Ladies and gentlemen, good day and welcome to Hitachi Energy India Limited Q4 FY25 Analyst Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. N. Renu, MD and CEO, Hitachi Energy India Limited. Thank you, and over to you, Mr. Venu.
Thank you very much. Good afternoon, everyone. Thank you for joining us for the Analyst Conference Call. I hope you're all doing well. Yesterday, as you know, we announced our results for Q4 and the full year 2024-2025. In the next 20 minutes or so, I will take you through our performance during the period ending March 31, 2025. We have uploaded the slide deck. For your convenience, I will read out the slide numbers. I have with me today our CFO, Ajay Singh, our General Counsel and Company Secretary, Mr. Poovanna Ammatanda, and our Head of Communication, Mr. Manashwi Banerjee. As always, you can follow the presentation on the webcast by downloading it from the stock exchange. I will mention, as I said, slide numbers as we proceed.
At the onset of the fiscal year, our focus remained on balancing the operational complexity and efficiency to preserve Hitachi Energy India's growth momentum. I am happy to inform you that we have sustained growth momentum and recorded the highest-ever order backlog of INR 19,245 crore at the year-end, 31 March 2025. Our strategic approach and adaptability to the rapidly changing global economic landscape has helped us to sustain growth momentum through the financial year. FY 2024-2025 was a special year for us as the company also celebrated its presence of 75 years in India. At the fag end of 2024-2025, we initiated and closed our first qualified institutional placement, QIP, which I will discuss later. As we step into the new financial year, a more robust, comprehensive, and collaborative approach is required to realize the sustainable growth for the company in the future.
This aligns with our parent company, Hitachi's vision of transforming the group into true One Hitachi. With this, you will see more synergy and collaboration among the group companies. It will enable us to provide the highest value to our discerning customers and partners by offering an expansive portfolio under One Hitachi. If I move to slide number three, which is our license to operate, safety, integrity, and quality constitute our license to operate. We never look the other way when we have to deal with this. These are the key fundamentals of our business practices and operations. Our focus on safety has helped minimize the risk of harm and equipped us to address any untoward incidents effectively. Our continued efforts towards strengthening our safety practices have helped us reduce the frequency of injuries over the years.
FY 2024-2025, we saw a decline of 18% of such incidents compared to the last year. With safety woven into our operational fabric, in March 2025, we celebrated the 54th National Safety Week across our offices and factories. The celebration included a mix of exciting employee activities, including emergency response training, safety drills, engaging employees across our project sites, factories, and offices. It is noteworthy to mention that our discerning customers have acknowledged our constant endeavor towards safety. During the quarter, we received several appreciation letters and awards for safety from our customers from different sectors: industry, renewability, utility, data centers, etc., and that. Moving to slide number four, this is also a very important slide for us at Hitachi Energy. Our commitment to environmental conservation is well-defined and a clear KPI for our business leaders.
The company's business strategy encompasses conserving the environment and minimizing the impact of its business on the planet. We strictly adhere to a responsible approach in delivering our solutions to propagate our purpose of advancing a sustainable energy future for all. For 2024-2025, we have taken definitive measures that align with our 2030 sustainability goals. Retrofits to optimize energy usage, transitioning to energy-efficient technologies, along with operational discipline, have helped us to reduce energy consumption by 6% reduction in total energy consumption for every core revenue. We have also installed 10 rainwater recharge wells at the company's manufacturing facilities in Maneja, Halol, which have helped to reduce freshwater usage by 4%. By following sustainable solutions for hazardous waste disposal through recycling of waste and considerably reducing total waste disposed through incineration and landfill, we have ensured a 17% reduction in our overall waste disposal.
On the climate front, we have added 1,240 kilowatt rooftop solar energy to our existing 291 kilowatt capability, and we maintain 100% fossil-free electricity across all units. Moving to slide number five, our focused strategic approach, coupled with our strict adaptability to the ever-evolving global economic landscape, has empowered us to maintain our growth momentum. In the quarter under review, we achieved a 56% year-on-year order growth amounting to INR 2,190.9 crore, led by energy transition and also due to the industry's cyclical nature. Revenue is also up by 13% year-on-year to INR 1,921 crore for the quarter, based on a solid order execution and focus on continuous improvement in overall operational efficiency. On a strong execution and a better product mix, profit before tax and profit after tax were up by 62.1% year-on-year at INR 246 crore and 61.8% year-on-year to INR 183.9 crore, respectively.
