metering and Systems: 60% year-on-year growth. • Consumer and Industrial: 8% growth.
Future Outlook • Smart Meter Market: Optimistic growth anticipated. • Order Book: Healthy order book of INR 879 crores. • Growth Projections: Confidence in achieving double-digit growth in Consumer and Industrial segments.
EBITDA Margins and Projections • Current Margins: • Consumer and Industrial: 11-12%. • Metering: 13.5-14.5%. • Impact of Smart Meters: Initial EBIT margins may increase, but overall margins could be affected.
Capacity and Production • Current Capacity Utilization: Operating at 65-70%. • Automation Plans: Increased automation in manufacturing processes. • Production Growth: Expectation of continued growth in production and sales over the next 15 months.
Revenue Trajectory • Q3 Revenue Delays: Possible delays due to pre-dispatch processes, but internal targets expected to be met.
Metering Segment Insights • Production Capacity: Capacity to produce 9-10 million smart meters, currently at 65% utilization. • Working Capital Cycle: Traditionally high but expected to improve with AMISPs financing smart meter projects.
Pricing and Cost Structure • Smart Meter Costs: Generally 3 to 5 times higher than conventional meters. • Cost Breakdown: 50-55% of total AMISP project costs attributed to meter supply.
Order Book and Market Share • Current Order Book: Approximately INR 879 crores. • Growth Expectations: Anticipated over 20% growth for FY 2023 and similar for FY 2024. • Market Share: 20-25% in the smart metering segment, targeting tenders worth INR 10,000 to 15,000 crores.
Closing Remarks • Management Commitment: Emphasis on opportunities in smart meters and consumer electrical business. • Encouragement for Engagement: Attendees invited to reach out with questions.