The orders we received this quarter followed from multiple segments, wherein transmission and renewable led the charge, redoing the focus on modernizing the grid to ensure a reliable supply of clean electricity across the length and breadth of the country, followed by orders from industry and the rail and metro segment. Some of the notable orders include the first made-in-India variable shunt reactor for the National Transmission Utility, a large Statcom order, 220 kV AIS substation for 700 MW wind farm, automation of five substations, and 128 traction transformer for railway, to mention a few. At the end of March 31, 2025, our order backlog stood at INR 19,245.9 crore, providing revenue visibility for several quarters going back. If I move to slide number six, our focus on continuous effort towards improving the overall operational efficiency has helped us maintain sustainable growth across parameters throughout the year.
The same is quite visible in our performance of FY 2024-2025, which surpasses last year, that is 2023-2024, in all parameters. For the full year, orders reached a record of INR 18,173.8 crores, as you can see from the slide, up by 228%, while revenue stood at INR 6,475.4 crores, up by 23%. Both PBT and PAT also significantly up by 133%, and our EBITDA margin has improved by 250 basis points compared to the last year. As I spoke in the beginning, FY 2024-2025 was a special year for us, from celebrating our 75 years in India to multiple key milestones. This year, we backed a large HVDC order, very clearly showing our technology prominence in our HVDC in India and worldwide. We have multiple expansions at our various facilities, especially in the transformers, interrupters, transformers, and valves, also our insulating materials, etc.
Also, we successfully concluded our first fundraising initiative through qualified institutional placement, which raised INR 2,520.82 crore. Moving to the next slide, slide number seven, and I know that you know more than me on this particular slide, but let me give my view on this. As per the Organization for Economic Co-operation and Development Report, OECD, the Indian economy will remain one of the fastest-growing major economies worldwide. The country is expected to grow at 6.1% for the fiscal year 2025-2026, with retail inflation dropping to a six-year low in March 2025. You got the latest data even lower, gives a strong growth signal. While India is comparatively less exposed to the reciprocal tariff, of course, we really have to wait and see how this will pan out to be. It will impact various industries whenever it happens.
We have to keep a constant vigil and devise a mechanism to minimize the same and retain the exports growth momentum clocked in the previous quarters. While the geopolitical uncertainty posed some challenges, we expect the growth momentum in the energy sector to continue. The government reiterated its commitment to the same by increasing the FY 2025-2026 budget for the energy sector to INR 26,550 crore compared to the INR 19,000 crore of the previous year. With India moving fast to meet its commitment of renewable energy installed capacity, the interstate transmission system expects close to an INR 1 lakh crore investment over the next two financial years. Furthermore, the flow of more foreign direct investments, growing investment in the Indian data centers for the next couple of years, and modernization of Indian railways will add more steam to the energy sector's growth engine.
Also, the government's effort to enhance the financial viability of power distribution companies is a positive step that will go a long way in strengthening the country's energy ecosystem. Moving to slide eight, at Hitachi Energy, we constantly endeavor to advance a sustainable energy future through all our projects. During the quarter ending March 31, 2025, we commissioned several key projects for the renewable transmission industry segments. I would like to highlight a few of them. We commissioned 400 kV substations for the 500 MW solar Buddhi Sith project in Rajasthan. Two transmission projects, one for establishing 220 kV, 33 kV, and 130 kV substations for the development of ISPS work in Madhya Pradesh. The second one is in Bhutan, for which we provided 60 kV GIS, 33 kV GIS, etc.
The last one, we also commissioned a 220 kV GIS project in Bengaluru for a leading battery manufacturing company in that. If I go to the next slide, in the quarter of January-March 2025, we have several impressive achievements. We tested our first VSR, that is a variable shunt reactor, that was designed and manufactured at the power transform factory with our focus on enhancing the overall efficiency. We have some significant extension and expansions, a big extension of pressboard and insulation kit manufacturing at our Mysuru facility. As you know, we are an expansion-free as and when a particular expansion is complete, so then we are opening it out to that. We also had a warehouse expansion at the power quality factory in Dabholpur, Bengaluru, to help streamline inventories and exports, etc.
We value our partners and customers to further strengthen our relationship and exchange ideas on the latest industry trends and development. The company has conducted several technical training sessions and factory visits for them. I'm also delighted to inform you that our service team has signed a first service level agreement with the world's largest data center provider for the entire transformer fleet of various ratings of a service agreement in that. Moving to slide number 10, as a pioneering technology leader, we always ensure that we present our views at various forums to create a conducive policy environment for the entire energy sector. This quarter, we also made our presence felt at key industry events and exhibitions such as India Energy Week, the Karnataka Global Investors Meet, Electrona, etc., and that. We continue to do so in that.
Moving to slide number nine, sorry, slide number 11, to provide some more color on our orders received this quarter, transmission and renewable led the charge, with an increasing focus on modernizing the grid to ensure a reliable supply of green electricity across the country. This was followed by orders from industry as well as the rail, metro segments. The transmission segment saw a 91% growth surge, whereas the renewable saw a year-on-year growth of 386%, and railways and metro is up by 24% year-on-year. However, the data center and industry saw a year-on-year decline of 56% and 33%, respectively. We believe this is a seasonal decline and a timing factor. With the aggressive push for a building data center network and electrification of industries in the country, we expect a significant demand from these segments in the coming quarters.
On the right-hand side, you see the order mix segment-wise. The product took the lead. Sector-wise, utilities are clearer winner. On the channel side, direct end users emerged at the top of it. This is of a whole financial year, the previous one more of a quarter one. If you see the segment-wise growth through the financial year, the transmission emerges again as the front runner, 750%. Industries, on a year-on-year wise, you see an industry's growth, whereas in the previous quarter, you find a decline. Data center, again, from a year-on-year basis is the thing. Railways and the metros, while in the previous quarter was up, but on an overall year-on-year basis is down, and the renewable is up in that.
If I move to the next slide, service slide number 13, exports and services continue to sustain their growth momentum, contributing significantly to the overall order book. Services saw almost 60% year-on-year growth, and exports recorded a significant year-on-year growth of 77%. In terms of contribution to total orders, exports contributed almost 37%, excluding HVDC, and services contributed around 7.4%. It also shows our constant endeavor towards strengthening our service and export portfolio. Service is a key. We have been explaining this also key to our long-term partnership collaboration with all our customers. Some of the orders in this segment include grid compliance, power systems, renewable studies for utilities, digital service-level agreements, SCADA upgrades, replacements of equipment, annual maintenance contracts, export orders received from across the continent, South Asia, Europe, and Africa on that.
Furthermore, foreseeing immense potential in service and maintenance, the company has, you know, introduced its service business unit. That is the fifth business unit from April 1, 2025. The unit will provide services to various sectors throughout the asset lifecycle, from installation to sustainable end-of-lifecycle solutions in that. So with that, let me hand over to our CFO, Ajay, to take you through the next two slides. Thank you. Thank you, Venu. And good afternoon to all of you. I hope all of you are doing well. You see our constant effort towards improving overall operational efficiencies has helped us in maintaining growth momentum in quarter four, 2025. During the quarter, the company reported Y-on-Y order growth of roughly 55.57%, with the INR 2,190.9 crore. And the revenue went by 13.1% Y-on-Y. It is INR 1,921.9 crore.
This is all because of the result of the solid order execution and focus on the continuous improvement in the overall operational efficiencies. Rising on the strong execution and the better product mix, our profit before tax increased by 62.1% year-on-year at INR 246.7 crore. Profit after tax also increased by 61.8%, stood at INR 183.9 crore. Operational EBITDA you see for the standalone quarter four, it stood at INR 235.6 crore, basically resulting in a double-digit operational EBITDA of 12.3%. The same emphasizes the company's constant endeavor towards improving margin and strengthening overall operational efficiencies. As we close March 31, 2025, the order backlog stood at INR 19,245 crore, and this provides visibility of the upcoming quarters. If you go into the next slide, here I would like to basically share more details about the quarterly performance. If you see the total income is INR 19,021.9 crore.
This includes exchange gain of INR 19.9 crores. Our metal cost is 61.6%. Personal expenses are 7.5%. Other expenses basically is 16.6%. Depreciation is 1.2%. Finance cost, if you see, is 0.3%. It has come down. As of now, we are not having any short-term borrowings at the company level. All these efforts really helped our profit before tax to be 12.8% and PAT at 9.6%. Little bit of a if you go extreme right and see on the year-end numbers compared to the last year to this year, if you see our revenues stood at INR 6,442 crores and roughly 22-23% growth compared to the last year. Our margin, if you see profit before tax, is 8% compared to last year, 4.2%, and PAT at 6% compared to 3.1%.
I would say overall, the overall performance, in my view, was pretty good in this particular quarter and in the year. Over to you, Venu. Thank you very much, Ajay. If I go to the last slide before I hand over back to the operator for the Q&A. As we close the final quarter of fiscal year 2024-2025 and step into the new financial year, our focus remains on carrying the growth momentum into FY 2025-2026. The company remains steadfast towards maintaining its leadership in core segments, along with establishing and strengthening our presence in industries, fast-emerging segments like data center, energy storage, etc. We continue to accentuate our export capabilities and digital prowess to accelerate our growth further.
With our new service BU in India being fully functional from April 1, 2025, the focus will be on strengthening the segment and exploring the tapping into potential opportunities and offering cross-BU offerings to our customers. We remain committed to adding more vigor to improve our overall operational efficiency and boost productivity and quality, especially under the umbrella of One Hitachi. The quest to leverage the largest ever backlog for revenues and margin acquisition remains one of our key priorities, along with systematic focused approach for the optimal utilization of the raised capital. Furthermore, our efforts to build our capabilities will continue to meet ever-growing energy requirements, both domestic and global. Most importantly, there will be no compromise regarding our license to operate, safety, integrity, quality in any of our spheres of work.
To stand the test of time and meet energy requirements today and in the future, we'll continue to reskill, upskill our entire employee workforce. We continue to build capacities, not only our factories, our project sites, also for our engineering capabilities, but also our future talent required for our growth. With this, I close my presentation and request the operator to open the channel for the questions. Thank you very much.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.
The first question comes from the line of Mohit Kumar with ICICI Securities. Please go ahead.
Yeah. Good afternoon, sir. And congratulations on a very strong order book and a great set of results. Thank you. My first question is, is it possible to share the HVDC order book at the end of FY 2025? Sorry? What was the question? Is it possible to share the HVDC order book at the end of FY 2025? HVDC order. Order HVDC. Okay. So normally, we do not give you that. We had only booked one HVDC project last year in our order backlog. So we have booked one HVDC project. The second HVDC project which we announced, that will come in this quarter because we have concluded the contracts in the first week of April. Understood.
My second question is, have you experienced QIP-related expenses in the quarter, or will it impact Q1 FY 2026? Poovanna? Yeah. Yeah. So this is Poovanna here. Thanks for the question. QIP-related expenses are estimated separately, which will be taken out of QIP-related proceeds. That will be paid separately. That will not impact operational profit. It will not come through P&L, not pass through P&L. Is that right? I understand. Yes. That's right. My last question, sir, in the cash flow, there is a decrease in other financial assets, and there is a decrease in loans and advances, right? There is an increase in other liabilities. This increase in other liabilities, is it related to mobilization advances? What is the reason for decrease in loans and advances? Can you just? Maybe Ajay, will you take this question, Ajay?
Increase in other liabilities, basically, it is from the advance collections that we have got. That is what mostly it is because of advance collections that we are getting. I said decrease in loans and advances? Decrease in loans. Let's say earlier, we are having the short-term borrowings. As I told you in the beginning, we are not having any short-term borrowings right now. We are debt-free since last quarter. Yeah. Yeah. Understood, sir. Thank you. All the best, sir. Thank you.
Thank you. Next question comes from the line of Umesh Raut with Nomura India. Please go ahead.
Hi, sir. Good morning. Sir, my first question is pertaining to incremental opportunities on HVDC side. As we are hearing, there are three packages which are lined up, and especially one is on the BSC-based technology, which is Cloud as Outdoor Parts.
Any update over here, any indicative timeline by when you expect finalization of these orders? Subsequently, I also want to know how your execution would look like from the projects that you have won on the HVDC side in the last two quarters.
Yeah. On the timeline, as we are saying that in our view, one if not the second one, we may get finalized by the second half of this fiscal year. When it comes to the technology-wise, we have explained also for Hitachi Energy, we invented this HVDC technology 70 years back, started with LCC. Thereafter, we moved to BSC technology. Throughout the world, we have close to 150 gigawatt worth of installations, both combined LCC and BSC technology. We are agnostic of the technology.
Just for information, the project which we are almost in the final stage of completion, which is Mumbai, which is a BSC technology. Whatever the customers want, we have the technology, and we have the capabilities. We have also done a lot of localization of those things in that. We will do that as and when it gets mature. When it comes to the execution of the first, the two projects which we have in our one project is in our portfolio end of March. As I said, second project has come into which we already announced to all of you that has come into our books in the first quarter, which will reflect in our first quarter results. These projects are a completion period of 48 and 54 months. 48 is a bipolar one. 54 months is a bipolar two.
Normally, the revenue for this will be very slow in the beginning with the low single digit. Then it will move up to the second year, third year in a big way. Okay. Is it fair to assume that initial two years will have about one-third of execution and maybe subsequently later two years will have about two-thirds of execution coming in? We will not be able to give you that. As I said, initially, the first year is a low single digit. Low single digit %.
Okay. From a capability point of view, I just wanted to understand how many projects on the HVDC side you can execute simultaneously in a similar time frame.
As I said, right now, if you ask all HVDC project portfolio, you can look at it, at least end of 31 March, we have three projects.
We have a Mariner's Link project. We are supplying portly. Then we have a Mumbai project. Then we have other projects we got. It is not about how many we can do it. We are flexible. We are agile. We are getting up the expansions in anticipation of that. As and when we see more things like that, we also expand not only our factories, but also our execution capabilities in that. Having said that, we look at every project as a new project. We look at it on a risk-reward basis. Then we take a decision based on each and every project.
Okay. Sir, I have one basic doubt. When you mentioned that certain technology is getting fully absorbed in a particular year, what do you mean by this? What did I?
When I refer to your annual report, there are mentions about various components or technologies getting fully absorbed in terms of technology transfer. I do not know which report you are referring to. When I refer to annual reports of your company, you always mention that certain components or technologies got absorbed during that particular period. For example, in the FY 2024 annual report, you mentioned that BSC-based wall technology version G5 got fully absorbed in India. Does this mean that you can manufacture these walls locally in India? Yeah.
Yeah. Any new technology comes, so we always bring those technology and localize the technology here and there. That is what we meant in that. Okay.
Based on current capability, how much of indigenized or localized value addition can we do in case of HVDC project execution?
We have been giving, we have a huge whatever we today, it's really not HVDC, but all the portfolio put together. Whatever we're producing globally, more than 80% we produce locally here. That's what is the thing. The value add is different and what we produce is different. For example, transformer you take, we don't have a CRGO here, right? We have to import it. If you take the value add locally, it doesn't come into picture. We have end-to-end manufacturing of the transformers, just to give you an example of that.
Thank you. Mr. Raut, please rejoin the queue for more questions. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Bhalchandra Shinde with Motilal Oswal AMC. Please go ahead.
Hi sir. There is one concern in most of the investors.
We are getting so many HVDC orders, but after that, relatively order inflow growth may taper out. If you can provide insight at that, what kind of order inflow growth one should see over next in a longer period of time, especially when the kind of HVDC CapEx is happening globally and within India? I think our whole strategy has been our portfolio, be it the product systems, services, software, is the bridge between the generation and the consumption.
Okay? HVDC is the one part of our portfolio. We have four business units. HVDC is one of them. It's not the only one. We are not building the strategy only based on the HVDC. HVDC, for sure, it's coming in a big way. We have the full-fledged transformer portfolio. We have a high-voltage portfolio. We have grid automation.
Then the grid integration, which includes the Statcoms and HVDC exercise. Our view, we have been saying very clearly for the energy transitions requirements, especially on the targets set by the government, it needs a lot of technology to come in. Technological product systems need to come in. For example, you need to have more HVDC projects, more energy storage, and more 765 kV transmission, and also some 1200 kV transmission line also will come in. All of them are enablers for us, and our portfolio will go into that. That is the one aspect. Then we come to the edge of the grid expansion. For example, data center, energy storage. Here again, we have the complete portfolio. It goes on that. I am not saying that just because HVDCs will clutter after some time and then our order flow is there.
We are not seeing that scenario at this point in time. We are looking at short-term to medium-term basis, and we see that market is very robust. The tailwinds are supporting. That is the reason we are expanding it. We are expanding our manufacturing capabilities, capacities in all the four business units. Got it.
Got it. In the margin trajectory-wise, sir, we showed relatively thinner margins in first half, and we improved on margins in the second half. Similar kind of a trend one should see in FY 2026, or overall execution front will be uniform?
See, on an overall basis, quarter on quarter, the mix can differ. Things can differ. Generally, we see a slow start in the first quarter of the financial year, which will pick up because many of our customers are also working towards their budgets, etc., and that.
What we said last time is that we will reach a double-digit margin in this quarter. Our thing is that overall, year-wise, we will maintain the double digit if it does.
Got it. Got it. Thanks.
Thank you. Next question comes from the line of Nikhil Bhandari with Goldman Sachs. Please go ahead.
Yeah. Hi. Thank you, sir. Congratulations on the great set of results. Can I ask the margins profile typically for the HVDC projects versus your base business? If you can provide any kind of color or range, that will be pretty helpful.
Thank you, Nikhil. Unfortunately, we do not give a margin profile at a project level in that. As I said, HVDC for us is one of our projects only. It is like any other project. We do not do that.
All I can tell you is that the margin profile of these projects is not margin profile. The risk profile of these projects is better than what we used to see previously. For example, we used to have a complete turnkey, the civil construction, etc., and that. Here, our things are mainly engineering and supply of the products and commissioning of the products and ensuring that the system works.
Understood. Thank you for that. Just a follow-up question to your capacity or bandwidth constraints for taking more HVDC projects. You mentioned that's quite dynamic, and you can probably operate multiple projects. What could be bottlenecks or constraints if you were to think as a risk in terms of taking multiple more projects from here on the HVDC lines?
Any thoughts on what could be the potential constraints for you to take, let's say, another two or three projects in the next one to two years?
Again, it depends upon how these projects will be stacked up together in a particular timeline, etc. Those things will be there. As I said, we are a global company, and our supply chain is global. Depending upon the need, we can always see that if our factory in one particular component manufacturing is full, we can always look at where else we can source it. Those are the flexible options available for us. With that, we will really look at exploring that to take more projects, whether it is HVDC, whether it is supplying a transformer or many other aspects of that.
Got it. Thank you very much. Thank you. Thank you.
Next question comes from the line of Mahesh Bendre with LIC Mutual Fund. Please go ahead. Hi sir.
Thank you so much for the opportunity. Sir, we have an order book of INR 19,000 crores. When will the execution pick up? I mean, when will execution peak, is it in 2026 or 2027 out of the current order book?
No. Order book is ongoing, right? For example, last year, based on our order backlog, we have improved the revenue by almost 22-23%. The 23% higher has come from the existing order backlog in that. We see that most of the revenue will come from our existing order backlog this year, and some of the things will spill over into the next years from that.
My question was out of 19,000 crores, whether the majority of this will get booked in the current year, that is FY 2026, or is it in FY 2027?
No. If we're talking about revenue, I think we will not see, let's slightly address your question differently. Other than the HVDC, the rest of the things, the order to the revenue cycle, depending upon the thing, anywhere between three to six months to goes up to 18 months, right? If it's a large transformer or large GIS, etc. That's the thing in that. If you have an order, then you can say that from three months to 18 months is what you can convert that into revenue.
HVDC, I told you, it takes a long time, and it has a 48-month completion period to one part of the project, and 54 months is the remaining part of the project. That will take longer time. That will not happen in the same way as I described for the rest of the portfolio. Sure. Last question from my end.
Sir, globally, also, there is a shortage of transmission distribution equipments. Given the strong demand in domestic market, is there any limitations on us in terms of taking export orders in the near term?
No. We do not have any limitations on that. As I told you, our exports last year, all of fiscal year, if I remove the HVDC, is in 37% of things. Exports have grown year on year from last year. In absolute value, it has grown, and the percentage-wise also.
Having said that, our pipeline in the domestic market is very strong. Our pipeline from the renewable, pipeline from the transmission, pipeline from data centers, pipeline from many other sectors where we are working on, that is quite strong. Our focus always, I have been saying this, and I continue to say, our focus is to address our domestic market first, and then we go to the exports.
Sure, sir. Thank you so much, sir.
Thank you.
Thank you. Next question comes from the line of Harshit Patel with Equus Securities. Please go ahead.
Thank you very much for the opportunity, sir. My first question is on our CapEx. You have talked about investing close to INR 2,000 crore over the next four to five years. When I see our FY 2025 CapEx, that number is close to INR 130 crore.
From here on, will we step up our CapEx to maybe INR 400-500 crore per year kind of a level?
Yeah. I think yeah, go ahead, Ajay. Yeah. Thank you for the question. Rightly so. In this year, we have done our QIP, and we have already declared that we'll be spending across INR 2,000 crore in a span of four to five years. That's what I'll say. What we have done in this year, obviously, in the next few years, it will be, let's say, 4X kind of thing, 4X-5X kind of thing. That is what we see at the moment, and our drive will be in that direction only. Yeah.
Could you share what kind of product groups or solution groups that we will see? I think one clear area would be investing towards these incremental HVDC-related factories.
Apart from that, what kind of investments we would see towards maybe Statcom, the higher range of AIS, GIS, transformers, anything that you can share on that front would be very helpful.
This investment, we have already spoke about earlier also. It is widespread. It will be in all our business lines, expansion of the business line, transformers, high voltage, grid automation, so on and so forth. Understood, sir.
Sure. My second question is on exports. As you have explained, our exports and even the share of exports has grown very sharply in FY 2025. Are there any more geographies or product groups that have been allocated to us by the parent? Are there any more products where we have become or we will become a global feeder factory for the group? Any outlook, if you can share on that front, that will be very helpful.
Our export strategy, as I was explaining to you also very well, that is a three-pronged strategy. First, we have some of the products with the global feeder factories, and that is the same. We have not added any new products into that. The second one is we have been allocated certain markets, and those things are dynamic as and when we are getting new markets, so we will be doing it. The third one is we do have feeder factories, and then based on the feeder factories, we are supplying our components into that. This is how the three-pronged strategy works. The scope, as I said, our exports are not at the cost of the domestic market. If we have more slots, we will definitely have opportunity for us to grow in exports.
Sure. Thank you.
Thank you. Mr.
Patel, please rejoin the queue for more questions. Next question comes from the line of Renu with IIFL Capital. Please go ahead.
Yeah. Hi. Good afternoon. And thank you for the opportunity, sir. I have a few questions. First, just trying to understand that in the last two quarters, while we have seen margins come into double-digit levels, even if we add that to the effect of commodity gains, it's still in 13% levels, which is significantly lagging other peers who are, in terms of their performance, mid-teens to 20% range. Just trying to understand what is pulling down the margin mix for Hitachi versus the other peers in the current business environment, despite the execution of high-margin HVDC, BSC that we're doing for them. That's the first question.
Yeah. So thank you for your question, Renu.
I think we have also done our own analysis of that, so I don't want to make a comparison with the competition. Our margins are coming in line with our strategy, and it's coming out. We have been saying last two years, it's not that we take a dip in one year and then start doing that. That's not our strategy. Our strategy is a continuously sustainably growing thing. That's exactly what we said. We have said two years back that we'll reach the double digit, and we have reached the double digit. We said on a year-on-year basis, we sustain this. It will also probably improve going forward. Okay. Even if the market is giving opportunity, we may not be very excited to grab better profitability or profit from. We will also, at the same time, invest in our future.
Whenever we are looking at it, we are not looking for short-term gains. We are looking for a long-term. As I said, our focus is the domestic market. We continue to serve our domestic markets, and that's where our thing is at.
Got it. The second is, do we have any updates? Probably I might have missed it out. Do we have any updates on the electrical packages related to the bullet train? Are we still expecting something from it, or probably we are out of the race for those orders?
No. I think it's getting delayed. That's what I understand. It's getting delayed right at this point in time.
Are there any particular timelines for fiscal 2026, or probably it's difficult to put anything on paper right now?
I think it should happen in this fiscal year, so we are not sure when and how it will happen.
Got it. Last bookkeeping question on slide 11 of the presentation. The segment mix numbers for the quarter seem to be backdated for fiscal 2024 and 2023 and not updated for 2025. Can we have the updated revenue mix between utilities, mobility, and industry?
Sure, sure. We will send that.
The numbers are, the year is. Okay.
The numbers are correct? But the numbers are correct. Okay. The numbers are correct. The year is wrong. Okay. Okay.
That is not updated. Got it. Thank you and best wishes to you. Thank you.
Thank you. Next question comes from the line of Ashwini Sharma with MK Global Financial Services Limited. Please go ahead.
Hi sir. Good afternoon. Thanks for the opportunity.
Yeah, the first question, if you can give us some idea on current tender pipeline, X of HVDC, how is that shaping up?
No. We do not normally give the value of the pipeline, but our pipeline is quite robust compared to what it was one year ago and one year now. Excluding HVDC, the pipeline is very robust.
Okay. The second question is that as we move towards execution of these HVDC orders, just wanted some idea on the working capital requirement. Is it different from the base orders or any inputs in that?
No. Maybe our CFO, they will also join. As you know, these are quite large HVDC, large projects, right? We need to be ready to manage the working capital whenever it is required, any particular part of the project cycle. That is where we are looking at it, Ajay. Yeah.
It is right, sir. Being a big project, initially when we start, it will start with the low working capital requirement. But once we pick up, maybe in the year two, the working capital requirement will be more for sure. For that, already we are all equipped, and we are having a plan in place.
Sure, sir. Thank you. Those were my questions.
Thank you. Next question comes from the line of Baracha with Ask Investment Managers Limited. Please go ahead.
Yeah. Congratulations on good outcomes. Thank you. Do not regard my question as a bit of a spoiled
sport. I'm afraid to say, of course, the performance is robust in financial terms. I would say the size of the order book, strength of the opportunity, all are more in the external segment. It is external opportunity, which is propelling us.
When I look at internals of the firm, the innards of the firm, some of those questions came from the earlier participants about the margins. In a business where demand is robust, we believe that we are technologically, in terms of quality of engineering, we have superior solutions. We also have a large business size. Therefore, in a business where gross margins are still at a very healthy 40% level, our operating profit margins are just over 6.5% in the year of 2023/2024 and just a little over 9% in the fiscal year 2025. I'm unable to understand why these are so poor. That means our internal costs are too high, or maybe our methods, processes, re-engineering, something. I'm afraid to say it doesn't add up.
No. Thank you for your question. Maybe I'll ask our CFO, Ajay, to talk and I'll answer. Yeah.
Thank you for the question. As you see, if you see our cost structure, if you see, you rightly mentioned our gross margins are hovering around 38%-40%. The expenses also, if you see, compared to last year, just compared with last year, our personnel expenses, for example, compared to last year, came 9.3% to 8.5%. The other expenses also are hovering in the same line. The depreciation finance was to us, it is all consistent. It is only with the kind of product mix and future revenue growth that we are having, where coupled with export and service will be whatever we are committing and whatever we are delivering will be moving in that direction.
No. I would say, Mr. Renu, this is not a finance question. I would say this is a business question.
He answered about depreciation and finance cost, but they sit after the operating margins, not before.
I think let me probably, as I said, that's why I said. When I told you, Ajay will add, and then I'm also going to top it up on that. So Mr. Shah, what we are looking at, I've been also telling you consistently, we are not looking like I don't want to make any comparison here. There are other companies who compare. They're also making losses in the two, three years. We are a consistent company. We wanted to build a company in a very long-term sustainable growth, both growth into the top line, growth into the bottom line in that. Some of the projects we look forward, big projects, we need to start working on those things much ahead of the things, which may also probably incur the cost.
All those things will be also required in addition to the technology, which is very important. One of the reasons why we are here, we are able to compete and beat others and get the orders is because we are doing a lot of localization and bringing the technology and localization. All those things will pay at one point in time. Right now, as I said, we are in line with our strategy. We are not moving. We were told two years back, we enter double-digit margin, we grow ahead of the market, and we expand our things into geographical thing as well as high-growth segment. We are on our schedule ratio. You see here what we are saying, we are doing it.
Thank you. Mr. Shah, please rejoin the queue for more questions. Next question comes from the line of Amit Aghicha with Edge Wealth. Please go ahead.
Thank you for the opportunity. Am I audible, sir?
Yes.
Sir, what is the growth outlook in data center, and how are you positioned versus peers?
Data center is one of our key growth segment, and we call it the high-growth segment. We are very well positioned. We have a strategic approach on that. We do a lot of long-term deals with some of the hyperscales, both global hyperscale, local hyperscales. We have multi-year projects in that. That way, one out of the three data centers today is powered through our integration solutions in that. We are well established. We are establishing. We are driving even more to offer our products and portfolio in that.
Question was like, what is the addressable market size for services in India, and how is the new business unit expected to scale in 2026/2027?
This is also we have been telling previously. Our addressable market, we have an INR 60,000 crore worth of installed base in India since the last 25 years we have been doing it, right? We saw that our addressable market, our potential orders, not addressable market. This whole INR 60,000 crore is addressable market, but everything will not come as a market, right? We said we have a potential of addressable future addressable market is in the range of INR 2,000 crore per year. Okay? Our orders are in the ballpark, in the plus-minus in that range. That is what we are looking at in that. Right now, we are on INR 500-600 crore of our orders. Our plan is to take it over a period of time, INR 2,000 crore orders. It will not happen overnight, but it will take three to four years. We are productizing.
We are offering digital offerings to our customers, both IT, OT combinations also we are looking at. As we speak, we are doing a lot of pilots with many of our industrial customers, data center customers. Some of the data center customers are looking forward for providing the lifecycle things. All those things will come into that. It will not happen again overnight. It is a three- to five-year journey.
My last question is like, how will we be using the QIP proceeds of INR 2,500 crore plus? Are there any inorganic opportunities in sight?
Yeah. I think QIP proceeds we talked about very clearly. Two-thirds of that we use in our expansion, CapEx. The rest 25% is our corporate usage. Yeah. 25% is our corporate usage, and 10% is working capital. Having said that, we are actively looking at some of the things.
Not in the areas of our transformer, etc., but mainly in our value-add or complementary things like our new segments, those are the things.
Thank you for the answer, and all the best for the future.
Thank you. Operators, since we already reached our time, and I know that there are lots of queue there for other questions, please reach out to us. We have back-to-back calls with some other things. I really want to thank you for your interest and listening to us. If you need any further information, please reach out to us. Anytime, happy to engage and provide the answers to you. Thank you very much, and looking forward to talking to you soon. Thank you. Thank you.
Thank you. On behalf of Hitachi Energy India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.